Shark Tank combines reality show drama with one of my favorite topics, venture capital investing. It’s been a hit since launching in 2009, but it is much more than just good entertainment.
I spent years as a venture capital analyst, researching companies and investments for big-money investors. I ran a team of six analysts for a Canadian VC firm in 2014 and loved the high-risk, high-return nature of early-stage investing.
For anyone in a cave the last nine years, Shark Tank features five billionaire investors that have created their own companies. Sharks include Kevin O’Leary, Barbara Corcoran, Daymond John, Robert Herjavec, Mark Cuban, and Lori Greiner. The panel hears a pitch by an entrepreneur looking for business funding. Then each person on the panel decides if they want to invest in the company.
The VC concept is as old as business itself. Still, the Shark Tank show is a spin-off of a Japanese show called Tigers of Money and a later British version called Dragon’s Den.
While there’s plenty of scripted drama on Shark Tank, the show can be invaluable for real business owners. The questions on Shark Tank are questions I asked daily about the potential investments the firm was considering in early-stage small businesses.
Use these Shark Tank questions to grow your business even if you aren’t looking for investors
Even if you’re not looking for business funding, these Shark Tank questions will help you guide your business, stay competitive, and grow beyond your wildest dreams.
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23 Shark Tank Questions for Starting a Business
Getting your idea off the ground is the hardest part of small business. There’s a lot more planning that goes into a successful business than most people understand.
Sure, you can jump right into selling your custom horse-buggy whips, but a little planning could tell you that the market dropped out with the launch of the Model-T. Asking these 23 business questions will help you understand the market and your product to be successful from day one.
There’s another benefit to asking these Shark Tank questions before starting your business idea. Self-defeating voices and doubts are the biggest destroyers of small business dreams. Of course, you never lose the voices completely, but a little planning can give you the confidence that you’re ready.
Why did you pick that product name?
There’s nothing to say you can’t change your product name later, but you’ll lose a lot of brand recognition. Spend some time creating a name that is brandable, memorable, and easy to remember.
Are you a product or a service company?
Or both? Many product companies see the most revenue from continuing service or some add-on to their main product. Understand exactly what you provide to the customer and other needs you can fulfill.
How does your product work?
I’ve seen entrepreneurs try to buy a product or company without knowing how it worked. Expert knowledge will go a long way in creating marketing material and establishing relationships. Explaining how the product works to yourself and others will also help reveal flaws in the process.
What makes your product unique?
You need an outside opinion on this one. Is your product something different? You can go to market as the ‘low-cost’ producer, but that’s rarely a profitable idea. To be successful, you need something special.
What else comes with your product?
Two ways to think about this: are there things you can provide with your product as sales incentives, or can you offer as up-sales? Both are powerful features that will make you more money.
Why are you different than your competition?
Again, go for the differentiation angle rather than low-cost. You want to avoid competing on price with established companies that can win a price war.
Why are you better?
Do you offer a better service, a longer-life product? What are the customer’s needs that are satisfied, and how does your product do this better?
Can anybody else do what you do?
This question is one of the Shark Tank questions that nobody sees coming. It’s easy to think your idea is unique and impossible to imitate, but how realistic is that? A truly successful business is built around a service or product only you can provide.
Is there a lot of competition?
Don’t mistake the lack of competition as a business opportunity. There are few buggy whip producers, but that doesn’t mean it’s a slam-dunk business idea. You want a market with lots of competition and sales but one that isn’t providing the service or product to meet customers’ needs.
Who is your target audience?
Don’t try to satisfy the entire market. You might grow your business to satisfy multiple niches within the market but start by targeting one group with very specific needs. Brand yourself as the very best for that group and expand from there.
What makes you think consumers want this product?
Nothing beats good market research. What are the existing competitors? What customer needs do they fulfill, and what isn’t the market fulfilling?
How big is your team?
If you’re not outsourcing some part of your business, you’re not being as successful as you could. Learn what you are good at and find people with skills to help your business grow.
How do you plan on advertising your product?
Let’s rephrase that Shark Tank question to, “How do you plan on advertising your product, and do you know the return on that advertising?” More than throwing money at your business is required. You have to know how well different advertising channels convert to sales.
Where do you plan to sell your product?
Are you selling online or at the store? Is it as close to the checkout decision as possible if you’re selling in a store? If you sell online, are you on the sites where your customer is thinking about the need you satisfy?
Are you working on your business idea full-time?
Venture investors and other Sharks want full-time commitment before investing in a company. Taking this leap can be scary, but it can also force you to take your business seriously.
What is your background?
Only think about it if you have experience in the product or your business’ industry. You need to have management skills to be a successful business person. You need direct experience in a specific sector.
Why did you get into this business?
Your answer should be something other than wanting to make a lot of money. Building a business is a lot of work, and you need to enjoy the industry in which you operate. That will motivate you to keep going before the money starts rolling in.
How did you come up with your idea?
The best business ideas come from noticing an unfulfilled need in the market.
Who designed your product?
Do you know enough about the product to design it yourself? Did it take a technical expert, or can just anybody imagine it easily?
How do you make your living now?
Do you have sales coming in, or do you still depend on an outside income? Angel investors are looking for that commitment that you are 100% behind your idea because you rely on it for your livelihood.
Are there any samples you can show us?
Part of being a passionate business owner is always looking to show your product to someone new or to tell them about it.
Why should I care about your product?
If you can’t explain to people why they should be excited about your product (and actually get them excited) then no amount of marketing will help you.
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22 Shark Tank Questions to Analyze Your Sales History
You can also answer a lot of these Shark Tank questions about sales before getting started as a way to plan for your business. For example, if you don’t know how high sales are for competitors’ products or your potential sales, how will you ever know if you’re doing well?
These sales history questions need to be an annual review as well. We’ll discuss improvement and growth in another section of questions but planning a yearly review is extremely important. It’s easy to get lost in the day-to-day struggle of small businesses and miss the significant trends in your industry.
Step back every once in a while and ask yourself these broad-level sales questions to keep an eye on the big picture.
How long have you been in business?
Time spent in the market includes business planning and operations.
Who is your consumer so far?
Are your current customers a niche part of a larger market? How are they different? What are the similarities they share with other customers in the market?
Who is your biggest customer?
Relying on one customer for a significant portion of your total sales is a red flag for investors. So what happens when that customer stops buying or decides they want to negotiate a lower price?
Understand who this customer is, why they buy, and where you can find others like them.
What were your sales last year?
What will your sales be this year?
These last two should come from a spreadsheet that tracks your sales and all operating expenses. Again, you don’t have to be an accountant, but you better understand where your money is going and how much profit you make on your business.
Where do you produce your product?
A follow-up to this business question is usually, “Are you limited to how much you can produce there? Is there somewhere you could produce at a greater scale or more cheaply?”
What are your logistics?
One way to lower your costs is by producing closer to your suppliers or buyers. This geographical advantage cuts down on transportation costs and can even build your brand as being locally sourced.
What is your lead time?
This question is a big one, but many business owners ignore it. How long does it take to place an order for supplies, produce your product and deliver it to the customer? Understanding this will help you save money and ensure you stay supplied when your customers buy.
How much does it cost to make?
The cost to produce your product includes raw materials and production costs. Remember to include a cost for your equipment used in production. That equipment will wear out regularly, and you’ll need to buy new, so depreciate an amount yearly to estimate your unit cost.
If you don’t know exactly how much it costs to run your business, you’ll never be as profitable as you could.
How much does the package cost?
How much does it cost to ship?
How much do you sell it for?
It would be best if you based the answer to this question on competitors’ prices, your product’s unique selling point, your costs, and how much you need in profit.
How do you sell your product?
Does the product sell retail off the rack, or do you need a more intense marketing funnel? Again, this isn’t just the physical location at which you sell but the process you use to sell.
Do you sell your product online?
Even if you’ve had success selling from a physical location, don’t overlook the need to find online distribution. Likewise, a strong online sales channel doesn’t mean you can’t also be successful selling offline.
What is your marketing spend?
The hidden question is, “do you know what in your marketing budget is the most scalable?” The focus should be on what you are doing that is receiving the most bang for your buck.
How many subscribers are there?
Can you convert your product into a subscription model or offer an add-on service that brings people back every month? Keeping your current customers close through a continuous relationship can help keep them from thinking about a competitor’s product.
How many purchases do customers usually make?
Is your product a one-time sale or do customers need to buy it regularly? What’s the average lifetime spend for a customer, and how often do they need to come back?
What is your attrition rate?
The attrition rate is the number of customers you typically lose each year out of your customer base. For example, if you have around 100 customers and typically lose five a year, you have a 5% attrition rate. So the next question to answer is why customers leave, and is there something you can learn from past clients?
What is the lifetime value of your product or service?
What is your product worth to customers? Does it help them do something, or does it satisfy a need?
Have you made any corporate sales?
This business question can extend beyond corporate sales to the wholesale approach to large retailers or any group of your customers.
What was the reception for your corporate and retail sales?
It can be frustrating even to get your foot in the door to pitch large distributors, but it will teach you much about your business. Try networking where decision-makers are within your community to get past the gatekeepers to these deals.
Where does your product sit on the shelf?
Optimally, you want your product at eye level and as close to the buyer’s decision as possible. You also want to consider what other products are around yours.
13 Shark Tank Questions for Valuation
Shark Tank candidates are looking for an investment in their business. They need funding for growth and need to convince a venture capital investor or angel investor to lend their insight and hard-earned dollars.
Even if you’re not looking for money to grow your business, you should regularly ask yourself these business valuation questions. It’s one way to measure your business’ growth, and you may need to answer them someday to bring on a partner or sell your business.
Why do you value your company the way you do?
I always used three valuation approaches when valuing a company for venture capital investors like the Sharks. Understanding the different ways to value a company can also help you know how to grow your company.
- Comparables find a measure like price-to-earnings or enterprise value-to-sales by which competitors are valued and then apply that to your measures.
- M&A method looks at how much other companies are paying when they buy a company similar to yours.
- Proforma cash flow uses estimated sales and profits to find a current value.
Are you including projected sales in your company valuation?
Projected sales and other proforma numbers must be realistic. Creating a proforma income statement is a must for any business owner. It goes way beyond just trying to value your company. Set your sales goals and plan your expenses to find potential profit.
Do you own a patent?
A patent can be a huge plus, but it’s not guaranteed protection against competitors. The fact that your product is patentable might be a selling point.
What is proprietary about your product or service?
This question focuses on your business’s uniqueness and how easy it will be for a competitor to copy. It doesn’t have to be simply about the product but can also be how you deliver it.
Is there proof of concept?
If you’re still in that startup stage of business, you’ll need to produce a test product for proof of concept. You’ll use this to test that it works and other points like durability.
Is there a partner or partners currently involved?
Outside investors are going to want to know who is on your team. Sharks want to know who they will work with if they come in on a business.
How much do you do in crowdfunding?
Crowdfunding is about much more than just money. Launching a crowd campaign can get instant feedback before spending a dime on production. It can also build a community of cheerleaders around your brand.
How much debt do you have?
Don’t think debt is a bad thing for your business. On the contrary, it might be a better funding source than sharing your profits with an investor.
How much inventory do you have?
Do you have enough inventory to handle big spikes in sales, or might you run out of product? Are you paying to store your inventory, or is there a way to track your sales so you have enough produced to meet sales?
How much of your own money is in the product?
Angel investors and Sharks like to see ‘skin in the game’ from entrepreneurs. Don’t look for outside money unless you’ve already put your money behind it.
What is your market share in comparison to your competitors?
You need to understand the scale of your market and how much market share you have. This data will help you track how you compete and your growth potential for the future.
Where do you get this data from?
Is there an industry resource from which you can get market data? Are there customer surveys you can get? It speaks a lot about how you may operate your business, seeing how you sourced your market research data and what you consider credible and relevant.
How soon will the investor receive a return on their investment?
This question might not be as crucial if you’re not seeking outside investment. Still, usually, VCs like to see an exit plan for their money within three to five years.
8 Shark Tank Questions to Ask Before Accepting an Offer
Just like the last section of Shark Tank questions, don’t underestimate the value of these 12 questions to help you value an investment offer.
You may not be considering a business partner or angel investor. Still, they can provide a wealth of knowledge beyond money. Besides money for growth, a business investor brings word-of-mouth and a lot of skills to the table.
Most Shark Tank entrepreneurs aren’t really in it for the investment funding. Instead, they are there because the Sharks bring decades of business experience and connections to the partnership.
Before you bring on an advisor or business partner, you must understand what you need out of the relationship and how much it’s worth.
Why do you want this investment?
Hint, the correct answer here is not because you need the money. Money isn’t an end for a business, but a means for growth and development. So how can you use extra resources to grow your company?
Why give away part of your company right now?
Why not wait until the company has grown more to sell a share for more money? Why is right now the best time for this growth?
Do you want a partner or just cash?
Again, there are better answers than cash. Knowing what you want from a partner isn’t just when seeking an angel investor. When you bring someone into your business, ask yourself what they contribute. What is their value beyond just their money or their time?
Can this product be licensed?
Licensing your product or franchising the service can be a great way to grow sales while limiting your own risk.
Will you accept a royalty instead of giving away equity?
Royalty investments mean you pay investors out of future sales. Since a new business is more likely to have sales than profits, it’s a less risky investment. For owners, it can be a good source of cash and investor skills without giving up an ownership share of profits.
Royalties usually only extend for a specific period or until you have returned investment dollars plus profit.
How will you use the money to grow your business?
An excellent question for any business owner is, how would you grow your business if money was not an issue? What would you do if you had unlimited resources to grow? But, conversely, what would you do if you had no money with which to invest?
Has anybody else offered you money?
They may ask this on Shark Tank, but it’s not something you would answer directly in a venture capital deal. Instead, you might give a vague answer like, “A major [sector] company approached me,” and provide a broad outline of the agreement. Still, you would want to keep specific details private.
How much money do you have and what is your cash burn rate?
Investors want to ensure you aren’t running out of money before sales are enough to cover your expenses. Knowing your cash burn can be a great planning question as well. Cash burn is the amount you spend each month that you don’t cover by sales. How much of your cash are you burning through before you run out?
16 Shark Tank Questions to Improve Your Product (If You Don’t Receive an Offer)
I shared my opinion on business failure in last week’s 51 business quotes. The truth is, there isn’t such a thing as failure. That’s not some lame, motivational idea but a belief that running a business is a succession of projects, goals, and progress.
You never fail until you die (because that’s it. Game over).
Not meeting a goal or not making progress isn’t a business failure because it’s not the end. You make a new goal and keep measuring your progress. The inability to reach that last goal is an insignificant period compared to the entirety of your business.
Sometimes, you’ll receive a flat-out rejection from an investor or customer. That can feel like a failure but can be turned around as a lesson. Use the refusal to learn how you can improve your business. You might grow faster off the rejection than you could have grown with the new partner or customer.
Can you improve sales by hiring outside help?
You might not be able to hire a full-time worker, but you should always be on the lookout for ways to outsource smaller tasks, especially those you aren’t good at. Do what you do best and hire other people with the skills to make your business a success.
Is it easy to improve your product?
If it’s easy to improve on your product, a competitor will do just that. Your unique selling position shouldn’t be something that can be easily or quickly improved on.
Are you targeting the right customer?
For many new businesses, the right customer is the one that’s buying. As your business evolves, the right customer is the one that is willing to pay the most for your product. Whose needs does your product serve best?
Are you offering the right products?
Business success is about constantly evolving your product or service. But does it still serve your customer’s needs, or is there a faster, better solution?
Are you marketing your products in the best possible way?
The answer to this Shark Tank question has to come from testing. Try out different marketing channels and keep an eye on costs, sales, and the types of customers you attract.
What makes you think consumers want your product?
Determining your customer’s motivation is an interesting question. Just because people buy your product doesn’t mean they ‘want’ it. They may buy it out of novelty, curiosity, or grudgingly think they ‘need’ it. Work on building your brand so people’ want’ to buy your product.
How much does your product cost compared to your competitor?
Don’t be afraid to charge a premium price for a premium product. I would rather spend more marketing on developing my brand and being able to get more for each sale than compete on price.
Can you scale your product without investment by making a few changes?
Regularly review the entire process behind your product to see where you can improve.
What are the main reasons customers don’t make an initial purchase?
Feedback from non-customers can be hard to come by, but it’s a goldmine of information. So put together a group of people to offer feedback on your product and why they wouldn’t buy.
Is there a learning curve for your product?
Do your customers need to learn how to use the product? This learning curve can be a hurdle to getting that first sale, but you’ve got a more significant commitment from buyers. Spend some time and money to help teach people how to use it. Then they’ll be ‘locked’ into it for the time they spend.
Is it easy for customers to understand your product?
Technical or perceived technical issues can be challenging to overcome. Again, product demonstrations and testimonials can be great tools here.
How will you update this product?
It would be best if you had product improvements on your calendar. Still, it would be best to watch competitors for their updates to ensure they don’t jump ahead.
What is your biggest obstacle to scaling your business?
Is it time, money, labor, or something else?
Is your product too localized to be franchised?
Even if you start selling to a small, localized niche of customers, you ultimately want to expand to other markets. Franchising or licensing can be a great way to do this.
Are you the best person to be selling your product?
Some people aren’t good at sales. Of course, you should be passionate about your product and business, but you can still sell it daily.
19 Shark Tank Questions to Scale Your Business
Scale is something you hear a lot in Shark Tank. It means growing your business and sales to a massive point where you benefit from buying supplies in bulk and reaching maximum efficiency in your operations.
Reaching this size is important for venture capital investors like the sharks. They are only interested in partnering with a business if it can reach hundreds of millions in sales. If you’re a billionaire, making an extra million isn’t worth your time.
Scale is important for any entrepreneur because you need to reach that optimal business size to reach your full profit potential. If you are not at the best scale for optimal efficiency, you are leaving money on the table.
The idea of constantly seeking growth is also essential because a business that isn’t growing is dying.
You can bet your competitors are evolving, adapting, and growing. If you’re standing still, you’re getting pushed backward and may one day find yourself out of business.
Ask yourself these Shark Tank questions for business growth to ensure you’re moving in the right direction.
How scalable is your product or service?
Even if you’re happy with how much your business is making, you always need to think about growth. Can you reach a larger group of customers more efficiently than you are now? Just going through the exercise of thinking about growing your business can uncover missed opportunities for more sales or lower expenses.
Can your product be mass-produced without compromising quality?
Don’t write off quantity as a way to grow your business. Henry Ford was able to mass produce his cars at such a pace he could offer them at a lower price and still make more money than all other car companies combined.
Is your product where you want it to be right now?
Your product doesn’t have to be perfect before you take it to market. Start making sales before everything is perfect. You should, however, always know how you can improve your product and what’s the next step in its evolution.
Can this same product be sold indefinitely or must it be updated as technology advances?
Keep an eye on your competitors’ products and those used with yours. If a complimentary product changes, you may need to change your product so customers can still use it.
Can you estimate how big your market is?
Change this question to: “Estimate how big your market is.” You need to estimate the market size to know if it’s a good business idea. Not being able to estimate the market size at least is a non-starter.
What feedback have you received from current customers? Can this feedback be used to develop new products or services?
Not only will seeking customer feedback help to improve your product, but it will also build that relationship to keep a customer.
When scaled, what will you sell your product for?
Can reaching a more significant market help lower your product’s price and make it more competitive?
How big can you be in 2-3 years?
You should always have a short-term (three years) and a longer five- or ten-year plan for your business.
How are you going to turn this into a brand?
Without a brand, you’re competing on price, and that’s a quick way to lose money. So instead, make your product stand for something in customers’ eyes so they’ll buy it even at a premium price.
Where is the next place to sell your product?
Your expansion can be within the same locale but to another group of customers or your existing customer type in a different region.
Do you already have future products or services in the pipeline?
The answer to this should always be YES!
Can other items be included with your product?
Again, consider pre-purchase incentive products and add-ons.
- Pre-purchase incentive products are freebies that come with your product to persuade the consumer to buy.
- You can offer add-ons after the purchase for a discounted price to add to your profit.
Which shark will be the most beneficial to scaling your product and why?
Consider more than just their money if you’re looking for an investor or partner. Their skills, experience, and connections add the most value. So, which ‘shark’ can take your business farther?
How can investors help you enter a new market?
The best investor will have the connections to introduce you to a new market or a new group of target customers.
What are your current production costs and commercial rent? Can either expense be reduced?
Regularly review your entire sales process to see if there are expenses that you can reduce without sacrificing quality.
Can you produce your product overseas to increase profit margins?
Check out Alibaba for low-cost manufacturers that can ship cheaply to overseas retailers.
Can you sell your product overseas?
This is the ultimate step in growth but can also include many risks.
The list of Shark Tank questions may seem insurmountable. But it’s easier to answer them now than wonder why your business isn’t growing as fast as it could. Take just a couple of weeks to answer every business startup question, and you’ll be well prepared. In addition, you’ll have the confidence to start your business because you’ll know you’re ready for prime time.