Diving into Shark Tank’s Portrayal of Entrepreneurship – Does the popular reality show encourage sound business strategy and risk-taking? (Copy)

Shark Tank is perhaps the most successful reality television show concerning a business topic.  On the show, entrepreneurs pitch their business ideas to a panel of investors, the titular “sharks.” The show, which has aired since 2009, has become one of the most watched and well-loved entrepreneurial shows on TV. But does the show offer a realistic view of entrepreneurship? Let’s talk about what it gets right and wrong about taking the leap into business ownership.

Encouraging The Leap

The visibility of Shark Tank has lifted the perception of entrepreneurship, inspiring countless would-be entrepreneurs. The show provides a platform for entrepreneurs to pitch their ideas to a panel of successful and well-known business icons supposedly valued for their investment acumen. While some of the reality TV show mechanics are overly contrived, viewers do get to witness entrepreneurs presenting their ideas and negotiating, providing valuable lessons for anyone looking to start or grow a business.

Shark Tank has also created a culture of entrepreneurship, inspiring people to start their own businesses and pursue their dreams. The show is often credited with inspiring new businesses and startups, as well as promoting entrepreneurship as a vehicle of long-term wealth generation.

The Realities of Entrepreneurship

Entrepreneurs who have been inspired by the show should be aware that the show does not always accurately reflect the realities of entrepreneurship. Even with the acknowledged “fakeness” of the show - the negotiations and deals made on the show are often staged or edited for the sake of entertainment – the show tends to portray a typical entrepreneur as an inventor with a brilliant idea on the cusp of becoming wildly successful, an image that belies the often methodical and mundane nature of starting a business, as well as the risks involved.

Important Lessons that Shark Tank Ignores

Shark Tank often focuses on a few key moments of the entrepreneur’s journey – the exciting moments and big failures – but starting a business involves many different key steps that don’t generally make for good TV. Here are just a few of the first steps you’ll need to take long before you begin looking for a Shark.

Market Experience – Although Shark Tank features some inventors who have never worked in the industry they are entering (and some of these investors find success), most entrepreneurs have extensive education and experience in the area of their potential business. Knowing the industry and its players helps business owners craft unique solutions to problems that they have experienced. Experience also opens up networks. If you are looking to start a business, you would be well served to start with what you know best.

Market Research – The “Sharks” often dismiss anything approaching market research during the pitch, but market research is often the difference between immediate profitability and costly trial-and-error. It's important to understand your target market and industry. Conduct market research to identify a need for your product or service and validate your business idea. While you don’t want to get bogged down and pessimistic, testing your assumptions with rigorous research should be the first step in any venture that you will invest your time and money in.

A Written Business Plan –A business plan is a keystone document for your business. The business plan outlines your goals, strategies, and how you plan to achieve them. A well-written business plan can help you secure funding and attract investors. And yes, it should be written. It should be thorough.

In the plan, you will need to choose a business structure: Determine what type of legal structure best suits your business, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation. You should designate how you will register your business with the appropriate state and local authorities, obtain any necessary licenses, and obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

The plan should include pro forma financials, including a budget. Your financials should include any needed financing, which usually doesn’t start with landing a fat investment from a Shark. Projecting the costs of borrowing from a bank or the opportunity costs of tapping a retirement account is tedious work, but important to getting off the ground.

Finally, your plan should discuss risks, including the risks that your business fails. Going into business without an exit plan can wipe out your financial future, but carefully considering risks can make sure that you can succeed in the future, even if your business doesn’t.

The Operations Build-Out – Whether starting in your garage or an executive office park, you will need to obtain the necessary equipment and supplies and establish the processes for daily operations. Don’t underestimate the time and effort of setting up shop. The effort, logistics, and costs can be overlooked when we’re eyeing future profits.

Marketing Your Business – On Shark Tank, effective marketing is often portrayed as a viral social media campaign. Actual marketing is less exciting. First, understand that you cannot generate sales without some underlying demand, and the existing demand should be able to find you without much marketing. Second, marketing doesn’t need to cost a lot, and probably shouldn’t be a large part of your budget at first. Successful entrepreneurs still rely on cold calls and networking. Customers will find you if you are solving a problem for them.

Entrepreneurship - Worth the Leap

Shark Tank generally portrays entrepreneurship in a positive light, and it’s great to see such excitement around starting a business. Owning a business is one of the greatest opportunities to generate wealth. The TV show has created a culture of business equity, inspired new businesses, and provided valuable negotiation and presentation lessons. However, it’s important to remember that the show is not always a true reflection of the realities of entrepreneurship. It’s hard work to start a business, and it doesn’t happen in a five-minute pitch in the Tank.