Shark Tank Jump Start Your Business: How to Launch and Grow a Business from Concept to Cash (2 page)

For me, being an entrepreneur is all about passion and drive. Starting out, I didn’t have people who were there to help me and take me by the hand. I had to figure things out on my own, which made me the person I am today. Nobody I knew had ever done anything like what I was attempting, so it really was up to me to figure it out. It made me smarter, I think, and that’s really important because the more experienced you are, the stronger, faster, and more responsive you can be—all of which are important qualities for anyone starting out.

Initially, my love of business grew out of a passion for inventing. After my first product did well, the creative juices just started flowing. I couldn’t stop. One success led to another, and before I knew it I had the entrepreneurial fever.

As my business began to take off, I grew even more excited about the work. I felt like I was really doing something meaningful—something that made people’s lives better. That was very enthralling for me. So I just kept going, inventing more products. That’s all I ever thought about.

The entrepreneur will face many challenges along the
way, so you’ve got to have the discipline and self-motivation to do whatever it takes to get the job done. You have to be willing to do the hard work and put in the long hours. There are times when I’ve literally worked thirty-six hours straight. [
Author’s note:
Case in point, Lori and I are meeting for this interview at 10 p.m. on a Saturday night after she’s already put in a full day of filming and travel.]

After launching hundreds of products, my business has become very successful and my entrepreneurial fever has evolved and grown to include other passions as well, like
Shark Tank
.

I absolutely love working on the show because it feels so good to help others achieve the kind of success I’ve had. The idea of paying it forward is very important to me, and I feel like being on the show has helped me do that. I’ve always believed that if you’re lucky enough to do well, you have a responsibility to give back. That’s the higher, truer, bigger meaning of life.

I really do feel as though it’s my destiny to be on the show and to serve as a positive role model for other entrepreneurs who are trying to succeed.

In 1931, the world had just entered a great depression. As the economy tanked and unemployment soared, Americans from California to New York felt the piercing sting of hopelessness and desperation. Following decades of tremendous growth and opportunity, the ebullient spirit that had once defined a nation was now depleted. But somewhere between the unveiling of the Empire State Building and Babe Ruth hitting his six hundredth homerun, a man you’ve probably never heard of defined an idea that would shape the next century and beyond: the American Dream.

When James Truslow Adams first put those two words together, Americans had yet to adopt prosperity as a core value
, let alone a birthright. No matter how inspired Adams may have felt when he first conjured up the idea of the American Dream, he couldn’t possibly have known just how transformative those words would become.

As our culture has progressed, the American Dream has matured and evolved. But the heart of the idea has remained as pure as the day it was first declared: the “dream of a land
in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”

Today the entrepreneur has become the very embodiment of that dream. Through hard work and perseverance, it’s he or she who dares not only to dream, but to risk everything for the chance to succeed.

When you think of the typical small business, you may imagine your favorite local diner or independent bookstore. Perhaps you picture the kind of quaint mom-and-pop establishment that lines the main streets of cities across America. But
small
business is actually much
bigger
than most people realize.
Defined by the Small Business Administration as companies with fewer than five hundred employees
, small businesses employ around 60 million people each year, contributing to roughly half of private sector employment. From grocery stores and doctors’ offices to consulting firms and advertising agencies, small businesses play a major role in the job market and the economy.

According to a 2009
USA Today
/Gallup Poll, roughly a quarter of working Americans have considered becoming an entrepreneur.
And with more access to resources than ever before, many people are walking away from the safety of their day jobs to do just that. But access should never be mistaken for ease. While a number of rewards come with starting a business, there are an equal number of challenges—challenges that must be considered before launching any new venture.

If you’ve picked up this book, you have, at the very least, a desire to start your own business. Congratulations, that’s the first step. But before you can begin building the next great company, you must first consider a few key questions:

Are you looking to open a small boutique firm or is the goal to create fast and furious growth? Do you want to start a service-based business or is your idea centered on a product? While one type of business isn’t necessarily better than another, it’s crucial to thoroughly research your industry and market
before
launching a company.

Perhaps even more significant than the “what” is the “why.” Do you want to start a business to avoid working for someone else? Do you have a great idea that you feel would perform well in the market? Are you out of work and looking to gain financial independence? The “why” behind your business will play a major role in many of the decisions you make as an entrepreneur.

Owning a small business, especially at the beginning, is a 24/7 job. From strategy and development to balancing the books and sweeping the floors, it’s likely you’ll be a one-man band, at least at the beginning. Don’t fool yourself into thinking that you’ll start a business next week and sell the company for millions of dollars next year. For most entrepreneurs the road is long and challenging. In fact, a good rule of thumb is to estimate how much time and energy you think you’ll need to invest in your new venture and then double that number. Still interested?

In Chapter Two you’ll be asked to dig deep and identify your strengths and weaknesses, but for now try to anticipate what
kind of training or skills you may need to make your company work. If you’re great with your hands and would like to open a massage business, there are certain types of certifications you must acquire before you can legally run that type of operation. If you have a great eye for design but not much experience, you may need to develop a few more hard skills before starting a design company. Flesh out your idea and try to anticipate what skills or training you’ll need to acquire.

Optimism is important, especially for the first-time entrepreneur, but so is pragmatism. Since
half of all new companies fail within the first five years
, you owe it to yourself to consider what might happen if your business faces a similar fate. Will you be financially wiped out or do you have another source of income? Will you be able to get your old day job back or will you face long-term unemployment? While you shouldn’t let fear of the unknown deter you from starting a business, you must also not let ignorance lead you down a dangerous path. It’s just as important to anticipate failure as it is to prepare for success.

While these types of questions are not easy to ask, their answers will provide tremendous value as you begin to shape
your business idea. Launching a business, especially for the first time, is a major undertaking, and preparation is absolutely critical.

Being an entrepreneur hasn’t always been so glamorous. Until the last twenty years or so, the entrepreneur was seen less as an innovator and more as a risk-taker or thrill-seeker. In many circles it was considered foolish and even sometimes careless to launch a new company. Why would you go through the trouble of starting your own organization when there were so many stable corporations to work for? But as technology invigorates the small business landscape and big business stumbles over its own red tape, the playing field is slowly beginning to level.

Still, much misinformation exists about what it takes to be an entrepreneur. Some believe that you must have access to a large amount of capital, while others insist that bootstrapping is the only way to ever succeed. From education and background to economic timing and geographic location, there are a number of confusing and contradictory ideas out there about what it actually takes to start and run a thriving business.

So why exactly do these myths exist? Much of the confusion is fueled by a paralyzing fear of failure. There’s comfort in believing there’s only one formula for success because it lets you off the hook. It gives you permission to stay at that job you don’t like or abandon that “silly idea” you’ve been dreaming about for years. Never trying is the only way to guarantee you will never fail. But the reality is that the path to success is entirely up to you. Daymond’s journey was different from
Barbara’s, which was different from Lori’s, which was different from Robert’s. For every rule there is an exception; for every definite there’s a maybe.

To help separate fact from fiction, here’s the truth behind a few of the most common small business myths:

While having an entrepreneur in the family can certainly instill some important knowledge and values, the truth is that growing up around entrepreneurs doesn’t affect your ability to become one.
A study done by the Kauffman Foundation—a renowned organization dedicated to promoting education and entrepreneurship—surveyed 549 company founders across various industries and found that more than half of the participants were first-generation entrepreneurs.
In other words, starting a great business isn’t about where you came from. It’s about where you want to go.

If you can’t sing, you’ll probably never be a professional singer. Sure, you can take lessons and get better, but if you can’t sing, you can’t sing. Starting a business is just the opposite: it’s a learned skill, not a natural born talent. While it’s hard to deny the common traits found in successful entrepreneurs, numerous studies suggest that the majority of small business owners didn’t even consider starting a company until much later in life.

While one camp believes that the best entrepreneurs bypass college, the other would argue that college is a breeding ground
for excellence. Those assumptions are both true and false. Yes, some entrepreneurs never attend college and others do exceptionally well. But the majority perform somewhere in the middle.
The same Kauffman study from our first example found that 67 percent of the surveyed entrepreneurs ranked their academic performance among the top 30 percent of their undergraduate class.
They weren’t setting the curve, but they weren’t flunking out either. Strangely enough, the study found that high school competency serves as a better indicator than college of future entrepreneurial success.

Most entrepreneurs don’t love the idea of working for somebody else; this is true. But it’s rarely the single driving force behind their decision to start a company, and it shouldn’t be yours. If it is, you may wish to reconsider your choice. As you’ll soon learn, running a business is all-encompassing, and a general dislike for authority may not be enough to keep you going.

False, false, and false!
Another study done by the Kauffman Foundation found that every year from 1996 to 2007, Americans between the ages of fifty-five and sixty-five had a higher rate of entrepreneurial activity than those aged twenty to thirty-four, “averaging a rate of entrepreneurial activity roughly one-third larger than their younger counterparts.”
Moreover, the study found that the average age of a tech founder is thirty-nine—with “twice as many over 50 as under age 25.”
By 2011, the number had increased even more, with Americans between the ages of fifty-five and sixty-four making up 20.9 percent of all new entrepreneurs.
Think you’re too old to start a business? Think again!

If you’re starting a business as a way to get rich quick, you may find yourself sorely disappointed. On average, small business owners actually make substantially
less
money than they would working for someone else. What’s more, they typically put in more hours, deal with more stress, and have more responsibilities. As Lori Greiner often says, “Entrepreneurs are the only people who will work eighty hours a week to avoid working forty.” If making a quick buck is your only motivation, you may be in for a long, frustrating journey.

You may need a lot of energy and stamina to launch a company, but you don’t always need a lot of money.
It’s estimated that the average startup cost for a business is somewhere between $25,000 and $50,000,
depending on whether or not the company plans to hire employees. And where do most entrepreneurs get that money? Not from a bank, not from their family. Most business owners use money from their personal savings to start their company. In fact,
studies suggest that around 65 percent of entrepreneurs finance their venture using some form of personal debt.

What do Burger King, GE, Microsoft, and Hyatt Hotels all have in common? They were all started during a recession. While you may think that starting a business during a recession is a bad idea, many companies have thrived during difficult
economic times. It actually makes a lot sense if you think about it. During a recession you may have better access to cheaper space and more talented employees. And because everyone is trying to save money, you may have a greater shot at competing than you would in a time of prosperity. Hopefully, by the time the market recovers, you’ll have already gone through the difficult startup phase and be on your way to growing the business.

Now that you know some of the myths, here’s the truth: starting a business is simultaneously one of the most rewarding and difficult things you could ever do. There will be moments, plenty of them in fact, of uncertainty and fear. After your second month of working seven days a week or your second year without a regular paycheck, you’ll begin to seriously question why you were ever crazy enough to start a company in the first place. But when that moment occurs, and eventually it will, you can’t let it get in your way. Instead, you must use that anxiety as a catapult to push you to the next level.