Shark Tank viewers know there isn’t an episode when The Sharks seem to compete against each other. Looking for the best deals, the show reveals how certain elements of any investment will spark massive interest from Tank.
It’s surprising, but it shouldn’t be, that the biggest element that sparks massive interest is high profit margins. When The Sharks hear they can make a solid profit margin from each single item, they appear to really perk up. It’s a far easier way to get started with an investment than a business that is struggling to reel in much income from the onset.
How does Shark Tank mirror investors in real life? If you have a product or service with higher than usual profit margins, you may also assume you will have more interest than others. Perhaps this is discouraging for some entrepreneurs with lower margins, but it could be a serious goal for anyone looking for an investor.
Why are investors interested in high profit margins?
Entrepreneurs and small business owners might be interested in why high profit margins lure investors, especially since so many great ideas don’t have a large profit scale. The answer is simple: time. The investor is looking for a way to get their money back as fast as possible. If you have a large profit margin, then the return time will be faster. Depending on the deal, it could also be more money than other opportunities for the return.
Have you figured out a way to increase your profit margins to make a bigger bottom line? If you can’t do it today, can you do it tomorrow with an infusion of cash? Sometimes materials, new manufacturers and other elements can spark higher profit margins. This leverage is what is seen on Shark Tank and should be explored in business too. There are often many different components that go along with getting the cost of your product low in return for the amount of money you earn.
Entrepreneur Tip: If you want more interest in your investment, find a way to prove how high profit margins are attainable. Even if you are not there yet, a plan to show their viability in the future may be enough to secure investment.