At times I watch Shark Tank. I enjoy the interaction and business lessons we can learn from the program. One common mistake many entrepreneurs make when entering the Shark Tank is asking for a ridiculous valuation. I’ve seen several shows where the sharks were interested in the idea; but the valuation was so high compared to earnings, no one was willing to pull the trigger and make an offer.

As a consultant I have encountered many business owners who, at times, have an unrealistic valuation of their business. Here is an example.

A client who was on the verge of closing an auto repair business came to me for options about restructuring the business. “Sam” operated a small facility employing two other mechanics plus a part-time office administrator. Sam worked most days from 7 am to 9 pm to keep the business afloat.

When I talk goal setting, I often introduce the concept with this analogy.  I explain that there are two kinds of people.  There are the ones who paint a target on their barn and then shoot the arrow, hoping for the bull’s-eye. They may not always hit the center of the target; but they discover that the clearer the target; the better the result.  Then, there are people who shoot the arrow at the barn and then paint the target to impress people with their self-adjusted accuracy.  

Three simple questions will help a leader stay focused: 

I was asked to consult with a young entrepreneur wanting to start an ice cream store.  “Bill” agreed to see me mostly because his father asked him to spend time with me. Bill was shocked by my first question, which was, “Do you like ice cream?”  Bill stared back and didn’t really answer. He countered my question by asking if I liked the money ice cream can make.

I told him that I don’t recommend starting a business for any other reason except serving customers. I explained that If you’re going to be in the ice cream business, you need to enjoy ice cream.  You must like making ice cream and ice cream-based treats.  You must enjoy the happy faces of your customers and their families when they enjoy your ice cream. You must love creating an experience they want to enjoy again.  The ice cream business is not about a methodology that will make your cash register ring.

Most people know that new sales online have been increasing.  In 2018, e-commerce increased 14.2% from 2017. The increase has been steady for years while we see retail stores struggling with stores closing in large numbers. This includes large retailers like Kmart and Sears but also involves smaller stores in strip malls. 

However, an interesting statistic is that, though retail sales in brick-and-mortar stores have been stagnant while e-commerce has increased; the increase is clearly at the expense of growth that would have occurred in traditional stores.  It is also true that while traditional stores have suffered decline, there is still a tremendous amount of retail activity. Over 90% of sales are still conducted through traditional storefront locations.