Do you watch the television show “Shark Tank” on ABC? It’s an entertaining blend of reality TV and business IQ as entrepreneurs pitch a few short-statured millionaires, and the 6’3″ billionaire Mark Cuban, on their homegrown ventures. Considering all the garbage on TV (anything Kardashian-related, The Housewives of West Lafayette, etc.), you can learn a thing or two from the sharks. Or maybe just laugh at the poor sap getting embarrassed and think, “I should know that answer about my own business….”
In the Tank there is a standard set of questions asked by the sharks:
• What is your revenue?
• What is your profit?
• What is your customer acquisition cost?
• What is your typical sales cycle?
• How will you spend the money?
There is also a standard philosophy shared by the sharks: Your business is overvalued. For example:
• The girl who teaches cats to urinate in a toilet like Jinxie from the movie, “Meet the Parents?” Your business is overvalued.
• The guy whose goats will mow/eat your lawn at a fraction of a landscaper’s price? Your business is overvalued.
• The five-year-old who makes gluten-free almond butter for dogs? Your business is overvalued.
In order to bring the valuation down to a “reasonable” level, the sharks encourage the entrepreneur to reevaluate her company’s worth on the spot—to negotiate against herself. (To state the obvious, all your negotiations should include at least one other person.)
After watching a couple dozen entrepreneurs negotiate against themselves on the show, one savvy entrepreneur finally bit back, “I’m not going to negotiate against myself. If you like my business—make an offer and I’ll consider it.” The stunned sharks just looked at each other…and then they smirked. They liked this guy even more now. He had shown that he was smart enough not to negotiate against himself. Two sharks invested in him.
As a purchasing manager, I had my own “Shark Tank” question. With little prompting, this question often resulted in sales reps actively negotiating against themselves. When accepting a bid, I’d look the person in the eyes and ask: “Are these your best numbers?”
Many sales reps froze. I could see the gears turning behind the wide eyes. They now faced a conundrum. “If I say yes, I won’t be able to lower my bid if we’re in danger of losing the work. If I say no, I’ll be admitting we are handing over fat numbers that will waste this purchasing manager’s time. Uhh….”
Many times the answer was some version of, “Lemme take another look at these—just in case—and I’ll see what I can do,” or “I bet we can sharpen our pencil a little bit.”
I’d slide the bid back across my desk and say, “Okay.”
Easily the most memorable response I ever received was, “Well, no. These aren’t our best numbers. Here’s why. We didn’t know how many rounds there would be in this negotiation, so we wanted to have plenty of room to come down in price in order to win your business.”
I appreciated his honesty, but I informed him this wasn’t some welterweight boxing match. It was one round. And he just got KO’d for attempting to waste my time.
After watching a couple dozen sales reps negotiate against themselves, one salesman sitting in my office finally bit back, “Yes. These are my best numbers. I’m not going to waste your time reviewing anything less than our best offer. Hopefully you can see all the ways we deliver value, in addition to fair prices.”
I liked this guy—and his company—even more. I decided to work with him.
From a purchasing manager’s perspective, the first sale made is the salesperson. Not the company. Not the product. The human being standing in front of me, communicating differentiation and value, ideally. Unlike “Shark Tank”, you don’t have to articulate your company’s value—just your own. Let your actions speak louder than words. Deliver all your bids deliberately and with confidence. If it’s impossible to do that, don’t submit them at all.
Remember—if the cat potty training device can get a thumbs-up, there’s no reason you can’t either.