There are few times when reality TV shows demonstrate any ties to the world most normal people live in. You most likely didn’t “win” your fiancée in a showdown among 20 other incredibly gorgeous people, like in The Bachelor and The Bachelorette. You probably don’t have the luxury of living in a glamorous location and making on-camera blow-ups your day job, like the cast of The Hills. There’s a reality show out there for pretty much every interest, from pawn shops to toddler beauty pageants — all with varying levels of adoring fans and scripted lines. In most cases, they don’t reflect the reality you’re in when you turn off the TV. However, when it comes to shows like Shark Tank, there might be more real-life lessons than you realize.
Granted, the hit ABC show about investors making deals with budding entrepreneurs has its share of editing, too. But if you pay attention, there’s plenty the show can teach you about real life — even if you’re not the next Thomas Edison or Mark Zuckerberg.
Shark Tank has now completed nine seasons, featuring self-made “Sharks” like Mark Cuban and Barbara Corcoran, who put their own money on the line when they invest in new business ideas — often for a stake in the company’s future earnings. According to the show, the Sharks have invested more than $100 million dollars in entrepreneurial ventures since it began. Of course, not every product has been a stellar success, but many have gone on to rake in millions of dollars along the way.
When you think about it, there are plenty of ways the show can relate to your own life, particularly in terms of your finances. Here are just a few of them.
1. Not everything is as it seems
When you’re talking about a TV show, this should go without saying. But on the screen as in life, it’s important to evaluate what you’re seeing. In terms of the show, one Inc. article reports that each product pitch lasts around an hour, or sometimes longer. An incredible amount of detail goes into each one, even though it eventually gets sliced down to 10 minutes of primetime footage. In addition, the handshake deals that happen on camera sometimes fall through. Sharks will pull out of the deal if a closer examination shows the entrepreneurs weren’t completely honest about their pitches, perhaps fudging the financials or falsely claiming they filed a patent for their product. We don’t see any of that in a 60-minute show, but that action has very real repercussions.
Both examples back up the adage of, “If it seems too good to be true, it probably is.” When it comes to protecting your own money, you need to be as ruthless as the Sharks. There are plenty of scams out there that don’t give you the full picture of their operations, just waiting to “help” you part with your hard-earned money. When it comes to investing your money, it also pays to remain skeptical about the latest “hot” stock or investment deal. Some of those pan out, but others will crash and burn. There’s little reward without a little risk, but you also need to put in some research to make sound financial decisions. No one else is going to protect your money — or want to see it grow — like you will.
2. Negotiation is always possible
Negotiating terms of business is the backbone of Shark Tank, as the entrepreneurs and the Sharks go back and forth on potential investments. Often, the ending handshake deal looks different than the entrepreneurs originally pitched, but still benefits both parties. Though it seems as if the Sharks have much of the power in this situation, since they’re holding the purse strings, that’s not always the case. If the entrepreneurs have leverage — like a solid business concept or an established history of growth — it gives them more bargaining power at the table.
When it comes to your own business deals, it’s important to remember that negotiating is almost always on the table. When you’re buying a home or a car, you never want to make your first offer the sticker price. Being prepared with lots of research will help you gauge competitor’s pricing, and try to use it to your advantage to get a better price. Rent prices might seem set in stone, but even if the price isn’t negotiable, other terms in the lease likely are. In addition, negotiating your salary, gym memberships, insurance fees, and your cable bill are also up for grabs. You might not be successful in lowering the price 100% of the time, but taking the chance to open that dialogue might yield you surprising results — and extra money in the bank.
3. Know your numbers
On Shark Tank, the pitches that have the worst success are the ones that don’t know, or don’t have the numbers to back up their product. If the company financials aren’t up to snuff, the Sharks won’t touch it with a 10-foot pole. In most cases, they’re tossed out of the tank in minutes, regardless of how inspiring or innovative their initial pitch might be. The Sharks didn’t make their millions and billions without knowing where every dollar was, and they’re not going to change their tune now.
Think you don’t have any experience keeping company books? Think again. In many senses, you are the Chief Financial Officer of your own household. If an investor were to take a look at your finances, what would they find? Would you have a budget history of your income and expenses? Do you have an emergency fund to cover unexpected costs? Are you saving for the future, in terms of your children’s college funds and your personal retirement savings?
You might not need to answer to anyone publicly about your finances, but knowing the numbers on your own household is vital. Otherwise, you’re less likely to attain the financial goals and success you’re aiming for.
4. Separate your feelings from your finances
This can be one of the toughest lessons of all, especially if you like to help other people. But when it comes to your finances, you sometimes need to show tough love. In the debut episode of Season 8 on Shark Tank, an entrepreneurial duo fail to receive a deal on their budding company, Spoonful of Comfort. The CEO and founder, Marti Wymer, got the idea for the company when her own mother was diagnosed with cancer. The company ships fresh, homemade chicken soup and other meal items to a recipient who might be too far away to visit in person.
Wymer’s story was touching, and the soup she served to the Sharks was delicious, but none of the investors ended up offering her a deal. Most believed the company wouldn’t have the staying power for long-term survival, and wouldn’t risk their money on a business deal they didn’t believe in.
Though you might be tempted to part with your own money for a loan to family or friends, tough love can sometimes be just as necessary. Studies show that personal loans to people you know often go unpaid — even if you set up repayment terms ahead of time. It can be tough to separate your connections from your wallet, but if you’re not in a sound financial position yourself, you might want to rethink it altogether. You can give the money as a gift if you’re feeling generous, or instead offer to help the person with budgeting tips or other things that can help them get back on their feet.
5. Always look for ways to grow your money
After some hard work and careful saving, you might be in a comfortable financial position. However, that doesn’t mean you should squirrel all your money away in a savings account and never touch it again. It takes money to make money, as they say, and now you have that chance.
The Sharks aren’t just on the show to altruistically help others achieve their dreams. That can be part of it, sure, but they’re also in it to continue growing their own wealth. Diversifying your investments is a great way to ensure that you have several revenue streams coming in, each helping to grow your net worth. Mark Cuban made his wealth by founding companies like MicroSolutions and HDNet, but also became the owner of the NBA’s Dallas Mavericks, diversifying his income. He’s also invested in various film companies, streaming services, and other startups along the way, giving him several ways to build his wealth. If one investment underperforms, he has several more to cover his losses and still earn him a profit.
Even if you only have a little bit of money set aside after emergency savings and your retirement funds, you can begin to do the same thing. It might look like putting a small amount of money into investment funds in the stock market, or finally start that IRA you’ve been thinking about. If you have a little more money, it could include purchasing a rental property, earning money through renters and selling it later on — ideally for a hefty profit. You might even have the chance to buy into business ideas of colleagues or friends — provided their idea is sound — or start a side business of your own. Whatever the opportunity, it pays to keep your eyes open for new ways to invest your money, instead of it losing value in a savings account somewhere.