- ABC/Michael Desmond
“Shark Tank” has changed the outlook for many small businesses over its eight years on the air. That makes its stars some of the most knowledgeable people on earth when it comes to what makes or breaks small businesses and why they’re so important to the American economy.
“Small businesses are near and dear to my heart, both from the show and my personal experience,” “Shark Tank” star Robert Herjavec recently told Business Insider.
In addition to his “Shark Tank” duties, Herjavec has spent about a year working with Deluxe Corporation on “The Small Business Revolution,” which picks an American town and helps to turn around its local economy though supporting small businesses.
“I think that in America today, that is security: starting a business, being an entrepreneur is security,” he said. “The idea of getting a job at a big company and retiring on a pension – that’s long gone.”
But that doesn’t mean being an entrepreneur is easy. Business Insider asked Herjavec and his “Shark Tank” costars what they believe to be the biggest challenges small businesses grapple with on the path to success.
Here are five big mistakes small business owners make according to the “Shark Tank” stars:
Small business owners have a problem with thinking big.
- “Beyond the Tank”/ABC
“The biggest challenge for a small business in a small town is the same as a small business in a big town: thinking big, being able to compete with large-scale competitors, and at the same time staying relevant,” Herjavec said.
In order to get there, Herjavec suggests entrepreneurs look for strategic partners.
“People start a small business to do dry cleaning or be a bake shop, or to take care of dogs, or whatever their passion was,” he continued. “And you’ve got to find that help, because if you can’t have a brand on a small town, you can’t have a brand on a global scale.”
Thinking big doesn’t mean getting a big head.
“Once a small business is up and running and entrepreneurs have a mini-hit on their hands, the biggest challenge is keeping the entrepreneur’s head on their shoulders,” Barbara Corcoran told Business Insider. “There’s something about instant fame and quick success where people get a big head and you have to squeeze it in. That’s the biggest problem with my entrepreneurs.”
Small business owners mistake successful crowdfunding campaigns with success.
- Gus Ruelas/Reuters
“Small business owners have seen people create large amounts of revenue from crowdfunding, but they don’t see a lot of the backstories,” Daymond John told Business Insider.
“If you were fortunate enough to have a large amount of people crowdfund your product, were you able to deliver to them afterward and deliver on that promise? Because after you sell that first piece, you have a lot of business to do after that,” he said. “You can make anybody buy once, but can you do two, three, seven times? They think they just need a million dollars, but that’s just the beginning of their problems.”
Many small businesses don’t know their numbers.
- “Shark Tank”/ABC
“Another big one is small business owners’ inability and ignorance of accounting,” Herjavec said. “If you don’t know your numbers, you’re going to go out of business. Nobody likes accounting. I don’t like accounting. I don’t even like my accountant – super-nice guy, but I don’t really like him, I don’t want to talk to him. But accounting and finance is the language of business. You have to understand that stuff.”
Small business owners don’t realize they need some backup cash until it’s too late.
- “Shark Tank”/ABC
“The biggest challenge is cash flow,” Corcoran told us. “Once a business is up and started, they have to have the cash to buy the product to sell it – even if they have a hit on their hands. They have to pay the patent when someone is trying to steal it and they don’t have the cash.”