Business Studies: Media Review Project

Summary

Shark tank is an American, award winning television series broadcasted on ABC. It is a business themed reality series where the ‘sharks’ are wealthy entrepreneurs that are willing to invest in the best businesses and products of entrepreneurs that pitch on the show. Entrepreneurs pitch their business on the show seeking for equity in return of a percentage of their business.

The first business was Scratch and Grain Co followed by Bottle Bright then Vestpackz and finally concluding the show; Evrewares. Most came out happy but then most faced the critics of the sharks and came out unhappy.

Scratch and Grain Co. is owned by Leah Tatin and Taya Greiger. Leah and Taya asked the sharks for $150K in return for 20% equity in the business. These two moms from Portland found and easier, faster way to make homemade cookies. “Almost every mother loves making cookies but the thought of work which has to be put in it devastates them” says Leah. This is why they came up with the Cookie kit. The cookie kit comes in six different flavors, including three gluten free options. Their product is currently sold at 220 locations. The sharks love the cookies and seemed interested in the business until the figures were revealed. Currently the sales of the business are $52K. The kits are sold at a retail price ranging from $7- $12 and cost $3.89 to make the kits. This is quite devastating for a business with such a brilliant idea. Currently the kits are hand packaged which is such time consuming and may be the reason for their bitter margins. The first three sharks; Mark, Lori and Kevin went out after realizing there was no hope in the business. Robert and Barbara saw an interest in the business. Robert’s interest had a twist to it, he offered $150K for 40% return, whilst Barbara stayed with Tanya and Leah’s offer. Finally the two moms made a decision to work with Barbara.

In season 5 Jason Hanson, former CIA agent, started his company in Utah namely ‘Spy Escape and Evasion.’ The other sharks thought it was a risk to invest in it business, but Daymond thought it was a risk he was willing to take. Before Jason came to shark tank, his sales were $305K. Ever since Shark Tank, his sales have reached $2million. That’s a good investment Daymond!

The next people to pitch their business at the Tank were Justin Keohneke and Seth Friedman. Justin and Seth are mountain bikers that were irritated with odors and stains with formed in these convenient water bottles. Therefore they saw a need to create Bottle Bright. Bottle Bright is an all natural product, mineral and organic based, cleaning detergent which removes odors and stains from water bottles. Justin and Seth asked the sharks for $25K in return for 15% of the company. Bottle Bright seems like a good cleaning detergent for people who are obsessed with their portable bottles, but honestly that’s a small fraction of people. Bottle bright is currently making sales of $85K. Kevin shows no interest and therefore he asked out by saying “I’m going to bet you have very little sales because no one gives a damn.” The entrepreneurs account for their devastating sales by revealing that when they were trying out a packaging type for one of their private label brands, the packaging was moisture damaged, this resulted in a loss of $100K. Robert, Barbara and Mark asked out for various reasons. Mark’s reason was that they seemed too desperate and he wasn’t willing to work with desperate people. Lori showed an interest in Bottle Bright and offers $75K in return of 35% on a condition that the money will go towards funding and she offers them advertising on her cost. Justin and Seth don’t seem too happy about the 35% return, and they offer her 25%.Lori says she won’t go below 33 1/3%. The men accept her offer.

The next business is VestPackz with the owner being Michael Woodley and official license Arthur Grayer. VestPackz was established by Mike’s daughter in sixth grade, when she was assigned by a subject teacher to do a project on something new. VestPackz is a handy, weight distributed backpack for children at school. Michael and Arthur seek $50K in return for 10%. The all seem to lose interest when they find out that VestPackz is a 16 year-old business with only sales of $10K for January and February. The sharks all ask out and the men walk out sadly.

Last in the tank are sisters Ellie Brown and Becca Nelson. They seek an investment of $100K in return of 30% in evREwares. EVREwares make suitable, reusable sticky ties which instantly transform t-shirts into statement pieces. Their stickers range from $4.99-$7.99. This is quite a high price to charge for stickers. The sales from 2011-2015 ranged between $600K. Ever since the sister tried to put their brand in stores, they made a huge loss leaving their sales at $50K this year. The women say they made a conscious decision to slow down to focus on their sell-through issues at stores. The Sharks seem concerned about the massive drop in their sales. They think that customers aren’t interested in their business and wonder if it will take too much work in order to offer the stickers to consumers again. Lori, Kevin, Barbara and Robert ask out. At this point it seems like evREwares will leave without a single offer. Mark then makes a surprising offer. He is willing to invest $200K in return for the entire business. This is a shock to everybody. The sisters seem hesitant to leave a business which they started from scratch and worked their butts off to get it where it is currently. After a deep thought with each other, the sisters make a decision to accept the offer. The sisters walked out the tank in tears.

Management and Entrepreneurship

Management is the process of dealing with or controlling things or people. Management can be normally shown by the owners/ managers of a business. It is coordination of business activities in order to achieve business goals and objectives. Management is normally done by the directors/those in management positions in a business. A manager is the image of a business therefore it is required that represent the business in their best ways. According to the business dictionary entrepreneurship is the capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit.

In shark tank management is shown by the ‘sharks’ and the entrepreneurs that pitch their business’s.

As the entrepreneur book says, an entrepreneur is someone who is willing to work for himself, take risks and sees a gap in the market, and finds possible ways to close the gap.

In shark tank, management and entrepreneurial qualities were shown majorly in three scenes. The first scene was of Scratch and Grain, and the second scene was of Vest Packz, and the third scene was of Bottle Bright.

The entrepreneurs of these two businesses showed different ‘versions’/ qualities of entrepreneurship and management.

In Scratch and Grain, the entrepreneurial qualities shown were: Commitment, Believes in what they do, Motivated, and hard working. In between the lines Taya and her sister showed some sense of hustle. Every entrepreneur should hustle for their businesses in the right way but Taya hustled in desperation mode. She used her past experiences in order to make the ‘sharks’ feel sympathy for her. Her hustle was necessary because 2 ‘sharks’ were already out. In the end her and her sisters’ hustle helped get the business $150K. Management were moderately shown by the ‘sharks’ when they gave advice to the entrepreneurs about ways to increase equity and reduce shipping costs. This showed some sense of leadership.

In Bottle Bright, management qualities were shown by Lori when she agreed to making a deal with the entrepreneurs. She set her foot down by saying that “ I’ll only accept the deal if you offer me 35% equity of the business in return of what you initially asked and on a condition that the money does not go to administration…” . The entrepreneurs also showed management skills when they offered her 33.3%. Entrepreneurial qualities are shown by the entrepreneurs when they pitched their business. Qualities shown were: Risk taking, dedication, problem solvers, and many more. The entrepreneurs appeared to be desperate in order to gain a ‘shark’ to invest in their business. Desperation is not a good a sign to show in front of future investors. It shows that the entrepreneurs aren’t confident in their business idea, and are just hanging onto the business like they have nothing else to do. In order for entrepreneurs to attract future investors, they have to be confident and believe in what they do. This is something Bottle Bright entrepreneurs need to gain.

Vestpackz mainly showed entrepreneurial qualities. Every entrepreneur needs to have a good pitch in order to attract the ‘sharks’. The entrepreneurs for Vest Packz need to learn how to pitch their business. They gave the wrong idea to the ‘sharks’ and made like their business started a few years ago and just needed help to get going. The entrepreneurs have a strong desire to succeed and a gap of credibility. Their product has solved a problem in the market but their product is on the wrong entrepreneurs. The entrepreneurs are holding onto a dying horse. If they had put enough effort and got funds whilst the business started, it would have succeeded. Not much management skills were shown by the ‘sharks’, they were mainly shown by the entrepreneurs when they were defending their business.

Finance

Finance as described by the Google dictionary, is the management of large amounts especially by large companies. Finance can also be providing funding to another person. There are different types of finance: Personal finance, corporate finance, and Public Finance. Personal finance is a personal activity which depends on one’s earnings and standard of living. It involves analyzing an individual’s current financial position, which can be done by using a personal budget. This finance includes the purchasing of financial products like credit cards or mortgage loans. Corporate Finance is the financial activities which relate to running a business/corporate. This could include working capital. Public Finance is tax or any other types of finance which will affect how a government pays for the services it provides to the public.

In shark tank, corporate finance is majored in. The sharks are seen as money lenders to the entrepreneurs. Though the sharks aren’t credited financial providers like banks, they still provide means of finance without interest. The reason why these entrepreneurs don’t go to banks to seek financial guidance is the interest which banks charge and the sales of their business. Most businesses which pitch at shark tank have one thing in common, little sales. A bank wouldn’t risk financing a business which will struggle paying back the loan.

The type of finance which the sharks offer the entrepreneurs is a loan. The sharks offer them money in return for equity in the business. The equity may be seen as a way in which the entrepreneurs pay back to the sharks.

The final entrepreneurs of ’EVREWARES’ experience a different type of finance. Robert decides to buy the entire business for $200k in exchange for contracting the entrepreneurs. This is seen as business acquisition.

VestPakz shows an example of a business which leaves the tank without any form of finance. These entrepreneurs required working capital in order to sustain the business up until it makes a profit. The business has close to zero sales.

Marketing Aspects

Marketing is one of the eight functions of a business. Marketing is promoting or selling products or services. It involves the research to find out what consumers want. It is an ongoing process. Marketing takes note of trends in the market and changes in consumer preference. It should also be informed of competitors’ products and prices. The marketing department is responsible for determining the price of the product and marketing the product to consumers. It also includes locating the consumer, standardization and grading storage, transport, financing risk bearing, and business and selling. There are five marketing activities including marketing itself; Product policy, Distribution policy, Communication policy and Pricing policy. The aspects of marketing use the tools of marketing from the marketing mix (the 7p’s); Price, Product, Promotion, Place, People, Physical environment and Process, these aspects help a business survive in the market. Marketing is not about advertising, there is more to it.

Shark tank can be seen as show where entrepreneurs market their business to the sharks. All entrepreneurs in this episode show one aspect of marketing; advertising. When advertising, the entrepreneurs should know their target audience and have a great, prepared pitch. For example, the Vestpackz entrepreneurs advertised their business using a child which gave the ‘sharks’ a wrong impression. Though the product is meant for kids, it should have been advertised by the maker of it. Wrong advertising made the entrepreneurs think that the business was newly established, which their major turn was off. This business had no competitive advantage as there are other businesses which already used/ had that idea.

Bottle bright entrepreneurs may have had good communication skills but their advertising was up to standard. Bottle Bright has a competitive advantage; their product uses all natural ingredients unlike their competitors-Efferdent. These entrepreneurs may have some aspects of social entrepreneurs. They discovered a problem in the community and started a business in order to solve the problem. The entrepreneurs were unique with their pitch. They were honest with their prospect, and they used facts and statistics relating to their business. The entrepreneurs met all the aspects of marketing and were able to get an investor- Lori.

Scratch and Grain met an important aspect of marketing. They were tired of a problem they kept on experiencing when baking and started a business based on that. Though there are lots of competitors in the market, they were able to survive because of the community members.

Conclusion

There are many aspects when it comes to pitching a business. Each business showed each of these aspects but did not meet a 100% level. In Scratch and Grain, there are a lot of things they should change, starting with the name of the business. The name does not portray that it is a cookie kit. It portrays a kit which was made through scratches. The name should be changed to Crispy Cookie Co.

Bottle Bright’s proposal was good. One thing I would change with anything concerning Bottle Bright is the advertising. More advertisements should be put concerning the product. Bottle Bright should also stick to one packaging supplier to avoid anything which will damage the product. The entrepreneurs should also sell the product as bottle bright and not under the name of the business which bought the product. This will allow the product to be located in many stores.

Vestpackz should work on increasing their sales. If this fails again, the business should close down.

Evrewares should advertise their business.

With all these suggestions, each business should likely succeed.