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Shark Tank/need to do a business plan

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not_ally

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Just watching Shark Tank, and it is *amazing* how unprepared most people are for questions from people that they are asking for money. I will never sell soap - unless for some kind of charitable /short-term purpose - but do have a business idea/LLC in place w/my sister and BIL for distributing ayurvedic hair care/skin-care products (we would be the US distributor for an existing business created by a family friend in India who has been extremely successful in other, non-US, markets.)

I *suck* at being a salesperson, so I have a huge amount of sympathy for people that go on that show and get hammered for an inability to sell. But it is harder to understand why they are not prepared for simple and predictable questions that would have been answered by a business plan.

Eg, what is the basis of the multiplier for your business? When can I expect to made whole on my investment? What is the basis for that, ie; past/current sales/contracts for future ones? Who are your competitors, and what is their market-share? How does your product vary from theirs, ie; why should I invest in you rather than them?These are not complicated questions, really, and definitely not unpredictable ones. A *real* investor (not a TV) one, if you were asking for a significant amount of money, would be holding your feet to the fire in a much more painful way.

Those questions are just not fun to look at/examine in advance. That is such a critical mistake, though, whether you are asking someone else for money or trying to figure out whether/how much of your own to invest.

I know there is a very good chance that I will not make a profit from my investment in my company - at this point we probably collectively have 70-80k in, that will go up over the next six months, and I could very easily lose it all (which would be a blow, bye-bye little house) - but I would not want to be in a position to not be able to answer those questions at all.

ETA: this post is not really about people who are retired/financially secure, and want to make their soaping costs back, and some extra, rather the ones that are thinking of making a good living at it at a younger (pre-SSI/pension) age. Then it is a much harder battle.
 
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harrietrosie

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This is what I am trying to do from day 1! I know a few people who have started selling things they make and don't keep track of expenses and income at all for a long time. Looking at the financial side/market share etc to prepare for these questions can be boring, but it can also really help your business! If you really understand who is buying your product and where the money is coming from then you can grow your business a lot more easily than if you don't like to deal with any of it. It seems to me that a successful businessperson needs to be passionate about what they're selling AND passionate about running a business. We have a similar program here in the UK (Dragon's Den), and a lot of people are passionate about their product but that's where it ends! If that's the case and you want to really grow I think you need to hire a business consultant.
 

not_ally

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Ugh, writing (and continuing to work on) a business plan is so unpleasant, really. But after years of reading other people's (on a much larger scale, as a lawyer) and now having my own sort of in place, I think it is (1) the best way to be prepared to convince other people to lend you money, and/or (2) to make a logical decision about whether to invest your own. This stuff is not fun, though.

And also you have to figure out your corporate structure and get a will in place. Good times!
 
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soapswirl

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Harrietrosie - if you are interested in selling soap in the UK you will need to read up on the EU cosmetic safety regulations. It's not as simple as just making and selling soap I'm afraid. For example, you need a safety assessment for every product in your range, and this can be a costly business!
 

harrietrosie

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Soapswirl - thanks but I am aware! It's costly but it also means your products will be great quality if you legally have to make sure everything is super safe!
 

The Efficacious Gentleman

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No, it does not mean that you will have quality products. It would make sense to only pay for an assessment on a quality product, but that is far from the same thing. You can get an assessment on a really terrible recipe - the assessment is not a mark of quality by any means
 

Dahila

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People connect the dots; quality assesement equal good product, such a shame is not true
 

cmzaha

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Sadly this is a very very saturated business which, even with a good business plan it may not work. You are correct not_ally being retired I do not have to worry about such and I love my little cash business, but believe me it is still work. Finally got out of our corporate, had one business crash and burn, not due to no business plan, had to clean up that mess, finally went back to a small family type business. My mom and I had a small family type beauty shop that was in business for 50 yrs. Life is good again even if we cannot travel a lot.
 

soapswirl

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TEG is right, the assessment is only taking account of safety, they will not look into the quality of your product at all. It's up to you to ensure your product is great before getting it assessed or it will be a waste of money!
 
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