I’m loving the new reality TV show Shark Tank. Every entrepreneur and small business owner is probably watching the show, thinking she or he could pitch a better idea, give a more accurate estimate of their company’s net worth, do better at hardball negotiations with Kevin O’Leary than the ones we see on the show. I admit I have daydreams of my moment in the tank, what I’d ask for and how I’d ask for it.
But the fact is Taryn Zhang International would be eaten alive in there, handbags for breakfast. Start the clock for 30 seconds of snide remarks from the sharks, to ensure the airtime isn’t entirely wasted, and then they’d each say “I’m out,” and out I would go.
I know this fact because I’ve done the financials and projections on TZI. Profit margins for a start-up independent handbag designer is nothing to quit your day job over. Projecting a reasonably successful scenario, hoping for a net gain at the end of Year 1 instead of a loss (and that right there is already being dangerously optimistic), TZI would make, in profits, in one fiscal year, about how much I make in a week just by going to my day job. And that is based on the assumption TZI can sell at least half of its start-up inventory.
Fortunately I don’t need anywhere near the six figures that most of the contestants on that show ask for. I am confident I can launch successfully with less than $30K. Heck, I can launch with just a $20K-$30K injection. The problem is the returns on that injection, from an investor’s perspective, isn’t worth the trouble. And from the small business owner’s POV, I would much rather fork over my own $20K and retain 100% of my company than get that measly $20K and lose equity. So maybe I’m the one saying “I’m out” here, not the sharks.
Second, assuming I still want to try my luck, the market is saturated with long-time established competitors, and if that isn’t enough to deal with, new ones crop up every day. Every day. There are websites that do nothing but provide constantly updated listings on people exactly like me. Young women who love handbags and one day decide maybe they can make their own and sell them, and so they put in their good faith effort, get a website, order a couple hundred of each design, positive they can sell those couple hundred, after all, it’s just a couple hundred; get a few photographs and mentions in fashion magazines, one B-list celebrity testimonial, and a year later, close down and wonder what they’ll do with that couple hundred purses they’ve got cluttering their homes. Please. The probability of me becoming a statistic is in itself a pretty convincing statistic.
Notwithstanding, I gotta say, it’s still a lot of fun daydreaming about me going on the show, pitching TZI to them, and daydreaming about the possibilities that have no possibility of realization.