It’s no secret the millionaire and billionaire investors on ABC’s Shark Tank are taking giant leaps of faith in investing hundreds of thousands, or even millions of dollars into new and growing businesses most of us have never heard of until they are introduced on national television. The chance for the Sharks to get in on the ground level for most of these budding businesses creates huge potential for big reward, but not without taking big risks.
Not all business challenges are in securing a the next deal with a major retailer, or getting the breakthrough licensing deal which could peak your revenues. Ask Barbara Corcoran who made a $75,000 deal with the skincare line Nardo’s Natural in season three, acquiring half of the company. The four Mastronardo brothers, sadly became three when their brother Keith died in an accident in 2013. While the company lives on, the face of ownership has changed.
Solopreneuers, or individual business owners lead many companies who seek funding through the Sharks. This creates even larger risk for the investors who have to rely much more heavily on a single owner’s performance to, at minimum, recoup their investment.
It also means a loss of the owner could be detrimental, and a Shark might never see their money again.
One prepared entrepreneur who pitched her business was Julie Busha of Slawsa, who appeared on season five of Shark Tank. She was asked about the risk of her being the sole owner in her thriving business during her pitch, which was obviously a concern for Kevin O’Leary.
We found her response to Kevin O’Leary a brilliant one, yet the Sharks only laughed it off. I had a chance to catch up with Julie to ask her about her experiences, as well as her thoughts on the risks involved with being a small business owner. Here’s what she had to say:
Q: Did your experience with Shark Tank change your mindset as a business owner? If so, how?
Julie: I think, if anything, it gave me more confidence that I’m on the right path. I didn’t receive any criticisms or suggestions in terms of what I can do to improve my business but I think that came because I know my industry and my business inside and out. It’s a good thing when you walk out of a room with confidence knowing you’ve earned accolades of such esteemed business people you truly respect.
Q: What would you say to other small business owners who are looking to scale their business?
Julie: I look at all businesses and brands differently, from a marketing eye. I think the marketing direction they need to take to scale is very dependent on the type of business they have as there is no cookie-cutter approach to marketing. Otherwise, I would say to make sure you are surrounding yourself with the hardest working and most passionate individuals you can find (not necessarily the most experienced on paper). Obviously, I work with so many people outside of my business and there’s nothing that will scale a business [better] than having the right people involved. With poor effort, you get poor results. Cut the “excuse makers” out of your business with no regret as they’ll suck the life out of your company. You don’t have time to carry the weight of others at the same time you’re focused on scaling a business. It’s counterproductive.
Q: What was going through your head as the sharks started to grill you on the intricacies of your business?
Julie: My focus was to take the questions one at a time and answer them completely to my satisfaction before moving onto the next question. With the edit, so much is left on the cutting room floor and while all of the questions they asked are relevant to what you would see in an actual investor meeting, the timing aspect isn’t the same. The sharks try to cut you off as you’re answering another shark’s question [so] they can get in theirs. You had to control the room so you could not only finish your response but to even lead them into questions you wanted to answer. The Q&A part was easy because no one knows my business like I do. There were no “deer in headlights” moments and I don’t feel there was a question I was not ready for.
Q: By far the most impressive part of your pitch, for us at least, was your personal responsibility to remaining financially independent while starting a business. How key was this to your success?
Julie: While there were some impactful statements edited out, it was certainly a point that hit home with many Americans given our country’s debt and the “borrow and spend” society that we developed for ourselves. The lack of money is a big constraint to a lot of businesses getting off the ground because people have to work a full time job while giving part-time efforts to their entrepreneurial dreams. For some businesses, this can work. In a business like mine, part time efforts don’t work… not if you’re scaling the way we are. When I do something, I put every fiber of my being into it. So for me, making sure I put myself in a position where I could put forth those full time efforts and not have to take valuable dollars out of the company (dollars better spent on marketing and scaling the business), [have] made a huge impact for our growth so far. Similarly, when I launched the brand, I was not expecting the added financial responsibilities that have come as the result of my former partner requesting I buy him out. That was an added expense on top of what it takes to start a company I [took] personal responsibility for. Did I plan 13 years ago in college that this would be my path? No. But more opportunities become available to those who have their financial lives in order and I made decisions early on that would ultimately allow me to take advantage of that today. I wasn’t given anything. I earned it.
Q: If you remember during the pitch, when Kevin O’Leary was the last remaining Shark, he said, “But think about the risk for an investor, for that kind of valuation it doesn’t reflect the risk in a one woman business. You could walk out of the Shark Tank tonight and get run over by a bus, and that’s the end of this company”. With such a finite statement, you had such a quick response. Why did you find life insurance as such an easy reply?
Julie: It was a preposterous statement that had no basis for my kind of business. I’m not an entertainer or an artist so my creativity isn’t solely relied upon to keep my company going. A very affordable key-man insurance policy, should I meet the front end of a bus, would not only protect his investment but to keep the company going by hiring several qualified individuals to fill my shoes. When I worked for a previous company, my long-time client wanted the guarantee that I would always be involved in their business and thus, they made sure they had my name written in as a key-member in their contract with my employer. Even clients want those levels of protection as well. Proctor and Gamble insured Troy Polamalu‘s famous locks since he represents their Head & Shoulders brand. When you can create that kind of value of yourself, you have to look at insurance policies or contractual assurances to protect your biggest assets, whether they are your employees or your investments.
Q: Why do you value the importance of life insurance for a small business?
Julie: I’m a big advocate of “term” life insurance for everyone but certainly, if your business is so dependent on a few key individuals, you have to ask yourself, “What would happen if this person died tomorrow?” It’s not a thought you want to have, but you have to protect yourself and your company from the very brutal realities of the world.
Q: You also mentioned you bought out a previous partner. Did you and your partner consider life insurance on each other as a hedge against risk?
Julie: I bought the company out per his request. I think if there are partnerships for any company, you have to weigh the value of what all parties bring to the table. He worked a full time job while I worked full time on the Slawsa business so it would make more sense to make sure I’m covered at a higher value given my responsibilities. I’ll always consider protecting any company with an insurance policy on [myself] if I know I am so heavily relied upon to run nearly every facet of the business.
Q: If you don’t mind us asking, what kinds of positive growth have you seen post Shark Tank?
Julie: Most food companies on the show don’t have as much pre-existing and growing retailer confidence we had, which was value that the Sharks didn’t take as seriously as I did. By the time we aired, we were in 5,175 stores (on our own accord) and we immediately capitalized on sales in the weeks following the show. That certainly doesn’t count all the new relationships that are being built now for spring launches for the condiment category resets. The media attention has been nice as many influential people in the food industry, including a few Food Network hosts, have had nothing but positive things to say about Slawsa’s flavor since. It’s to premature to quote numbers but let’s just say I intend to keep that promise I left with.
Q: We were impressed by your appearance on Shark Tank. Where do you project Slawsa going in the next 5 years?
Julie: I think Robert Herjavec said that you’ll overestimate what you can do in the first year while you’ll underestimate what you’ll do in 5 or 10. I tend to have pretty high expectations of myself so, God, I hope he’s right.
Q: What was your single greatest take away from the Shark Tank experience?
Julie: That’s a tough question. So many good things have come from the Shark Tank. First, I hold my producers and all of the behind-the-scenes staff in the highest regard… [they are] true professionals and I am proud to say that I am a Shark Tank Alum. I think the biggest takeaway came after the airing in the countless emails, posts and tweets from the kindness and well wishes of total strangers. It’s nice to get the celebrities endorsing Slawsa’s flavor, but there are so many people who support you because of who you are, your work ethic and what you stand for… knowing that you’ve made sacrifices and assumed risks people won’t dare take for themselves. It’s all about the people and while I would have loved to have gotten a deal, I have found that the voice of America rings much louder than that of any Shark. A brand like mine doesn’t make it without those voices, so I am relentless in continuing to thank my customers for not only giving Slawsa a try but spreading our flavor to others. Knowing you have so many cheerleaders, it really helps you keep your focus.
Julie was not able to secure the deal she came into the Tank for, but wasn’t short on making an impact. Every small business owner can identify with the hopes and dreams of taking their business to the next level, but Julie exemplifies doing so while having mastered financial responsibility along the way.
I found her financial astuteness in life insurance specifically grand, and it’s something any new business owner might consider if one partner holds some or all of the responsibilities in a start-up.
The risks taken by the investors in up-and-coming new business ventures are not unlike what every other small business, or even family unit, deal with every day in America. To capitalize on opportunity, a foundation needs to be set to hedge against the risks we encounter financially.
At the end of the segment, even Mark Cuban was impressed and commented, “You know what, the fact that she scrimped, had no debt, pays off all her credit cards, saved up enough money to invest in this company and buy him out is just such an amazing example for everybody.”
We’d like to personally thank Julie Busha for her time, her wisdom on the set, and of course, her “Slawesome” condiment.