Shark Tank, the popular CNBC reality show that features enterprising (if capital-deficient) business owners delivering financing pitches to a group of potential investors, has heightened discussions among many people, especially young entrepreneurs, on how to go about funding their ideas.From my vantage point, the show has been incredibly helpful in encouraging people to launch technology-based and other ventures that they are passionate about. The only negative is that the “sweat equity” invested by the founders is frequently glossed over, lending to a misperception among viewers that obtaining financial backing is easy. Bringing a “shark” into your company has lots of potential upsides related to growth and new relationships, but, as with most things, there is usually a catch.
During the life of most businesses, the owner will need to seek out cash to help with growth challenges, or to keep their company viable during rough patches. On the show, funding from the sharks almost always requires the owner to give up a stake in his or her company – and possibly even surrender control of key future decisions. Although watching the entrepreneurs attempt to “swim” with these sharks in the hopes of landing a mutually advantageous deal makes for entertaining television – and undoubtedly provides a huge rush of adrenaline to those making the pitch in the process – such arrangements are neither necessary nor desirable for many growing companies.
If, for example, you launched your company with the help of personal funds, family loans, and friendly investors, and you’ve managed to achieve a level of growing and reliable sales, you might be best served spending more time in the bank tank than the shark tank. Chief among the reasons why is: The bank doesn’t desire an ownership stake, nor will it tell you how to run your business – and it surely doesn’t want to ever take over your operations. The bank’s ultimate goal, then, is to see you grow, thrive, and strengthen your business, with you maintaining control and ownership every step of the way. More often than not, our business banking relationships work out as expected, and we end up happily swimming by your side, helping you to avoid rough waters and predators along the way.
If you are thinking of starting a business, or are a current owner who’d like to fully explore all of the options available to you, get in touch with one of our business bankers to learn how we can help today!