For Glen Richards, Shark Tank investor and the man behind the Greencross and Petbarn pet care empire, the most important quality for an entrepreneur is being able to listen to and take on advice.
“There are three reasons people come into the tank: publicity, money, and strategic mentoring advice,” Richards told SmartCompany.
“The ones there for advice are the ones I want to work with, as they’re willing to listen to other people’s opinions. Business people can be the victims of their own success, and they can think they’re heroes on the business field so they stop taking advice.”
“As a businessperson, you’ve got to be humble, and it’s damn hard.”
With the third season of Network Ten’s popular Shark Tank series underway in its second week, Richards said he had been looking forward to the season’s airing, saying there were some “quirky businesses” coming through, and the season has “a lot more mojo” than the previous seasons.
Richards says his focus right now is on businesses in the health and food space but acknowledges that if he “sees an opportunity to make some money, I’ll go after it”.
“Part of my investment style is as well as liking the product, I have to really gel with the entrepreneurs behind it,” Richards says.
“That’s why I went forwards with Marc from Rhinohide, and he’s been a delight to work with. He’s open to mentoring and to take on board opinions, and he works hard and is across his numbers.”
The investment has also got to engage Richards’ interest, saying he needs a passion for the business, and so do the entrepreneurs pitching it.
“I’ve got to see entrepreneurs who know their market and have an idea about where the business is going to go over the coming years. A long-term vision for the business is essential,” he says.
Due diligence an important factor
With only around 50% of the deals from the tank going ahead after the cameras stop rolling, Richards says the choice to bail out of a deal can come from both sides, noting it’s a “two-way conversation” between the sharks and the entrepreneurs.
“It’s often a stressful situation for the entrepreneurs, so they sometimes do deals they want to do at the time, but they bail out on reflection afterwards,” he says.
“It can be a bit the same for the sharks as you dig into a business and find out some of the information was shared in exuberance, and the details don’t quite turn out to be there.”
“It’s important we’re very disciplined around how we invest, but at the end of the day, we have to like each other’s style. It’s a minimum three to five-year partnership with most businesses, so you really have to gel.”
For a business looking to thrive, Richards says the most important thing you can have is a well structured long-term vision, a “defined road map of where the business will go”.
One of the most important things to get across in your road map is the “valley of death” which is early stage cashflow, with Richards noting it can be the killer of many businesses.
“It’s a very common thing for product and services business for when you’re building out your network too fast. You could be selling a product, and it could take 120 days for the payment to get to you,” he says.
“At the same time you have to get cash to pay your supply chain for that order, and businesses can very quickly run out of cash at this critical time.”
“If they can get through this valley of death and correctly time their cashflow, then they can get off and running.”