Capital

Capital is the up front funds the bank expects you to infuse into a business venture when applying for a bank loan.  Banks refer to it as having “skin in the game.”  If you don’t put up your share of the funds into a project, the bank won’t put up theirs to loan you the money.  The more you have the ability to put in, the likelier your chances of approval to secure a bank loan.  This makes sense on a basic level, as the bank is putting is capital at risk, so it wants to have a borrower who is also going to his/her capital at risk.

Collateral

Collateral is the hard assets the bank has the ability to take back if your business venture happens to fail.   Obviously, not all businesses succeed.  So when a business fails that has a loan to pay back, the bank needs to have tangible collateral to collect against.   Quite frequently, the collateral for a bank loan is a home, other real estate, cash or investment accounts. The more you have of these items, the more likely you are to get qualified for the bank loan and financing that you are looking for.  In the case of equipment financing, sometimes the equipment financed can be the collateral itself.

Capacity

Capacity is the ability to repay the money you wish to borrow from the bank. The good old days of the mid 2000s are over.  Which means that gone are the days when anyone with a pulse could get a bank loan. Nowadays, if your business, or you personally, cannot afford to pay a loan on paper, you won’t get a business loan and bank financing.  This means that undocumented loans are very rare to receive.  You need to have documentable income to prove that you have the capacity and ability to repay.   The only circumstances where someone can get an undocumented loan is when they have a long standing history with a smaller community bank and a LOT of cash in the accounts of the bank.

Bottom Line

Looking to buy a new business, expand your current one or start something up? Better make sure you have the Three Cs in good order, Capital, Collateral & Capacity.   Contact our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com for assistance with selecting a bank to obtain financing, lines of credit or other business loans for your business.

Appearing on Shark Tank is Eleven Year old Ryan Kelly from Stamford Connecticut.  Ryan Kelly is the proprietor of Ryan’s Barkery.  Ryan’s Barkery is a business that makes home made dog snacks that come in the following flavors: Peanut Butter, Banana Oat, Pumpkin Apple and Low-fat Cheddar.  Ryan Kelly was inspired to create Ryan’s Barkery when his family came home with a rescue dog.  Ryan had bought a pre packaged doggie treat that he though smelled bad.  So, like any entrepreneur he decided to take matters into his own hands, so he made his own doggie treats and create his business Ryan’s Barkery.  Will Ryan’s Barkery be a fully baked business that the Sharks can offer to invest in?

Curious about a better dating website.  There are many of them, and Three Day Rule will be pitched on Shark Tank by Valerie Brennan.  Valerie Brennan is a Los Angeles Based entrepreneur who started Three Day Rule organically in 2009 after making friends with her partner Talia.  They started organizing events for singles, and that grew into Three Day Rule.  What  Valerie Brennan did to differentiate Three Day Rule was to make it an exclusive membership.  It isn’t an automatic join, there is some human screening involved to become a member of Three Day Rule.  For those curious about the name Three Day Rule, it stems from the unwritten rule to wait three days after getting a phone number to call to offer the appropriate amount of interest.

Got a hankering for a good old fashioned Grilled Cheese Sandwich, then you are in luck.  Tom & Chee will be pitched in the Shark Tank by Trew Quackenbush & Corey Ward.  Tom & Chee is based in Cincinnati Ohio.  The named Tom & Chee is based on Tomato Soup (Tom) and Grilled Cheese (Chee).   Tom & Chee has five locations, three in Cincinnati Ohio and two more in Louisville Kentucky.  There are quite a few variations of sandwiches on the Tom & Chee menu, including Pesto & Turkey and BLT.  Tom & Chee even has a Grilled Cheese Doughnut!  Since Tom & Chee has 5 locations, it’s safe to say that the food tastes good, so no question that the sharks will enjoy eating their samples.  But, will the sharks be interested in investing in Tom & Chee?

Kunal Sarda & Ryan Frankel are Wharton graduates who pitch their language translation service VerbalizeIt. to the Sharks.  Kunal Sarda & Ryan Frankel came up with VerbalizeIt as they had experienced the need to Live Human translation services when they were traveling internationally.  In some situations using translation software and apps doesn’t cut it, in particular in situations when software and apps struggle with local dialects and accents and that is where VerbalizeIt can help.  Kunal Sarda & Ryan Frankel set up VerbalizeIt allow a freelance translators to work at their convenience.  VerbalizeIt does have a screening process for translators who choose to be involved.  Will VerbalizeIt’s business model and sales history translate to a deal for Kunal Sarda & Ryan Frankel with the Sharks?

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.

Curious how much your business is worth, Just Elementary, Inc, Business Brokers can help you with Valuation Matters. We can also help you with Negotiation Techniques for your business when dealing with investors. Contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

Franchise Transfer Fee:

• How much is the transfer fee? Who is going to pay for it?  The Buyer, Seller or both
  • Does it include franchisor training for the buyer?  If not, how much is additional franchisor training for the buyer?
  • How long is the remaining term of the transferable franchise agreement?

Even though the franchise transfer fee can be a small amount in comparison to the price of the business, it’s still important to know how much it is and to be clear on the expectation of who responsible to pay it when beginning contact with potential buyers.  For Example, the price on the business could be in the six figures, and the transfer fee could $7,500.  A dispute over an amount as little as $1,000 can derail a sale transaction for a business.   Also, is the buyer expected to pay for additional training from the Franchisor?  If so, find out how much that cost is before finalizing terms with the buyer.  This franchisor training fee can be really small, but if it isn’t disclosed it could derail the sale of the business.  Make sure the buyer is aware of how much time is left on the Franchise Agreement.  This way the buyer is clear on when to renew the Franchise agreement and how much the cost is to renew.

Required Upgrades

• Will there be signage upgrades required?
• Will New FF&E be required?
• Who will pay the cost of any upgrades
  • The cost of required upgrades will affect the selling the franchise business

When selling the franchised business, be aware that if the franchise has updated branding, then be prepared that there will likely be an expense to upgrade the franchise business to the current branding and look.  This can be very expensive, as it mean new signage, new furniture and equipment.  Make sure you get a good estimate of how much this may cost.  This way the amount can be properly factored into the asking price of the Franchise Business.  If the cost of the upgrades are going to be very high, be aware that it could adversely affect the Asking Price of your business.

Franchisor Approval:

• What are the Franchisor requirements for new Franchisees?
  • Two main requirements
    •  Liquid & Total Net Worth
    •  Industry Experience

An important note when it comes to choosing buyers for your business is to make sure they are qualified to meet the Franchisor’s criteria.  There are two main criteria that Franchisor’s look for.  #1 is the Liquid and Total Net Worth of the Buyer.  #2 is the industry experience of the buyer.  Liquid Net Worth is the total amount of Cash On Hand and other easily convertible assets to cash less any liabilities.  Total Net Worth would include illiquid assets, which are those that can not be converted to cash quickly, such as Real Estate Equity.  Make sure your buyer’s numbers meet the Franchisor’s expectations.  Industry experience is also important to Franchisors.  So if your buyer has no experience running a QSR, then your Franchisor may turn them down based on experience.  

Coordinating Closing Timeframe:

• When is discovery day?
• When will franchisee training be completed?
• How long is franchisee training
• All this means that escrow can go on for 60 days or much longer
• Will you offer selling training as well?

A Bulk Sale Escrow for a business can close in just under 30 days if the timing works out and if there are no complications.  It’s a different story when selling a franchised businesses though.  One reason is that the buyer has to be approved by the Franchisor.  This can be a few week process.  Then, when your buyer is approved to buy your franchise business, they have to get franchisor training.  When is that Franchisor training.  Is the next one scheduled for 6 weeks from now?  If so, prepare to wait until that franchisor training is completed until the buyer can take over your franchise business.  Are you going to offer training as well?  Factor all of this in and we could be at a 90 day bulks sale escrow or even longer!  So, it’s important to know the franchisor schedule for Discovery Days, Franchisee Training sessions, and how long the timeframe is to approve the buyer. 

Non Compete Covenant:

• Will you be able to operate other businesses in the same industry?
• Usually not, due to the Franchisor’s intellectual property concerns.

One important thing to keep in mind is that you may be under some restrictions via a Non Compete Covenant on how you operate an independent business in the same industry after you sell your business.  Keep in mind that the Franchisor wants to protect its intellectual property and trade secrets.  So there are usually terms in the Franchise agreement that will govern what you do after the sale of your franchise business.  Read into those terms so you are aware of what you are going to be responsible for.

For More information on how Just Elementary, Inc, Business Brokers can help you with the sale of your Franchise Business contact our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com

• Lack of Expertise in the Sale of Businesses (Business Opportunity Listings)
• Lack of Marketing Avenues for the Sale of on-going Businesses
• Lack of quality Bulk Sale Escrow officers to work with for a Business Escrow (Bulk Sale Escrow)
• Lack of familiarity with Due Diligence for the Sale of Businesses
• Lack of familiarity with Inventory Discounting if appropriate for the Sale of Businesses
• Lack of familiarity with accounting for Work In Process for the Sale of Businesses
• Lack of familiarity with handling Accounts Receivables & Accounts Payables for the Sale of Businesses

So what is a Realtor or real estate agent to do when presented with a client who needs help with the sale of  a business?  Refer the client to a Business Brokerage that specializes in the sale of businesses (Business Opportunity Listings).  This serves two purposes, #1 it gives the client the expertise they deserve and #2 with a referral fee, it serves the business you are in which is helping clients achieve their goals while being compensated for it financially.

If you are a Realtor or real estate agent looking to refer a client with a business for sale (business opportunity listing), contact our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com.  We can help you determine if the client referral will work with our Business Brokerage and arrange for referral fee compensation.

Aldo Orta of Aldo Orta Jewelry gets an update segment.  You may recall that Aldo Orta Jewelry from 2011 when it was pitched in the season finale of 2nd season of Shark Tank.  Aldo Orta struck a deal with Kevin Harrington & Barbara Corcoran during that appearance on Shark Tank.  It is important to note that deal struck was for only for a select portion of Aldo Orta’s line of jewelry.  Aldo Orta Jewelry has appeared on QVC quite often, so it must be doing well.  We’ll be curious to see what new updates there are to the Aldo Orta Jewelry collection.

For those people who have the problem of not enough neck ties, or not enough variety in neck ties, then Tie Try is a possible solution for them.  Tie Try is a service that offers a subscription service for people looking to have a new design of ties shipped to them.  Similar to a service such as the DVD by mail business model of Netflix or like coffee subscription service like MistoBox, Tie Try lets people have a variety of ties from the comfort and convenience of home.    Scott Tindle is the entrepreneur behind Tie Try.   Customers get new ties shipped to them as ties are returned to Tie Try.  Tie Try also has an option the let customers keep the ties they like by buying them.  The entrepreneurs behind Tie Try were a little early in the development of the company when they taped the segment.  At that they only had 110 customers.  They were at the beginning stages of proving their concept.  Since they hadn’t fully proven the concept, they did not get an investment from the sharks.  Lesson Learned here is one we’ve seen in the past, when a company is too early in development, investors usually pass, as they want to place their money in lower risk situations, which up their odds of generating a return.

Long Beach California Based Cork’s Away Wine Adventures is pitched on Shark Tank by Captain Nathan Buffet and Shane Cianciolo.  Cork’s Away Wine Adventures is a leisure cruise that features wine and appetizers for private parties that are held on board a ship.  Corporate parties, Evening Sunset parties, etc are the type of fun bookings that people can have with Cork’s Away Wine Adventures.  Currently, the business operates out of one location, so while it might be too small for the Sharks to invest in, it certainly will be fun for people in the Los Angeles area for parties with Cork’s Away Wine Adventures.  The main issue that prevented the Sharks from investing in Cork’s Away Wine Adventures was the fact that the business plan wasn’t focused enough for an investor’s appetite.  Lesson Learned while an entrepreneur can be more ambitious and take more risks, investors are more risk averse, as they only seek a return on their investment and not the realization of a dream.   Have simple plan for profit, so an investor can gauge a quick return on their money.  If you have bigger dreams, stay privately held and do your thing.

Jaqueline Courtney appears on Shark Tank to pitch her business called Nearly Newlywed.  Nearly Newlywed is a business that sells used wedding dresses to brides who want more bang for their buck.  Nearly Newlywed also buys back dresses, which helps brides afford more expensive dresses.  The great thing about Nearly Newlywed is is gives brides the ability to have a nicer dress for their wedding.  An alternative to selling back a wedding dress to Nearly Newlywed is to consign the dress to the company.  This is good for Nearly Newlywed in that it doesn’t require the business to outlay significant cash for the inventory, and it allows the bride the chance to recoup more of the original price paid for the dress.  Nearly Newlywed also has a partnership with Kleinfeld.  Jaqueline Courtney proved herself to be a sharp entrepreneur who had created the business from scratch.  The Nearly Newlywed business was also in its early stages of development at the time of taping, however, it was proven enough to generate an offer from Kevin O’Leary that was for much more equity than Jaqueline Courtney was willing to give away for Nearly Newlywed.  With that Jaqueline Courtney walked away from the Shark Tank without a deal for Nearly Newlywed.  Lesson learned here is that if you are still establishing the company, but on the right track, feel emboldened to turn down giving away significant equity while you are building it up as long as you are willing to see it through

Curious about what you can do to increase the value of your business, read and/or watch the video in this post for what we have come across in marketing businesses for sale.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.

For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

Mary Beth Lugo demonstrated solid revenues for KaZAM training bikes.  The initial issue that popped up were the fact that the gross margins for a physical product maker weren’t high enough to not require significant capital to finance growth.  The more capital it takes to finance growth, the harder it is for the business to return the investor’s invested capital.  Also, Barbara Corcoran questioned whether Mary Beth Lugo of KaZAM training bikes had the emotional drive to push through all of the obstacles that arise when growing a business.  Mark Cuban issued  a challenge to Mary Beth Lugo, which was to convince Barbara Corcoran to join his offer.  Barbara Corcoran’s skepticism was answered by Mary Beth Lugo and she got Barbara to join Mark Cuban’s offer.  One important note is that Mary Beth Lugo did not counter offer Cuban and Corcoran forcefully, but they took her seriously because she was well prepared and well versed in her business valuation.  So we’ll take that as the lesson from the segment.  Lesson Learned if your Valuation Numbers are justified, you can often let them speak for themselves and forgo having to posture to get a fair deal.

Getting an update segment on Shark Tank will be Cheryl Rigdon, the founder of the Spatty and Spatty Daddy.  You may recall that she brought the Spatty and Spatty Daddy to the set of Shark Tank when the Spatty and the Spatty Daddy were just prototypes that weren’t in full production for sale.  As such, Cheryl Rigdon did not receive a deal for the Spatty and the Spatty Daddy from the Sharks.   Now that Cheryl Rigdon has managed to get Spatty and the Spatty Daddy into full production, expect to hear some exciting sales numbers for the business.  Fun fact about the Spatty and Spatty Daddy is that Cheryl Rigdon is from the Palmetto State, South Carolina.  It’s great to hear that Daymond John has been an important cog to helping Cheryl Rigdon grow Spatty Daddy by helping open doors to other companies.

Los Angeles based Baby’s Badass Burgers appeared in the Shark pitched by Erica Cohen & Lori Barbera.  Baby’s Badass Burgers is a food truck business that has a unique marketing pitch.  Erica Cohen & Lori Barbera have a simple and beautiful business model by offering a simple burger menu with attractive employees called burger babes in the catering trucks.  Baby’s Badass Burgers also offers to cater events.  Will the numbers, the business model and most importantly will the drive and determination of Erica Cohen & Lori Barbera for Baby’s Badass Burgers entice the Sharks to make an offer?  Also Erica Cohen & Lori Barbera are looking for franchisees across the United States for Baby’s Badass Burgers.  What we don’t know is if the push to franchise Baby’s Badass Burgers was a part of the pitch on Shark Tank, a result of the show or totally unrelated to the appearance.  Either way, for folks in the Los Angeles areas looking for eye candy with their burger, they are in luck, they can follow Baby’s Badass Burgers on twitter (@BabysBBs).  Well as the show unfolded it certainly did not seem like franchising was high on the radar for Erica Cohen & Lori Barbera in regards to expanding Baby’s Badass Burgers.  Well, that is no longer the case, as Baby’s Badass Burgers is aggressively looking to expand the business via franchising.  The Sharks did not want to invest in a brick and mortar version of Baby’s Badass Burgers, so Erica Cohen & Lori Barbera walked away without a deal.  No worries, Erica Cohen & Lori Barbera seem to be doing just fine with Baby’s Badass Burgers now that they are franchising.  Lesson Learned from this segment is that investors don’t like investing in unproven concepts. The sharks stated they would have been interested in investing in Baby’s Badass Burgers had it been a plan to grow by adding the proven concept of food trucks versus the brick and mortar restaurant.   Since Baby’s Badass Burgers is now franchising, it looks like Erica Cohen & Lori Barbera are heading in the direction of proven growth!

Tom Kanemoto & Lance Yabut are Los Angeles based entrepreneurs behind Pink Shutter Photobooths.  The duo appear on Shark Tank to pitch Pink Shutter Photobooths for an investment in their business.  The duo have Pink Shutter Photobooths operating in quite a few locations, including Las Vegas, San Francisco, Sacramento, San Diego and the majority of Southern California.  Beginning on May 9, 2013, the Dallas Forth Worth market will also be served by Pink Shutter Photobooths.  What is Pink Shutter Photobooths?  Well they are fun Photobooths that can be used at events like Weddings, Corporate Parties, Birthday Parties and any other celebrations.  Pink Shutter Photobooths offers a few package options to suit a customers needs.  Will the Sharks click into Pink Shutter Photobooths and make a deal?  Certainly the high valuation of $3,000,000 ($300,000 for 10%) was a turn off for the sharks.  However, Tom Kanemoto & Lance Yabut were realistic about their valuation, so they were open to wheeling and dealing for Pink Shutter Photobooths.  As such they entertained a salaried deal for 33% equity from Barbara Corcoran that allowed her to recoup her money as Tom Kanemoto & Lance Yabut took salaries.  The additional equity got Mark Cuban interested, and as such he came back in with the same offer, but without the salary.   Tom Kanemoto & Lance Yabut were faced with a dilemma, which deal to take.  They had a quick conference, and came back with a joint offer including Barbara Corcoran and Mark Cuban but for less equity (only 25%) and no salary.  The reduced equity chased away Mark Cuban and they ended taking Barbara Corcoran’s original offer.  Lesson Learned a bird in the hand is worth two in bush.  Or put this way, be careful to go too far past what you will be happy with, lest you end up settling for less than that by extending the time for renegotiations.

Brian Pitt, James LaVitola & Cliff Dorman are the trio behind Track Days, a motorcycle road racing movie.  Brian Pitt, James LaVitola & Cliff Dorman will appear on Shark Tank to secure some funding for their motorcycle road racing movie called Track Days.  Since Track Days is a movie about motorcycle road racing, here’s the preview trailer on YouTube.

While there have not been any big budget blockbuster films about motorcycle racing, if you are interested, you can find the Track Days motorcycle racing movie project on Kickstarter.  While Robert Herjavec is a noted car racer, let’s see what  he’ll have to say about motorcycle racing and most importantly, what he has to say about financing the production of a feature length film such as Track Days.  Deal or no deal, Track Days, a motorcycle racing movie is going to get some major exposure on Shark Tank, which should be a big benefit for Brian Pitt, James LaVitola & Cliff Dorman.  Track Days wasn’t well developed at the time of the pitch.  There was a story, but not a script.  Track Days did not get a deal from the Sharks.  Financing films is a risky business, but there is money to be made.  But, the project was just too early at the time of the pitch for any of the Sharks to be involved.  Lesson Learned, businesses in very early stages rarely receive investments, it’s best to pitch investors after a business concept has been proven

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.

Curious how much your business is worth, Just Elementary, Inc, Business Brokers can help you with Valuation Matters. We can also help you with Negotiation Techniques for your business when dealing with investors. Contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

The update segment of the show features were Abby Jordan & Becky App. They are the owner representatives of eCreamery.com.  eCreamery.com is a online business that ships premium ice cream and gelato packages.   eCreamery.com. is based in Omaha Nebraska, where Abby Jordan & Becky App operate a retail store where locals are able to walk in to enjoy eCreamery.com in person.  One of the challenges for the Sharks that prevented them from investing was the retail location for eCreamery.com.  Expect to see in the update segment for eCreamery.com that online sales have grown tremendously, and that in store retail sales have also likely grown for eCreamery.com due to the national television exposure from Shark Tank.  Sales for eCreamery.com have grown so much that   Abby Jordan & Becky App were expecting  up to $2,000,000 in sales for the current fiscal year for eCreamery.com.  They also were expanding their business into a new facility and had hired additional staff for eCreamery.com.

Los Angeles based Carol Foster of Mee-Ma’s Louisiana Gumbo Brick appears on Shark Tank to pitch its unique food product.   Mee-Ma’s Louisiana Gumbo Brick is frozen reaux that forms the base of a gumbo dish.  Mee-Ma’s Louisiana Gumbo Brick is available locally in a few markets in Los Angeles.  Carol Foster designed the Mee-Ma’s Louisiana Gumbo Brick to make it easy for people to make a gumbo dish.  The reaux is the flavoring base of a gumbo dish, so using Mee-Ma’s Louisiana Gumbo Brick solves the problem of replicating the flavor.  All a user of Mee-Ma’s Louisiana Gumbo Brick has to do is to prepare the meats that are used in the gumbo dish by either browning them in a pan or using pre-cooked meats that area available in grocery stores.  Seems like Mee-Ma’s Louisiana Gumbo Brick will be tasty for the Sharks, but will the business numbers entice the sharks to invest in Mee-Ma’s Louisiana Gumbo Brick?  They were tasty Carol Foster’s story was a touching one, as she had been through a lot of struggle in her life and was able to create a product that had sold well in Costco.  Even though Carol Foster stated that she “didn’t have business acumen”, she had shown strong determination by still building her business, Mee-Ma’s Louisiana Gumbo Brick, despite her challenging personal circumstances.  This determination along with a pending order from Costco was enough to convince Lori Greiner and Kevin O’Leary to make a deal for Mee-Ma’s Louisiana Gumbo Brick with Carol Foster.  Carol Foster accepted $200,000 for 50% equity from Lori Greiner and Kevin O’Leary for Mee-Ma’s Louisiana Gumbo Brick.  Lesson Learned here is that Determination is a KEY ingredient that Investors look for when investing in people.  Investors want to know that when the going gets tough, the people they invest in power through.

David Glickman from Vermont appears on Shark Tank to pitch his natural wood products business called Vermont Butcher Block & Board Company.  Vermont Butcher Block & Board Company is as you can guess based out of Vermont.  Vermont Butcher Block & Board Company is a company that retails all sorts of wood based products, mainly for kitchen.  Vermont Butcher Block & Board Company products range from cutting boards, utensil sets, cheese trays, butcher blocks, smoking blocks, bowls, platters, rolling pins, you name it.  All of these Vermont Butcher Block & Board Company products are made from wood.  David Glickman operates one retail store in Burlington Vermont.  For everybody else, Vermont Butcher Block & Board Company are available online.  Will the Sharks bite into some wood and make a deal for Vermont Butcher Block & Board Company?  Well they certainly were amused by David Glickman’s tie dye wardrobe, but they came to respect him as he mentioned that Vermont Butcher Block & Board Company lifetime sales were almost 3 Million Dollars.   The business had sales through distributors, online sales and the local retail store that served as a testing ground.  David Glickman did not get a deal from any of the Sharks for various different reasons, but one primary reason was that the Sharks, aside from Lori Greiner were not familiar with his industry.   Lesson Learned, Savvy Investors are smart enough to know that they should invest their money in businesses that they understand and can BRING value to.  

Scottsdale Arizona based MistoBox appears on Shark Tank to pitch it’s subscription based coffee business.  Samantha Meis & Connor Riley  were the two founder of MistoBox that appeared on Shark Tank to pitch the business.  They were asking for for $75,000 for 15% equity in MistoBox, which is a $500,000 Business Valuation.  MistoBox offers 4 premium single origin coffees every month for subscribers.  MistoBox Offers variety and convenience with delivery service.  To select the four coffees of the month, MistoBox curates from over 50 different coffees.  Flavor of the month concepts exist with other products such as wine clubs, cheese clubs etc.  So applying the flavor of the month club concept to coffee seems like a no brainer.   No doubt the sharks will enjoy the flavor of the coffee they will sample, but will the financial numbers that the MistoBox is brewing be good enough to warrant an investment? Well, the only two sharks interested were Kevin O’Leary & Mark Cuban.  However, Mark Cuban was lukewarm to the business.  Kevin O’Leary offered $75,000 for 25% equity ($300,000 Business Valuation) which is a $200,000 discount from the asking Business Valuation for MistoBox.  However, Samantha Meis & Connor Riley were bent on getting a deal from Mark Cuban so they offered him a deal a that gave away more equity than Kevin O’Leary had been asking for.  They did because they perceived Mark Cuban to be a better strategic partner for MistoBox.  How much more were they willing to discount their company, MistoBox, to get a deal with Mark Cuban?  They gave Cuban an offer of $75,000 for 30% equity ($250,000 Business Valuation).  They reduced the value of their company by $50,000 to entice Mark Cuban to accept their offer.  Will it be worth it?  Time will only tell, but keep in mind that there is no guarantee that Mark Cuban will be able to finalize a deal for MistoBox with Samantha Meis & Connor Riley.

Lesson Learned here is that if really have a strategic partner in mind to make a deal with, be ready to give up additional equity.  The wrinkle is that you better be right about them being the RIGHT strategic partner that will be able bring additional tangible value, because if they don’t, then you have given away value which you will not be able to get back.  

One thing to look out for is Daymond John.  Daymond John is invested in other caffeine based businesses and is a firm believer in the industry,  If the Business Valuation and numbers for MistoBox makes sense, expect to see him interested in the business.  University of Arizona graduates Samantha Meis and her partners Collin and Conor are the entrepreneurs behind MistoBox.

Curious about what you can do to increase the value of your business, read and/or watch the video in this post for what we have come across in marketing businesses for sale.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.
For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

Also appearing on Shark Tank is the nPowerPEG by Aaron Lemieux from Cleveland Ohio.   The nPowerPEG is a portable device that uses natural motion to create energy that can be used to charge hand held devices such as mobile phones, portable GPS devices, and portable media players.  One obvious use for the nPowerPEG is for folks who are into the outdoors, such as joggers, runners and hikers who are often in motion.  Using Kinetic Energy for power is a clean energy source.  Also Aaron Lemieux manufactures the nPowerPEG in Ohio, so the nPowerPEG is a made in USA product.  nPowerPEG is available online at places like Amazon.com and at select retails stores.  Will the Sharks charge up their investment portfolio with the nPowerPEG?  They did not.  Aaron Lemieux was asking too much for his nPowerPEG business, and the sharks did not see a clear path to making a return on their money on the nPowerPEG due to it’s profit margins.  Also, the main play of the company was not the nPowerPEG, but to make to an energy generation business out of ocean waves.  While the business has quite a bit of potential, it was too far off in the future for the Sharks to feel like they were going to get a quick return.  Lesson Learned: pitch investors that are already in the market or industry that you are in if you are far away from profitability, as they are the only ones who see the path forward to successful operation and profitability.

Have you ever wanted a belt that you love?  A belt that has no holes?  Well Nate Holzapfel’s Mission Belt appeared on Shark Tank to pitch it’s belt without holes.  Another great thing about Mission Belt’s belts with no holes is that the company says it donates one dollar per belt towards helping people fight against hunger and poverty.  Will be curious to see how much of this philanthropic angle will be featured in the Mission Belt segment.  It turns out that any mention of the philanthropic angle for Mission Belt by Nate Holzapfel was left on the cutting room floor.   On Mission Belt’s website page about their mission they write that they donate to Kiva.org, a non-profit peer to peer micro lending organization.  Why buy a Mission Belt belt with no holes?  Depends on your style, as you can see in the image, the belts are modern in design and style.  The key is if the Sharks will buy into Mission Belt and give it an investment.  Nate Holzapfel did score a deal for  Mission Belt due to his drive and will to to be the best salesperson for the business.  An underrated aspect of being in a start up business is that the people in charge need to be effective in sales to get investors to believe that they will follow through on promoting the business to lead it to successful sales and profitability.  Lesson Learned, Investors invest just as much in the people as they do in the business.  Investors want to know that an entrepreneur will run through walls for the business, their livelihood and to deliver a return on the investors money.

Jeff Stafford and Dusty Holloway appeared on Shark Tank to pitch their fishing related product called ShellBobbers.  The company is named Fishing Ammo.  Jeff Stafford and Dusty Holloway got the inspiration to create Fishing Ammo and ShellBobbers while Duck Hunting.  ShellBobbers are bobbers used at the end of fishing poles.  Jeff Stafford and Dusty Holloway created Fishing Ammo to give people who fish an accessory company that is hunting themed.  Fishing Ammo’s initial product is the ShellBobbers.  Will Jeff Stafford and Dusty Holloway reel in a deal with the Sharks for Fishing Ammo and ShellBobbers.  They did reel in a deal for ShellBobbers.  Even though the business was really small, only a $1,000 in sales, their limited retail testing had shown that there was strong demand.  In addition they had interest from Ace Hardware to carry the products in their stores, as the ShellBobbers had sold really well in a test run at one location.  Jeff Stafford and Dusty Holloway had interest from Lori Greiner and Mark Cuban for ShellBobbers.  Greiner hesitated and Mark Cuban offered $80,000 for 33% equity.  This was quickly accepted.  Why did Mark Cuban make a deal for ShellBobbers?  Simply put, just as was the case with Nate Holzapfel and Mission Belt, Jeff Stafford and Dusty Holloway had demonstrated a will to run the company and determination to generate retail and wholesale sales.  Lesson Learned: Be prepared to put every ounce of your energy, effort and will into making your business succeed to get investors to believe in you.

Wicked Good Cupcakes from Cohasset Massachusetts appeared on Shark Tank to pitch their popular cupcakes.  Wicked Good Cupcakes is a mother daughter operation run by Tracey Noonan and Daniella Desroches.  If you are craving some Wicked Good Cupcakes, and you live in or near Boston, you are in luck you can stop in and get some for yourself in person.  For everybody else, the good news is that Wicked Good Cupcakes ships nationwide.  So let’s see if the Sharks enjoy the taste of the bite they take in Wicked Good Cupcakes and offer an investment.  All the sharks gobbled up the cupcakes, except for Robert Herjavec, so naturally he was out on Wicked Good Cupcakes.  After the other sharks bowed out for other reasons, the only offer was from Kevin O’Leary for no equity, but $1 royalty per unit sold in exchange for $70,000.  Tracey Noonan and Daniella Desroches countered at 40 cents royalty, and they accepted Kevin O’Leary’s counteroffer for 45 cents per unit royalty.  This deal was decried on twitter as unfair to Tracey Noonan and Daniella Desroches for  Wicked Good Cupcakes.  On the surface of it, it is an unfair deal for the duo to take for Wicked Good Cupcakes.  But, it’s important to keep in mind that the deal terms are not final on the set.  There is Due Diligence that happens after taping the segment, during which plenty of other terms are negotiated.  Terms can easily be renegotiated during Due Diligence, or other party can walk away.  Many shark tank deals have fallen apart and not been consummated after taping.  Lesson Learned here though is that giving a royalty in perpetuity is like getting a loan, but it never having an end date and paying forever.  Paying forever is a bad deal, which should only be taken by businesses in really dire straits.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.
For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

Appearing in the Shark Tank were two American Armed Forces veteran sisters who created a jewelry business named Stella Valle that had some design cues from their days in the military.  The name Stella Valle is a play off their original family last name of Dellavalle.  Previous jewelry businesses in the Shark Tank have fared well. You may recall the jewelry business named Litter from San Francisco that received a deal from Mark Cuban and Daymond John.  Also Barbara Corcoran invested in Aldo Orta Jewelry.  Stella Valle’s jewelry collection has sharp geometric lines that harken a bold and striking sense of steely resolve.  As you can see in the images, the Stella Valle collections are also high fashion, with a price point to match.  Given the price range, expect to see that Stella Valle would be more up the investment alley of Daymond John versus Lori Greiner.

Robert Gifford appeared in the Shark Tank to pitch his Lifestyle Furniture Business.  Geek Chic is heirloom quality furniture that is designed to last and fill the needs of geeks, gamers, and lovers of chic furniture.  As you can see here the Geek Chic Furniture line is finely crafted furniture.  Given Geek Chic’s appeal to fantasy gamers, it will definitely take a Shark who is familiar with the industry to get it and want to invest.  That is, of course, unless Geek Chic has well established revenues and EBITDA, then it might get the attention of any or all of the sharks.  Geek Chic also offer custom made projects under the label of Bespoke.

Hungry for some Tasty Scones?  Well, then you might be interested in Jones Scones from Colorado.  J. Jones started the business after his scones became very popular with friends and at local Denver cafes.  Essential to the Jones Scones story is not just the rhyming name, but the man behind Jones Scones.  J. Jones is a singer, and a cancer survivor.  Expect to see both of these aspects to come up during J. Jones’ pitch for Jones Scones.  Will the sharks take a bite and investment in Jones Scones?

Also appearing in the Shark Tank will be an entrepreneur who will be pitching a luggage valet service that will offer pickup and drop off services for travelers.  The service is called LugLess.  Brian Altomare from the New York metropolitan is the entrepreneur behind LugLess.  LugLess is part of a family of companies associated with moving, storage and shipping that Brian Altomare operates.  The other two businesses Brain Altomare runs are BoxMyDorm.com and Ship2School.com.  LugLess offers to ship suitcases, surfboards, skis, boxes, packages etc from anywhere to anywhere in America and 235 other countries! LugLess is designed to simplify the travel experience, in particular to make the airport experience easier.    Here is a YouTube video that Brian Altomare made to explain the service LugLess offers.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.
For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

Love your sports team with undying loyalty?  Or just love having some off the wall wacky fun.  Then the Root Suit just might be for you and your friends.  Colinn Grussing from New Orleans, Louisiana was third in the Shark Tank to pitch his  Root Suit.  The Root Suit is a full body spandex suit designed for fun and hijinx.  You may have even seen a group of people running about town in Root Suits.  Root Suits come in most colors that correspond to sports team colors, but they also come along in whimsical prints, such as the Full Body Tuxedo Root Suit, The Full Body American Flag Root Suit, Spider-Man Full Body Root Suit and Full Body Camouflage Root Suit.  Just like the GOBIE H2O water filtered water bottle, the Root Suit had established sales and distribution.  Root Suit had sold approximately $500,000 in sales and profit of approximately $140,000.  So, the Sharks first concerns with any pitch were answered, and that is there are sales and they were profitable.  However, the Sharks were concerned about the knock off competitors that Root Suit was facing in the marketplace.   Competition is okay if there is a way to brand the product and differentiate it from the Knock Offs.  Colin Grussing had not found a way to brand and differentiate Root Suits, so the Sharks were all out.  Except for Daymond John.  As an apparel item, Root Suit is definitely a product that he could bring value to.  However, Daymond John was very clear that he would not to invest a lot of time to help Root Suit carve a niche in the marketplace.  As such, his offer was for 50% equity.  Colin Grussing was pleased to get an offer, but he was indecisive about whether or not to take it, or to counter it.  Daymond John eventually withdrew his offer for Root Suit.  The common takeaway lesson from this segment is that he should have acted decisively, which is a valid point.  However, another lesson from this segment is that if an investor is already on the fence, expect that there is a great likelihood that they will back out during due diligence anyway.  Good news for Colin Grussing is that Root Suit is already a profitable business, and that Mark Cuban was most likely correct in saying that Grussing didn’t need any partners for Root Suit.

Have you ever been in the woods looking for something in your cooler, but it has been too dark out too see what is in your cooler?  That problem will be solved by Jayson Sandberg’s Liddup Cooler.  Liddup Cooler was pitched first in the Shark Tank by Talyor Gwiazdon & Jayson Sandberg. Liddup is not yet on the market, but based on the company website, it seems like it will be hitting the market in the summer of 2013.  A Liddup can be ‘pre ordered’ via their page on Kickstarter.com.  Jayson Sandberg’s Liddup coolers use built in LED lighting to illuminate the contents of the cooler at night.  The advantage of using LEDs is that they don’t generate significant heat, which works against the purpose of a cooler, which is to keep beverages and other items cool.  Will the sharks be interested in partnering with Jayson Sandberg on the Liddup Cooler.   Like we saw in the previous episode with the Drop Stop, necessity is the mother of all investion as Jayson Sandberg grew frustrated with his experience dealing with coolers in the dark and created the Liddup.  In the segment it became apparent that the portable cooler field is dominated by a few large manufacturers and that Talyor Gwiazdon & Jayson Sandberg had a licensing deal in mind.  Naturally, a licensing play is exactly what had Kevin O’Leary interested in Liddup.  But, Robert Herjavec was also interested in Liddup because he had a friend connected in the industry.  O’Leary made an offer for only 33% of royalty payments if they were successful in licensing the intellectual property in Liddup.  Herjavec wanted equity with his offer for Liddup.  Herjavec said he could bring value because he had a friend in the industry who could plug them in with the largest manufacturers in the space.  Talyor Gwiazdon & Jayson Sandberg were forced to go with O’Leary after their momentary indecision caused Herjavec to withdraw his offer for Liddup.  Lesson Learned here, is to keep multiple offers on the table to keep the negotiation leverage in your hands.  Since Talyor Gwiazdon & Jayson Sandberg were down to one offer from O’Leary only they had no standing to counter offer him for a lower portion of the royalties.

Dave Alwan of Echo Valley Meats pitched the Sharks his gourmet meat business in the third segment of the show.  Dave Alwan is a third generation farmer, who oversees his retail and meat processing plant in Bartonville Illinois.  Pursuing a gourmet market means operating in a space with higher margins, however, Alwan deliberately chose to price his premium meat lower than other premium meat vendors.  This lower pricing was one factor that lead to Echo Valley Meats have a EBITDA only slightly in the black.   The good news for Echo Valley Meats was that the company had very little debt.  However, for the Sharks, the lack of significant profitability was an issue that they could not overcome.  The fact is that even though the business was just fine, as Dave Alwan was drawing a salary, debt free, and profitable (if, ever so slightly), there just wasn’t enough meat on the bone in terms of left over profit for the Sharks or any other investors to generate a return on their money.  Lesson Learned, Investors need to have significant EBITDA to know that they will get a return on their money.  That doesn’t make Echo Valley Meats a bad business, as it is still viable and successful for Dave Alwan, it just makes it hard for investors to get involved.  Dave Alwan is going to have to continue growing it himself.  Fortunately, some National TV Exposure will help Dave Alwan generate some increased brand awareness and revenues for Echo Valley Meats, especially since he came across as a very likeable person.

The Shark Tank Update segment featured Juliet Boydstun and Lucinda Lent’s business called The Coop LA.  The Coop LA was a business that Barbara Corcoran invested in.  The Coop LA is a high end party space for children, with a location in Studio City California.  One of the aspects of the business that the partners of The Coop LA wanted to grow was their portable party packs.  Juliet Boydstun and Lucinda Lent had started to sell their The Coop LA portable party packs, which had helped fuel growth in the business.  These The Coop LA portable party packs are shippable crates that have supplies for folks to use at their venue to dress it up and theme their party themselves.  Also, the duo  had received franchising requests and had plans to open an additional location in the Los Angeles area.  Seems like Barbara Corcoran’s investment in The Coop LA has helped it grow and will turn out to be a net positive.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.
For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

Have you ever had something fall between the center console and your car seat that ends up wedged in a hard to reach spot? If that is a yes, then you know how annoying it can be. Also, it can be very dangerous, if it distracts your driving. This leads to the Drop Stop, which was pitched on Shark Tank by the Los Angeles based duo Marc Newberger and Jeffrey Simon. Drop Stop, much like Simple Sugars, was created out of necessity, as Marc Newberger had a very close call in a driving mishap where he jumped a curb and nearly struck a pedestrian and a light pole. After going through a few variations that did not work well, Marc Newberger and Jeffrey Simon finally switched to using neoprene as the material to make Drop Stop out of. Neoprene is an expensive material that is durable, so Drop Stop should be a quality product that lasts, and not a cheap throwaway. Marc Newberger and Jeffrey Simon received offers from both Kevin O’Leary and Lori Greiner for Drop Stop. Drop Stop definitely seems like a product right up Lori Greiner’s alley. The only question is if Kevin O’Leary can trump Lori Greiner’s offer by offering to take no equity in Drop Stop, instead opting for royalty payments. As has been discussed previously, offering royalties are in most cases far less preferable to giving equity. In short, the reason that is the case is that paying royalties drain working capital for the business, which hampers growing the business. Thus, the offer from Loru Greiner was a no brainer for Drop Stop. Lesson Learned here is avoid offering royalty payments to investors, as they eat into cash flow, working capital and profits.

Lani Lazzari from Pittsburgh, PA was third in the Shark Tank to pitch her business which is a line of All Natural Body Scrubs called Simple Sugars.  One extraordinary aspect of her story is that she was 18 at the time of taping her Shark Tank segment for Simple Sugars. She was incredibly polished and poised on the set.  An even more extraordinary things about Lani Lazzari’s story is that she began creating her all natural body scrubs at the age of Eleven!  Like many great inventions, Lani Lazzari created Simple Sugars Body scrub based on necessity.  Lani Lazzari has very sensitive skin, so much so, that she isn’t able to use commercially available products, and thus, was compelled to create Simple Sugars all natural body scrubs to help her and her family.  Will Lani Lazzari’s Simple Sugars get a deal on Shark Tank?  It seems like Daymond John and Lori Greiner are going to be the best fit for Simple Sugars.  However, all four sharks aside from Mark Cuban were out.  They cited the fact that they were not going to be able extract value for themselves unless they took a great enough share of equity to make it unappealing for Lazzari.   This is despite the fact that Lani Lazzari had proven herself to be a dynamite entrepreneur.  However, that was enough for Mark Cuban to be interested, but as the other sharks alluded to, he needed enough equity to make it work his while, so he got Lani Lazzari to give up 33% in Simple Sugars.  During Negotiations, Cuban made an offer for 33%, which elicited the counter offer from Lazzari for 25% equity.  Cuban gave a simple no to the 25% counter offer.  This is where the negotiation skills became apparent.  Cuban was wise to say no, and not offer a different counter to Lazzari.  This is because he had the leverage, there were no other bidders.  Lazzari knew that she did not have the leverage, which made her accept Cuban’s offer for 33% equity too quickly.  What could she have done differently.  After Cuban said no to her counter, she could have said something along the lines of “Let’s do 30% equity” and then accepted Cuban’s 33% equity offer if he said no to that.  Lesson Learned if you don’t have leverage in Negotiations always make one last offer while leaving the door open to accept what the other party put on the table.

David Johnson of Traditional Fisheries jumps into the Shark Tank not to swim with the sharks, but to swim with Lion Fish, which form the focus of his business.  Lion Fish are native to the West Pacific and Indian Oceans.  They are super predators of other native reef fish with their large venomous external spines and have become a problem in the Caribbean Ocean.  You can see in the image, Lion Fish are quite colorful and the venomous spines are quite large.  David Johnson’s Traditional Fisheries is a business that aims to commercialize Lion Fish and help control their invasive spread in the Caribbean Ocean.  The sharks enjoyed the taste, as they doned on Lion Fish.  But they did not give David Johnson an investment for Traditional Fisheries.  The problem for the sharks was that they felt that raising market awareness to make Lion Fish a commercially viable product was too long of a horizon for their investment.  Lesson Learned Here: Successful investors want a quick return on their money.  It’s best to pitch investors when you have your product ready to hit a big break.   .Let’s hope that national television helps David Johnson and his partner cultivate a market for Lion Fish sooner than later.

Giving gifts is a lot of fun.  Opening gifts can be even greater fun, especially for little kids who get a ton of amusement from the gift wrapping.  But wrapping gifts can be a lot of work.  Jeffrey Miller wants to make gift wrapping a simpler and more fun process.  As such, he’s invented a patented and trademarked concept called CoolWraps.  CoolWraps are essentially Shrink Wrap gift bags.  Jeffrey Miller made CoolWraps a simple three step process.  It is as easy as placing the gift inside of a CoolWraps gift bag, sealing the bag with the closing flap and heating the bag with a hair dryer to shrink the CoolWraps bag to fit.  As is evidenced by the CoolWraps website, the product isn’t on the market yet, but is advertised as available for licensing or complete purchase.  This was a very interesting segment for many reasons, but we’ll point to one big misconception of the show.  The verbal deals struck on the set are not FINAL.  Meaning, when Lori Greiner said to Miller that her offer for $150,000 for 100% equity would make CoolWraps either her problem or success is misleading.  There is no way that Lori would Finalize a deal with Miller after Due Diligence if her homework told her that the product was not going to a worthwhile money maker.  That means she would walk away, and Miller would be left with nothing.  As it is, Mark Cuban Recognized this and trumped Greiner’s offer by $100,000 plus a royalty for 100% equity.  These verbal deals are ‘No Obligation’ deals for the sharks.  By the looks of CoolWraps‘ website, it looks like the deal with Cuban either never materialized or is still in progress at the time of original airing of the episode, which aired about 6 months after the segment was taped.  Think that this is a one off thing?  Hyconn, LLC and You Smell Soap are two examples of deals made on the set that did NOT materialize after Due Diligence.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.
For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

What is the Right to Take property:

Private Property Ownership can be taken away for “Public Use” provided fair compensation is offered.  The definition of “Public Use” has been debated over time and updated through case law.  Can your property be taken to be used to build a mall, to build a power plant, to build a new road?  This depends on your location.  It is best to consult an expert in eminent domain to determine your options.

Determining the Goodwill Value for a Business subject to Eminent Domain:

Fortunately, the State of California does recognize and can compensate the value of a business in the case of an eminent domain taking.  However, there are key conditions that need to be met.  Two of these key conditions are the following:

• A Loss of Value to the business has to be caused by a taking of the real estate by eminent domain
• Said Loss of Value can’t be mitigated by a relocation or any other form of relocation compensation.

Benjamin Rubin & Brad Kuhn of Nossaman, LLP write an analysis of the details of the case of a operating winery that received Zero dollars in business goodwill compensation.  A key takeaway from the case applies to all businesses, which is the importance of maximizing profits on your financials.  Click to learn more about how you can maximize the value of your business.  While avoiding a higher tax bill by reducing taxable profits may help you in the short term, it can be at the cost of tremendous value and money in the long run.

For assistance with a Business Valuation for your business contact our office, you can reach our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com

Make sure to bring the initial application filled out to the Shark Tank open casting.  You will have one minute to pitch the casting staff, and each session will be limited to the first 500 participants, so arrive VERY early.

Prepare yourself in advance of your appearance on the set by reading about the business lessons from prior episodes. Click here to see the entire collection of episode recaps, all of them with business lessons you can take away from each pitch. To learn how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

SUNDAY, APRIL 14TH – ATLANTA
THE FOX THEATRE
660 Peachtree St. NE
Atlanta, GA 30308
11:00 AM to 1:00 PM – Numbered Wristbands Distributed
12:00 PM – Interviews Begin

SATURDAY, APRIL 20TH – DALLAS
WFAA – VICTORY PARK
3030 Olive St.
Dallas, TX 75201
9:00 AM to 11:00 AM – Numbered Wristbands Distributed
10:00 AM – Interviews Begin

THURSDAY, MAY 9TH – CHICAGO
SHEDD AQUARIUM
1200 S. Lake Shore Dr.
Chicago, IL 60605
12:00 PM to 2:00 PM – Numbered Wristbands Distributed
1:00 PM – Interviews Begin

SATURDAY, MAY 11TH – PHILADELPHIA
NEXTFAB STUDIO
2025 Washington Ave.
Philadelphia, PA 19146
9:00 AM to 11:00 AM – Numbered Wristbands Distributed
10:00 AM – Interviews Begin

FRIDAY, MAY 24TH – LOS ANGELES
BEVERLY GARLAND’S HOLIDAY INN
4222 Vineland Ave.
North Hollywood, CA 91602
10:00 AM to 12:00 PM – Numbered Wristbands Distributed
11:00 AM – Interviews Begin

Here is the link to the official ABC website for Shark Tanks’s Season 5 Casting Information

There are plenty of mobile phone accessories, but are there any truly revolutionary products out there?  Cellhelmet was pitched in the Shark Tank. eCellhelmet was founded by three people, Mike Kane, Brian McHenry and Dave Artuso.  The trio are from Pittsburgh, so we’ll expect a little shout out between them and Mark Cuban who is also from Western Pennsylvania.  What Cellhelmet does to differentiate itself from other mobile phone accessories is to offer accidental damage coverage.  This did not help propel Cellhelmet to sales strong enough to entice the Sharks.  The Sharks cited concerns that Cellhelmet would be subject to significant fraud issues.  Good news for Cellhelmet is that they have established distribution in a limited amount of retail stores in the lower 48 states quickly from inception of the business.  Cellhelmet is available online at the company website and on Amazon.com

The venerable bean bag.  We have all sat one at some point in our lives.  What is a bean bag doing in the Shark Tank?  What if you could have a bean bad seat that fairly easily turned into a bed?  Well that is what CordaRoys is.  Byron Young from Florida is the creator of CordaRoys.  Inside of the CordaRoys bean bag  bed cover is a foam mattress that unfolds into a mattress shaped bed.  But, why would people want to buy a CordaRoys bean bag bed?  Well you see the YouTube video below to get an idea.

Will the Sharks bite in Byron Young’s CordaRoys Bean Bag Bed creation? That will certainly depend if Byron Young has demonstrated a market for CordaRoys and the bean bag bed market. Also, what are margins like for CordaRoys, especially with shipping a relatively large product that has some weight to it?

Get ready to be pumped up by Fitness Coach Cowboy Ryan Ehmann. He has an online membership program to help people get fit. Aside from offering amazingly enthusiastic motivation with his larger than life persona, he helps people target their ideal heart rate for workouts to achieve burning of body fate.  Ryan Ehmann had developed chronic lower back pain and was

See this video to get an idea of the personality and verve we’ll see on Shark Tank.

Tired of the same old boring activities for your young children? Then Baby Loves Disco is something you might be interested in.  Baby Loves Disco was pitched by Andy Hurwitz and Heather Murphy.  They created Baby Loves Disco as an afternoon party held at nightclubs designed for little kids.  The music is a mix of 70s and 80s music.  Baby Loves Disco parties are staged with bubble machines, baskets of scarves and other fun items.  Of course, there are diaper changing stations and plenty of healthy snacks to make it young child friendly.  Baby Loves Disco started as a business prior to 2005 and is currently in 21 different cities, mainly spreading by word of mouth.  Clearly there are a lot parents and kids who love Baby Loves Disco, but what about the Sharks?  The business had generated sales as high as $800,000 in a calendar year.  However, in that highwater year, they had a loss of $20,000.   Baby Loves Disco had switched to a different revenue generation business models over the years of operation.  Lesson Learned: though, while the business is successful, investors want to invest in a business that has a clear and credible path going forward to generate revenue and profitability. of using sponsorships to generate revenues and offer parties for free and discounted amounts.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.
For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

Where is the Underwriting Committee located?

Having a local underwriting committee has a few distinct advantages over big national bank chains that use central offices for underwriting committees.  Among them are: #1 Local underwriting committees typically respond quicker to loan application files than their nationally based counterparts.   #2.  Local underwriting committees can can factor in local issues and nuances to properly assess a loan application.  An example of this would be a business located generally in a zip code that is not performing well, but perhaps it’s immediate neighborhood is performing well.  The nationally based underwriting committee looking at the zip code data is more likely to say no.

Is your bank representative directly connected to the Underwriters?

Not only is it important to have a local underwriting committee, but it is also important to ask and find out how many people are in between the bank representative who is working with you and the underwriting committee.  How this matters is that the more people in between you and the underwriting committee, the more in the dark you are going to be.  If your bank representative has one or more people in between him and underwriting, then it is going to be harder for him/her to get proper updates on what the underwriting committee is thinking, since the information is going to be filtered.  This is where working with a local community bank can be a smart move, as you are likely to be working with the direct liaison to the underwriting committee.

Which industries does the bank like to keep in its portfolio?

This is an important question to ask when applying for Lines of Credit & SBA Loans for your business, because you need to know if the bank likes to lend to the industry that your business is a part of.  ‘In a bank’s portfolio’ means loans that are still on the bank’s books.  This would be all the loans that the bank has written that have not been sold off on the secondary market.  Banks will usually avoid lending to industries that it perceives as high risk.  Also, banks will avoid offering financing and writing further loans to industries in which they have had a high failure rate of loans in the recent past.  For example, if the bank has had too many loans to franchise restaurants go bad, then they will be reluctant to approve a loan or other financing for another franchise restaurant owner, EVEN IF, the numbers all check out.   So, make sure to find out if the bank has a good or bad history with the Industry your business is a part of.  If the bank has a bad history of lending to your industry, then look for another bank.  This is where having your bank representative as close as possible to the underwriting committee helps, as you are more likely to find this out sooner than later.

For assistance with selecting a bank to obtain financing, lines of credit or other business loans for your business contact our office.  You can reach our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com

Nick Gonzalez & Kevin Mack did not get any offer from the Sharks for their Neo Mag Light aka Black Magic IPL Tattoo removal business/product.  The main issue for the sharks was liability over legal issues and lawsuit potential.   To Nick Gonzalez & Kevin Mack’s credit, they have taken the lesson to heart and have been proactive since the time of taping to address safety concerns with additional notices and when buying the product.  Lesson Learned from this segment, is always cover the liability issues involved in your business or product EARLY in the development of the business to nip potential problems in the bud.  Lawsuits are a headache and waste of precious company resources in time and money.

Neal Cameron, Dennis Iannotti and Peter Ferreira appeared on Shark Tank to pitch their line of natural butters called Nuts ‘N More which you can find on Amazon.com.  Neal Cameron, Dennis Iannotti and Peter Ferreira were asking for $250,000 in exchange for 20% equity ($1.25 MM Business Valuation) for Nuts ‘N More.  Nuts ‘N More is a finely blended line of peanut  & almond butters that are also fortified.  Flavors that Nuts ‘N More are available in are Cinnamon Raisin Almond Butter, Chocolate Almond Butter, Almond Butter, Peanut Butter and Chocolate Peanut Butter.

If this seems familiar you may recall Wild Squirrel Nut Butter that got a deal with Barbara Corcoran that did not get finalized after the taping of the episode.  Why didn’t  Wild Squirrel Nut Butter get a deal?  A lot more goes into finalizing a deal between the Sharks and any business like Wild Squirrel Nut Butter than just price and percentage equity, so a lot more negotiation goes on after the taping.  Also, Due Diligence happens by both parties, and sometimes that reveals information that makes people change their mind or ask for different terms, both of which jeopardize a deal getting finalized.

Did Nuts ‘N More taste good enough to entice the Sharks to make an offer palatable for Neal Cameron, Dennis Iannotti and Peter Ferreira?  Well, the Business Valuation being way too high drove away Kevin O’Leary, Daymond John and Barbara Corcoran.  Though, Barbara Corcoran was effusive in her praise for the design of the branding and packaging.  As Mark Cuban mentioned, Barbara Corcoran does not compliment branding often.  When she does, the compliment carries a lot of weight.   Barbara Corcoran is a marketing maven.  If you don’t know her story outside of Shark Tank, you should read her book “Use What You’ve Got, and Other Business Lessons I Learned from Mom” which you can find on Amazon.com

Well, offers came from Mark Cuban and Robert Herjavec, though they were for less than HALF of what the trio were asking for Nuts ‘N More.  They combined their offers which was acceptable to Neal Cameron, Dennis Iannotti and Peter Ferreira for Nuts ‘N More.  The important wrinkle that was in the accepted offer was that the money invested would come in stages, as the capital was needed to grow the business.  Lesson Learned, Always ask for enough capital to accomplish goals as needed.

Second into the Shark Tank was PSI Bands from Pacifica California which was pitched by Romy Taormina.  PSI Bands are fashionable wrist bands that are used to relieve symptoms of nausea.  Reviews are plentiful and favorable of the product on Amazon.com.  PSI Bands are designed to look like wristwatch bands, and as you can see in the image, they are very colorful.  The Sharks were skeptical of the product, in particular Mark Cuban and Robert Herjavec.  An offer came from Kevin O’Leary, however, his offer was far from what Romy Taormina wanted for PSI Bands.  Romy Taormina didn’t even counter offer Kevin O’Leary because of the gap.  This earned Romy Taormina a lot of grief on twitter for being stubborn.  However, the take here will be that Romy Taormina was crystal clear in what she expected for PSI Bands and wasn’t willing to take lowballs because she didn’t need to.  Good for her to go into the Shark Tank with clearly defined goals for the pitch of PSI Bands.  Important Negotiation Lesson Learned here, ALWAYS Define which outcomes you want BEFORE beginning negotiations.  This way, you won’t accept offers you will regret, and you won’t regret turning offers that you would have liked.  

There will be an update segment on SurfSet Fitness that Mark Cuban invested in.  Also, a business concept by Jessica Haynes will be pitched on the show.  Her business is called JesKa Shoe Company and offers a shoe that has an interchangeable heel or wedge.  This is similar to OneSole Shoes, except OneSole Shoes had interchangeable tops.  You may recall that OneSole Shoes was a hit company that had great sales and got an investment from Daymond John.

The story behind the Jeska Shoe Company is that the product is in the prototype stage.  As such, there was not a “business” per se to invest in since there was no revenue.  Jessica Haynes had put in money of her own and taken her parents money and put it into the business, putting her business concept into a fair amount of debt.   The only offer came from Daymond John, which was for a majority stake in the company ($70,000 for 70% equity).  This elicited reaction from Mark Cuban and Robert Herjavec that it asking for too much equity.  However, Daymond John made a clear point that he would not just be an investor in the business, but that he would have to be fully involve in getting it off the ground.  This obviously would require a lot more time than a passive investment would, which means he needs significant equity to make it worth his TIME invested.  Lesson Learned, Time is Money, if you are going to require more of an investor’s time, they’ll have to get more equity to make it worth their while.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.

For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

Brooks, Tanner and Taylor Dame were asking for $150,000 for a 10% equity investment in Proof Eyewear.  That translates to a $1.5 MM Business Valuation for Proof Eyewear.  Do the sales and profit justify that valuation?  Prior year sales for Proof Eyewear were $433,000, with projections in the current year of taping to be $850,000 or even higher.  The products were wholesaled for $50 with a cost to produce approximately $14.  That is greater than a 300% markup.  Good margins.  The business clearly had momentum for continued increase in sales, as they had been widening their distribution and were in a position to get orders from PacSun.    Does this all justify the $1.5 MM Business Valuation that the brothers were asking for Proof Eyewear?  The information we gather from the segment seems to indicate that it does, BUT, we would need to properly analyze the financials to assess a proper Business Valuation.

Robert Herjavec & Kevin O’Leary both came with identical offers of $150,000 for 25% equity, except that Kevin O’Leary wanted a royalty on sales.  While royalties can be a trade off for equity, they aren’t usually good to accept since they are a drain on the cash flow for the business.  Lesson Learned Here: Don’t offer to pay royalties to investors unless you have a very specific and urgent need to retain more equity as a trade off.

Steve Maloney & Stephen Kirkpatrick are the duo behind Muddy Water Camo, which was the second segment of the show.  Muddy Water Camo is a line of camouflage hunting gear designed with patterns to blend in with marshy areas popular for duck hunting.  Muddy Water Camo was created by Steve Maloney & Stephen Kirkpatrick because there was not a good camouflage design for duck hunters.  Steve Maloney is the active hunter and Stephen Kirkpatrick joined him as a photographer and then as a designer.

Stephen Kirkpatrick is a great fit for Muddy Water Camo as he is an award winning wildlife photographer.  Awards that Stephen Kirkpatrick has won are the 2011 Writer’s Digest International Self-Published Book Award, the National Outdoor Book Award, the Benjamin Franklin Award, and three Southeastern Outdoor Press Association Book of the Year Awards. He’s also won the prestigious International Wildlife Photographer of the Year competition held in London, England twice.  You can find Stephen Kirkpatrick’s books on Amazon.com.  Stephen Kirkpatrick is responsible for the design of the patterns that are used on Muddy Water Camo apparel, which he said is a 54 step process.

Back to Muddy Water Camo, is it worth what Steve Maloney & Stephen Kirkpatrick were asking for the business which is a $3 MM Business Valuation ($150,000 for 5% equity).  Is the business worth that much?  Sales at the time of taping were $150,000, which means that the Business Valuation definitely was not justified by the sales and/or the profit.  It became clear as the segment unfolded that there had been a lengthy discussion regarding the other investors that had invested in the business at a $2.5 MM Business Valuation.  There were apparently 6 other investors that had invested $100,000 each for 4% each.  This meant one important thing which is that any new investors joining the group as minority shareholders would have to deal with many other minority shareholders, which complicates decision making.  This is especially true given the amount of equity being offered to the Sharks was fairly low.  No deal here with any of the sharks.  Lesson Learned here is to try to minimize the numbers of investors to keep things as simple as possible.  Why does this matter?  Businesses need to make numerous decisions daily, weekly, monthly etc.  You’ll be able to make decisions much more quickly with fewer investors to consult and accommodate.

The third segment was Hip Chix Denim, which is an upscale fashion denim line for women.  Hip Chix Denim is based out of Dallas, Texas, the hometown of Mark Cuban.  Hip Chix Denim is positioned as a lifestyle brand. Megan Careiker & Aimee Miller are the Duo behind the premium brand of denim jeans that currently makes up Hip Chix Denim.  Hip Chix Denim is available in two variations, Straight & Narrow and Skinny Bootie.  Megan Careiker & Aimee Miller were asking $150,000 for 35% equity in Hip Chix Denim, which translates to just over a Business Valuation of $428,000.  Was this amount justified?    Gross sales were $12,000, so the Revenues did not justify the business valuation.  The sharks did not make any offers.  There were two interesting pieces of advice offered to Megan Careiker & Aimee Miller for Hip Chix Denim.  One was from Daymond John, who suggested giving pairs to celebrities in hopes of having one like them enough to lend their name in partnership.  Daymond John from his industry experience felt that if they were able to secure a celebrity who had aspirations to attach their name to an apparel line such as Hip Chix Denim, that it would open doors to them.  The second piece advice came from Kevin O’Leary and Lori Greiner, who both in their own way told Megan Careiker & Aimee Miller to use their design skills to master another product that was much less competitive and then come back to denim as proven business people. Lesson Learned here is that if you are entering a very crowded and competitive space, have a unique angle to your business to carve out market share, or go to a space that has less competition.

Addison’s Wonderland is a line of Children’s Decor and Bedding and was first in the Shark Tank.  Addison’s Wonderland is the creation of Brooke Bryant & Brittany Hayes.   Addison’s Wonderland is based out of Loganville, Georgia.   Brittany Hayes started the business while designing bedding and decor for her daughter.   Brittany Hayes’ close friend and neighbor Brooke Bryant soon joined the business as she was a fan and firm believer in the business as it was getting off the ground.  The designs are colorful and fun, designed to transition from infancy to teenage years for girls.  Brooke Bryant & Brittany Hayes were asking for $90,000 in exchange for 20% equity for Addison’s Wonderland which is a $450,000 Business Valuation.  Was this Business Valuation for Addison’s Wonderland justified?  Sales revenue were $130,000 at the time of taping for the prior 12 months.  A large concern for the sharks was the price point for Addison’s Wonderland, for example a bedding sets were in the range of $1,400.  This price point got a lot of grief on twitter, but it is important to point out that there is a customer demographic that wants high end products, and this was demonstrated by the fact that they had generated $130,000 in sales in the first 12 months with only basic social media marketing.  Daymond John made a point to say that the business would be a success, but not a fit for him as an investment.  Lesson Learned here is that if you have a high end price point niche proven out, stay there and dominate it before venturing into different price points.

Want to read recaps of previous Shark Tank episodes? Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.

For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at (888) 926-9193 or email cs@justelementary.com

In terms of the pitch by Carmen Lindner for Gotta Have S’More the main challenge was the fact that the product was and is expensive to ship to areas outside of the Los Angeles Area.  The segment was heavily edited, and it seems like the strategic vision of the company was discussed in depth.  All we saw were the comments from the Sharks which echoed their concerns about the direction of the business.  Lesson Learned here is that it is important to have a Clear Strategic Vision on the Direction of the business to Get Investors to believe in YOU and invest their CASH

The update segment will be about Donny McCall’s Invis-a-rack. Invis-a-rack is a made in the U.S.A. product that has been licensed to DeeZee Truck Accessories. You may recall the original pitch by Donny McCall for Invis-a-rack that demonstrated well and had the sharks very much interested. You can read the original recap of the episode that Donny McCall pitched Invis-a-rack in here. We’re very interested to see just how far things have come for Invis-a-rack.

Peter & Yuen Yung appeared on Shark Tank to pitch their Choose Your Own Ingredients Franchise Restaurant concept called How Do You Roll. The headquarters are in Austin Texas. Currently there are 13 How Do You Roll restaurant locations in Texas, Arizona, California and Florida. The How Do You Roll concept lets customers customize their rolls by choose their ingredients. Let customers customize orders is a definite monkey wrench in traditional restaurant models as it slows food preparation time, which slows sales and reduces profit. Peter & Yuen Yung hope to have solved that issue with their business model for How Do You Roll, which will be on display tonight on the show.

As Barbara Corcoran mentioned, investing in a Franchise Concept on the Franchisor end is a complicated investment that has many factors that slow return on investment that turns away most VC investors.  This is eveidenced by the fact that most franchisors that have pitched on Shark Tank have walked away without a deal.  However, Kevin O’Leary was interested in the business.  There was a very specific key reason that Kevin O’Leary was interested.  That is that Peter & Yuen Yung were planning on Taking Cash distributions out of How Do You Roll on an on going and immediate basis.  This solved the KEY issue that VC Investors have when reviewing Franchisors to invest in, and that the speed at returning the initial investment.  Lesson Learned, Offer a Quick return on an investors interest to get them to invest.

Appearing in the Shark Tank is Bea Arthur’s Online therapy business called Pretty Padded Room.  Pretty Padded Room is a convenient way to receive therapy without the hassle of commuting to the therapists location.  While this obviously changes the dynamic of the therapy by removing the in person interaction, it does offer some benefits in the convenience and privacy factor.  Also, Bea Arthur’s Pretty Padded Room has two way online diary that allows for the customer to journal at their pace and get feedback from a therapist who would have access to it.  Convenience and Privacy are two major issues that prevent people from using a therapist’s service and Bea Arthur’s Pretty Padded Room has come up with two solutions to those roadblocks.  Bea Arthur did not know the financial metrics for Pretty Padded Room.  She did not get an offer on the show.  Lesson Learned here, know the financial numbers behind your business! If you don’t, don’t expect investors to knock down your door!

The SmartWheel is an invention created by six very young teenage entrepreneurs from Londonberry New Hampshire.  The six entrepreneurs have invented a steering wheel cover that helps monitor driving behavior by tracking hand position on the steering wheel.  When a hand or both hands are removed from the steering wheel, it is a clear indication of distracted driving, which is not a safe situation.  As such, the SmartWheel can help reduce distracted driving by reminding the driver to put hands back on the steering and sending the data to a third party for monitoring.  The invention is so compelling that the Londonberry six have had an audience with President Obama and Secretary of Transportation Ray LaHood where they demonstrated their SmartWheel invention.  The SmartWheel is not available for sale yet, but there seems to be an initiative to bring it to the market.  Don’t be surprised to see it available for sale, or even for use in commercial fleets such as mass transit systems and trucking companies.  The Inventioneers received an offer for SmartWheel from Mark Cuban and Robert Herjavec which they accepted.  Lesson Learned from this segment is the inspiration seeing 6 teenagers focus on creating great products.  

Want to read recaps of previous Shark Tank episodes?  Click here to see the entire collection episode recaps, all of them with business lessons you can take away from each pitch.

For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com

The thing is, that they do make plenty of loans, but primarily to very large ‘small businesses.’  This leaves virtually 99% of small businesses out in the cold.

But wait, the friendly person at the big name national bank says that a business loan is an easy thing to get.  Is that really the case?

Can we decode what they say, so we can know what is actually going on with the loan application?

Yes, we can.  Let’s peel back the process of getting a small business loan approved to get an understanding of how it works.  This information will help you to choose a bank that is going to be more likely to give you the loan that you need to grow or start your business.

What to watch out for:

Going to big national bank will lead to a higher likelihood of getting strung along for weeks before being finally told that they will not be able to fund a loan for you.  Why would you get strung along for weeks? Simply put, the underwriting committee is a group that you will not interact with.  This is important, because It is the underwriting committee that makes the ‘yes or no’ decision on the loan application, no the bank representative that you are talking to.  At at large national bank, the underwriting committee might not even be local, it could actually be clear across the country.  This is a problem in situations where understanding the local market impacts the likelihood of the loan approval.

Getting back to the bank representative that you would be working.  That  bank representative is at best, a direct liaison to the underwriting committee.  But more likely, there will be one or more bank employees in between.  The bigger the bank, the more people that will be in between the underwriting committee and you. When that is the case, it will be a slower process, and there will be messages getting lost in translation.  This means more miscommunication and other avoidable problems that lead to delays and significantly increase the chance that the loan will be denied.  In the meanwhile, the bank representative that you are working with will be most likely in the dark regarding the status of the loan application since they are so far removed from the underwriting committee.  As such, all they can offer you is blind reassurance that things are in the works and the loan is still on track for approval, even if it may be going nowhere.

What does this all mean?  In short, working with local community banks is likely the best bet to get financing for your small business.

Here’s how a local community bank can be a better source for small business loans and financing.  Number one, you will be much closer to the underwriting committee. which is going to be local, so they will be able to factor in their understanding of the local market to help approve your loan for the appropriate amount. Number two, because there are fewer bank employees between you and the underwriting committee, you will get a faster answer, which means you’ll get the money sooner, or be able to shop another bank for a loan sooner.  Either way, you benefit, as wasting time is bad for business. What you may have to do to get the best possible rate on a business loan or other financing from a small community bank is to open checking and/or savings accounts there, which may mean switching from your old big national bank. This can be a real pain if you have a lot of accounts linked to it. But it can be a small price to pay to actually get financing and to get it quickly.  It may also offer the benefit of better service.

For assistance with selecting a bank to obtain financing, lines of credit or other business loans for your business contact our office.  You can reach our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com

Grounds Coffee Pouches is the creation of Matt Canepa and Pat Pezet.  They pitched Grounds Coffee Pouches to the sharks.   Grounds Coffee Pouches is an alternative to chewing tobacco, which is popular with baseball players, even on the Major League Baseball level.  Grounds Coffee Pouches come in three flavors, Mocha, Cinnamon Roll & Chocolate.   The packets are filled with coffee instead of tobacco.  Matt Canepa and Pat Pezet are based in California and smartly promote the product by getting professional baseball players to switch to Grounds Coffee Pouches from tobacco based chews.  San Francisco Giants manager Bruce Bochy was a key user in the early days of the product that help Matt Canepa and Pat Pezet get a boost to keep them working on Grounds Coffee Pouches as a full time business.   Having grown the business to a respectable level of sales (on track for $300,000 in the year of taping), Matt Canepa and Pat Pezet received offers from Kevin O’Leary and a combined offer from Daymond John & Robert Herjavec for Grounds Coffee Pouches.   Kevin O’Leary offered a Zero Equity investment that was going to be paid back by royalties.  As has been discussed with previous episodes in greater detail, royalty payments are a drain on cash flow, as they get paid back even if there is no profit.  This is good for the investor, but puts a large burden on the cash flow of the business.  As such Matt Canepa and Pat Pezet were wise to take the investment from Daymond John & Robert Herjavec for Grounds Coffee Pouches that was for $75,000 for 15% equity and NO royalties.

Lesson Learned here, avoid taking investments that get paid back in royalties, unless you have no other choice, as we see in the Green Garmento segment.

Rebecca Rescate & Chris Hindley appeared on the Shark Tank to pitch their product the HoodiePillow Pillow Case.  The HoodiePillow Pillow Case is a handy invention created by Chris Hindley to help people that are sleep deprived to get more sleep.  People such as parents of newborns, people who work swing shifts and light sleepers.  The HoodiePillow Pillow Case is a pillow case with a hoodie built in.  Meaning, you can cover your eyes with the hoodie while resting your head on a pillow.  Very handy for daytime sleepers and people who need to catch naps during the day.   The HoodiePillow Pillow Case also has a handy pocket for smartphones or portable media players such as an iPod Touch.  Chris Hindley created the HoodiePillow concept after the birth of his triplets.  He and his wife were sleep deprived as we can all imagine parents of newborns can be with just one child, let alone three.  Rebecca Rescate, who you may be familiar with because of her invention, the CitiKitty.  Rebecca Rescate earned her chops on the Shark Tank by wisely using negotiating leverage to get Kevin Harrington to Double his initial offer.  Here is the post about CitiKitty.

While the HoodiePillow Pillow Case was not popular with the Sharks or most viewers, the HoodiePillow Travel Pillow was a big hit with both the Sharks and viewers.  The HoodiePillow Travel Pillow is a handy pillow that can be used in cramped quarters such as buses, subway and airplanes to provide a bit of peace and quiet.  Offers cam in from every Shark except for Mark Cuban, who stated on twitter that he was not a fan of either product.

Rebecca Rescate & Chris Hindley mentioned early in their pitch that they were interested in Daymond John’s retail expertise and Barbara Corcoran’s marketing expertise.  This is notable as it gave away a bit of leverage, since both Daymond John and Barbara Corcoran were now aware that they were the preferred choice.  This manifested itself in Daymond John placing a 10 second clock on his offer for HoodiePillow to apply pressure on Rebecca Rescate & Chris Hindley to take his offer before they solicited and received other offers.

Lesson #1 in Negotiating, Don’t give away leverage by favoring some bidders over others.   Keep all bidders in play until finalizing a deal with one of more bidders.

Fortunately for Rebecca Rescate & Chris Hindley, they stood their ground and solicited other offers, which they could do because there was genuine interest in the product and in the owners of the business, in particular with Rebecca Rescate’s track record of success with CitiKitty.  As such, they received a full price offer from Robert Herjavec, which they accepted.

Lesson #2, prove yourself as a business person before pitching investors.  Then you will get outside investments on your OWN terms.  The opposite of this was on display with Green Garmento, which was the first segment.

The first segment of the Shark Tank was about the Green Garmento.  The Green Garmento is a product that is resuable dry cleaning bag that is environmentally friendly as it is reusable unlike those thin plastic one time use only bags that most dry cleaners.  Just like the trend to switch to reusable grocery bags, the Green Garmento is another way for consumers to help the environment and limit the overuse of plastic bags.  Rick Siegel and Jennie Nigrosh are the proprietors of Green Garmento.   The Green Garmento can be offered by Dry Cleaners for their customers.   The Green Garmento is machine washable and most Dry Cleaners will accept them if brought in by the consumer.  To answer an important questions the The Green Garmento does come in other colors besides green.  Jennie Nigrosh had been running the business for four years with turning a profit and had gone into approximately a million dollars in debt.  Also, they had taken on investor that they were paying on a royalty basis.  The Sharks disliked this as the royalties were a burden on the cash flow.  Royalties are good when you collect them, because they are paid regardless of profit, which is why the Sharks like to GET royalties but hate to pay them.

Lesson Learned in this segment is that Investors don’t want to invest in businesses that will not turn a profit in the near future.  They want a return on their investment.  Not turning a profit in 4 years of operation leads the sharks to believe that they would never get any of their investment back..  So, prove yourself as a business person before seeking outside investments.

For More information on how Just Elementary, Inc, Business Brokers can help you with Valuation Matters & Negotiation Techniques for your business contact our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com