Shark Tank can be one of the best ways to teach your kids about business and investing. Not only is the show highly entertaining, it is real life investing and all that goes along with it. It helps kids begin to speak the language of business.
This show has been instrumental in teaching my kids to think like a stock picker. The stock picking process includes evaluating the story, numbers, and expectations for a business. Watching “Shark Tank” naturally leads you down this path of thinking.
When you watch “Shark Tank,” you’re watching small and typically young companies (usually a one- or two-person operation) asking for new investors to join their business.
Watch the show with your kids and actively talk about the businesses being pitched to the Sharks. Ask each other questions like this:
• What is the product?
• Would you buy it?
• How easy would it be for competitors to do the same thing?
• What do you like or not like about the product?
• What do you think about the offer prices and asking prices?
• Would you buy into the business if you were a Shark?
• Was it a good or bad deal for the business? Remember, sometimes a good idea can be a bad deal.
Pay particular attention to the company’s pricing of the offers. Based on the price and percentage of the company they are willing to part with for that price, you can figure out what they believe the company is worth. If the company says they’re asking for $100,000 for 50 percent of the company, they think the total company is worth $200,000. If they say they want $100,000 for 25 percent of the company, then they think the company is worth $400,000.
You will usually also hear the Sharks dig into the numbers a little deeper and ask, “How many are you selling per year?” or “How much profit are you making per year?”
The question all of the sharks are asking themselves is, “How long will it take me to get paid back?” You’ll find in the stock picking process, investors think about stocks the same way.
Among the Sharks, Kevin O’Leary (aka Mr. Wonderful) is often a good one to watch for this. At some point he always seems to boil it down to the bottom line, saying “I want to know how this is going to make me money.”
That’s an important thing to think about in a business. Who wants to go into business to lose money? Not me! Good business people and investors think to themselves “How long will it take me to get paid back and start making money?”
The “Shark Tank” teaches this lesson, and so many others, very well. You even see a fair amount of kids on the show, proving that there are plenty of kids doing extraordinary things in business!
