5 Keys to Success in Business from Kevin O’Leary
Kevin O’Leary, also known as Mr. Wonderful, became an icon in the business world after investing in 40 companies during his time on ABC’s show, Shark Tank. While he was building his empire of businesses, his vision and mantra always remained the same: The best thing you can do for entrepreneurs is to create opportunity for them by creating jobs for them. O’Leary believes greatly in the power of great entrepreneurs, and believes that great entrepreneurs are the ones in pursuit of freedom, versus greed.
During the Conquer Local Conference in June of 2019, O’Leary gave a remarkable presentation highlighting his biggest rules for investing, marketing, and creating a successful business. Keep reading to discover a few lessons from the shark himself.
Kevin O'Leary's Lessons from a Shark
Marketing a Commodity
Is there a want or need for your product or service?
O’Leary’s advice is to invest primarily in companies that are selling a commodity — in other words, a product that a great majority of people will use. Your top priority needs to be getting it in front of as many eyes as possible.
As an example, he mentions one of his top investments on Shark Tank, Wicked Good Cupcakes. Flour, sugar, water..etc.—cupcakes are just that, a commodity. They used the Shark Tank platform to get their product in front of the eyes of as many people as possible. Once they got on TV, their sales blew up.
Your efforts cannot stop there. You need to be constantly working to put yourself in front of your audience. This company knew what worked for them, and continuously looked for opportunities to be on TV.
Take a look at their TV clips here!
One of their marketing initiatives came when they were getting close to selling their one millionth cupcake jar, and O’Leary flew to their store to live stream the event. Once that footage hit TV networks, they gained thousands of more customers. Their customer acquisition cost? $0. It’s really as simple as that.
Once Wicked Good Cupcakes saw the ROI from their efforts, they realized they had found their most profitable marketing channel and never looked back. Get your product to reach as many people as possible, with the lowest cost to your company.
Recommended Reading: How to Slash Your Customer Acquisition Cost
Telling a Story
Storytelling is a powerful strategy to facilitate audience engagement. Your audience will be able to smell dishonesty from miles away, so don’t even think about being fake.
Telling your story is a great way to get noticed and show the authenticity of your brand. Your audience is intrigued to see behind the scenes of creating a product that they love and seeing the faces behind the success. As mentioned above, TV is a great channel to start showcasing your brand story, but how do you keep it going?
Social media has a way of keeping your audience up to date with your products, promotions, and continuing your brand’s story. Telling your company's story is not about creating a boring and lengthy blog post, or fake PR initiatives, but a real representation about what building your business was like— both the good, and the not-so-good.
Back to our original example, Wicked Good Cupcakes. What did they do that set them apart from other cupcake companies? They told their story. The smartest thing they could do was to utilize the content they captured on TV and re-purpose it. With this in mind, they were able to produce tons of micro-content for their social media accounts.
Use the value that you’ve already created and break it into 5 second clips, 10 second clips, 20 second clips, etc. The specifics don’t matter as much, but use it to your advantage. Strive to be open and honest about how you are building your business, and focus on connecting to customers in unique ways.
Pitching to Investors
Don’t buy into the myth that there is a specific “sales gene”, where only certain types of people can become entrepreneurs or deliver great pitches. Pitching is a trait that can be learned.
O’Leary has seen endless pitches and his advice can be broken up into three consistent rules for pitching, adding that, “They will be the same today, and the same in 100 years”.
1. Pitch in 90 seconds or less
O’Leary states that as a good entrepreneur you should be pitching in 90 seconds or less (60 seconds if you’re really excelling). Look your investors in the eye and explain what it is you do, why your idea works, and why it’s a big opportunity for investors.
2. Sell yourself first
Even though you are pitching in hopes to sell your big idea, you need to also sell them on yourself. Your entrepreneurial passion and your ability to sell will give investors confidence that you will be able to sell your product to the masses and get their money back as soon as possible.
You can have a great idea, but your execution plan is equally as important.
3. Know your numbers
Now this is the part where a lot of entrepreneurs get caught slipping. If you are starting a business you should know your numbers inside and out. Your investors need to know:
- Market Analysis → Size of market, competitor analysis, threats, etc.
- Break-Even Point → How long until you start making a profit?
- Product Margins → Is there a way you can widen your margins?
Being clear and honest about your business model will entice investors to trust you.
Recommended Reading: Crafting Elevator Pitches That Sell
Effective Management
O’Leary speaks on an interesting fact that over 90% of his returns come from his companies run by women. This peaked his interest greatly, and he wanted to learn what these companies were doing differently to mitigate risk. He decided to study this phenomenon so that he could apply these strategies to all of his companies.
1. Better Time Management
What the CEO of a company does with their time and how they allocate their employees time is the #1 asset they have. It’s important to be setting goals, allocating time to those goals, and then watching if that time was allocated successfully.
2. Set Achievable Goals
After he analyzed each company's quarterly estimates of sales, he started looking at sales actually achieved. He found that in companies run by men, they hit their targets 65% of the time with an average growth target of 30%, where as women hit their targets over 90% of the time, with a 17% average growth rate.
You might be thinking “Well they are likely just undershooting their growth targets”, and at first O’Leary thought the same thing. But, he soon realized that what they were doing was actually incredibly strategic. When you set goals that are consistently being met, the culture of the company changes. This brings us to the third point.
3. Maintain Culture
Maintaining a healthy company culture has a positive impact on employee turnover rates. Some cultures will be discouraging and unstable if you are constantly failing to meet your growth targets, and that can have a negative impact on employee retention.
The results proved that companies that were hitting achievable targets, had wildly better turnover rates. After discovering this, O’Leary told all of his companies to set targets that they could meet over 90% of the time. The result? Just as he thought, 30% decrease in employee turnover and an increase of 11% free cash flow.
4. Assimilate Feedback to Enhance Customer Service
Two Words: Online Reputation.
Back in the day if a customer had a problem with a product or service, they would simply call a 1-800 customer service line, and have their problem mitigated. Fast-forward to today, the customer service landscape has changed greatly.
Per O’Leary’s example, United Airlines had over-booked a flight, and decided to choose a customer at random to leave the plane. They decided to use excessive force to tear the person from their paid seat, as multiple other passengers took out their cell phones to videotape the event.
The video went viral on social media in 23 minutes—costing the company billions.
Social Media has the power to cause reputational damage to your brand. Customers may choose to unleash their negative feelings onto social media, and it’s your responsibility to mitigate the issue as quickly and flawlessly as possible. O’Leary states that around 80% of the time you can’t get angry customers back, so stop spending a fortune trying to get them back.
That person leaving horrible comments on your Facebook post, is not your customer. They are likely a competitor trying to pollute your search metrics or someone who will likely not buy from you. So, what are you supposed to do? You write your response for the other thousands or millions or people that will be reading your responses. Others will see the effort of you trying to fix the problem, and your audience will value that you are genuine about your mistake and took the responsibility to correct the issue at hand.
Who’s managing your reputation in your company? We can help.
Not quite ready yet? That’s okay, read more about it!
5. Maintaining a Brand
Brand image is everything.
Most brands need to learn to listen better.
When you are starting your business as an entrepreneur, almost nothing can distract you from the myopic focus you have towards your vision. That exact thing is what will be your greatest weakness when you get your first real dollar of sales.
If you are too stuck to your vision, it’s going to make it extremely difficult for you to listen to your customers needs, and when you are just starting out, customer acquisition is your top priority. Businesses, customers, and trends are ever changing. Your business model will always be changing, and you need to be changing with it by assimilating customer data.
- Listen to customers
- Listen to employees
- Listen to investors
Great entrepreneurs assimilate data — never stop listening.
The Golden Rules of Investing
As an expert investor himself, O’Leary has a few key guidelines to smart investing.
#1 Diversification is the only free lunch
Never put all your eggs in one basket. By diversifying your investments you have more control over your risk. His rule states that you should never put more than a 5% investment in any one position, not allowing any one stock to become more than 5% of your portfolio. Of course there is leeway, but that’s a good baseline to start investing your assets.
#2 Never put more than 20% of your assets in any one sector
There are 11 sectors to choose from, so don’t pick just one. It’s important to invest in different opportunities in different sectors to lessen your risks when a certain industry goes down.
#3 Never own a position that does not return capital
Venture investing is very risky, therefore you better be sure about how you are getting your money back. If its a bond you get interest, if its a stock you get dividends— if you aren’t getting paid back, don’t own it.
#4 Own at least 35% fixed income at any time —including real estate
Your fixed income is your safety blanket, and you should keep it at 35% at all times. Your fixed income are those payments that you receive for the same amount every month. For example, investing in real estate is a good opportunity to collect month fixed payments from renting patrons.
There’s no doubt that stocks can generate high yields of cash, but that can change in a moment’s notice, so have something to fall back on.
#5 Position preservation above performance
When it comes to your hard-earned cash, you should be keeping it. Don’t waste earning on too many speculations about certain markets. You shouldn’t care if you beat the stock market, care if your money will still be there if the stock market corrects.
He’s not saying that you’ll never see losses, or that some of these speculations won’t yield high returns, but more so that high-risk high-reward type investments should be a small portion of your total investments.
#6 Keep 10% in cash at all times because “poo-poo” happens!
The 10% of cash that you hold onto may be your saving grace one day. Maybe a competitor will wipe you out, unpredicted litigation fees...etc. Events happen that are often out of our control. The business world is ever changing and it’s best to be prepared.
That's It!
Now that you’ve learned a little something from the shark himself, it’s your turn to apply these tactics to your own business.
Experiment. Track it. Report on it. Adapt.