Are You Shark Tank Ready? Know Your Costs!

If you’ve ever watched?Shark Tank, you know that one of the first questions investors ask is, “What are your sales?” This is quickly followed by, “What does it cost you to make your product?” These questions are crucial because understanding your costs is fundamental to running a successful business.

I recently worked with a business owner who had purchased a company with cash-based financial statements that failed to reflect its true financial performance. After three years, the business had yet to turn a profit, had violated its bank covenants, and was in serious trouble.

This was a manufacturing company, and like many small and medium-sized businesses (SMBs), it lacked proper cost accounting. The business had grown from one product to multiple offerings, but its accounting infrastructure had not kept pace.

To address this, I conducted a thorough analysis to determine the actual cost of each product. We streamlined inventory management and implemented labor cost control policies. As a result, the company began generating real profits and, within six months, was back in compliance with its bank covenants.

Is Your Business Shark Tank Ready?

Knowing your costs is essential whether you’re growing your business, seeking financing, or planning to acquire or sell a business.

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