Proof of Concept – Could You Face the Sharks?

Every Friday night at 9 p.m. you will find me sitting comfortably on my sofa eagerly awaiting the next episode of one of my favorite TV shows – “Shark Tank”. What intrigues me most with this show is the Sharks’ ability to, within minutes, tell entrepreneurs exactly what is wrong or right with their business. Sadly, for many they hear what is wrong.

Almost every time, the very first question out of a Shark is “What are your sales?” They are asking this question because customers vote on a product or service with their wallets and they are attempting to learn how they voted. They are seeking out evidence of proof of concept. Successful business owners are those that know their sales numbers in addition to their costs and profit margins, inside and out. If the numbers they share tell the story of a company on the rise, growing at a reasonable, if not accelerated pace, then the Sharks will start to circle the entrepreneur with interest.

So the question stands: Have you proven your concept yet? Have you demonstrated evidence that your company is thriving? What are your sales? What are your costs? What are your profit margins? Do you know your story and is it a positive one? If not, are you equipped with the knowledge, tools and resources to remedy any shortcomings?


This is most everyone’s favorite number. It’s the easiest to calculate. Just take all the revenue from products sold or services rendered and add it up. The hard part of course here is actually getting the sales. If your sales numbers aren’t where you would like them, what do you do? This is where marketing becomes critical to any business. Without the amplification of a product or service proposition to potential customers, sales have no hope of growing.

Marketing is not an option; it is a requirement. Be thoughtful about your marketing efforts. Understand that every impression from your packaging, to website, to advertisements to social media all need to be cohesive to be effective. Cohesiveness goes beyond aesthetics; it speaks to your company’s voice, product quality and customer service.

If you don’t think you have a solid understanding of marketing, then seek out a professional. What may seem expensive at first will prove far more cost effective in the long run, than a self-taught crash course taken at the expense of the company and its potential.


The necessary evil of every business is cost. There are many types of costs from fixed, like the lease on company offices, to variable, like the inputs that go into making your products. Generally, when asked about costs, especially if you are a manufacturer, this refers to the costs involved in producing one unit of your product. Ideally, the cost to produce one unit is far less than the money earned upon its sale. By far less, I mean your unit margin should be at least 25%. The more you can save on the cost to produce one unit, the more money you earn.

If your unit margin is not meeting your desired hurdles, you can consider a price increase, but more likely you will need to be creative about reducing your input costs. You may need to change vendors, factories or packaging. Just as it’s imperative that you market your product, it’s also just as important that you know your costs like the back of your hand, and that you are confident that you are manufacturing at the quality you desire, at the lowest possible costs. Money saved on costs can be reinvested into the business to further fund growth.

Profit Margin

Big numbers in revenue, while impressive on the outset, are meaningless if the company is not in the black. This means that inflated sales numbers due to steep discounted pricing is not a sustainable business model. It’s one thing to be operating at a loss for a short period of time if the company is showing strong growth trends, but it’s quite another for a languishing company to be operating at loss for an extended period of time. Even if your unit margins are good, it’s possible to eat away at profit margin with other expenses, so be mindful of all your budgets and truly know where every penny is going.

This all may seem like an unnecessary exercise in Business 101, but as the “Shark Tank” has proven week after week, entrepreneurs of every kind can get caught up in a plethora of other business distractions to the point where they can’t competently speak to their numbers. Those that do are usually the ones that strike a deal with a Shark.

Just knowing that you should know is not enough, have these numbers written down, look at them often and consistently strive to find ways to not only grow the top end (sales) but also save on expenses of every kind from product costs to printer ink if need be, knowing that every penny counts toward future success. Know, without a shadow of a doubt, that you have proven your concept and that it’s a viable one with promising market potential. If you can’t do this, you might need to reassess your efforts.


About Insights Discovered

Penny Redlin is a regular contributor to the “Business Sense” feature on The Giggle Guide®, sharing insights about business planning, effective communications and marketing strategies.

Based in Las Vegas, Nevada, Insights Discovered was founded by Penny Redlin in an effort to share her professional expertise within the children’s product category. The company’s mission is to give every mompreneur an opportunity for success. Insights Discovered exclusively services children’s products brands. The specific industry focus demonstrates a strong dedication to the unique needs of children’s products companies. Insights Discovered offers strategic planning, market research and traditional marketing services.

For more information, visit or call 702.218.5707.

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