"Don't sell out too soon" — Shark Tank mentor Robert Herjavec shares his advice for entrepreneurs

Shark Tank's Robert Herjavec shared a YouTube shorts video on his channel on October 29, 2024, discussing three mistakes new business owners should avoid. Talking from his experience as an entrepreneur and investor, Herjavec offered advice aimed at helping aspiring founders build their businesses.

One of the points was about holding onto equity during the early stages of a business. He suggested that selling equity too early might reduce the business' future valuation.

"Don't sell out too soon," he said.

Herjavec explained that showing sales and tangible results first can help secure better investment terms later. He also talked about how important it is to manage money carefully and focus on what a business does best.

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Robert Herjavec's advice for avoiding these three things in businesses

1) Don’t sell out too soon

Robert Herjavec spoke about the importance of holding onto equity during a business's early stages on a YouTube shorts video he shared in October 2024. He cautioned entrepreneurs against rushing to sell ownership before the business shows tangible results. According to the entrepreneur, early sales, even if they are low, serve as proof of concept and increase a business’s valuation.

“Even a little bit of sales proves the concept and gets you a higher valuation,” Herjavec explained.

He advised founders to work on gaining customers and building trust in their businesses before asking for investments. He noted that this would potentially help them get better deals from investors and keep more control over their company in the future.

Herjavec highlighted the importance of patience, advising founders to grow their ventures steadily. By waiting for clear results, entrepreneurs can demonstrate their business’s potential and avoid undervaluing it during critical early stages.

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2) Cash flow is essential

Robert Herjavec said that managing cash flow is one of the most important factors in running a successful business. As he explained that a business cannot survive if it runs out of cash, he noted that it was "king," highlighting the importance of cash.

He added that keeping enough cash saved helps business owners deal with unexpected problems and take advantage of new opportunities.

"Always make sure you have enough to make another day," he said

He compared cash flow to "ammunition," essential for staying operational. Without it, even promising businesses risk failure. Entrepreneurs are encouraged to plan their finances carefully, ensuring their cash flow remains consistent.

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3) Focus on your core strengths

Herjavec advised entrepreneurs to focus on their main strengths and not take on too much at once. He suggested that founders figure out what their business does best and put their energy into doing that really well.

“The only place general knowledge gets rewarded is on Jeopardy!” he noted.

By focusing on specialization, businesses can differentiate themselves in the market and build a solid foundation. Robert Herjavec highlighted that expertise in one area is often more valuable than trying to succeed in multiple areas too early. This strategy helps entrepreneurs stand out and attract customers or investors who value their specific skills or services.

Robert Herjavec has continued to share advice for aspiring entrepreneurs through his series, Things I Learned from a Billionaire to Become a Billionaire. In the series, he highlighted ten key lessons he learned from his mentor and fellow Shark Tank star Mark Cuban.

Robert shared that one of the lessons he learned from Mark Cuban was, to "Expect to win always." He further added that he learned the difference between "Hope and expectation," from Cuban.

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Watch Robert Herjavec in the latest season of Shark Tank airing every Friday on ABC.