The Sharks emphasized urgency and how significant getting three-year contracts could be . “ The goal should be to build a business at a $ 50 million run rate at 20 % margin where every single client [ is ] on a three-year contract ,” O ’ Leary said . “ That would be very valuable and trade somewhere between seven and eleven times . So , when you ’ re building a business , really focus on getting those three-year contracts , and then , if you can keep your margins at 20 %, you ’ d be pretty rich by the time you finish . That ’ s a pretty good business . This industry provides crazy-good margins . The S & P doesn ’ t get 20 %. Either this industry is going to stop growing and the margins are going to come down or you ’ re going to keep this productivity up for many , many more years at 15 to 20 %. But there are no sectors that get 20 % forever , so enjoy it while you ’ re getting it .”
# 2 Know And Review Your Numbers Religiously
Every Shark on the panel also stressed the importance of tracking , knowing , and understanding your numbers in business , emphasizing that “ if you can ’ t measure it , you can ’ t grow it .” Numbers are also critical for solving problems . “ You can ’ t diagnose if you don ’ t know numbers ,” Robin Robins said . “ It ’ s blind archery . You ’ re just throwing darts and hoping one hits .”
Numbers allow you to scale easily . Kevin O ’ Leary requires every single one of his portfolio companies to report two numbers to him every single Tuesday morning : revenue and free cash flow from the previous week . “ We know everything from those two numbers ,” O ’ Leary said . “ The minute we see bad news , we call and say , ‘ Bad week , what happened ?’ You should know your numbers . Numbers are the language of business . You should be all over them . I do this with my own business . Every single night , when the market closes , I look at the entire aggregated investment portfolio . . . If you know your numbers , you can pour gasoline on the fire . That ’ s what an investor like me looks for — I know if I pour this much in , I ’ m going to get this much out .”
Daymond John added that a company is not investable without knowing its numbers . “ You don ’ t drive a car without a dashboard ,” John said . “ If we are looking at a company and they don ’ t have their numbers , we ’ re not investing in them . We don ’ t believe them . They are fudging something . They are irresponsible . We ’ ll never get our money back . It ’ s as simple as that .”
Robert Herjavec highlighted the need to track customer acquisition , churn rate , and average ARR to get buyout offers . “ Nobody in this room is going to get bought because of the EBITDA you make . You ’ re going to get bought because you ’ re growing ,” Herjavec said .
Fred Voccola emphasized the notion of measuring one ’ s progress . “ Knowing your numbers , whether it ’ s financial numbers or operational KPI [ key performance indicators ], is critical ,” Voccola said . “ It ’ s instrumental , so you know
16 | MSPSUCCESS . COM