During a recent appearance on The Bobby Bones Show, Barbara Corcoran explained what she looks for in promising entrepreneurs and why she would never recommend going into business with your friends.
While in her twenties, the American businesswoman borrowed $1,000 and started a small real estate company, which grew into The Corcoran Group, a billion-dollar business. Today, Corcoran is a motivational and inspirational speaker, an investor and a Shark on “Shark Tank.”
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With her deep finance background and experience, Corcoran detailed why you should think twice about investing with friends.
Why Corcoran Doesn’t Invest with Friends
When asked whether investing with close friends was a wise decision, Corcoran explained that it was “a terrible move.”
And her feelings on the subject are based on personal experience; Corcoran shared that she has lost two friends because she chose to invest in businesses with them.
When The Bobby Bones Show members, who are also close friends, asked if it was wise to pool their money into a business investment, Corcoran encouraged them to pool their money and go out for a nice lunch instead.
She highlighted the value of a friendship that could be lost if a business deal goes wrong.
“You like each other too much,” Corcoran said. “There’s too much to lose. Think about it that way.”
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What Gets Corcoran’s Attention on “Shark Tank”
While investing in a business with friends could jeopardize that friendship, entrepreneurs can still decide to go it alone or pair up with a business partner who isn’t a close friend.
A show like “Shark Tank” can help entrepreneurs to potentially secure an investment from a Shark like Corcoran, and it also comes with valuable business exposure.
But to catch Corcoran’s attention, entrepreneurs need more than a solid business plan and sales. When asked if it helps for entrepreneurs to sing a jingle or go in with a solid, more traditional pitch, Corcoran admitted that the jingle wins out.
“I love a good jingle,” she said, highlighting the fact that “Shark Tank” is not only an investment opportunity, but also a TV show, so it’s important for entrepreneurs to be engaging and entertaining.
Even more important is the fact that Corcoran isn’t only evaluating your business. Instead of focusing just on the businesses, she’s learned to focus on the entrepreneurs.
“You’ll lose all your money on good businesses and make all your money on good entrepreneurs,” she said.
Corcoran admits that it took her three years on “Shark Tank” to realize the importance of focusing on the entrepreneurs instead of the businesses, and that she wasted lots of money during those first three years.
The Bottom Line
According to Corcoran, if you want to succeed in business, avoid investing with close friends. And if you do have the chance to pitch on “Shark Tank,” or to get in front of other investors, showcase not only why your business is a good, solid idea, but also why you’re an ambitious and dedicated entrepreneur that they should invest in.
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This article originally appeared on GOBankingRates.com: Why Barbara Corcoran Says Investing with Friends Is a Bad Idea
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