Even Sharks have been known to bite off more than they can chew from time to time.
Before Daymond John earned a reputation as a big fish investor on ABC's Shark Tank, the fashion mogul struggled with making smart financial decisions, even after achieving massive success with FUBU, the clothing company that's amassed more than $4 billion in revenue since its founding.
During a recent small-business marketing and mentoring event in New York City hosted by Capital One, John told the story of how he once burned through $20 million in profits that he later admitted he should have saved for future business expenses.
"It wasn't lavish spending, but I was pulling money out when I shouldn't have," he said. "I said, 'Wait a minute. Where did that $20 million go?' Thank God, I had really great partners and mentors, and I had another bite at the apple to keep growing my business."
In an interview with Inc., John talked about some of the business lessons he's learned from the mentors. While marketing tactics and best practices are constantly changing, the core principles of business are always going to be the same, according to John. Here are his five most important tips:
1. The customer always comes first. Even before you take your first paycheck from your company, make sure you're taking care of your customers. If you're not putting their needs first, you're shirking your responsibility as an entrepreneur.
"Customer appreciation used to be sending a coupon to a select number of people on the basis of how much they bought," John says. "Today, we'll send an email saying 'Happy Birthday' without trying to sell them anything, because making people feel special is always going to be the most important thing in business."
2. Be able to explain your product in two to five words. If you can't explain your product or service quickly and concisely, you're going to have trouble pitching and selling. Help consumers understand what you're offering by keeping things simple.
3. Anything worth doing is worth overdoing. Closing a sale isn't the end result--it's the beginning of what should be a long-term customer relationship. "When I started with FUBU, after I sold you a shirt, I would find you the next day and sell you another shirt," John says. "That's where my edge was."
4. Deliver a product that is king. If you don't believe your product is the best in its category, then it needs work. Don't stop improving your product just because it's selling.
5. Understand your customers better than they understand themselves. The ability to predict which products will attract specific consumers has been key for dog meal bar company TurboPup, one of John's Shark Tank investments.
"Marketing technology has gotten to the point where you can target women aged 30 to 40 living in Detroit, who like dogs," John says. "Once you have that proof of concept, you can create another strategy for the best way to scale, and it can happen at light speed."