Shark Tank TV Mogul, Solution Provider Discusses Business Growth

He's now a central character on one of America's most popular television shows, a man whose vote of approval can put any company on the map.

But at his core, Robert Herjavec is still a solution provider looking to grow his business.

"What we do in this room is not really that sexy and exciting unless you're in this room," Herjavec, a panelist on the ABC reality series Shark Tank, told some 400 people Friday during Tech Data's TechSelect Partner Conference in Henderson, Nev. Herjavec said the television series has helped improve the notoriety of his brand.

[Related: 10 Tips For Running A VAR: Advice From Shark Tank's Robert Herjavec]

Herjavec has been in the technology business for nearly three decades and landed Canada's first commercial firewall sale many years ago. But his journey wasn't easy, learning after two years that his vice president of sales was putting half the company's orders through a side company.

"Every possible mistake you can make in this business I've made," he said.

The struggles continued after Herjavec started a managed security services firm in Toronto in 2004, netting just $400,000 in sales in the first year.

Virtually all prospective customers were already working with a managed security firm, and were unwilling to leave a serviceable relationship for something potentially better, he said.

"People always underestimate how long it takes companies to get to scale," said Herjavec, who projected $5 million in sales in the first year.

But fortunes would soon turn for The Herjavec Group. Over the past five years, he said his company has gone from $6.2 million to more than $150 million in sales.

The Herjavec Group employs 275 people and is No. 152 on the CRN SP 500.

That hypergrowth has been challenging both from a discipline and cash-flow perspective, Herjavec said.

The Herjavec Group invests nearly all of its profits back into the business, meaning that, counterintuitively, its cash positions are actually strongest after a bad quarter.

For that reason, Herjavec said it can take his company nearly 18 months to recover from a bad quarter.
"If we don't hit our targets, we're pissed off," he said.

But not all of Herjavec's employees share the same sense of urgency. As the company has grown, Herjavec said some of his salespeople have become less concerned about missing sales targets.

In order to keep up with the industry, he said he must grow his product sales by at least 10 percent annually, and managed security services by at least 30 percent each year.

Not all of The Herjavec Group's growth has been organic. Herjavec said some of it has been fueled by the acquisition of eight VARs all doing at least $2 million in annual business.

Many small businesses erroneously see risk as tantamount to jumping off a cliff, Herjavec said, while, in reality, a thorough investigation can lessen the downside.

And he believes the biggest changes -- fueled by connectivity and big data -- are still yet to come.

The number of global IP addresses is expected to go from 5.5 billion today to 343 trillion by 2021, at which point the notion of a strong Internet connection will cease to exist, Herjavec said.

"You will just be online all the time," he said.

NEXT: Why Good Salespeople Are Hard To Find

But even as technology changes, he expects one thing to remain the same: the need for good salespeople.

"We will never get rid of people in the sales process," Herjavec said. "Very few things sell themselves."

It's becoming increasingly difficult to touch customers because few high-ranking employees answer their phones anymore, and corporate compliance policies bar many executives from attending social events, he said.

Given the acceleration of the sales vital, Herjavec said it's crucial that salespeople build strong relationships with end users in months rather than years.

Some of The Herjavec Group's more experienced salespeople have had difficulty letting go of other tasks as the company grows and each employee's tasks become more specialized.

On the other hand, Herjavec said salespeople new to the company often struggle with asking customers tough questions such as, "Why won't you buy from me?" or "What are you planning to do instead?"

"In business, how many times is it about asking for the order?" Herjavec asked rhetorically.

He said he's surprised by how few of his competitors ask customers why they were unsuccessful on a particular sale.

"Where the customers are spending the money is where we want to go," Herjavec said.

Both on Shark Tank and with his channel business, Herjavec said he frequently encounters business owners well into their design process who've failed to test or get feedback on their product from actual customers.

"Nobody cares what your family and friends think, because their job is to love you, not to run your business," Herjavec said. "The only person's opinion who matters is the person writing the check."

Companies that fail to bring customers or partners on board early in the process are doomed to remain small, he said.

"If you can't handle stress, you shouldn't be in this business. And if you can't handle change, you shouldn't be in this business."

Likewise, Herjavec chided companies whose growth strategy is predicated on landing superstar employees.

"Talent is not a strategy," he said.

In reality, talent isn't scalable, Herjavec said, and most companies end up having to deal with more B- or C-grade employees than all-stars.

And as new competitors enter the arena, established players will have to redouble their efforts simply to maintain their current position, he said.

"All of us in this room are in an industry that has unlimited potential," Herjavec said. "You just have to ask yourself, 'If you work a little harder, how much more successful would you be?'"

PUBLISHED OCT. 27, 2014