It’s Audition time again! – the start of auditions for the next series of Dragon’s Den. At least it is in my home town of Nanaimo, situated on beautiful Vancouver Island, BC, Canada.
Dragon’s Den has become essential viewing for all entrepreneurs who dream of building their business, and inventors who dream of creating the next Big Idea – all with the help of a Dragon, who will hopefully invest their own cash into the business, and maybe provide wisdom and valuable business contacts.
It could be a dream come true. But to get there, each applicant must face the panel of Dragons and pitch their business idea. And its’s a gruelling process. In the interests of good TV, some Dragons are not polite – the famous Kevin O’Leary (Once Canadian Dragon, now a “Shark” from Shark Tank – the US version of the TV show) has often dismissed applicants as “idiots” and “cockroaches”.
I have never applied to be on Dragon’s Den, and many people who do, do not get the opportunity for a chance in the spotlight.
However, I have pitched business ideas to potential investors – some pitches were successful, some not (although no one has ever called me a cockroach) and these are my top five tips, should you find yourself in the Den, or in front of any other potential investor…
- KNOW YOUR PRODUCT
Ok, this sounds obvious, but you should not only be able to articulate what your products is, you should also know what problem it solves and who it is for… for example …
“My product is ABC organic baby food, created with no chemical additives, for mums who need a food choice for their babies, who have food intolerances”
If you can’t explain your product, you can’t sell it.
- KNOW YOUR NUMBERS.
This is where we see so many Dragon’s Den victims collapse under pressure. Every investor will want to know the following….the cost to make your product (if you are selling a physical product) or the cost of acquisition of a customer (if you are pitching a service – that is how much you will have to spend to get one customer to sign up for your service), the price of your product – both wholesale and retail if applicable and therefore the gross margin, sales (if you have them) since you launched your product, and for the last twelve months, and what sales you expect in the next twelve months, or for the rest of the year. DO NOT be tempted to exaggerate ……all investors will do their due diligence before writing a cheque – many deals we see the Dragons make on TV, never go anywhere because of ‘surprise” information that turns up during the due diligence stage – which includes going over your numbers with an accountant. Have a written business plan for at least the next twelve months, I would advise three years.
- KNOW WHERE AND HOW YOU WILL SELL YOUR PRODUCT
Are you already selling on line and intend to get into retail outlets? How do you intend to do this? Where and how are you marketing your product? Why? Have a plan and be able to explain it. (Your marketing plan and budget should be part of your overall business plan)
- WHY DO YOU NEED AN INVESTMENT?
“Because I’m broke” is not the correct answer. You need to know how much you need, what it is going to be spent on, and when you forecast that the investor will get their money back. Also be clear about what kind of investment you need – is it a loan? Are you giving up equity in the company? And what type of investor – are you looking for a working partner? What kind of say will your investor have in your company?
- BE YOURSELF
It may be a cold hard business decision, but all our decisions are affected by emotion. We are human after all. You need to like the people who are involved in your business, and investors need to like the business owners they support. So don’t try to be something you are not. My husband used to be a fisherman, and has had no formal business education. He has never worn a tie in his life. Yet he has won over investors because he is enthusiastic, passionate about his products, and genuine.
You are not always going to be successful. Don’t take it personally, it doesn’t necessarily mean that your business idea is doomed to failure. For some investors, it just won’t be a good fit for their portfolio. If you are turned down, ask for some feedback. It maybe that you need to adapt your product a little, or your business strategy. It never hurts to listen to advice.
Then, try again.
