Be Prepared in the Dragons' Den
Brian Perry
09-Sep-06
Like it or hate it, BBC’s The Dragons’ Den is now running in it’s third season and has become a success. Over the past three seasons we have seen a few new Dragon faces and this year, they have added Aussie Richard Farleigh and British multi-millionairess, Deborah Meaden.
I personally find the show very entertaining to watch and think this is just the sort of programming needed to inspire some would-be entrepreneurs. The show is also excellent in that it gives any existing or potential angel investor a few tips from these very successful Dragons.
However, one thing I simply cannot get my head around is how unprepared some of these entrepreneurs are when they get to the actual presentation. Yeah, Peter Jones will always bash someone for not dressing the part and likely not invest as a result of this (which I find a little crazy – anyone I know in the entertainment industry who dresses in anything other than jeans is a red flag for me) but clothing aside, some of these people come into this potential life changing experience with absolutely no clue about reality. This makes good television at the end of the day and I think part of the success and appeal of this show is actually watching those entrepreneurs squirm because they are so “out there” or unprepared.
If there is a lesson to be learned from watching the show, it is to be prepared. I mean how difficult is it to have done a business plan, review and fully understand the numbers, explain the features (what it is), advantages (how it works) and value (benefits to potential customers), have talked to a few credible potential customers, have a prototype done up, be reasonable and know exactly where you stand equity wise. That is the other strange part of watching these entrepreneurs, they seem to be so unsure of how much of the company they are willing to give up in exchange for the proposed investment by the angel. If that was me, I would have gone through every possible scenario over and over in my mind a million times. Sure, the obligatory pause and concern on my face to play the negotiation game but I would know exactly where I stand.
It would also certainly play to the entrepreneur’s advantage if they knew more about each Dragon’s businesses. There have been times where the Dragon takes control and the power has shifted even further their way. If the entrepreneur knew their product or service could directly leverage off of one of the Dragons existing business and they could clearly articulate this, it would likely help their situation.
This however brings up another issue; how the entrepreneur values their company. As I discussed in the July issue, entrepreneurs tend to place a much higher value on their sweat equity and this is more often than not over inflated. On the other hand, these Dragons are here to make money and get the best deal they can. The problem lies in the entrepreneur not understanding either how to value their business or not relying on a professional to help them stand their own. “Boot camp” training courses for entrepreneurs making investment pitches sounds like something worth going on the show for!
