BBC Dragons Den Survival Guide
Dragons Den is the "must watch" programme on BBC2 for budding entrepreneurs. The series has been going for ten years now with popular investors and entrepreneurs such as Peter Jones, Theo Paphitis, Duncan Bannatyne and Deborah Meaden.
The programme broadcasts as a syndicated show around the globe with the US version aptly named as "Shark Tank" to add drama to the occasion.
The dragons have invested many £millions into various projects over the years. Numerous well-known companies such as Reggae Reggae Sauce, Trunkie, iTeddy, Hundryhouse, Rapstrap and MyDish all started life in the Den with most receiving an investment.
However, only a small percentage of ventures receive investment. Here's our guide as to why investment pitches are successful on the show and reasons why most fail.
It all Starts With a Successful Pitch
The first hurdle to overcome is your actual pitch. It can be very nervous to stand up in front of a group of five people on your own, and when they're TV celebrities, it's even worse. Your so-called elevator pitch summarising the offer is only going to take 60 seconds or so and here's how to get it right:
- Dress professionally and suited to your industry. If the pitch is more about you rather than a company e.g.: Levi Roots, then make yourself stand out.
- Be assertive and deliver without pausing or stressing too much.
- Structure your pitch as follows:
- Introduce the company name and what they produce or sell.
- Introduce you and any partners in the pitch.
- Say what your turnover and profit has been last year and the next three years.
- Explain why your company is good for investment and any large contracts you have won.
- Ensure you communicate any awards, patents, high street contracts, big milestones and any other successes.
- Say what investment you're looking for and the percentage shareholding on offer.
- Practice, practice, practice until you know it off by heart.
If you're a nervous person then why not get a partner to pitch with you for moral support?
Know Your Numbers Inside Out
There are so many people on the programme that simply do not know basic numbers about their business. Any investor, whether on television or not, will be asking about your financial history and projections. Here's some of the financial data you'll need:
- Revenues and profits for any years trading so far and forecasts for the next three years.
- If you're selling a product, you need to know how much it costs to make, the price to the wholesaler and the price to the retailer.
- Know your largest costs other than product costs such as salaries and other expenses.
If you're not good with numbers then have someone who knows them pitch with you.
Don't be Over Ambitious
As with almost all new businesses, you'll start slowly and gather momentum as your business grows. Having a £10 million turnover after a couple of years is rare, so any forecasts have to be believable.
Don't Reject Offers
If you want a particular dragon to invest in your company keep that to yourself. Others may pull offers and say "I'm out" if they realise you don't want them.
Don't Offer too Little Equity
Apart from limited knowledge on your numbers, the other major issue with the dragons is offering a small amount of equity for the investment.
No one is going to invest for such a small stake so you'll need to make it worthwhile. Have in your mind the maximum equity you wish to sell, but be flexible. Having 80% of a company with no profits is not going to make you a success whereas 50% of a multi-million pound business will achieve that.
Don't be Afraid of Marketing
Although there are strict rules on what advertising is allowed on BBC programmes, you should try and communicate your organisation for a TV audience. Here are some ideas to help brand yourself in front of several million viewers together with repeats on Dave TV:
- If you have a website, then get a large A1 or cardboard print and make sure your logo is clearly readable from a distance.
- Talk about your company many times over and clearly so viewers can interpret it.
- Take in your current products with packaging to show the dragons.
- Wear t-shirts with a company logo clearly displayed.
As pitches can last anything up to three hours in length, you should be aware that you'll need to mention your company many times over and not just at the beginning of the programme. If you have been on Dragons Den let us know your experiences.