0:00:02 > 0:00:04'This is the Dragons' Den.
0:00:04 > 0:00:10'Over the last six years, nearly 700 entrepreneurs have walked up the stairs looking for investment.
0:00:10 > 0:00:14'Before them, five of Britain's most successful business brains.
0:00:14 > 0:00:18'Collectively worth a reported £1 billion.
0:00:18 > 0:00:21'Convincing them to part with their cash isn't easy,
0:00:21 > 0:00:25'but tonight they've agreed to share their tips for success.
0:00:27 > 0:00:32- 'From the initial idea to the pitch.' - Are you ready for the alternative?
0:00:32 > 0:00:37- 'From the business plan...' - Probably the tidiest patent that I've ever seen.
0:00:37 > 0:00:40- '..to the negotiation.'- Five percent each, ten percent in total.- Oh!
0:00:40 > 0:00:45'These are the business secrets that work outside the den and within
0:00:45 > 0:00:51'revealed by the Dragons themselves and the brave entrepreneurs who've dared to stand before them.
0:00:59 > 0:01:03- 'Tonight on How To Win In The Den...'- Action.
0:01:05 > 0:01:09'..we examine the art of negotiation.'
0:01:09 > 0:01:13I think we would really like to keep the stake below 50 percent.
0:01:13 > 0:01:17- 'From increasing your pocket money...'- I'm out!
0:01:17 > 0:01:22'..to buying a car, negotiation is an everyday skill we all need.'
0:01:23 > 0:01:27So much life is about give and take. Where there's give and take,
0:01:27 > 0:01:30there's negotiation.
0:01:31 > 0:01:36Would you take 40 percent if I exceed year one's target?
0:01:36 > 0:01:40- And the reason why you're doing that, Ian, is because... - I'm negotiating.
0:01:40 > 0:01:42THEY LAUGH
0:01:42 > 0:01:45It's rather surreal, negotiating with five Dragons.
0:01:45 > 0:01:50I don't want to give 40 percent away, but thank you very much for your offer, Theo.
0:01:50 > 0:01:54You're trying to basically take as much as you possibly can.
0:01:54 > 0:01:58- Two percent. One percent? - Don't make it about the percentage.
0:01:59 > 0:02:01You're there on your own
0:02:01 > 0:02:04and the crucial decision is whether to accept or not.
0:02:04 > 0:02:06I will accept, gladly.
0:02:10 > 0:02:14'Now the Dragons are catching up with their investments.'
0:02:14 > 0:02:1715 quid to you, madam. Sold.
0:02:17 > 0:02:20'And revisiting some of the entrepreneurs who dared to walk away.'
0:02:20 > 0:02:24I'm Valentine! How are you? HE LAUGHS
0:02:25 > 0:02:28'So as they impart their words of wisdom...'
0:02:28 > 0:02:32- There's a lot of tactics.- You can haggle, you can play it cool.
0:02:32 > 0:02:36- Do not be greedy. - Everybody's got to be a winner.
0:02:36 > 0:02:38Stay in control.
0:02:38 > 0:02:40'..get out your notepad and pen.
0:02:41 > 0:02:48'Because these are the lessons you need to know if you want to negotiate the best deal.
0:02:55 > 0:03:00'Entering into a negotiation with five of the brightest brains in business
0:03:00 > 0:03:03'is a daunting prospect for any entrepreneur.'
0:03:03 > 0:03:06- Very, very nervous. - I expect them to grill me.
0:03:06 > 0:03:10I play a lot of badminton, so that helps me to cope with nerves.
0:03:10 > 0:03:14'Not everyone who walks up the stairs gets the chance to cut a deal.'
0:03:14 > 0:03:18I'm not amused, I'm angry. I'm out.
0:03:20 > 0:03:25'But for the lucky few who get to talk numbers, the final furlong can be the toughest.'
0:03:26 > 0:03:29Would it be possible for us to meet at 45?
0:03:29 > 0:03:32My best offer is £100,000 for 50 percent.
0:03:32 > 0:03:38Being able to negotiate is part of the whole essence of business
0:03:38 > 0:03:43and it's not my responsibility to help them through negotiations.
0:03:43 > 0:03:48It's my responsibility to say, "This is the deal that I will do with you.
0:03:48 > 0:03:51"Do you agree with that deal or not?"
0:03:51 > 0:03:54'So the Dragons' first rule of negotiation is
0:03:54 > 0:03:57'have your bargaining banter at the ready.'
0:03:59 > 0:04:02There is a lot of haggling in the den.
0:04:02 > 0:04:04- Mark, 40 percent.- 30 percent.
0:04:04 > 0:04:08- I'm going to offer you £100,000... - But I want 30 percent share of the business.
0:04:08 > 0:04:12It used to be very simple. It was just, "How much money? How much equity?"
0:04:14 > 0:04:18- How flexible are you on the percentages?- I'm about as flexible as a steel rod.
0:04:19 > 0:04:24But as the den has evolved, we've seen some of the haggling get more complicated.
0:04:24 > 0:04:30- We can put a ratchet system where you can get three percent back from each of us.- What's a ratchet system?
0:04:30 > 0:04:32So you've got deals with claw-backs.
0:04:32 > 0:04:35If you deliver 500,000 the following year,
0:04:35 > 0:04:37750 the year after...
0:04:37 > 0:04:42- Give-backs of equity.- ..then we will take 18 percent today...
0:04:42 > 0:04:45Contingent clauses in the contract.
0:04:45 > 0:04:47..we will drop one percent each year
0:04:47 > 0:04:50providing you deliver 250 increments.
0:04:51 > 0:04:55Suddenly, what seemed like a sticking point resolves.
0:04:55 > 0:04:57Do we have ourselves a deal, then?
0:05:00 > 0:05:05'And there's one particular Dragon who just loves to haggle.'
0:05:05 > 0:05:09Theo, he likes to haggle. He's the Arthur Daley of the den.
0:05:09 > 0:05:12I am not coming down to Duncan's level.
0:05:12 > 0:05:17- He likes to roll his sleeves up, do a deal.- I'll do a half, I'll do a quarter, I'll do a third.
0:05:17 > 0:05:20Look at my watches. I can buy more watches than you.
0:05:20 > 0:05:23I've got a lot of wealth, I'm successful
0:05:23 > 0:05:26and for me, money is a measure of the success.
0:05:28 > 0:05:30He loves it.
0:05:37 > 0:05:41'One memorable entrepreneur haggler was Chris Hopkins.
0:05:41 > 0:05:45'Chris entered the den this year looking for a £120,000 investment
0:05:45 > 0:05:50'for a ten percent share in his solar panel installation business.'
0:05:51 > 0:05:56Hello, Dragons. You've heard that money doesn't grow on trees, which is true,
0:05:56 > 0:06:02but I'm here to show you that money can grow on rooftops thanks to the feed-in tariff.
0:06:02 > 0:06:07The feed-in tariff works like this. Ploughcroft would install
0:06:07 > 0:06:09these solar panels on domestic home roofs.
0:06:09 > 0:06:13The natural daylight that comes out of the sky is absorbed by the panels,
0:06:13 > 0:06:16turns into electricity, goes through the house
0:06:16 > 0:06:18to the energy generating company.
0:06:18 > 0:06:23That energy generating company then pays that home owner the tariff.
0:06:27 > 0:06:31'After the pitch, Duncan Bannatyne got straight into the figures.'
0:06:31 > 0:06:34What's the projection for the year you're in now?
0:06:34 > 0:06:39- £5 million turnover.- Profit? - Profit September this year, £600,000.
0:06:39 > 0:06:42'And came up with an immediate offer.'
0:06:42 > 0:06:46I'm going to offer you all the money, £120,000,
0:06:46 > 0:06:48but I want 30 percent of the equity.
0:06:49 > 0:06:53- Would you come down to 20 percent and meet me halfway? - I'll raise my offer to 25 percent.
0:06:53 > 0:06:59- 20 percent.- 25.- Chris, is Duncan the only Dragon you're interested in?
0:06:59 > 0:07:02- You've got four Dragons here. - Five seconds, Chris.
0:07:02 > 0:07:08- You're absolutely crazy. You came in here to talk to five investors, not one investor.- 120,000, 25 percent.
0:07:08 > 0:07:12Duncan Bannatyne made a really quick offer and it flummoxed me.
0:07:12 > 0:07:16The other Dragons got upset and said, "There's more than one Dragon.'
0:07:16 > 0:07:21Sorry, OK. Right, I'll open the floor up to the next person that wants to speak to me.
0:07:24 > 0:07:28'Chris had narrowly avoided alienating the four remaining Dragons
0:07:28 > 0:07:32'and it was time for Deborah Meaden to show her hand.'
0:07:32 > 0:07:35- I am going to make you an offer.- OK.
0:07:35 > 0:07:37- All of the money.- Right.
0:07:37 > 0:07:41I want 25 percent of the business.
0:07:42 > 0:07:46When Deborah made her offer, yeah, I felt elated. It was good.
0:07:46 > 0:07:49'Peter Jones declared himself out,
0:07:49 > 0:07:52'but there were still two Dragons left.'
0:07:54 > 0:07:56I'm going to make you an offer.
0:07:56 > 0:08:01- My offer is the full money for 25 percent, as well.- Right.
0:08:01 > 0:08:07Chris, I will give you the full amount, £120,000.
0:08:08 > 0:08:13- But I would want 26 percent of your business.- Right.
0:08:13 > 0:08:17I had an offer off all four of them. It was like, "Which one do I pick?"
0:08:21 > 0:08:24'With so many offers on the table,
0:08:24 > 0:08:28'Chris suddenly found himself involved in some serious haggling.'
0:08:29 > 0:08:32I don't like to see too many of my negotiations
0:08:32 > 0:08:38get into a haggling stage because it's more about, "I want to win. No, I want to win."
0:08:38 > 0:08:43You're not just haggling with yourself, because there's four other Dragons
0:08:43 > 0:08:45who are watching your every single move
0:08:45 > 0:08:51just in case you leave a gap that they can actually jump into.
0:08:51 > 0:08:55- Chris.- Yes? - I'm going to make you an offer now
0:08:55 > 0:09:01that I think is the offer that is best for you.
0:09:01 > 0:09:06The best deal is to accept an offer from two Dragons. OK?
0:09:06 > 0:09:12So my offer really is an offer from me and Hilary if Hilary were to come in.
0:09:12 > 0:09:15Half the money for 11 percent.
0:09:15 > 0:09:18I'm perfectly happy to work with Duncan.
0:09:18 > 0:09:22'With the confidence that comes from having four Dragons fighting over a deal,
0:09:22 > 0:09:27'Chris was able to start the negotiation on his terms.
0:09:27 > 0:09:31'But at first, it didn't quite go according to plan.'
0:09:31 > 0:09:35Right. So would you two consider making an offer together, combined?
0:09:35 > 0:09:40- Yeah.- Would you come down collectively so it was 22.5 percent?
0:09:40 > 0:09:44Chris, I just want to say, I've made you three offers, right?
0:09:44 > 0:09:48And I'm now deeply insulted that you've refused two of my offers and you're using my offer
0:09:48 > 0:09:53- to try and get a better offer. - This is an important decision. - And so for that reason,
0:09:53 > 0:09:57I'm withdrawing my offer and I'm out.
0:09:58 > 0:10:03And I tried haggling with them but I alienated Duncan to the point he went, "I'm out".
0:10:03 > 0:10:06'Duncan Bannatyne may have declared himself out,
0:10:06 > 0:10:12'but new Dragon Hilary Devey was still keen to bag her first den investment.'
0:10:13 > 0:10:16- I see this as a growing business. - Right.
0:10:16 > 0:10:20And I will give you everything that you require
0:10:20 > 0:10:23to make it a market leader.
0:10:26 > 0:10:29I'd get into a bidding war with anybody if it's something I really wanted
0:10:29 > 0:10:32that I think would enhance my business portfolio.
0:10:32 > 0:10:36'But who would Chris choose?'
0:10:36 > 0:10:41So, I'd like to accept Deborah and Theo's offer.
0:10:41 > 0:10:44- Oh.- Well, that's easy done!
0:10:44 > 0:10:47Hilary's offer was the best in the den
0:10:47 > 0:10:51but because I had no knowledge of Hilary, I didn't have that confidence to commit to her.
0:10:56 > 0:10:59'Once a deal has been agreed in principle in the den,
0:10:59 > 0:11:03'both parties go through the regular business process of due diligence.
0:11:03 > 0:11:08'Today, Deborah is in Brighouse to pay a visit to the company's West Yorkshire branch
0:11:08 > 0:11:11'and talk about future plans.'
0:11:11 > 0:11:13I've got my own ideas of what we can do,
0:11:13 > 0:11:18but I really want to find out what they're already onto and then I can plug any gaps where I think,
0:11:18 > 0:11:21"You haven't thought of this, it's something we should do".
0:11:25 > 0:11:30- Hi, Deborah.- Hello, Chris! - You all right?- Very well. Glad to see you out of the den.
0:11:30 > 0:11:33So this is our eco visitors centre.
0:11:33 > 0:11:36As you can see, it's stacked with renewable products
0:11:36 > 0:11:41ranging from your wind turbine, solar PV, to your ground source heat pumps.
0:11:41 > 0:11:44So who comes here, the general public?
0:11:44 > 0:11:50Probably councillors, schools. It's here to help the whole industry evolve.
0:11:51 > 0:11:57'Chris says that in the last three weeks alone, he's turned over £350,000
0:11:57 > 0:12:01'and he's expecting that to grow to £1 million by the end of the month.
0:12:01 > 0:12:04'He's also predicting a profit of half a million pounds for this year.'
0:12:06 > 0:12:09That's what I used to do. Bodybuilding.
0:12:09 > 0:12:12- All natural. - Is that you?- Yeah, that's me.
0:12:12 > 0:12:17- Of course it's me.- No.- Yeah, second at the World Championship. - No, that's someone else's body.
0:12:17 > 0:12:21No, it is not. Basically, you can think about bodybuilding as you've got to train hard,
0:12:21 > 0:12:27as in you've got to educate yourself in business. You've got to get your presentation, baby oil, false tan.
0:12:27 > 0:12:31You've got to stand on stage and present, just like in the den
0:12:31 > 0:12:37and get your business looking right, streamlined. You've got judges. In business, that's the public.
0:12:37 > 0:12:43And all I've done really is replicate what I learned in bodybuilding and done it into this business.
0:12:43 > 0:12:45- Yeah.- With the training, as well, to back it all up.
0:12:45 > 0:12:48- Fantastic. - That is the business model.
0:12:49 > 0:12:53'Even though the due diligence process isn't quite complete,
0:12:53 > 0:12:55'with such a strong business model in place,
0:12:55 > 0:13:00'Deborah and Chris are both confident the deal will be finalised in the next few weeks.
0:13:00 > 0:13:08'So the new business partners plough on with their strategy to take this regional company nationwide.'
0:13:08 > 0:13:12The business is moving already. Since being on the den, we've opened up two branches,
0:13:12 > 0:13:18- one in Exeter to cover the southwest and one in Hertford. - So why those two regions?
0:13:18 > 0:13:23Just because I can see them as hotspots and they're far enough away
0:13:23 > 0:13:28for us not to be basically getting mixed up with our northern branch.
0:13:28 > 0:13:31We'll test it over the next three months. Providing that's successful,
0:13:31 > 0:13:37I think we'll get another four open and then it's about maximising those six additional branches quickly.
0:13:37 > 0:13:43Yeah. So get two open, check that you've got it right, tweak it and then roll it out.
0:13:43 > 0:13:46'The renewable energy market may be growing at a rapid pace,
0:13:46 > 0:13:53'but Deborah knows that exercising caution over expanding the business too quickly is a smart move.'
0:13:53 > 0:13:57You're in quite a dangerous position because you could get caught up in,
0:13:57 > 0:13:59"I've got to go, I've got to expand".
0:13:59 > 0:14:01But I really like what I'm hearing from you,
0:14:01 > 0:14:05"No, we need to do this fast but in a controlled fashion".
0:14:05 > 0:14:11I've not experienced this level of growth ever. You've experienced it and hopefully can guide me through.
0:14:11 > 0:14:16That's what I like about you. You know what you know, you know what you need help with.
0:14:16 > 0:14:20Both Theo and I have rolled out big businesses across the UK,
0:14:20 > 0:14:25so we can just steer you clear of some of those mistakes that we would've made.
0:14:25 > 0:14:28We need your name to be a household name throughout the UK.
0:14:28 > 0:14:33'To date, the company say they've done 5,000 installations across the UK.
0:14:33 > 0:14:41'And with Deborah and Theo on board, Chris is projecting a turnover of £9.3 million for 2013.
0:14:41 > 0:14:44'And the ex-bodybuilder is over the moon
0:14:44 > 0:14:48'at the thought of having this kind of business muscle on his side.'
0:14:49 > 0:14:53Well, it makes me feel great, that somebody's actually taking me seriously
0:14:53 > 0:14:57and that we are going to be this national brand
0:14:57 > 0:15:02and it's exciting and I'm realising the vision that I had five years ago.
0:15:02 > 0:15:06I fought pretty hard for the investment in Ploughcroft.
0:15:06 > 0:15:11This is a massively expanding marketplace.
0:15:11 > 0:15:17I will be staggered if this isn't one of the biggies from Dragons' Den.
0:15:24 > 0:15:29'Every entrepreneur wishes that all five Dragons will be begging to invest.'
0:15:29 > 0:15:32I'm hoping the Dragons do fight over me. That would be my dream.
0:15:32 > 0:15:37'But only the coolest customers ever achieve that elusive den nirvana.'
0:15:37 > 0:15:40I can't invest and I'm out.
0:15:40 > 0:15:46'So the Dragons' next lesson is to stay in control of the deal and yourself.'
0:15:47 > 0:15:50You've got to maintain a very good personal relationship.
0:15:50 > 0:15:55- I'm going to offer you £50,000 for ten percent of the company. - At 25 percent...- Shh.
0:15:55 > 0:15:57You've got verbal diarrhoea sometimes.
0:15:57 > 0:16:03If it gets nasty, if it gets out of hand in personal terms...
0:16:03 > 0:16:06I won't answer that question because it's not relevant.
0:16:06 > 0:16:10- ..you're not going to get the best out of the other side. - It's not relevant.- It is to me.
0:16:11 > 0:16:14Stay in control.
0:16:14 > 0:16:18If we were willing to sort of double that for you guys
0:16:18 > 0:16:22- and give you 20 percent each... - No, hold on a minute. Where's this negotiation going?
0:16:25 > 0:16:28'And if you want to gain the bargaining upper hand,
0:16:28 > 0:16:31'you need to take charge of your bodily functions, too.'
0:16:31 > 0:16:38Any good negotiator is just looking for that tiny little bead of perspiration. That's all it takes.
0:16:38 > 0:16:43Just take a couple more seconds just to think before you say the words "last final offer".
0:16:43 > 0:16:47What I was going to say was, "Can I get a tissue?" LAUGHTER
0:16:47 > 0:16:54'But when an entrepreneur does manage to gain control of their negotiation, anything's possible.
0:16:55 > 0:17:01'And that includes having all five Dragons eating out of their hands.'
0:17:03 > 0:17:07It's a very rare moment when you actually see something in the den,
0:17:07 > 0:17:11somebody presents, everybody agrees, great product.
0:17:12 > 0:17:18'James Brown and Amanda Jones entered the den in 2007 looking for a £50,000 investment
0:17:18 > 0:17:24'in their mobile water purification system aimed at developing countries.'
0:17:24 > 0:17:29As the user rolls the unit back to the community,
0:17:29 > 0:17:34the mechanical movement of the wheels drives a filter system through the tank.
0:17:34 > 0:17:36Upon reaching the destination,
0:17:36 > 0:17:40the water in the unit is completely free of contaminates.
0:17:41 > 0:17:45It's such a good idea. You look at it and go, "I wish I'd thought of that".
0:17:45 > 0:17:48It could save millions of lives, potentially.
0:17:49 > 0:17:54'After a controlled and professional pitch, the offers started to roll in.'
0:17:54 > 0:17:57- I'm going to make you an offer. - £25,000.
0:17:57 > 0:18:01- I'd be happy to match James's offer. - £50,000.- For ten percent.
0:18:01 > 0:18:07'But before Amanda and James had the chance to negotiate, there was one surprise still to come.'
0:18:07 > 0:18:10If everybody is keen on this,
0:18:10 > 0:18:14all chuck £10,000 in and make this happen.
0:18:15 > 0:18:19Competitive spirit was dropped just for that occasion.
0:18:19 > 0:18:25- I would lob £10,000 in. - I'd be very happy to.- Absolutely.
0:18:25 > 0:18:29It doesn't happen very often and it probably will never happen in our lifetimes again.
0:18:31 > 0:18:35'But after a smooth ride in the den, the deal hit a snag outside it.
0:18:35 > 0:18:39'The 50K wasn't a realistic projection
0:18:39 > 0:18:44'and the duo didn't have an accurate figure as to what it would take to bring the product to market.
0:18:44 > 0:18:48'With the terms having changed, all parties agreed not to proceed.'
0:18:49 > 0:18:52They weren't wanting to start an investment
0:18:52 > 0:18:55that was, from their point of view, bottomless.
0:18:55 > 0:19:00And from our point of view, we didn't want to give away ten percent of equity
0:19:00 > 0:19:05when that could keep increasing, so from both sides, there was this vulnerability.
0:19:05 > 0:19:10'Four years on and the company have now got the cash injection they needed from a syndicate of investors
0:19:10 > 0:19:13'with expertise in the humanitarian market.
0:19:14 > 0:19:21'At long last, a very persistent James has just returned from Kenya
0:19:21 > 0:19:26'where the newly renamed Midomo unit is being slowly introduced into the community.'
0:19:26 > 0:19:31Just incredibly exciting to see these Midomos being used
0:19:31 > 0:19:37by women, by children, who were very excited to be using them.
0:19:41 > 0:19:44There were some problems that we need to learn from,
0:19:44 > 0:19:48but overall, it was a fantastic experience and it worked so well.
0:20:18 > 0:20:21'From the thousands of budding entrepreneurs
0:20:21 > 0:20:26- 'desperate for an audience with the Dragons...'- I've got an opportunity and I want to use it.
0:20:26 > 0:20:30'..less than 100 get to walk up the den stairs every year.'
0:20:30 > 0:20:34How many people can say that they're going to stand there? Brilliant.
0:20:34 > 0:20:37'And just a select few find themselves with an offer on the table.'
0:20:37 > 0:20:42I'm not stupid. If there's a good deal to have, I'm taking it.
0:20:42 > 0:20:45'So, if you get a chance to shake hands with a Dragon,
0:20:45 > 0:20:50'take heed of the third deadly sin and don't be greedy.'
0:20:52 > 0:20:56People do sometimes clutch defeat from the jaws of victory.
0:20:56 > 0:20:58There's a deal to be done, it would benefit the Dragons,
0:20:58 > 0:21:01it would benefit the entrepreneur, but they walk away.
0:21:01 > 0:21:05# It's not about the money, money, money
0:21:05 > 0:21:07# We don't need your money, money, money
0:21:07 > 0:21:11- Do you want the money in 50s or...? - HE LAUGHS
0:21:11 > 0:21:13It's right here.
0:21:13 > 0:21:17It is vitally important in negotiation not to be greedy.
0:21:17 > 0:21:22And now you want to think that, actually, I'll try and mug five Dragons for 200 grand.
0:21:23 > 0:21:28When I see somebody get very, very close to what they actually came in to get...
0:21:28 > 0:21:31I started at five. You can see I've moved.
0:21:32 > 0:21:36..but are not willing to perhaps give an extra five percent away...
0:21:36 > 0:21:39We've decided to stick to our guns on the 25 percent.
0:21:39 > 0:21:42Guys, that's loopy.
0:21:42 > 0:21:47..my heart sinks, because I know the difficulty of getting money and funding.
0:21:47 > 0:21:50Don't let the five percent influence you away from
0:21:50 > 0:21:53making the right decision for you and your business.
0:21:53 > 0:21:55When they walk back down those stairs,
0:21:55 > 0:21:59I know that they'll be thinking within hours, "What an idiot".
0:21:59 > 0:22:04- You're an entrepreneur, you've got to...- Yeah.- ..think with your mind, not your wallet.
0:22:04 > 0:22:07'No matter how many pitches the Dragons sit through,
0:22:07 > 0:22:11'they're still shocked by the entrepreneurs' unrealistic expectations.'
0:22:11 > 0:22:15Some people who come in front of the Dragons are absolutely amazingly greedy.
0:22:15 > 0:22:20And I'm here today to raise two and a half million pounds
0:22:20 > 0:22:22for 30 percent of the equity.
0:22:24 > 0:22:29This is such an amazing product that you want to put two and a half grand for 85 percent
0:22:29 > 0:22:33and I'm going to put in 150 grand for 15 percent?
0:22:33 > 0:22:39I'm obviously a bit disappointed that you think that we're that stupid, really.
0:22:39 > 0:22:43'So, if you want to walk away from the den with a pocket full of money...'
0:22:43 > 0:22:45Yes. Yes, please!
0:22:45 > 0:22:49- '..and avoid an earful of grief...' - Go away!
0:22:49 > 0:22:51'..take heed of this advice.'
0:22:51 > 0:22:55Make sure you're coming in for an investment at a sensible level.
0:22:55 > 0:22:59- What sort of levels are you willing to discuss? - Between five and ten percent.
0:22:59 > 0:23:02- Between five and ten? That's your range?- Mm-hm.
0:23:02 > 0:23:06And if you get an offer, take the Dragon's arm off.
0:23:06 > 0:23:11My gut feeling is, if you walk away today,
0:23:11 > 0:23:13another big mistake in Clive's CV.
0:23:20 > 0:23:24'One woman who asked for a little too much was Ling Valentine.
0:23:24 > 0:23:27'Ling entered the den back in 2007
0:23:27 > 0:23:31'looking for investment in her car leasing website.'
0:23:35 > 0:23:42Hello. I'm Ling. My famous Chinese nuclear missile truck, my trademark.
0:23:42 > 0:23:45I'm looking for an investment of £50,000
0:23:45 > 0:23:48for a five percent share of my company.
0:23:48 > 0:23:51Ling is just one of those firecrackers.
0:23:51 > 0:23:54I mean, she just came in and grabbed our attention.
0:23:54 > 0:24:00I've made over £100,000 gross profit in each of the last two years.
0:24:01 > 0:24:07Your money would double each year. By the year 2010, it will be worth £400,000.
0:24:08 > 0:24:11My business model is... # Money, money, money, money
0:24:11 > 0:24:14# Money! SHE LAUGHS
0:24:16 > 0:24:22'After her pitch, Peter Jones led the questioning about Ling's unique marketing strategy.'
0:24:24 > 0:24:30- Ling.- Yeah. - What on earth is with the advertising on the nuclear truck?
0:24:30 > 0:24:35With the nuclear missile truck, nobody else has got such a thing
0:24:35 > 0:24:39and I used to put it next to A1
0:24:39 > 0:24:44- and it attracts loads of publicity. Fantastic idea.- Really?- Yeah.
0:24:44 > 0:24:46I'm just a genius with marketing.
0:24:46 > 0:24:52I have all these crazy ideas about how to market my business and it works.
0:24:52 > 0:24:55You set this up two years ago?
0:24:55 > 0:24:58No, I set it up about five years ago.
0:24:58 > 0:25:01I think the most memorable thing was when she said
0:25:01 > 0:25:04she spoke "perfect Jinglish".
0:25:04 > 0:25:06I've been in this country for eight years.
0:25:06 > 0:25:09I came with nothing apart from perfect Jinglish.
0:25:09 > 0:25:11Sorry?
0:25:11 > 0:25:12LAUGHTER
0:25:14 > 0:25:18'In spite of the light-hearted mood,
0:25:18 > 0:25:23'some of the Dragons had serious doubts about Ling's business acumen.'
0:25:23 > 0:25:25What did your accounts show?
0:25:25 > 0:25:29- Erm...- For 2005?- I just, er...
0:25:29 > 0:25:33I just know roughly the figure. The thing is because I don't do the book.
0:25:33 > 0:25:37You come here asking for money, you're telling me you don't do a book?
0:25:37 > 0:25:41How do you expect me to give you money if you can't tell me what you're making?
0:25:41 > 0:25:44I don't do my book. That's what I pay an accountant to do.
0:25:44 > 0:25:48I trust my accountant. My accountants do all the book. That's it.
0:25:49 > 0:25:54Your lack of business nous is terrifying.
0:25:55 > 0:25:58And that's my problem. So I can't. I'm out.
0:25:59 > 0:26:02'Two other Dragons dropped out in quick succession
0:26:02 > 0:26:06'but former Dragon Richard Farleigh and Duncan Bannatyne
0:26:06 > 0:26:09'saw something in the zany entrepreneur.'
0:26:09 > 0:26:15I would like to offer you half the money but for 20 percent.
0:26:15 > 0:26:18So I'm going to match Richard's offer
0:26:18 > 0:26:21and I'm going to offer you £25,000 for 20 percent of the company.
0:26:21 > 0:26:24I think it's a bit too much. I really refuse that.
0:26:24 > 0:26:28- You're turning us down?- Yeah. Well, Chinese eat dragons for breakfast.
0:26:28 > 0:26:29Oh!
0:26:29 > 0:26:30HE LAUGHS
0:26:30 > 0:26:35I would say five percent each, ten percent in total.
0:26:35 > 0:26:41The best I could offer you would be £25,000 for 15 percent of the company.
0:26:41 > 0:26:44Now, if Richard matched that,
0:26:44 > 0:26:48- that would be £50,000 for 30 percent of the company. - Ling, I would match that.
0:26:50 > 0:26:55'It's very rare that the Dragons renegotiate to meet the demands of an entrepreneur,
0:26:55 > 0:26:58'but somehow Ling had pulled it off.'
0:26:58 > 0:27:03I think to go on Dragons' Den and not be flexible about the equity stake is a very silly mistake.
0:27:03 > 0:27:07I certainly would've been happy with the second offer that she got.
0:27:07 > 0:27:13'But Ling's hunger for a larger piece of the pie was just too strong.'
0:27:13 > 0:27:18- Thank you. I refuse it.- Ling, think about it. It's a fantastic...
0:27:18 > 0:27:22It's an unbelievable offer. Take their money.
0:27:22 > 0:27:26Thank you for your money. Er, I refuse it. Thank you.
0:27:26 > 0:27:29'To the Dragons' disbelief,
0:27:29 > 0:27:32'Ling walked away from the deal.'
0:27:32 > 0:27:37Just completely bizarre. The biggest mistake ever, turning down my investment.
0:27:37 > 0:27:40I'm not greedy, no.
0:27:40 > 0:27:43End of the day, I'm still a businesswoman.
0:27:43 > 0:27:47I'm not prepared to give my company away very cheaply,
0:27:47 > 0:27:52so I would just only accept what I think is fair.
0:27:53 > 0:27:57'Four years on and Ling has gone from strength to strength.
0:27:57 > 0:28:01'She's won several awards and her unique persona
0:28:01 > 0:28:05'has attracted offers to give inspirational business seminars.'
0:28:05 > 0:28:09There are so many car-leasing companies around,
0:28:09 > 0:28:11we had to make it start out.
0:28:11 > 0:28:18Before Dragons' Den, I was turning over about £10 million worth a year.
0:28:18 > 0:28:24Nowadays, I'm doing £40 million worth every year. I'm making more money. I'm very happy.
0:28:24 > 0:28:28Please put your hands together and say a big thank you.
0:28:28 > 0:28:30APPLAUSE
0:28:32 > 0:28:36'Leasing a reported £40 million worth of vehicles
0:28:36 > 0:28:40'sounds like a business opportunity any Dragon would want to be involved with
0:28:40 > 0:28:44'and today Ling is keen to show Duncan Bannatyne what he's missed
0:28:44 > 0:28:47'as well as show off her latest marketing ploy.'
0:28:52 > 0:28:55I think Ling's business has been growing up since I saw her in the den,
0:28:55 > 0:28:58but I still don't think she's making a lot of money.
0:28:58 > 0:29:02I think she still hasn't grasped the fact that turnover is vanity, profit is sanity.
0:29:02 > 0:29:08It's profit that pays your mortgage, that you live on, that builds up your pension, not turnover.
0:29:16 > 0:29:20Oh, I think this is probably Ling now, in her yellow submarine
0:29:20 > 0:29:24or yellow tank or whatever it is. I think we'll stand back.
0:29:24 > 0:29:26I'm Valentine! How are you?
0:29:26 > 0:29:27HE LAUGHS
0:29:27 > 0:29:29Over here.
0:29:29 > 0:29:30HE LAUGHS
0:29:30 > 0:29:33- Hello, Ling. How are you? - Yeah, good.
0:29:33 > 0:29:38- What is this?- Well, my new pet. - Your new pet?- Yeah.
0:29:40 > 0:29:43- Nice to see you. - Nice to see you again.
0:29:43 > 0:29:45You've missed the good fun.
0:29:45 > 0:29:49If you invest in my business, you can have a tank, too.
0:29:49 > 0:29:53- Oh, if I invest, I could have one of these? That'd be nice.- It's good.
0:29:53 > 0:29:58HE LAUGHS Duncan, I'd love to show you how I've done in the last few years.
0:29:58 > 0:30:01Come to my office. Do you want a ride?
0:30:01 > 0:30:05Erm, no, I think actually I'll come by car.
0:30:05 > 0:30:09- I'll get my driver and follow you. - OK.
0:30:09 > 0:30:12- See you in my office. - Have a nice trip.
0:30:12 > 0:30:13HE LAUGHS
0:30:19 > 0:30:24'Five years ago, Ling was running her business out of her dining room at home.
0:30:24 > 0:30:28'Today she's keen to show Duncan her new branded premises in Gateshead.'
0:30:34 > 0:30:39This is my office. This is my famous, famous missile launcher.
0:30:39 > 0:30:43Yes, I remember this. I knew this before I knew you because I'd seen it on the motorway.
0:30:43 > 0:30:47- Here we go. - 'Ling currently employs ten people
0:30:47 > 0:30:51'and has made sure her staff can never forget who's the boss.'
0:30:55 > 0:30:58Duncan, this is my office.
0:30:58 > 0:31:01- What's this?- Oh, money.
0:31:01 > 0:31:04- Is this for me?- 50 grand.
0:31:04 > 0:31:06HE LAUGHS
0:31:06 > 0:31:08'As well as flaunting her 50K in cash,
0:31:08 > 0:31:15'Ling also wants to show off her website that she claims has over a million unique visitors a year,
0:31:15 > 0:31:19'resulting in 100 leasing deals a month.'
0:31:20 > 0:31:23I decided to design the crazy website
0:31:23 > 0:31:26to attract all the attention, make the website stand out.
0:31:26 > 0:31:30I have over 20,000 cars leased on my website.
0:31:30 > 0:31:37- What do you make out of a car? - On average, we make £300 to £400 per car.- Wow. That's good.
0:31:37 > 0:31:43'The Dragons' biggest criticism of Ling was her lack of financial knowledge,
0:31:43 > 0:31:47'so she's had some figures prepared to prove that Duncan would've made money
0:31:47 > 0:31:50'out of a 15 percent investment in her business.
0:31:50 > 0:31:55'But he immediately spots an error in the calculations.'
0:31:55 > 0:32:00These are flawed because they show a Dragon taking 15 percent of profit, which you wouldn't do.
0:32:00 > 0:32:04Unless you took 85 percent, and you can't afford to do that.
0:32:04 > 0:32:09So these are flawed. You can't add up the 15 percent and say that's what would happen.
0:32:09 > 0:32:12Right, hang on a minute, these are the figures. My accountant gave it to me.
0:32:12 > 0:32:17I'm not interested in reading the accounts all the time. I'm not a professional, but...
0:32:17 > 0:32:21No, Ling, what I'm saying is, these accounts assume an investor
0:32:21 > 0:32:24would take 15 percent of profit every year.
0:32:24 > 0:32:27An investor would not take 15 percent of the profit every year.
0:32:27 > 0:32:30- That's not how you do investments. - Right.
0:32:31 > 0:32:34So how does that work, then? How much...
0:32:34 > 0:32:37If you invest in a business, how much do you take out of the business?
0:32:37 > 0:32:41Well, we normally take it in dividends, so we take 15 percent of the dividend paid.
0:32:41 > 0:32:45So if you don't take dividend, we don't. If you take 100,000, we take 15,000.
0:32:45 > 0:32:51But the company can't afford to pay £100,000 dividend, so we don't take any. You let the company build up.
0:32:52 > 0:32:55It does make sense.
0:32:56 > 0:33:00'Most investors wouldn't take 15 percent of the company's profits
0:33:00 > 0:33:05'until the business had built up enough equity to be in a position to pay out.
0:33:05 > 0:33:10'And in spite of her high leasing figures, Ling's actual profit is showing at around £30,000.
0:33:10 > 0:33:13'So Duncan has some more bad news for her.'
0:33:15 > 0:33:19In my opinion, this would've been a bad investment.
0:33:19 > 0:33:22If we'd put £50,000 in for 30 percent of the company,
0:33:22 > 0:33:26making £30,000 per year now, that would've been a bad investment.
0:33:26 > 0:33:33- OK.- I wouldn't have been happy with that investment.- OK. Well, I didn't want you to invest anyway.
0:33:33 > 0:33:36- We're both happy, then.- Yeah. - Cos you didn't want the investment
0:33:36 > 0:33:41- and I'm glad I didn't make it. - Exactly. We're happy. HE LAUGHS
0:33:41 > 0:33:47I think there's no doubt that Ling's Cars would be making a lot more money if she'd taken the investment,
0:33:47 > 0:33:51because we'd have analysed the accounts, seen where we could make improvements.
0:33:51 > 0:33:55I'm proud I walked away, refused their offer and I made a success.
0:33:55 > 0:34:00I saved the company for myself. I'm great, eh? SHE LAUGHS
0:34:00 > 0:34:04I don't think you can underestimate the benefit of having a good investor on board.
0:34:04 > 0:34:08I think there's a lesson learned here. Don't be greedy.
0:34:08 > 0:34:12Take a decent investment, and I think the investment would have worked.
0:34:23 > 0:34:26'This is the Dragons' guide to negotiation.
0:34:26 > 0:34:31'Five lessons that can help all of us get the best deal, and maybe even save us a bob or two.
0:34:31 > 0:34:37'Something that these five business brains don't have to worry about ever again.
0:34:43 > 0:34:45'When you're waiting outside the den,
0:34:45 > 0:34:50'it's easy to think you'll turn the Dragons down if the deal is not right.'
0:34:50 > 0:34:53I have a bottom line of how much equity I'll give away.
0:34:53 > 0:34:58Obviously we want a Dragon on board, but we also want the right deal for us, as well.
0:34:58 > 0:35:03- 'But when the pressure is on...' - Sorry, I completely lost it.
0:35:03 > 0:35:07'..and the Queen's head is staring up at you, all bets are off.'
0:35:07 > 0:35:11- We made a snap decision.- Yep. - Perhaps not the best one.
0:35:11 > 0:35:16'So the next lesson is simple. Know when to walk away.'
0:35:16 > 0:35:19It is very important before you go into the den
0:35:19 > 0:35:24to know what your final bottom line really is.
0:35:24 > 0:35:27I can't go to the 30 percent.
0:35:29 > 0:35:32And more importantly, if you don't hit it...
0:35:32 > 0:35:35I'm a little uncomfortable with the equity we're looking at.
0:35:35 > 0:35:38..be prepared to walk away.
0:35:38 > 0:35:44I'm confident I can find a better deal, which is why I'm turning down your offer.
0:35:44 > 0:35:47Everybody's got to be a winner.
0:35:47 > 0:35:52There's no point either party being unhappy with what's been achieved,
0:35:52 > 0:35:54because it won't work.
0:35:54 > 0:35:58I can't wait to have a meeting with you and show you the figures on paper.
0:35:58 > 0:36:01We can't wait to make you a multi-millionaire.
0:36:04 > 0:36:08'But once you've decided on that final figure, make sure you stick to it.'
0:36:08 > 0:36:12If you move your bottom line, you have completely lost it.
0:36:12 > 0:36:16- 50 is a huge chunk. - Yeah, but Casey, you know how it is.
0:36:17 > 0:36:20I couldn't do it without you. I'd love you both on board.
0:36:20 > 0:36:24If you're not prepared to walk away in a negotiation, you're bluffing.
0:36:24 > 0:36:27Cos at the end of the day, you're going to give in.
0:36:27 > 0:36:31If you are genuinely prepared to walk away...
0:36:31 > 0:36:36I just don't negotiate. I make what I think is fair in the first place.
0:36:36 > 0:36:39..people can see it, they can see it in your eyes. You mean it.
0:36:39 > 0:36:43We're going to stick to our guns. So, thank you.
0:36:43 > 0:36:49'And if you do stand firm on your bottom line, you'd better be certain you're making the right decision.'
0:36:49 > 0:36:52Only walk away if you've got a back up plan.
0:36:52 > 0:36:58If he wants to put the money in, someone similar will put the money in. He's playing hardball.
0:36:58 > 0:37:03One thing is for certain, if you turn down an investment from a Dragon,
0:37:03 > 0:37:08the chances of you being successful are incredibly slight.
0:37:08 > 0:37:14Now that could either make you a million-pound deal, or lose it you.
0:37:16 > 0:37:22'Two people who stuck to their bottom line were Fenella Lindsell and Lara Goodbody.
0:37:22 > 0:37:27'They entered the den in 2006 looking for a £200,000 investment
0:37:27 > 0:37:30'for 15 percent of their children's yoga franchise.'
0:37:30 > 0:37:36- Could you just show me, briefly, what you do do with children. - Well, we might go rowing in a boat.
0:37:36 > 0:37:41So we're going on an adventure and we're rowing down the river, and we're, "Heave-Ho!"
0:37:41 > 0:37:45When I was asked to demonstrate it was a very scary moment,
0:37:45 > 0:37:47because full of adrenalin and in rather tight trousers,
0:37:47 > 0:37:49it was a rather daunting prospect.
0:37:49 > 0:37:54Mummy and Daddy phone us and we answer the phone and we tell them how we're doing.
0:37:54 > 0:37:57Got on the floor and started doing the yoga moves,
0:37:57 > 0:38:02putting her foot in her mouth, answering the phone.
0:38:02 > 0:38:06'After also flexing some impressive figures...'
0:38:06 > 0:38:11And our turnover has grown from £120,000 to £390,000.
0:38:12 > 0:38:16'..the duo soon found themselves negotiating offers
0:38:16 > 0:38:20from three investors, including former Dragon Richard Farleigh.'
0:38:20 > 0:38:26- I will give you £200,000 but I want 30 percent of the business. - Are you negotiable on your equity?
0:38:27 > 0:38:33- It's a good offer. - 'But the duo decided to stay true to their bottom line.'
0:38:33 > 0:38:37Whilst your input would be, without a doubt, financially valuable...
0:38:37 > 0:38:40- No!- No! - ..we're going to turn you down.
0:38:40 > 0:38:46It was Nell who actually turned them down and I'm glad she did because I don't know how I would have said it.
0:38:46 > 0:38:50Because I have never turned down £200,000 before.
0:38:50 > 0:38:52I think you will live to regret that.
0:38:56 > 0:39:00'After leaving the den, the company did gain investment,
0:39:00 > 0:39:05'and five years on, they're predicting a profit of £110,000 for this year.'
0:39:05 > 0:39:10Don't forget to scream. CHILDREN SCREAM Wow!
0:39:10 > 0:39:14Since we appeared on Dragons' Den, we've sold a franchise to Australia,
0:39:14 > 0:39:20we had a book deal from Virgin, and probably one of the most strategic and exciting partnerships has been
0:39:20 > 0:39:24with Waybuloo, which is the children's CBeebies programme.
0:39:24 > 0:39:28'Fenella and Lara now value their business at £1.5 million,
0:39:28 > 0:39:34'meaning that if Richard had invested at 30 percent, he would have more than doubled his money.
0:39:39 > 0:39:43'Another business partnership whose bottom line stopped them taking investment
0:39:43 > 0:39:47'were Naomi Timperley and Andy Hurwitz.
0:39:47 > 0:39:51'They entered the den in 2008 looking for £100,000
0:39:51 > 0:39:54'for a ten percent share in their children's disco brand.'
0:39:54 > 0:39:58Baby Loves Disco was a really sweet concept.
0:39:58 > 0:40:01It's an event for parents and children from six months to seven years.
0:40:01 > 0:40:05We get a great DJ playing classic disco, 70s, 80s.
0:40:05 > 0:40:08The overall brand Baby Loves is something that we're looking
0:40:08 > 0:40:12to exploit in other media, as well as various content.
0:40:13 > 0:40:18'After hearing their pitch, four of the Dragons dropped out in quick succession.
0:40:18 > 0:40:24'And only Deborah Meaden remained to throw the entrepreneurs a lifeline.'
0:40:24 > 0:40:28So I'm going to offer you £100,000 for 40 percent of the business.
0:40:30 > 0:40:35That's an offer that we appreciate and are honoured by, but we respectfully decline.
0:40:35 > 0:40:41It knocks me out of control of the brand and the company and that worries me.
0:40:42 > 0:40:47- I think it's the wrong decision. - Why did they do that? Why did they turn down the Dragons?
0:40:50 > 0:40:56'Three years on and the company say that, while last year's turnover was £65,000,
0:40:56 > 0:41:01'they made no profit, and they predict next year's figures to be the same.'
0:41:01 > 0:41:05At that point in the business, it was the right decision to make.
0:41:05 > 0:41:08Maybe now it wouldn't be.
0:41:09 > 0:41:15'The company is still running events but Andy and Naomi have decided to start scaling the business down
0:41:15 > 0:41:19'as they both have other ventures in the pipeline.'
0:41:19 > 0:41:20And freeze!
0:41:32 > 0:41:38'The Dragons' penultimate lesson is vital for any negotiation.'
0:41:38 > 0:41:41If I get a roasting, at least I've got protection.
0:41:42 > 0:41:47'Whatever happens, make sure you've got a strategy.'
0:41:47 > 0:41:50Every entrepreneur should have a plan.
0:41:52 > 0:41:59What we'd like to do is offer you one of each of the models and 30 percent of our company.
0:42:00 > 0:42:03There's a lot of tactics that are all going on.
0:42:03 > 0:42:08And if you don't recoup, we give you the money back, and you keep the cars.
0:42:08 > 0:42:12'And for some entrepreneurs, their best strategy is to get personal.'
0:42:12 > 0:42:15They've sometimes got a favourite Dragon.
0:42:15 > 0:42:19Did you have your mind fixed on any particular Dragon?
0:42:20 > 0:42:23And they can't help giving it away.
0:42:23 > 0:42:24- Leslie, hello, I'm Peter. - Hello, Peter.
0:42:24 > 0:42:26SHE GIGGLES
0:42:26 > 0:42:28THEY LAUGH
0:42:28 > 0:42:34Their eyes keep darting to the person they actually want to invest in their product.
0:42:34 > 0:42:37I'm shaking a bit. Hello, Peter.
0:42:38 > 0:42:43'But flattery isn't the only negotiation strategy the entrepreneurs use.
0:42:43 > 0:42:46'There's low-risk clauses...'
0:42:46 > 0:42:50Ten percent is still a sizeable chunk. You'll have your money back in three years.
0:42:50 > 0:42:54After that, you should still have enough to buy a new car every year.
0:42:54 > 0:42:58- I'm not struggling with a new car every year.- '..no-risk clauses...'
0:42:58 > 0:43:03How about if I offered to buy back your shares so you're actually not risking any of your money at all?
0:43:03 > 0:43:06'..and just good old-fashioned begging.'
0:43:06 > 0:43:09I will return your investment within three years,
0:43:09 > 0:43:14and I promise not to take a penny in salary until I've done that.
0:43:14 > 0:43:19- 'And the Dragons have a few tricks up their sleeves, too.' - Do you play it cool?
0:43:19 > 0:43:22I'll give the offer for three minutes.
0:43:24 > 0:43:26Do you actually play your hand?
0:43:26 > 0:43:31So I'm finding myself in a situation of how to play this so that I make sure that I win.
0:43:31 > 0:43:33I like to be a bit jokey.
0:43:33 > 0:43:38As the heat's gone up in the den, I've started to see that your brains are defrosting slowly.
0:43:39 > 0:43:42But sometimes my palms are actually sweating.
0:43:42 > 0:43:46I can't believe, this is the first time ever, I've started to sweat.
0:43:46 > 0:43:50And I don't know whether it's the sauce I've just taken, or whether it's what I'm about to say.
0:43:50 > 0:43:57And I'm thinking, "Crikey! Please, one of those other Dragons go out, cos I'm really interested in this."
0:43:59 > 0:44:03One woman who used a risky strategy to negotiate the deal she wanted
0:44:03 > 0:44:06was Kate Castle.
0:44:06 > 0:44:09She entered the Den this year looking for £50,000
0:44:09 > 0:44:13for a 15% investment in her foldaway portable loo.
0:44:16 > 0:44:19Bog In A Bag is a lightweight portable toilet.
0:44:19 > 0:44:22When you want to use it, you remove it from its bag,
0:44:22 > 0:44:23open it out.
0:44:23 > 0:44:26You remove the cover,
0:44:26 > 0:44:29take one of the specially-designed degradable bags.
0:44:29 > 0:44:32This then goes into the central section
0:44:32 > 0:44:35and completely seals the seat.
0:44:35 > 0:44:38'When I walked up the steps with a portable toilet,
0:44:38 > 0:44:42'I definitely knew it was going to get a few laughs.'
0:44:42 > 0:44:46My only hope was that they would also take me seriously.
0:44:46 > 0:44:48You then sit down, go to the toilet.
0:44:48 > 0:44:51Once you've finished, you remove the bag,
0:44:51 > 0:44:52tie the top.
0:44:52 > 0:44:55Completely seals the contents, and dispose.
0:44:58 > 0:45:02Low-cost, simple, and there's definitely a need.
0:45:02 > 0:45:07A confident pitch, but Peter Jones was not impressed.
0:45:07 > 0:45:09- Kate.- Yes?
0:45:09 > 0:45:14Where do I start? I just want to make sure that
0:45:14 > 0:45:18I've still got my sanity, because I've just seen a person present
0:45:18 > 0:45:20a chair with a hole in it and a bin liner,
0:45:20 > 0:45:23and want £50,000 for it.
0:45:23 > 0:45:27I'm just trying in my head to work out,
0:45:27 > 0:45:31how can you really make some serious money in this?
0:45:31 > 0:45:35I can't see hundreds of thousands of people buying this product.
0:45:35 > 0:45:36I'm out.
0:45:40 > 0:45:45Duncan Bannatyne also declared himself out,
0:45:45 > 0:45:48but Deborah Meaden saw potential in the product.
0:45:48 > 0:45:51So, I'm going to offer you the full amount, 50,000.
0:45:51 > 0:45:56- I want 30% of the business. - 'When I got'
0:45:56 > 0:45:57that offer in, I thought,
0:45:57 > 0:46:00"That's a really, really good offer."
0:46:00 > 0:46:06I will offer you the full amount for 25%.
0:46:09 > 0:46:11With two good offers already on the table,
0:46:11 > 0:46:14Theo Paphitis was still undecided.
0:46:14 > 0:46:19It forced Kate into making a highly tactical gamble.
0:46:19 > 0:46:22It's, do I match Deborah's 30%,
0:46:22 > 0:46:27or do I just say, "You've got two Dragons already"?
0:46:27 > 0:46:30What would you like me to do?
0:46:30 > 0:46:34If I'm honest, I'd really, really like you to make an offer
0:46:34 > 0:46:39because I think you've got the retail experience that I need.
0:46:40 > 0:46:45- PETER:- That's high rolling risk. - That's a very high risk.
0:46:45 > 0:46:47I think you just told me something...
0:46:47 > 0:46:52that you've got a clear preferred Dragon.
0:46:55 > 0:46:57I'm withdrawing my offer.
0:46:57 > 0:46:58I'm out.
0:47:01 > 0:47:03'At that moment, I really began to panic'
0:47:03 > 0:47:04and think that, you know,
0:47:04 > 0:47:08everything could fall apart and that I could walk out with no deal.
0:47:08 > 0:47:12Kate's high-risk strategy had cost her a Dragon.
0:47:12 > 0:47:15But had it been worth it?
0:47:15 > 0:47:21Kate, I'm struggling, really struggling, with that 30%,
0:47:21 > 0:47:23because you're so early.
0:47:26 > 0:47:30I will match Deborah's 30%.
0:47:31 > 0:47:33OK.
0:47:40 > 0:47:43Thank you for your offers, all three of you.
0:47:43 > 0:47:46Um... Deborah's right.
0:47:46 > 0:47:50Theo is my preferred Dragon.
0:47:50 > 0:47:51Kate, congratulations.
0:47:53 > 0:47:54'I do think that if I had been'
0:47:54 > 0:47:57more woolly and less honest with my answer,
0:47:57 > 0:48:01then I would have potentially lost Theo, and I might have
0:48:01 > 0:48:02walked out with a deal,
0:48:02 > 0:48:05but it wouldn't necessarily have been my perfect deal.
0:48:05 > 0:48:07Come and look at this face. Look, look.
0:48:07 > 0:48:09- She chose Mr Paphitis...- Mr Crapper.
0:48:09 > 0:48:11- As opposed to...- Lovely me.
0:48:11 > 0:48:15- And me!- And Hilary, sorry.- And you!
0:48:21 > 0:48:24It's a few months since her performance in the Den.
0:48:25 > 0:48:28Today, Kate's setting her stall out at the Cornbury Music Festival
0:48:28 > 0:48:32in Oxfordshire, to try and make some sales.
0:48:32 > 0:48:34But now Kate says the deal has officially gone through,
0:48:34 > 0:48:38how are things progressing with her new business partner?
0:48:38 > 0:48:41'It's still early days, but I'm confident that,'
0:48:41 > 0:48:44with Theo's experience and his contacts,
0:48:44 > 0:48:48it's going to be possible to move a lot quicker than I ever could have imagined.
0:48:48 > 0:48:51With her Dragon's involvement now confirmed,
0:48:51 > 0:48:56Kate has valued her business at £170,000.
0:48:58 > 0:49:01Today, Theo has agreed to meet his new partner at the festival
0:49:01 > 0:49:03to see how well their product is selling,
0:49:03 > 0:49:06and discuss how to take the business forward.
0:49:08 > 0:49:11Kate's negotiation was actually quite different
0:49:11 > 0:49:12to some we get in the Den.
0:49:12 > 0:49:14Normally it's just all about the percentage.
0:49:14 > 0:49:17Actually, with Kate, it was all about the Dragon.
0:49:17 > 0:49:19She was prepared to sacrifice
0:49:19 > 0:49:22a little bit more than the other Dragons wanted
0:49:22 > 0:49:25to make sure she got Number One Dragon,
0:49:25 > 0:49:30who turns up at music festivals wearing...a suit.
0:49:33 > 0:49:35You haven't seen Bog In A Bag, have you?
0:49:37 > 0:49:41You haven't seen a lady selling bogs, have you?
0:49:43 > 0:49:45This fella's not well, is he?!
0:49:48 > 0:49:51Look, I've found her!
0:49:51 > 0:49:53Love the wellies! How are you doing?
0:49:53 > 0:49:54- Yes, good thanks.- Good.
0:49:54 > 0:49:57- Good to see you. - What a glorious day for it.
0:49:57 > 0:49:59I know, it's fantastic.
0:49:59 > 0:50:01- How's it been going? - It's been going brilliantly.
0:50:01 > 0:50:04In the Den, the Dragons advised me to get out at festivals,
0:50:04 > 0:50:07meet my customers, sell some, so here I am.
0:50:07 > 0:50:09I've taken the advice and I'm busy selling.
0:50:09 > 0:50:11Right, so... Let's see you do your stuff.
0:50:11 > 0:50:14- OK, let's do it. - Listen, I'm right behind you.
0:50:14 > 0:50:15SHE LAUGHS
0:50:15 > 0:50:18I am right behind you.
0:50:18 > 0:50:22To date, Kate's reportedly sold a total of 11,000 products,
0:50:22 > 0:50:26but this year, she says she's in line to sell 10,000 portable toilets
0:50:26 > 0:50:30and 27,000 packs of refill bags.
0:50:30 > 0:50:32Would you like to take a leaflet?
0:50:32 > 0:50:34You can give some out for me, if you want!
0:50:34 > 0:50:38Although now she's got top salesman Theo Paphitis on board,
0:50:38 > 0:50:40- that could be set to rocket. - How you doing?
0:50:40 > 0:50:43- Theo's going to demonstrate. - So you can sit on that as a seat.
0:50:43 > 0:50:46- How does it feel? - It's very clever and very easy.
0:50:46 > 0:50:50- 15 quid to you, madam. Sold. Cheers. - Thank you.
0:50:50 > 0:50:53'Doing the Den and surviving that experience has made me more focused'
0:50:53 > 0:50:57and more confident in my business and where I'm going.
0:51:00 > 0:51:03Both the stall and Theo seem to be a hit with the festival crowd,
0:51:03 > 0:51:08but Kate is still worried about the seasonality of her product.
0:51:08 > 0:51:11Theo, we've talked a bit about the problem we've got
0:51:11 > 0:51:13with cash flow with such a seasonal business.
0:51:13 > 0:51:18I wondered if you had any advice on how we could solve that.
0:51:18 > 0:51:22Cash flow is the most important thing of any business.
0:51:22 > 0:51:25People often think profit is. They're wrong.
0:51:25 > 0:51:28A lack of profit is like a cancer.
0:51:28 > 0:51:32It kills you very, very slowly.
0:51:32 > 0:51:34A lack of cash flow, you can't pay your rent,
0:51:34 > 0:51:36you can't pay your staff.
0:51:36 > 0:51:37You're dead.
0:51:37 > 0:51:39But we can solve this, it's easy.
0:51:39 > 0:51:43You find other products that sell at different times of the year.
0:51:43 > 0:51:47So, basically, if we need all our money to pay for our stock
0:51:47 > 0:51:50in, say, February or March when all our cash goes out,
0:51:50 > 0:51:54we need a product that sells just before that period.
0:51:54 > 0:51:57So, maybe something that sells at Christmas?
0:51:57 > 0:52:01I'm thinking possibly ski, winter - those kind of products.
0:52:01 > 0:52:04So, yeah, I think that's definitely something
0:52:04 > 0:52:06to go away and really start thinking on.
0:52:06 > 0:52:09Sound advice from the Dragon.
0:52:09 > 0:52:13But before he leaves, Theo explains his strategy
0:52:13 > 0:52:16to turn his £50,000 into a growing investment.
0:52:16 > 0:52:22I thought Bog In A Bag, and I still do, is a really simple good product.
0:52:22 > 0:52:24Is it going to make me rich?
0:52:24 > 0:52:25No.
0:52:25 > 0:52:28Is it going to make you rich? The bad news is, no.
0:52:28 > 0:52:31It's going to give you a springboard.
0:52:31 > 0:52:32It's what you make of it.
0:52:32 > 0:52:35I back people. So, I actually backed you.
0:52:36 > 0:52:41Last year, Kate reportedly turned over £27,000
0:52:41 > 0:52:44and made a profit of £3,000.
0:52:44 > 0:52:47With her Dragon on board, she's now forecasting
0:52:47 > 0:52:52a £149,000 turnover, and a profit of £40,000.
0:52:52 > 0:52:56Kate is going to be one of those investments
0:52:56 > 0:52:58that I've made in the Den,
0:52:58 > 0:53:00and people are going to say, "Why did you do that?"
0:53:00 > 0:53:04But you know what, sometimes you see someone and you say,
0:53:04 > 0:53:06I'm going to back them.
0:53:06 > 0:53:09Dragons' Den has given me a fantastic opportunity
0:53:09 > 0:53:11to work with an amazing businessperson,
0:53:11 > 0:53:15and I'm going to prove to Theo that he made the right decision.
0:53:26 > 0:53:31We've learnt that a good negotiation is all about haggling.
0:53:31 > 0:53:34Will you come down to 20% - meet me halfway?
0:53:34 > 0:53:37Being in control, not being greedy.
0:53:37 > 0:53:39Well, Chinese eat dragons for breakfast.
0:53:39 > 0:53:41HE LAUGHS
0:53:41 > 0:53:46Knowing your bottom line, and having a strategy.
0:53:46 > 0:53:49I'd really, really like you to make an offer.
0:53:49 > 0:53:54But who lays the claim to be the smoothest negotiator in Den history?
0:53:54 > 0:53:56Well, there's one man who surprised everyone.
0:53:56 > 0:54:00He may not have been an obviously shrewd businessman,
0:54:00 > 0:54:03but he made the whole process just look easy.
0:54:08 > 0:54:12Guy Portelli and the pop icons was a really interesting pitch.
0:54:12 > 0:54:14I am a professional sculptor.
0:54:14 > 0:54:18I'm looking for an investment of £70,000 for a 25% share
0:54:18 > 0:54:21in my pop icons collection.
0:54:24 > 0:54:28His hair was all over the place, he was dressed like
0:54:28 > 0:54:29he's just come out the studio.
0:54:29 > 0:54:31I intend to use the investment
0:54:31 > 0:54:34to complete a series of 18 sculptures,
0:54:34 > 0:54:38which I will then be showing at the Mall Galleries in London.
0:54:38 > 0:54:41You really didn't think that he was going to be a fantastic negotiator.
0:54:41 > 0:54:44What I'm offering is
0:54:44 > 0:54:46a 25% share
0:54:46 > 0:54:49- of 100 sculptures. - What's the overall portfolio,
0:54:49 > 0:54:53in what you're aiming to sell for?
0:54:53 > 0:54:58Well, the whole 100 pieces are today valued in excess of £1 million.
0:55:02 > 0:55:05That was the turning point. They kind of went...kerching!
0:55:05 > 0:55:06They were hooked.
0:55:06 > 0:55:08They wanted a part of that.
0:55:08 > 0:55:12Are you saying that today, if somebody gave you £70,000...
0:55:12 > 0:55:15- Yeah.- ..they would get back 25% of a sale price
0:55:15 > 0:55:19of every sculpture you sold for the next 100?
0:55:19 > 0:55:20Yes.
0:55:20 > 0:55:21Why?
0:55:21 > 0:55:25Why? Because I have never put on a show of this magnitude.
0:55:25 > 0:55:30He himself was very cool, calm and collected.
0:55:30 > 0:55:33If someone was to offer you the money,
0:55:33 > 0:55:38would you allow ownership of those 18 pieces
0:55:38 > 0:55:41- until they got the investment back? - That wouldn't be a problem.
0:55:41 > 0:55:45Guy exhibited one of the most important skills in negotiation,
0:55:45 > 0:55:49which is to recognise what it is the other side will value,
0:55:49 > 0:55:50and that you can give to them,
0:55:50 > 0:55:53but which, frankly, isn't very expensive for you to give.
0:55:53 > 0:55:57Well, I'll make you an offer then. I'll give you the £70,000.
0:56:01 > 0:56:04Guy had a full offer on the table from Theo Paphitis.
0:56:04 > 0:56:06But, not wanting to miss out on the action,
0:56:06 > 0:56:11Peter Jones came up with a negotiation strategy of his own.
0:56:11 > 0:56:14For this to really work, you want maximum impact out in the market.
0:56:14 > 0:56:17You want people to know about it.
0:56:17 > 0:56:20So, I would like to recommend
0:56:20 > 0:56:23you get £70,000 for 25%,
0:56:23 > 0:56:29but all of the Dragons collectively have a piece of the pie.
0:56:29 > 0:56:34I would be quite interested to follow Peter's theme.
0:56:34 > 0:56:36I think I could add quite a lot of value to that.
0:56:38 > 0:56:42From nowhere, he's got three Dragons interested in investing in him.
0:56:42 > 0:56:46I think there's a return to be made.
0:56:46 > 0:56:48Yeah, we like that. We'll invest.
0:56:48 > 0:56:50Do you want to invest? Do you want to invest?
0:56:50 > 0:56:52It was going up and down the line!
0:56:52 > 0:56:55Well, I'm very happy if people are passionate about what I do.
0:56:55 > 0:57:00Duncan, if you feel passionately about it,
0:57:00 > 0:57:04then I'm happy for you as well to be part of that team.
0:57:04 > 0:57:10He was a good negotiator because he knew that they actually needed him.
0:57:10 > 0:57:12I feel passionate about your work,
0:57:12 > 0:57:15- but not about investing with the team.- No.
0:57:15 > 0:57:17My offer is not for £70,000.
0:57:17 > 0:57:18It's for £90,000.
0:57:18 > 0:57:20It's an offer by me on my own.
0:57:20 > 0:57:24Not content with having achieved the rare feat of having offers
0:57:24 > 0:57:26from four of the five Dragons,
0:57:26 > 0:57:29Guy managed to up the ante even more.
0:57:29 > 0:57:34I think three people, three lots of enthusiasm,
0:57:34 > 0:57:36would be beneficial to the project.
0:57:36 > 0:57:40And, if I could have an offer of £80,000 from the three,
0:57:40 > 0:57:43I would be keen to have that.
0:57:45 > 0:57:48He actually used the offer that Duncan put to him
0:57:48 > 0:57:51to shift the power in the Den.
0:57:51 > 0:57:53- Yeah, I'm happy.- I'm happy.
0:57:53 > 0:57:57- I think you've got yourself a deal, Guy!- OK, thanks.
0:57:57 > 0:58:00Guy kept his cool and walked away with three of them,
0:58:00 > 0:58:02and three of their black books,
0:58:02 > 0:58:05to invite a lot of people to private views
0:58:05 > 0:58:09and to hopefully sell more of his artwork to. He absolutely nailed it.
0:58:09 > 0:58:11He got more than what he went in for.
0:58:13 > 0:58:16It was incredible. He cleaned us all out.
0:58:20 > 0:58:24Next time, the Dragons examine how the strength of an idea can be
0:58:24 > 0:58:26the key to unlocking their cash.
0:58:26 > 0:58:27Yeah, baby!
0:58:27 > 0:58:30And catch up with the entrepreneurs who had some of the best...
0:58:30 > 0:58:32- Congratulations.- Cheers.
0:58:32 > 0:58:34..and the worst ideas.
0:58:34 > 0:58:39You win the worst invention ever to be brought into Dragon's Den.
0:58:58 > 0:59:01Subtitles by Red Bee Media Ltd
0:59:01 > 0:59:04E-mail subtitling@bbc.co.uk