The Art of Negotiation Dragons' Den: How to Win in the Den

'This is the Dragons' Den.

'Over the last six years, nearly 700 entrepreneurs have walked up the stairs looking for investment.

'Before them, five of Britain's most successful business brains.

'Collectively worth a reported £1 billion.

'Convincing them to part with their cash isn't easy,

'but tonight they've agreed to share their tips for success.

-'From the initial idea to the pitch.'

-Are you ready for the alternative?

-'From the business plan...'

-Probably the tidiest patent that I've ever seen.

-'..to the negotiation.'

-Five percent each, ten percent in total.

-Oh!

'These are the business secrets that work outside the den and within

'revealed by the Dragons themselves and the brave entrepreneurs who've dared to stand before them.

-'Tonight on How To Win In The Den...'

-Action.

'..we examine the art of negotiation.'

I think we would really like to keep the stake below 50 percent.

-'From increasing your pocket money...'

-I'm out!

'..to buying a car, negotiation is an everyday skill we all need.'

So much life is about give and take. Where there's give and take,

there's negotiation.

Would you take 40 percent if I exceed year one's target?

-And the reason why you're doing that, Ian, is because...

-I'm negotiating.

THEY LAUGH

It's rather surreal, negotiating with five Dragons.

I don't want to give 40 percent away, but thank you very much for your offer, Theo.

You're trying to basically take as much as you possibly can.

-Two percent. One percent?

-Don't make it about the percentage.

You're there on your own

and the crucial decision is whether to accept or not.

I will accept, gladly.

'Now the Dragons are catching up with their investments.'

15 quid to you, madam. Sold.

'And revisiting some of the entrepreneurs who dared to walk away.'

I'm Valentine! How are you? HE LAUGHS

'So as they impart their words of wisdom...'

-There's a lot of tactics.

-You can haggle, you can play it cool.

-Do not be greedy.

-Everybody's got to be a winner.

Stay in control.

'..get out your notepad and pen.

'Because these are the lessons you need to know if you want to negotiate the best deal.

'Entering into a negotiation with five of the brightest brains in business

'is a daunting prospect for any entrepreneur.'

-Very, very nervous.

-I expect them to grill me.

I play a lot of badminton, so that helps me to cope with nerves.

'Not everyone who walks up the stairs gets the chance to cut a deal.'

I'm not amused, I'm angry. I'm out.

'But for the lucky few who get to talk numbers, the final furlong can be the toughest.'

Would it be possible for us to meet at 45?

My best offer is £100,000 for 50 percent.

Being able to negotiate is part of the whole essence of business

and it's not my responsibility to help them through negotiations.

It's my responsibility to say, "This is the deal that I will do with you.

"Do you agree with that deal or not?"

'So the Dragons' first rule of negotiation is

'have your bargaining banter at the ready.'

There is a lot of haggling in the den.

-Mark, 40 percent.

-30 percent.

-I'm going to offer you £100,000...

-But I want 30 percent share of the business.

It used to be very simple. It was just, "How much money? How much equity?"

-How flexible are you on the percentages?

-I'm about as flexible as a steel rod.

But as the den has evolved, we've seen some of the haggling get more complicated.

-We can put a ratchet system where you can get three percent back from each of us.

-What's a ratchet system?

So you've got deals with claw-backs.

If you deliver 500,000 the following year,

750 the year after...

-Give-backs of equity.

-..then we will take 18 percent today...

Contingent clauses in the contract.

..we will drop one percent each year

providing you deliver 250 increments.

Suddenly, what seemed like a sticking point resolves.

Do we have ourselves a deal, then?

'And there's one particular Dragon who just loves to haggle.'

Theo, he likes to haggle. He's the Arthur Daley of the den.

I am not coming down to Duncan's level.

-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.

Look at my watches. I can buy more watches than you.

I've got a lot of wealth, I'm successful

and for me, money is a measure of the success.

He loves it.

'One memorable entrepreneur haggler was Chris Hopkins.

'Chris entered the den this year looking for a £120,000 investment

'for a ten percent share in his solar panel installation business.'

Hello, Dragons. You've heard that money doesn't grow on trees, which is true,

but I'm here to show you that money can grow on rooftops thanks to the feed-in tariff.

The feed-in tariff works like this. Ploughcroft would install

these solar panels on domestic home roofs.

The natural daylight that comes out of the sky is absorbed by the panels,

turns into electricity, goes through the house

to the energy generating company.

That energy generating company then pays that home owner the tariff.

'After the pitch, Duncan Bannatyne got straight into the figures.'

What's the projection for the year you're in now?

-£5 million turnover.

-Profit?

-Profit September this year, £600,000.

'And came up with an immediate offer.'

I'm going to offer you all the money, £120,000,

but I want 30 percent of the equity.

-Would you come down to 20 percent and meet me halfway?

-I'll raise my offer to 25 percent.

-20 percent.

-25.

-Chris, is Duncan the only Dragon you're interested in?

-You've got four Dragons here.

-Five seconds, Chris.

-You're absolutely crazy. You came in here to talk to five investors, not one investor.

-120,000, 25 percent.

Duncan Bannatyne made a really quick offer and it flummoxed me.

The other Dragons got upset and said, "There's more than one Dragon.'

Sorry, OK. Right, I'll open the floor up to the next person that wants to speak to me.

'Chris had narrowly avoided alienating the four remaining Dragons

'and it was time for Deborah Meaden to show her hand.'

-I am going to make you an offer.

-OK.

-All of the money.

-Right.

I want 25 percent of the business.

When Deborah made her offer, yeah, I felt elated. It was good.

'Peter Jones declared himself out,

'but there were still two Dragons left.'

I'm going to make you an offer.

-My offer is the full money for 25 percent, as well.

-Right.

Chris, I will give you the full amount, £120,000.

-But I would want 26 percent of your business.

-Right.

I had an offer off all four of them. It was like, "Which one do I pick?"

'With so many offers on the table,

'Chris suddenly found himself involved in some serious haggling.'

I don't like to see too many of my negotiations

get into a haggling stage because it's more about, "I want to win. No, I want to win."

You're not just haggling with yourself, because there's four other Dragons

who are watching your every single move

just in case you leave a gap that they can actually jump into.

-Chris.

-Yes?

-I'm going to make you an offer now

that I think is the offer that is best for you.

The best deal is to accept an offer from two Dragons. OK?

So my offer really is an offer from me and Hilary if Hilary were to come in.

Half the money for 11 percent.

I'm perfectly happy to work with Duncan.

'With the confidence that comes from having four Dragons fighting over a deal,

'Chris was able to start the negotiation on his terms.

'But at first, it didn't quite go according to plan.'

Right. So would you two consider making an offer together, combined?

-Yeah.

-Would you come down collectively so it was 22.5 percent?

Chris, I just want to say, I've made you three offers, right?

And I'm now deeply insulted that you've refused two of my offers and you're using my offer

-to try and get a better offer.

-This is an important decision.

-And so for that reason,

I'm withdrawing my offer and I'm out.

And I tried haggling with them but I alienated Duncan to the point he went, "I'm out".

'Duncan Bannatyne may have declared himself out,

'but new Dragon Hilary Devey was still keen to bag her first den investment.'

-I see this as a growing business.

-Right.

And I will give you everything that you require

to make it a market leader.

I'd get into a bidding war with anybody if it's something I really wanted

that I think would enhance my business portfolio.

'But who would Chris choose?'

So, I'd like to accept Deborah and Theo's offer.

-Oh.

-Well, that's easy done!

Hilary's offer was the best in the den

but because I had no knowledge of Hilary, I didn't have that confidence to commit to her.

'Once a deal has been agreed in principle in the den,

'both parties go through the regular business process of due diligence.

'Today, Deborah is in Brighouse to pay a visit to the company's West Yorkshire branch

'and talk about future plans.'

I've got my own ideas of what we can do,

but I really want to find out what they're already onto and then I can plug any gaps where I think,

"You haven't thought of this, it's something we should do".

-Hi, Deborah.

-Hello, Chris!

-You all right?

-Very well. Glad to see you out of the den.

So this is our eco visitors centre.

As you can see, it's stacked with renewable products

ranging from your wind turbine, solar PV, to your ground source heat pumps.

So who comes here, the general public?

Probably councillors, schools. It's here to help the whole industry evolve.

'Chris says that in the last three weeks alone, he's turned over £350,000

'and he's expecting that to grow to £1 million by the end of the month.

'He's also predicting a profit of half a million pounds for this year.'

That's what I used to do. Bodybuilding.

-All natural.

-Is that you?

-Yeah, that's me.

-Of course it's me.

-No.

-Yeah, second at the World Championship.

-No, that's someone else's body.

No, it is not. Basically, you can think about bodybuilding as you've got to train hard,

as in you've got to educate yourself in business. You've got to get your presentation, baby oil, false tan.

You've got to stand on stage and present, just like in the den

and get your business looking right, streamlined. You've got judges. In business, that's the public.

And all I've done really is replicate what I learned in bodybuilding and done it into this business.

-Yeah.

-With the training, as well, to back it all up.

-Fantastic.

-That is the business model.

'Even though the due diligence process isn't quite complete,

'with such a strong business model in place,

'Deborah and Chris are both confident the deal will be finalised in the next few weeks.

'So the new business partners plough on with their strategy to take this regional company nationwide.'

The business is moving already. Since being on the den, we've opened up two branches,

-one in Exeter to cover the southwest and one in Hertford.

-So why those two regions?

Just because I can see them as hotspots and they're far enough away

for us not to be basically getting mixed up with our northern branch.

We'll test it over the next three months. Providing that's successful,

I think we'll get another four open and then it's about maximising those six additional branches quickly.

Yeah. So get two open, check that you've got it right, tweak it and then roll it out.

'The renewable energy market may be growing at a rapid pace,

'but Deborah knows that exercising caution over expanding the business too quickly is a smart move.'

You're in quite a dangerous position because you could get caught up in,

"I've got to go, I've got to expand".

But I really like what I'm hearing from you,

"No, we need to do this fast but in a controlled fashion".

I've not experienced this level of growth ever. You've experienced it and hopefully can guide me through.

That's what I like about you. You know what you know, you know what you need help with.

Both Theo and I have rolled out big businesses across the UK,

so we can just steer you clear of some of those mistakes that we would've made.

We need your name to be a household name throughout the UK.

'To date, the company say they've done 5,000 installations across the UK.

'And with Deborah and Theo on board, Chris is projecting a turnover of £9.3 million for 2013.

'And the ex-bodybuilder is over the moon

'at the thought of having this kind of business muscle on his side.'

Well, it makes me feel great, that somebody's actually taking me seriously

and that we are going to be this national brand

and it's exciting and I'm realising the vision that I had five years ago.

I fought pretty hard for the investment in Ploughcroft.

This is a massively expanding marketplace.

I will be staggered if this isn't one of the biggies from Dragons' Den.

'Every entrepreneur wishes that all five Dragons will be begging to invest.'

I'm hoping the Dragons do fight over me. That would be my dream.

'But only the coolest customers ever achieve that elusive den nirvana.'

I can't invest and I'm out.

'So the Dragons' next lesson is to stay in control of the deal and yourself.'

You've got to maintain a very good personal relationship.

-I'm going to offer you £50,000 for ten percent of the company.

-At 25 percent...

-Shh.

You've got verbal diarrhoea sometimes.

If it gets nasty, if it gets out of hand in personal terms...

I won't answer that question because it's not relevant.

-..you're not going to get the best out of the other side.

-It's not relevant.

-It is to me.

Stay in control.

If we were willing to sort of double that for you guys

-and give you 20 percent each...

-No, hold on a minute. Where's this negotiation going?

'And if you want to gain the bargaining upper hand,

'you need to take charge of your bodily functions, too.'

Any good negotiator is just looking for that tiny little bead of perspiration. That's all it takes.

Just take a couple more seconds just to think before you say the words "last final offer".

What I was going to say was, "Can I get a tissue?" LAUGHTER

'But when an entrepreneur does manage to gain control of their negotiation, anything's possible.

'And that includes having all five Dragons eating out of their hands.'

It's a very rare moment when you actually see something in the den,

somebody presents, everybody agrees, great product.

'James Brown and Amanda Jones entered the den in 2007 looking for a £50,000 investment

'in their mobile water purification system aimed at developing countries.'

As the user rolls the unit back to the community,

the mechanical movement of the wheels drives a filter system through the tank.

Upon reaching the destination,

the water in the unit is completely free of contaminates.

It's such a good idea. You look at it and go, "I wish I'd thought of that".

It could save millions of lives, potentially.

'After a controlled and professional pitch, the offers started to roll in.'

-I'm going to make you an offer.

-£25,000.

-I'd be happy to match James's offer.

-£50,000.

-For ten percent.

'But before Amanda and James had the chance to negotiate, there was one surprise still to come.'

If everybody is keen on this,

all chuck £10,000 in and make this happen.

Competitive spirit was dropped just for that occasion.

-I would lob £10,000 in.

-I'd be very happy to.

-Absolutely.

It doesn't happen very often and it probably will never happen in our lifetimes again.

'But after a smooth ride in the den, the deal hit a snag outside it.

'The 50K wasn't a realistic projection

'and the duo didn't have an accurate figure as to what it would take to bring the product to market.

'With the terms having changed, all parties agreed not to proceed.'

They weren't wanting to start an investment

that was, from their point of view, bottomless.

And from our point of view, we didn't want to give away ten percent of equity

when that could keep increasing, so from both sides, there was this vulnerability.

'Four years on and the company have now got the cash injection they needed from a syndicate of investors

'with expertise in the humanitarian market.

'At long last, a very persistent James has just returned from Kenya

'where the newly renamed Midomo unit is being slowly introduced into the community.'

Just incredibly exciting to see these Midomos being used

by women, by children, who were very excited to be using them.

There were some problems that we need to learn from,

but overall, it was a fantastic experience and it worked so well.

'From the thousands of budding entrepreneurs

-'desperate for an audience with the Dragons...'

-I've got an opportunity and I want to use it.

'..less than 100 get to walk up the den stairs every year.'

How many people can say that they're going to stand there? Brilliant.

'And just a select few find themselves with an offer on the table.'

I'm not stupid. If there's a good deal to have, I'm taking it.

'So, if you get a chance to shake hands with a Dragon,

'take heed of the third deadly sin and don't be greedy.'

People do sometimes clutch defeat from the jaws of victory.

There's a deal to be done, it would benefit the Dragons,

it would benefit the entrepreneur, but they walk away.

# It's not about the money, money, money

# We don't need your money, money, money

-Do you want the money in 50s or...?

-HE LAUGHS

It's right here.

It is vitally important in negotiation not to be greedy.

And now you want to think that, actually, I'll try and mug five Dragons for 200 grand.

When I see somebody get very, very close to what they actually came in to get...

I started at five. You can see I've moved.

..but are not willing to perhaps give an extra five percent away...

We've decided to stick to our guns on the 25 percent.

Guys, that's loopy.

..my heart sinks, because I know the difficulty of getting money and funding.

Don't let the five percent influence you away from

making the right decision for you and your business.

When they walk back down those stairs,

I know that they'll be thinking within hours, "What an idiot".

-You're an entrepreneur, you've got to...

-Yeah.

-..think with your mind, not your wallet.

'No matter how many pitches the Dragons sit through,

'they're still shocked by the entrepreneurs' unrealistic expectations.'

Some people who come in front of the Dragons are absolutely amazingly greedy.

And I'm here today to raise two and a half million pounds

for 30 percent of the equity.

This is such an amazing product that you want to put two and a half grand for 85 percent

and I'm going to put in 150 grand for 15 percent?

I'm obviously a bit disappointed that you think that we're that stupid, really.

'So, if you want to walk away from the den with a pocket full of money...'

Yes. Yes, please!

-'..and avoid an earful of grief...'

-Go away!

'..take heed of this advice.'

Make sure you're coming in for an investment at a sensible level.

-What sort of levels are you willing to discuss?

-Between five and ten percent.

-Between five and ten? That's your range?

-Mm-hm.

And if you get an offer, take the Dragon's arm off.

My gut feeling is, if you walk away today,

another big mistake in Clive's CV.

'One woman who asked for a little too much was Ling Valentine.

'Ling entered the den back in 2007

'looking for investment in her car leasing website.'

Hello. I'm Ling. My famous Chinese nuclear missile truck, my trademark.

I'm looking for an investment of £50,000

for a five percent share of my company.

Ling is just one of those firecrackers.

I mean, she just came in and grabbed our attention.

I've made over £100,000 gross profit in each of the last two years.

Your money would double each year. By the year 2010, it will be worth £400,000.

My business model is... # Money, money, money, money

# Money! SHE LAUGHS

'After her pitch, Peter Jones led the questioning about Ling's unique marketing strategy.'

-Ling.

-Yeah.

-What on earth is with the advertising on the nuclear truck?

With the nuclear missile truck, nobody else has got such a thing

and I used to put it next to A1

-and it attracts loads of publicity. Fantastic idea.

-Really?

-Yeah.

I'm just a genius with marketing.

I have all these crazy ideas about how to market my business and it works.

You set this up two years ago?

No, I set it up about five years ago.

I think the most memorable thing was when she said

she spoke "perfect Jinglish".

I've been in this country for eight years.

I came with nothing apart from perfect Jinglish.

Sorry?

LAUGHTER

'In spite of the light-hearted mood,

'some of the Dragons had serious doubts about Ling's business acumen.'

What did your accounts show?

-Erm...

-For 2005?

-I just, er...

I just know roughly the figure. The thing is because I don't do the book.

You come here asking for money, you're telling me you don't do a book?

How do you expect me to give you money if you can't tell me what you're making?

I don't do my book. That's what I pay an accountant to do.

I trust my accountant. My accountants do all the book. That's it.

Your lack of business nous is terrifying.

And that's my problem. So I can't. I'm out.

'Two other Dragons dropped out in quick succession

'but former Dragon Richard Farleigh and Duncan Bannatyne

'saw something in the zany entrepreneur.'

I would like to offer you half the money but for 20 percent.

So I'm going to match Richard's offer

and I'm going to offer you £25,000 for 20 percent of the company.

I think it's a bit too much. I really refuse that.

-You're turning us down?

-Yeah. Well, Chinese eat dragons for breakfast.

Oh!

HE LAUGHS

I would say five percent each, ten percent in total.

The best I could offer you would be £25,000 for 15 percent of the company.

Now, if Richard matched that,

-that would be £50,000 for 30 percent of the company.

-Ling, I would match that.

'It's very rare that the Dragons renegotiate to meet the demands of an entrepreneur,

'but somehow Ling had pulled it off.'

I think to go on Dragons' Den and not be flexible about the equity stake is a very silly mistake.

I certainly would've been happy with the second offer that she got.

'But Ling's hunger for a larger piece of the pie was just too strong.'

-Thank you. I refuse it.

-Ling, think about it. It's a fantastic...

It's an unbelievable offer. Take their money.

Thank you for your money. Er, I refuse it. Thank you.

'To the Dragons' disbelief,

'Ling walked away from the deal.'

Just completely bizarre. The biggest mistake ever, turning down my investment.

I'm not greedy, no.

End of the day, I'm still a businesswoman.

I'm not prepared to give my company away very cheaply,

so I would just only accept what I think is fair.

'Four years on and Ling has gone from strength to strength.

'She's won several awards and her unique persona

'has attracted offers to give inspirational business seminars.'

There are so many car-leasing companies around,

we had to make it start out.

Before Dragons' Den, I was turning over about £10 million worth a year.

Nowadays, I'm doing £40 million worth every year. I'm making more money. I'm very happy.

Please put your hands together and say a big thank you.

APPLAUSE

'Leasing a reported £40 million worth of vehicles

'sounds like a business opportunity any Dragon would want to be involved with

'and today Ling is keen to show Duncan Bannatyne what he's missed

'as well as show off her latest marketing ploy.'

I think Ling's business has been growing up since I saw her in the den,

but I still don't think she's making a lot of money.

I think she still hasn't grasped the fact that turnover is vanity, profit is sanity.

It's profit that pays your mortgage, that you live on, that builds up your pension, not turnover.

Oh, I think this is probably Ling now, in her yellow submarine

or yellow tank or whatever it is. I think we'll stand back.

I'm Valentine! How are you?

HE LAUGHS

Over here.

HE LAUGHS

-Hello, Ling. How are you?

-Yeah, good.

-What is this?

-Well, my new pet.

-Your new pet?

-Yeah.

-Nice to see you.

-Nice to see you again.

You've missed the good fun.

If you invest in my business, you can have a tank, too.

-Oh, if I invest, I could have one of these? That'd be nice.

-It's good.

HE LAUGHS Duncan, I'd love to show you how I've done in the last few years.

Come to my office. Do you want a ride?

Erm, no, I think actually I'll come by car.

-I'll get my driver and follow you.

-OK.

-See you in my office.

-Have a nice trip.

HE LAUGHS

'Five years ago, Ling was running her business out of her dining room at home.

'Today she's keen to show Duncan her new branded premises in Gateshead.'

This is my office. This is my famous, famous missile launcher.

Yes, I remember this. I knew this before I knew you because I'd seen it on the motorway.

-Here we go.

-'Ling currently employs ten people

'and has made sure her staff can never forget who's the boss.'

Duncan, this is my office.

-What's this?

-Oh, money.

-Is this for me?

-50 grand.

HE LAUGHS

'As well as flaunting her 50K in cash,

'Ling also wants to show off her website that she claims has over a million unique visitors a year,

'resulting in 100 leasing deals a month.'

I decided to design the crazy website

to attract all the attention, make the website stand out.

I have over 20,000 cars leased on my website.

-What do you make out of a car?

-On average, we make £300 to £400 per car.

-Wow. That's good.

'The Dragons' biggest criticism of Ling was her lack of financial knowledge,

'so she's had some figures prepared to prove that Duncan would've made money

'out of a 15 percent investment in her business.

'But he immediately spots an error in the calculations.'

These are flawed because they show a Dragon taking 15 percent of profit, which you wouldn't do.

Unless you took 85 percent, and you can't afford to do that.

So these are flawed. You can't add up the 15 percent and say that's what would happen.

Right, hang on a minute, these are the figures. My accountant gave it to me.

I'm not interested in reading the accounts all the time. I'm not a professional, but...

No, Ling, what I'm saying is, these accounts assume an investor

would take 15 percent of profit every year.

An investor would not take 15 percent of the profit every year.

-That's not how you do investments.

-Right.

So how does that work, then? How much...

If you invest in a business, how much do you take out of the business?

Well, we normally take it in dividends, so we take 15 percent of the dividend paid.

So if you don't take dividend, we don't. If you take 100,000, we take 15,000.

But the company can't afford to pay £100,000 dividend, so we don't take any. You let the company build up.

It does make sense.

'Most investors wouldn't take 15 percent of the company's profits

'until the business had built up enough equity to be in a position to pay out.

'And in spite of her high leasing figures, Ling's actual profit is showing at around £30,000.

'So Duncan has some more bad news for her.'

In my opinion, this would've been a bad investment.

If we'd put £50,000 in for 30 percent of the company,

making £30,000 per year now, that would've been a bad investment.

-OK.

-I wouldn't have been happy with that investment.

-OK. Well, I didn't want you to invest anyway.

-We're both happy, then.

-Yeah.

-Cos you didn't want the investment

-and I'm glad I didn't make it.

-Exactly. We're happy. HE LAUGHS

I think there's no doubt that Ling's Cars would be making a lot more money if she'd taken the investment,

because we'd have analysed the accounts, seen where we could make improvements.

I'm proud I walked away, refused their offer and I made a success.

I saved the company for myself. I'm great, eh? SHE LAUGHS

I don't think you can underestimate the benefit of having a good investor on board.

I think there's a lesson learned here. Don't be greedy.

Take a decent investment, and I think the investment would have worked.

'This is the Dragons' guide to negotiation.

'Five lessons that can help all of us get the best deal, and maybe even save us a bob or two.

'Something that these five business brains don't have to worry about ever again.

'When you're waiting outside the den,

'it's easy to think you'll turn the Dragons down if the deal is not right.'

I have a bottom line of how much equity I'll give away.

Obviously we want a Dragon on board, but we also want the right deal for us, as well.

-'But when the pressure is on...'

-Sorry, I completely lost it.

'..and the Queen's head is staring up at you, all bets are off.'

-We made a snap decision.

-Yep.

-Perhaps not the best one.

'So the next lesson is simple. Know when to walk away.'

It is very important before you go into the den

to know what your final bottom line really is.

I can't go to the 30 percent.

And more importantly, if you don't hit it...

I'm a little uncomfortable with the equity we're looking at.

..be prepared to walk away.

I'm confident I can find a better deal, which is why I'm turning down your offer.

Everybody's got to be a winner.

There's no point either party being unhappy with what's been achieved,

because it won't work.

I can't wait to have a meeting with you and show you the figures on paper.

We can't wait to make you a multi-millionaire.

'But once you've decided on that final figure, make sure you stick to it.'

If you move your bottom line, you have completely lost it.

-50 is a huge chunk.

-Yeah, but Casey, you know how it is.

I couldn't do it without you. I'd love you both on board.

If you're not prepared to walk away in a negotiation, you're bluffing.

Cos at the end of the day, you're going to give in.

If you are genuinely prepared to walk away...

I just don't negotiate. I make what I think is fair in the first place.

..people can see it, they can see it in your eyes. You mean it.

We're going to stick to our guns. So, thank you.

'And if you do stand firm on your bottom line, you'd better be certain you're making the right decision.'

Only walk away if you've got a back up plan.

If he wants to put the money in, someone similar will put the money in. He's playing hardball.

One thing is for certain, if you turn down an investment from a Dragon,

the chances of you being successful are incredibly slight.

Now that could either make you a million-pound deal, or lose it you.

'Two people who stuck to their bottom line were Fenella Lindsell and Lara Goodbody.

'They entered the den in 2006 looking for a £200,000 investment

'for 15 percent of their children's yoga franchise.'

-Could you just show me, briefly, what you do do with children.

-Well, we might go rowing in a boat.

So we're going on an adventure and we're rowing down the river, and we're, "Heave-Ho!"

When I was asked to demonstrate it was a very scary moment,

because full of adrenalin and in rather tight trousers,

it was a rather daunting prospect.

Mummy and Daddy phone us and we answer the phone and we tell them how we're doing.

Got on the floor and started doing the yoga moves,

putting her foot in her mouth, answering the phone.

'After also flexing some impressive figures...'

And our turnover has grown from £120,000 to £390,000.

'..the duo soon found themselves negotiating offers

from three investors, including former Dragon Richard Farleigh.'

-I will give you £200,000 but I want 30 percent of the business.

-Are you negotiable on your equity?

-It's a good offer.

-'But the duo decided to stay true to their bottom line.'

Whilst your input would be, without a doubt, financially valuable...

-No!

-No!

-..we're going to turn you down.

It was Nell who actually turned them down and I'm glad she did because I don't know how I would have said it.

Because I have never turned down £200,000 before.

I think you will live to regret that.

'After leaving the den, the company did gain investment,

'and five years on, they're predicting a profit of £110,000 for this year.'

Don't forget to scream. CHILDREN SCREAM Wow!

Since we appeared on Dragons' Den, we've sold a franchise to Australia,

we had a book deal from Virgin, and probably one of the most strategic and exciting partnerships has been

with Waybuloo, which is the children's CBeebies programme.

'Fenella and Lara now value their business at £1.5 million,

'meaning that if Richard had invested at 30 percent, he would have more than doubled his money.

'Another business partnership whose bottom line stopped them taking investment

'were Naomi Timperley and Andy Hurwitz.

'They entered the den in 2008 looking for £100,000

'for a ten percent share in their children's disco brand.'

Baby Loves Disco was a really sweet concept.

It's an event for parents and children from six months to seven years.

We get a great DJ playing classic disco, 70s, 80s.

The overall brand Baby Loves is something that we're looking

to exploit in other media, as well as various content.

'After hearing their pitch, four of the Dragons dropped out in quick succession.

'And only Deborah Meaden remained to throw the entrepreneurs a lifeline.'

So I'm going to offer you £100,000 for 40 percent of the business.

That's an offer that we appreciate and are honoured by, but we respectfully decline.

It knocks me out of control of the brand and the company and that worries me.

-I think it's the wrong decision.

-Why did they do that? Why did they turn down the Dragons?

'Three years on and the company say that, while last year's turnover was £65,000,

'they made no profit, and they predict next year's figures to be the same.'

At that point in the business, it was the right decision to make.

Maybe now it wouldn't be.

'The company is still running events but Andy and Naomi have decided to start scaling the business down

'as they both have other ventures in the pipeline.'

And freeze!

'The Dragons' penultimate lesson is vital for any negotiation.'

If I get a roasting, at least I've got protection.

'Whatever happens, make sure you've got a strategy.'

Every entrepreneur should have a plan.

What we'd like to do is offer you one of each of the models and 30 percent of our company.

There's a lot of tactics that are all going on.

And if you don't recoup, we give you the money back, and you keep the cars.

'And for some entrepreneurs, their best strategy is to get personal.'

They've sometimes got a favourite Dragon.

Did you have your mind fixed on any particular Dragon?

And they can't help giving it away.

-Leslie, hello, I'm Peter.

-Hello, Peter.

SHE GIGGLES

THEY LAUGH

Their eyes keep darting to the person they actually want to invest in their product.

I'm shaking a bit. Hello, Peter.

'But flattery isn't the only negotiation strategy the entrepreneurs use.

'There's low-risk clauses...'

Ten percent is still a sizeable chunk. You'll have your money back in three years.

After that, you should still have enough to buy a new car every year.

-I'm not struggling with a new car every year.

-'..no-risk clauses...'

How about if I offered to buy back your shares so you're actually not risking any of your money at all?

'..and just good old-fashioned begging.'

I will return your investment within three years,

and I promise not to take a penny in salary until I've done that.

-'And the Dragons have a few tricks up their sleeves, too.'

-Do you play it cool?

I'll give the offer for three minutes.

Do you actually play your hand?

So I'm finding myself in a situation of how to play this so that I make sure that I win.

I like to be a bit jokey.

As the heat's gone up in the den, I've started to see that your brains are defrosting slowly.

But sometimes my palms are actually sweating.

I can't believe, this is the first time ever, I've started to sweat.

And I don't know whether it's the sauce I've just taken, or whether it's what I'm about to say.

And I'm thinking, "Crikey! Please, one of those other Dragons go out, cos I'm really interested in this."

One woman who used a risky strategy to negotiate the deal she wanted

was Kate Castle.

She entered the Den this year looking for £50,000

for a 15% investment in her foldaway portable loo.

Bog In A Bag is a lightweight portable toilet.

When you want to use it, you remove it from its bag,

open it out.

You remove the cover,

take one of the specially-designed degradable bags.

This then goes into the central section

and completely seals the seat.

'When I walked up the steps with a portable toilet,

'I definitely knew it was going to get a few laughs.'

My only hope was that they would also take me seriously.

You then sit down, go to the toilet.

Once you've finished, you remove the bag,

tie the top.

Completely seals the contents, and dispose.

Low-cost, simple, and there's definitely a need.

A confident pitch, but Peter Jones was not impressed.

-Kate.

-Yes?

Where do I start? I just want to make sure that

I've still got my sanity, because I've just seen a person present

a chair with a hole in it and a bin liner,

and want £50,000 for it.

I'm just trying in my head to work out,

how can you really make some serious money in this?

I can't see hundreds of thousands of people buying this product.

I'm out.

Duncan Bannatyne also declared himself out,

but Deborah Meaden saw potential in the product.

So, I'm going to offer you the full amount, 50,000.

-I want 30% of the business.

-'When I got'

that offer in, I thought,

"That's a really, really good offer."

I will offer you the full amount for 25%.

With two good offers already on the table,

Theo Paphitis was still undecided.

It forced Kate into making a highly tactical gamble.

It's, do I match Deborah's 30%,

or do I just say, "You've got two Dragons already"?

What would you like me to do?

If I'm honest, I'd really, really like you to make an offer

because I think you've got the retail experience that I need.

-PETER:

-That's high rolling risk.

-That's a very high risk.

I think you just told me something...

that you've got a clear preferred Dragon.

I'm withdrawing my offer.

I'm out.

'At that moment, I really began to panic'

and think that, you know,

everything could fall apart and that I could walk out with no deal.

Kate's high-risk strategy had cost her a Dragon.

But had it been worth it?

Kate, I'm struggling, really struggling, with that 30%,

because you're so early.

I will match Deborah's 30%.

OK.

Thank you for your offers, all three of you.

Um... Deborah's right.

Theo is my preferred Dragon.

Kate, congratulations.

'I do think that if I had been'

more woolly and less honest with my answer,

then I would have potentially lost Theo, and I might have

walked out with a deal,

but it wouldn't necessarily have been my perfect deal.

Come and look at this face. Look, look.

-She chose Mr Paphitis...

-Mr Crapper.

-As opposed to...

-Lovely me.

-And me!

-And Hilary, sorry.

-And you!

It's a few months since her performance in the Den.

Today, Kate's setting her stall out at the Cornbury Music Festival

in Oxfordshire, to try and make some sales.

But now Kate says the deal has officially gone through,

how are things progressing with her new business partner?

'It's still early days, but I'm confident that,'

with Theo's experience and his contacts,

it's going to be possible to move a lot quicker than I ever could have imagined.

With her Dragon's involvement now confirmed,

Kate has valued her business at £170,000.

Today, Theo has agreed to meet his new partner at the festival

to see how well their product is selling,

and discuss how to take the business forward.

Kate's negotiation was actually quite different

to some we get in the Den.

Normally it's just all about the percentage.

Actually, with Kate, it was all about the Dragon.

She was prepared to sacrifice

a little bit more than the other Dragons wanted

to make sure she got Number One Dragon,

who turns up at music festivals wearing...a suit.

You haven't seen Bog In A Bag, have you?

You haven't seen a lady selling bogs, have you?

This fella's not well, is he?!

Look, I've found her!

Love the wellies! How are you doing?

-Yes, good thanks.

-Good.

-Good to see you.

-What a glorious day for it.

I know, it's fantastic.

-How's it been going?

-It's been going brilliantly.

In the Den, the Dragons advised me to get out at festivals,

meet my customers, sell some, so here I am.

I've taken the advice and I'm busy selling.

Right, so... Let's see you do your stuff.

-OK, let's do it.

-Listen, I'm right behind you.

SHE LAUGHS

I am right behind you.

To date, Kate's reportedly sold a total of 11,000 products,

but this year, she says she's in line to sell 10,000 portable toilets

and 27,000 packs of refill bags.

Would you like to take a leaflet?

You can give some out for me, if you want!

Although now she's got top salesman Theo Paphitis on board,

-that could be set to rocket.

-How you doing?

-Theo's going to demonstrate.

-So you can sit on that as a seat.

-How does it feel?

-It's very clever and very easy.

-15 quid to you, madam. Sold. Cheers.

-Thank you.

'Doing the Den and surviving that experience has made me more focused'

and more confident in my business and where I'm going.

Both the stall and Theo seem to be a hit with the festival crowd,

but Kate is still worried about the seasonality of her product.

Theo, we've talked a bit about the problem we've got

with cash flow with such a seasonal business.

I wondered if you had any advice on how we could solve that.

Cash flow is the most important thing of any business.

People often think profit is. They're wrong.

A lack of profit is like a cancer.

It kills you very, very slowly.

A lack of cash flow, you can't pay your rent,

you can't pay your staff.

You're dead.

But we can solve this, it's easy.

You find other products that sell at different times of the year.

So, basically, if we need all our money to pay for our stock

in, say, February or March when all our cash goes out,

we need a product that sells just before that period.

So, maybe something that sells at Christmas?

I'm thinking possibly ski, winter - those kind of products.

So, yeah, I think that's definitely something

to go away and really start thinking on.

Sound advice from the Dragon.

But before he leaves, Theo explains his strategy

to turn his £50,000 into a growing investment.

I thought Bog In A Bag, and I still do, is a really simple good product.

Is it going to make me rich?

No.

Is it going to make you rich? The bad news is, no.

It's going to give you a springboard.

It's what you make of it.

I back people. So, I actually backed you.

Last year, Kate reportedly turned over £27,000

and made a profit of £3,000.

With her Dragon on board, she's now forecasting

a £149,000 turnover, and a profit of £40,000.

Kate is going to be one of those investments

that I've made in the Den,

and people are going to say, "Why did you do that?"

But you know what, sometimes you see someone and you say,

I'm going to back them.

Dragons' Den has given me a fantastic opportunity

to work with an amazing businessperson,

and I'm going to prove to Theo that he made the right decision.

We've learnt that a good negotiation is all about haggling.

Will you come down to 20% - meet me halfway?

Being in control, not being greedy.

Well, Chinese eat dragons for breakfast.

HE LAUGHS

Knowing your bottom line, and having a strategy.

I'd really, really like you to make an offer.

But who lays the claim to be the smoothest negotiator in Den history?

Well, there's one man who surprised everyone.

He may not have been an obviously shrewd businessman,

but he made the whole process just look easy.

Guy Portelli and the pop icons was a really interesting pitch.

I am a professional sculptor.

I'm looking for an investment of £70,000 for a 25% share

in my pop icons collection.

His hair was all over the place, he was dressed like

he's just come out the studio.

I intend to use the investment

to complete a series of 18 sculptures,

which I will then be showing at the Mall Galleries in London.

You really didn't think that he was going to be a fantastic negotiator.

What I'm offering is

a 25% share

-of 100 sculptures.

-What's the overall portfolio,

in what you're aiming to sell for?

Well, the whole 100 pieces are today valued in excess of £1 million.

That was the turning point. They kind of went...kerching!

They were hooked.

They wanted a part of that.

Are you saying that today, if somebody gave you £70,000...

-Yeah.

-..they would get back 25% of a sale price

of every sculpture you sold for the next 100?

Yes.

Why?

Why? Because I have never put on a show of this magnitude.

He himself was very cool, calm and collected.

If someone was to offer you the money,

would you allow ownership of those 18 pieces

-until they got the investment back?

-That wouldn't be a problem.

Guy exhibited one of the most important skills in negotiation,

which is to recognise what it is the other side will value,

and that you can give to them,

but which, frankly, isn't very expensive for you to give.

Well, I'll make you an offer then. I'll give you the £70,000.

Guy had a full offer on the table from Theo Paphitis.

But, not wanting to miss out on the action,

Peter Jones came up with a negotiation strategy of his own.

For this to really work, you want maximum impact out in the market.

You want people to know about it.

So, I would like to recommend

you get £70,000 for 25%,

but all of the Dragons collectively have a piece of the pie.

I would be quite interested to follow Peter's theme.

I think I could add quite a lot of value to that.

From nowhere, he's got three Dragons interested in investing in him.

I think there's a return to be made.

Yeah, we like that. We'll invest.

Do you want to invest? Do you want to invest?

It was going up and down the line!

Well, I'm very happy if people are passionate about what I do.

Duncan, if you feel passionately about it,

then I'm happy for you as well to be part of that team.

He was a good negotiator because he knew that they actually needed him.

I feel passionate about your work,

-but not about investing with the team.

-No.

My offer is not for £70,000.

It's for £90,000.

It's an offer by me on my own.

Not content with having achieved the rare feat of having offers

from four of the five Dragons,

Guy managed to up the ante even more.

I think three people, three lots of enthusiasm,

would be beneficial to the project.

And, if I could have an offer of £80,000 from the three,

I would be keen to have that.

He actually used the offer that Duncan put to him

to shift the power in the Den.

-Yeah, I'm happy.

-I'm happy.

-I think you've got yourself a deal, Guy!

-OK, thanks.

Guy kept his cool and walked away with three of them,

and three of their black books,

to invite a lot of people to private views

and to hopefully sell more of his artwork to. He absolutely nailed it.

He got more than what he went in for.

It was incredible. He cleaned us all out.

Next time, the Dragons examine how the strength of an idea can be

the key to unlocking their cash.

Yeah, baby!

And catch up with the entrepreneurs who had some of the best...

-Congratulations.

-Cheers.

..and the worst ideas.

You win the worst invention ever to be brought into Dragon's Den.

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