The Dragons revisit some of the businesses they have invested in, including a caravan sleeping bag, and share expertise on creating a successful business plan.
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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 have 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 I've ever seen.
-..to in the negotiation.
-5% each, 10% in total.
These are the business secrets that work outside the Den and within, revealed by the Dragons themselves
and the brave entrepreneurs who have dared to stand before them.
Over the last three weeks the Dragons have shared their wisdom on pitching...
I've completely lost it.
-..and money-making ideas...
I invented the toaster bag in 1999.
Tonight on How To Win In The Den, we unlock the Dragons' secrets to a successful business plan.
It absolutely staggers me when people come into the Den
with a muddled business plan or actually sometimes without a plan.
Now whether they have lost it coming up the stairs I do not know.
Whether it's your household budget or family holiday, planning is a vital part of everyday life.
And when it comes to running a successful business, it's no different.
One of the most important predictors of whether a business will succeed
is whether there's a plan.
-What is your business plan?
-I want to make this into something that will really sell.
I want the £7 million turnover within five years.
I've learned a lot about business planning is to have one.
I didn't have one at the start!
So you're probably admit to me that your business skills
-probably would need a bit of help.
-I would say that, yeah.
It's so important to know who your market is, who your competition is.
I know about stock, ordering, I studied chartered accountancy.
It's so important to get that business plan spot on.
Now the Dragons are catching up with their investments.
One thing I want you to know from me is I would not want to be
involved as a minority investor with all your family involved.
And revisiting some of the entrepreneurs whose business plans failed to impress.
-You've gone into the coffin business?
-With a twist.
So if you're an entrepreneur in the making, pay attention.
-Investors expect your figures to be right.
-Timing is everything.
Set realistic goals.
You really do need to be sensible.
It's you that makes the plan come together.
These are the lessons you need to run a successful business.
Every entrepreneur who comes looking for a Dragon's investment must come prepared for battle.
Going into the Den without a business plan is like getting into your car without insurance.
But without the goods to back it up, a business plan is not worth the paper it's written on.
I cannot imagine that you're ever going to see any part of your £200,000 recouped.
So the Dragons' first lesson is set realistic targets.
One of the important things for a plan to do
is to just set out projections of where the business is going to go.
What's your forecast going forward over the next three years?
Next year it's projected at a combined turnover of 3.4 million with a £240,000 net profit.
Now the key thing is that there must be some evidence, some reason
for thinking what you're thinking about how much you can sell.
Have you got anything that supports that 3.4 million growth?
We've got an order, the contract value is between £2 million and £20 million a year.
It's remarkable how many people will make a plan that comes really from nowhere at all.
What do you reckon you're going to do this year?
-A few million?
-Are you making it up as we go along?
-No, it could be 5 million.
And when it comes to the Den, it's amazing how many people have set absolutely no targets at all.
I am astonished about how many people actually turn up in the Den without a plan.
The business you're asking us to invest in, though,
-doesn't exist at the moment?
-So to set up a new website that doesn't exist yet,
has no customers, no revenue, no barriers to entry, nothing that you'd call a business...
-And you want me to invest in that?
They actually can't tell me what they're going to do with the money,
never mind how they're going to make money.
So how do I make my £100,000 back?
It's a great question and I'm struggling to answer it.
It isn't just about the numbers, it's how to get there.
-How can you generate £150,000?
-Five advisers answering five calls an hour.
So you need 2,000 calls a week? How much money are you going to make, what are you going to turn over?
If they're all customers like you, maybe not as much as I thought!
Two entrepreneurs whose solid business plan caught the interest of all five Dragons back in 2010
were Richard Blakesley and Chris Barnardo.
Although it didn't harm that their product was pretty impressive as well.
Hi, we're the wand company and we're here today to ask for
£200,000 investment for a 10% stake in our company.
Arthur C Clarke is famous for having said,
"Any sufficiently advanced technology is indistinguishable from magic."
The magic market, fantasy market is huge.
We thought that Richard and I would get together and make some really magical products.
Our first one is a real magic wand.
I thought the magic wand guys
were possibly the best I've ever seen on Dragons' Den.
With this wand I can, for example...
..play some music. I can rotate it to turn the volume up.
I can give it a flick to change tracks. Stop the music.
In fact, you can control almost anything in your house.
Everyone wants to zap someone, you know?
I can turn on the TV.
Dab, dab, dab, dab, dab, dab...
# Da-da, la-da, da-da, la-da, da-da-da... #
Or even things like lighting.
Fair play, that was a really good demo.
We started the company last year and by Christmas
we'd sold over 10,000 units but we feel that with your help, investment and expertise we could take
The Wand Company to a revenue of about £18 million within three years.
A good product rarely gains investment without a realistic business plan.
And Theo Paphitis was keen to hear the duo's sales targets and how they were going to achieve them.
How many do you really believe you can sell?
Have you got the financial year?
-We are projecting conservatively £1.2 million.
How much net profit are you going to make out of 1.2 million?
-50%, 0.6 million.
What makes you think that you require my £200,000?
We don't need the cash to make this worst-case forecast we're talking about
but we're saying with your investment we can do say £3 million.
-The worst case is 1.2 million?
We're just concluding a deal with Target in the US
and one of our distributors wants to put the product into SkyMall.
-They are putting it into SkyMall.
-Oh they are, OK.
SkyMall, for example, is a magazine in the back of the seat
of every internal US flight, pretty much 600 million people a year sit in front of that.
With ambitious targets but more importantly
a strategy of how to meet them, Duncan Bannatyne was sold on both the duo and their business plan.
I'm going to make you an offer for all the money, the £200,000, but I want not 10%
but 30% of the company.
If you make £600,000 profit I'll give you 10% of the equity back.
-Is that a deal?
-Can we ask of anyone else is interested?
You can if you want to but you'll be wasting your time.
I'd like to offer you the full amount of money for 25% of the equity.
With the confidence that comes from having two offers already on the table,
the duo even set their own targets when it came to the negotiation.
What offer would you like from me that would make you happy?
20%, going down to say 10 if we make 1.2 net profit.
-Does that work for you?
-That would work.
I don't think we were
playing them off against each other, we just wanted to understand what
the range of deals available to us were going to be.
It's a consumer retail product but I don't know everything about all of your businesses but my impression is
that Theo and Peter have got the strongest connections in that market.
You'd be wrong to assess that,
that the other Dragons have more connections than me.
Can either of you move at all on your offers then?
I could actually feel they would have been happy to walk away
rather than take a deal that wasn't working for them.
So it was either make a better offer or lose the investment.
OK, well, I'll improve mine
and I'll drop to 10% if you make 1.2 million.
Deborah Meaden and former Dragon James Caan were also won over by the duo's strategy
and made attractive offers and after a lengthy negotiation the entrepreneurs made their choice.
Duncan, we'd like to accept your offer.
Anyone coming on Dragons' Den should watch their pitch, watch what they did before they come on Dragons' Den.
I have to say they played that masterfully.
It's a year since Chris and Richard appeared in the Den and business is booming.
The duo say they've more met their targets, turning over a reported 1.8 million last year.
We are well ahead of the worst-case forecast that we gave in the Den. We haven't quite hit
the best-case scenario that we presented but we are pretty happy with how things are going so far.
Just push it in.
And now the company is Tokyo bound with a new target to go global.
They say they've sold over 60,000 units worldwide with 10,000 of
their magical products sold in their first ten weeks of trading in Japan.
The Japanese love our product. They didn't to start with really understand it. They don't have
a heritage of a magic wand but once they got the idea, they absolutely loved it.
And the company's rapid international success has not gone unnoticed.
Chris and Richard have been working closely with
the Government's trade and investment organisation to help meet their international targets.
They have a programme called the OMIS programme
where you can commission reports for different countries where they list the retailers,
list the entry into those retailers and help you get into that market.
Today the boys have been invited to rub shoulders with some of the country's
business VIPs at the UK trade and investment strategy launch.
And one of the biggest names at this exclusive event is Government Business Secretary Vince Cable.
-Nice to meet you.
-I've heard about your exploits.
-You've got it in Japan.
Via the UKTI. We wanted to go there and it will probably be about
-half our revenue this year.
The Wand Company is an example of how Britain is going to recover and get out of its economic mess.
They're a mini multinational already and they attribute a large part of
their success, particularly in Japan, to their work with UKTI.
The duo's realistic targets and solid approach have paved their way to success.
The Wand Company, I see the two founders are in the front row, an amazing story...
And it's all the more impressive given that they chose not to sign the deal with their Dragon investor.
As it happens, within days they signed a new agreement with a distributor,
but the Wand just started selling and flying off the shelves and they
very politely turned round to me and said, "We are really sorry, Duncan, but we don't need you."
I was very happy to let it go because they were right, they didn't need me.
I think we'd have liked to have had his involvement.
I think from our point of view, it has allowed us to take the company where we wanted to go without having
to ask anybody else and I think we've done all right, actually.
There's only one person responsible for turning a business plan
into a successful venture, the entrepreneur.
One of the things I say about investing is I've got to trust the people I invest in.
So convincing the Dragons you can pull it off is absolutely essential.
Investable as a person myself?
No, absolutely not!
So the Dragons' next piece of advice is YOU make it happen.
# I'm on the right track, baby
# I was born this way... #
Once they like you, the Dragons will view everything you say positively.
You are good and you've definitely got it so I expect we'll see you at some...
You might even be sitting in one of these chairs one day.
If they don't like you, it will be the reverse.
I couldn't spend the time on my own dealing with you two, it would drive me round the bend.
So what would happen now
if I made you an offer and said I didn't want you two managing the company?
And when it comes to the Dragons evaluating whether your business plan
is going to sink or swim, the likeability factor is key.
There is one individual that is going to make a business work
and it is the entrepreneur that created the business plan in the first place.
You could say to me, "Peter, if you were to put £100,000
"into this product I will do nothing else until this works."
This product does not require me working 100%.
You might like that but it's not what it actually requires.
It's important that they are determined, focused...
-I've been self-employed since I was 13.
I had a little car wash company that I sold to my neighbour for £10.
They've got to have all the qualities necessary to deliver business success.
Businesses don't fail, aeroplanes don't crash, pilots crash airplanes.
-The people fail.
-Is that true?
If you don't believe in a business plan,
if you don't have the enthusiasm to carry it out, it won't work.
To be honest with you, I am only now interested in becoming
a business person, it's actually coming to me now, I can feel it.
Tell me how!
I was tunnel-visioned and focused for 11 years totally on succeeding.
And I ran it to plan.
How on earth do you expect anybody to invest in you?
You would make my foot itch. I'm out.
One trio whose sheer determination has turned their business into
a success are Ray Duffy, Chris O'Nyan and Dean Walton.
They entered the Den in 2009 looking for investment of £50,000
for 10% of their novelty mask company.
We are the Three Masketeers from Masquerade.com,
we create personalised and character products for stag dos, hen dos, corporate events and charity events.
So you think if I have a party I'll order 400 masks of myself?
No, your friend would order masks of you.
The idea is you walk into a room and everybody is wearing your face.
Wow. Wouldn't you love that, Peter? Everybody would be you.
I do quite like that, actually.
In spite of an endorsement from a seemingly airbrushed Duncan Bannatyne...
I think the masks are fantastic.
For that reason, I'd like to invest.
-..the Dragons couldn't see money-making potential in their business plan.
-I'm afraid I'm out.
-Thank you very much.
Although the Dragons wouldn't invest, the entrepreneurial trio didn't give up on
their business strategy and two years on their tenacity and vision
has meant their company is growing into a successful brand.
We sat down and plotted where we should be in three years
and it is mirroring the conversation that we had.
It's fantastic to realise where it's going.
As part of their plan, the creative trio knew they needed
an original marketing concept so they came up with a publicity-grabbing idea.
Every time there was a celebrity in town, we always
produced masks of them and set about going to meet them.
The reaction has always been fantastic and we would follow that up with a photo,
which we send to the local newspapers and nationals even.
We have had an amazing success rate with our stories about celebrity encounters
and our autograph mask collection, which is well over 100 and adorning our wall of fame.
And the trio's business also benefited from the world's hottest ticket of 2011.
We met a well-known chain store, they placed an initial order with us for Kate and William masks.
They've now taken over 60,000 masks of us and they're selling like hot cakes at the moment.
Last year the company reported a turnover £160,000 with a profit of £20,000
but having already sold 300,000 masks this year, they say their profit is set to quadruple.
But none of this would have happened without a bit of added grit and determination.
This is our baby, our passion. It's what we've forsaken friends, family and everything for to build.
The proof of the pudding is there in the figures and the amount our business increases month on month
on month, it will make all the figures we thought it would and it will go above and beyond.
If an entrepreneur wants their business plan to be taken seriously,
they need to make sure their figures add up.
Just praying everything sticks in my head and all the figures
and everything look good in there, they are there when I need them.
So the Dragons' next lesson is - get the numbers right.
Some people come into the Den
and show they really understand their business.
How much profit did you make?
We actually made a net of 170,000,
but I invested 150 into the development of these products.
And you get others who come to the Den who don't have the discipline
to think about all the things that go into a business.
And if you don't know your numbers, you don't know your business.
-What's the return on that investment?
-I'm looking for a number.
Everything's just leaving me right now.
The sales were... I think the turnover was...
Numbers isn't my strong point, to be honest.
I gathered numbers weren't your strong point!
Once the Dragons do hear an entrepreneur's calculations,
they might have wished they'd never asked.
From the confused...
-60. Wait, 20...?
No, it's not, sorry.
That would be 480. No, it wouldn't.
..to the bemused.
-What's going to be the turnover?
-It should be about £100,000.
The turnover was 200,000 and the profit was 100,000.
He said 100,000 minute ago.
-I know, but he's getting his figures mixed up.
-Should I ignore you?
A little bit, I think!
One couple who left the Dragons to figure it out were Liz and Alan Colleran.
The husband and wife team entered the Den this year
looking for investment in their innovative caravan sleeping bag.
Our company's Raskelf Memory Foam, and we're pitching for £80,000
for 10% of our business.
We've been married 28 years
and our company came about from a simple idea we had whilst we were out caravanning with the children.
Our bestselling product is also our most innovative product -
The Duvalay sleep system is really simple.
It has a special memory foam base which smoothes out
the lumps and bumps in caravan seats.
It's joined, it can't come off, you can't get a cold back or bottom,
you can have one for single or simply put two together to make a double.
So far, we've sold about 10,000 of these units.
So that's sales of about £1 million on this product alone.
In fact, we can't make them fast enough.
And we need your help and expertise
to help us break into the huge European and American markets.
Thank you for listening. Would you like to come and try?
Liz and Alan had delivered their vision for the business.
It is quite cosy, that.
But it was Deborah Meaden who wanted to drill down further into the company figures.
Can you talk me through your P&L just for last year,
just tell me what you're spending your money on.
-We've got a factory, shop, show rooms.
-What kind of money are they, then? Factory?
-That's 16,000 a year.
A lot of entrepreneurs don't understand a balance sheet,
don't understand a P&L.
And don't really understand the numbers.
-Staff? We've got 10 staff.
'I think as soon as you start to stutter or blunder on it,'
you're more inclined for the Dragons to think,
"Do they really know what they're talking about?"
I don't know.
-You don't know? Don't know.
-It doesn't sound good.
'You have to know your numbers, and the profit and loss.'
You HAVE to understand the fundamentals of your business.
We don't know. We don't have those details, I'm afraid.
Once that we couldn't get one of the figures out,
that was it, Deborah really, you know, tore into us.
I'm an investor.
All I want to know from you
is how your business works
and things like what is your wage bill
is pretty simple stuff.
We were focusing on the product.
We prepared the figures for the product and the sales.
We probably neglected the fact the Dragons
were going to invest in the business, not just the product.
You should know. Absolutely you should know.
Liz and Alan's lack of financial knowledge
had gone down badly with the Dragons
and three declared themselves out in quick succession.
But would Deborah Meaden,
who made her fortune in the holiday park industry,
invest in the couple's caravanning business plan?
You have got to give me a reason
and enough information to want to hand you my money
because I honestly... I promise you this,
if you had, you'd have had an investment from me.
I'm sorry, Deborah.
And for that reason, I'm out.
Only Hillary Devey remained, but would the new Dragon
be able to overlook the duo's poor grasp of their finances?
If I liked the product, and I could empathise with the people,
and I can see a route to market, then I possibly would invest,
even if they didn't have a business plan.
You need some input into the business to help you
with the direction, but because I do think it has got vision...
..I'll offer you the full amount...
..but I want 26%.
-You couldn't make it 20%?
I'm sorry, I can't move from 26. No.
Can we go and have a word?
Liz and Alan had secured an offer, but not knowing their figures had cost them dearly
as Hillary was demanding 16% more equity
than they'd originally wanted to give away.
You're making big decisions in there, very big decisions.
We'd had built a business over seven years
and we're giving 26% of it away.
And, you know, it's not something you do lightly.
Yes, please! We'd love it. Thank you.
'If I was to go back into the Den,'
I would definitely make sure I knew those figures.
You'd be foolish not to.
-Look forward to working with you guys.
-Thank you, we do as well.
Once a deal has been agreed in principle in the Den,
both parties go through the regular business process of due diligence before the contract is finalised.
Is there a lot to go today?
You've got one done? All sorted. Lovely.
Four weeks on, Liz and Alan are itching to get their Dragon's input
into the family business they run with their two sons.
Hillary will bring to the business some focus.
There's so many different ways our business could go and so many different ideas that we've got,
it's hard trying to structure them all.
Last year, the company turned over just under £800,000,
making a profit of £108,000.
But with their Dragon on board,
the couple might one day be able to stump up the cash
for a quaint little country retreat like Hillary's.
-This is my home.
-This is lovely, yeah. Gorgeous.
Today, Liz and Alan are meeting Hillary to discuss the best strategy
-for taking the company forward.
-Come on through, I'll make you a cup of tea.
And the couple know exactly what they want out of their Dragon.
'She's doing in Europe now what we want to do.'
She's gradually expanding her business into different countries individually.
'We need somebody to help us get into the other countries
'and how to structure it there.'
We need advice with that, there's no two ways about it.
We did wonder what you'd think about our plans getting into Europe, what would be the best way forward.
I think with your product is to find master licensors
in each country to act as agents to sell the product.
That way, they're paying the manufacturing costs
and all you're taking is for every product sold,
you're taking a royalty from it.
-That's really interesting, isn't it?
-It's easy and it's possible.
Shaking hands with a Dragon comes with a wealth of benefits,
but it also means you might have to make some difficult decisions.
Before the deal is finalised with Liz and Alan,
Hillary wants to voice her concerns about their future plans
to hand the reins over to their two sons.
One thing I want you to know from me is
I would not want to be involved as a minority investor
with all your family involved
because I'd be displaced.
I personally would prefer that we run it more of a commercial venture.
You're only small now,
but we're not going to be small, are we?
In five years' time, we're going to be a substantial business.
-So what matters is bottom line.
We've not said we are building this business up
to just give it to our children because we've worked really hard, you know,
and we make the decisions and we'll do whatever is right
because we haven't worked this hard to fail.
So we've got a lot of work to do and this has got to become
-a big, big business with a big brand.
Hillary's ambitious plans for the Collerans' business
also include an exit strategy that will benefit them all,
so Liz and Alan have some serious decisions to make.
'Deep down, we all want the same outcome'
so if we can achieve what we all want, then perfect.
I just hope they listen and take the advice,
because I am investing in their future
as well as trying to get a return back on my own investment.
If you want to win in the Den,
an impressive business plan is a must.
So, these are six simple lessons from the Dragons
that could help you start a moneymaking venture of your own.
Putting a price on the hard work may seem impossible to an entrepreneur,
but entering the Den with a racy valuation on your business plan
rarely goes down well with the Dragons.
You know, a company that loses money every year
and has been valued at 2.5 million is quite ridiculous.
So, the Dragons' next lesson is make sure the price is right.
The mistake that some entrepreneurs make is to go too far down the road of projecting.
£3 million you value this product at.
We value it at more than that, to be honest.
'Having so much faith in what they're doing,'
so much self-belief that, actually, they just look faintly deluded.
It's not worth £3, let alone £3 million, Fraser, and I'm out.
We do get an amazing amount of people coming up with the most ridiculous valuations.
You value your business at the moment at £1 million.
We know it's worth diddly squat.
-We've based it on projected turnover over the next three years.
So, you want me to invest now based on a valuation in three years' time?
When they're coming up with, "We need 100K, 200K,"
that is what they think they need to get that product to market.
That is not a valuation of what their product or business is worth.
You've got a business that you value at half a million pounds. How?
Come on, snap, snap. You should have the answer.
'To be credible,'
you've got to understand business valuations.
You come in here and you say, "I value this at 1.5 million,
"although I've only got £1,200 worth of turnover."
'Otherwise I'm going to look at them'
and think, "You haven't got a clue, have you?"
I wouldn't give you £150,000 for 100% of it, at the moment!
And, therefore, the next two words that come out of my mouth are...
One man who shocked the Dragons
with the price he put on his company was Gavin Wheeldon.
He entered the Den in 2007 looking for an investment
in his online translation company.
I'm here today to ask for £250,000
for a 4% equity.
'You could see visible shock.'
Everybody sat back, and "Did he really just say that?"
We've achieved a lot, we've had an aggressive growth in three years.
We are set to do 3.2 million turnover this year.
We need some help to do that and a bit of money as well.
Gavin had an excellent turnover,
but could he justify the £6 million valuation of his business?
Your valuation, from where I'm sitting, looks like this -
21-22 times prospective earnings.
Do you expect me to feel a little bit uncomfortable?
If you start putting such a high valuation on your business,
you risk losing any sort of investment from the Dragons.
At the end of the day,
something's only worth as much as someone's prepared to spend.
My intention is within five years to float for 60 million,
so the 4% will give a 2.4 million return.
Duncan Bannantyne saw potential in Gavin's business
and offered him 50% of the money.
If I'd invest £125,000,
I'd want 9% of your company.
He'd obviously sat quietly, done a few sums, and saw the value in it.
But Gavin couldn't convince another Dragon
to invest the remaining £125,000.
The risk is too high for an investor.
I think I might as well state now - I'm out.
So, four years on, has Gavin managed to prove
that the £6 million price tag was right?
When I left the Den, I was determined I will prove you wrong.
And that's what I've done.
What we've achieved today as a business more than proves the valuation was absolutely right.
What language would you like to book for the interpreter?
Gavin says he's just secured a lucrative contract
supplying translation services for the Ministry of Justice.
We'll be up to 50 million turnover in the next two years.
Now we're worth well over 30 million
and by the time we expand this contract,
we'll be worth well over 100 million.
'Even if they'd have invested in the 4% for quarter of a million, they'd have made a massive return,'
so big mistake there on the Dragons' part.
I'd just like to say thank you to everybody involved.
And with his company continuing to grow,
the Dragons better not get too comfortable.
We're going to be up there, similar size to some of the Dragons
in terms of turnover, so keep those chairs nice and warm!
When launching a new business,
you've got to make sure your timing is right on the money.
I had my Eureka moment.
It started to take shape about 2008.
So, the Dragons' next lesson is it's all about timing.
Business is as much an art as a science.
The helicopter car combines two of the hottest big boys' toys -
a remote-controlled car and a helicopter in one.
If you can get the right idea, the right product,
at the right time, you're well on your way.
Wait for this economic climate to settle down a bit better,
then launch your business.
A good idea at the wrong time isn't going to work.
Bright PC manufacture the world's most energy-efficient computer equipment.
I know this market very, very well and you're 20 years behind.
Lighting Emotions design, manufacture and sells glow-in-the-dark glasses.
-I was selling light-up drinks in these...
..probably five years ago.
Timing is everything.
One entrepreneur whose business plan was timed to perfection
was Patrick van der Vorst.
The Belgian auctioneer entered the Den in 2010
looking for a £100,000 investment
for 20% of his online antique valuation business.
The idea grew when I was working at Sotheby's
that actually there's no easy way for people to find out
what the value is of their items,
of their art and antique. I think everybody at home
has got a teapot or maybe a chair
that they'd like to know the value of
and I think maybe they might feel intimidated
to pick up the phone to an auction house
or go to see a dealer directly.
So what we do is our customers come onto our website.
They upload a photograph of their item and within 48 hours,
one of our 28 experts will reply back to the customer.
So many people have got things
and they think, "It's an old bit of tat,"
and it's worth hundreds or thousands, really worth money.
You can find out, you know, do I have something that I can go out and flog and get myself a brand-new car.
I thought that was a brilliant idea.
It was an assured pitch, but Deborah Meaden
wanted to know more about Patrick's business model.
-What's your average transaction value?
Plus the additional revenue streams like the advertising.
How many unique businesses do you think you're going to have
to actually attract advertising revenue?
Hopefully, we'll get about 100,000 unique visitors a month.
-Through Google advertising.
-How much are you going to spend on that?
At the moment, I'm spending £4,000-£5,000 a month.
How many unique visitors do you get at the moment?
Unique visitors, we get 20,000 unique visitors a month.
And we have a conversion rate of 3.6%.
I'll tell you what's not adding up.
-20,000 unique visitors.
3.6%. That's 720 customers.
720 customers paying 4.99 is 3,600
and if you're spending 5K a month on Google AdWords to get 3,600 worth of revenue, you haven't got a business.
When it came to Peter, he really sort of drilled down
deep into the figures and I think it was a pivotal moment in the pitch.
Those figures are based on unique visitors.
About 25% of the customers bring repeat business.
We have got clients who have bought 15 or 20 times,
sort of new credit.
We had a customer last Friday who spent 350.
Patrick had proved there were profits to be made,
but was it enough to convince Duncan Bannatyne to invest?
Patrick, what I am going to do is go home...
In fact, I am going to go to all three of my houses,
I am going to photograph all my antiques.
I am going to send them to you.
-And I'll get you to value them.
I don't think it's an investable product, so I won't invest.
For that reason,
Patrick, I'm out, but were going to have a good time together valuing my antiques.
Former Dragon James Caan and Peter Jones chose not to invest
but would the last two multimillionaires think the time was right?
Do you know what, I think in a time of austerity
people will be looking at actually selling things.
They will be looking at value.
So I think you will get a lot more demand on your website.
I actually like it.
I think Theo hit the nail on the head,
the timing for the concept and the website was exactly right.
I am prepared to make you an offer.
Half the money for 20%.
I completely agree with Theo
that if this website was ever going to have its moment,
it's going to be now.
I'll match Theo's offer.
'They say while the iron is hot, you've got to strike.'
When the time comes you've got to move with it.
I have thought about it, and I would be delighted to proceed.
I firmly believe that if you have got the right time for that product,
then you will find the right place to get that product to market.
A year later, and Patrick has moved to new premises in Westminster,
where he has proved the timing was perfect
for his business to succeed.
When I went into the Den a year ago,
we had done 10,000 valuations.
Now we have done 65,000 valuations.
We had 6,500 customers, I believe.
Now we've got 35,000 customers.
We launched an agency service where we'll assist people going to auction.
The most rewarding aspect of all that though
is customers keep coming back to us, and there is a lot of repeat custom.
Patrick is keen to capitalise on his website's growing market,
but ensures he never takes his eye of how his business is performing.
Today he's in Sussex to see if his latest valued lots
have achieved the price they predicted,
and one of his Dragon investors is here to discuss how the business is progressing.
From the offset I could see where Value My Stuff could go,
and I see this as an international business.
Today is as much as about just seeing, was I right?
Was this the right time?
-Hi, how are you?
-Very well. How are you?
Very well, thank you.
It took me a while to get through, you've got some lovely stuff.
Lovely paintings, very nice drawings as well.
We have got two lots which we sold yesterday very successfully,
on behalf of some of our clients who asked for advice, it is exciting.
I'm going to start at £4,000.
On average, Patrick says his website does up to 250 valuations a day
and has over 50,000 unique visitors a month.
Finishing at £4,800.
And his customer base is continuing to grow at a steady pace.
You've been in this industry for a long time.
But you spotted the moment
when you felt it was ready, and ripe,
to do something different.
What made you think it was the right time?
From a technological point of view, five years ago,
most people didn't have digital cameras.
Now most people have a camera on their phones,
so it is almost the first time
that it is very easy for people to upload items onto the internet.
I suspect if you'd done it five years ago...
It wouldn't have worked five years ago.
Now we are the first ones in there to try and capture the market.
What's your dream? How big do you think this can get?
We have a wonderful opportunity I think in China
which at the moment I think
already makes up for 45% of the global art market.
For them, when I spoke to our contact there,
he said actually
people would be willing to pay
double or triple the amount for a valuation,
if the valuation could come with a printout
or a photograph of the expert holding up the valuation.
Interesting. In the UK it wouldn't make any difference.
In the UK it wouldn't make a difference, over there in China...
Patrick says the company's turnover has grown three and a half times
since his appearance on the Den, and with new markets emerging,
the future is looking bright for his online service.
Timing in business is very important.
An uncle told me once years ago,
he said the difference between a successful person and an unsuccessful person is one second.
It's actually very true.
When you can be the first person in there to capture a market,
that is exactly the position that you want to be in.
When Patrick came into the Den he believed the time was right.
I thought the time was right,
but actually as we stand here today,
we have proved the time is right.
If an entrepreneur's business plan fails to impress in the Den...
You'll never make a penny from this market.
-I am out.
..should they accept defeat or carry on regardless?
I do honestly feel for somebody like that. He has tried everybody, everybody had said no.
This is his last throw of the dice.
And he needed the honesty today.
Oh, he did. It was one of those moments he's feeling crushed
and I think it's one of the best days of his life.
So the Dragons' final lesson is - know when to stop.
I think it is so important to get a realistic plan from the outset,
and that makes it much easier for you to appraise where you are.
Year five, which was 2011,
I made a loss of just over 100,000.
It also makes it a little bit easier for you to say to yourself,
it is time to get out.
Why would you want to invest in a business that doesn't make money?
You have to invest to get to where you are.
I have never, ever invested in a business
and waited five years for it to start making money.
But knowing when to give up is easier said than done,
especially when an entrepreneur eats, sleeps and breathes their business.
They clearly believe in it.
You are going to sell your house to back this?
I firmly believe in this product.
And then you are just quashing their dreams.
Do not sell your house for this.
I don't know what makes them so passionate about something they can't see
the obvious things that tell me this cannot work, can't make money.
It can never, ever be a decent business.
Have you had any response from anybody who wants to place an order?
No, we haven't had any response.
They still continue with that passion because they've got one idea,
maybe they can't think of a second idea, they're just passionate about one idea.
I urge you, urge you not to do this.
Two entrepreneurs whose cute companion impressed the Dragons,
but whose business plan sadly did not,
were Stephen Mitchell and Michael Ehrenreich.
They entered the Den last year
looking for investment in their innovative buggy bike.
We are looking for a £225,000 investment,
and we are offering 6% of our company.
The Zigo carrier cycle is a multi-mode cycle.
It is very stable, great all-round vision,
first mode as you see it now, child pod in front, cycle behind.
You've put a rather large valuation on your product.
I'm going to ask you, why?
I'll take that.
We're not a start-up company, exactly. We have previous investors.
We've sold about 500 units to date,
revenues for the last 12 months is approximately 400,000 US dollars.
-You've spent all that?
-Have you borrowed any more?
I've put in a substantial sum personally.
We had a plan. The key thing we were never going to say
was how much we spent on development.
I've put in 1,300,000.
You've put 1,300,000?
At that point, I wished a trap door open and swallow me up.
With such an enormous amount of money already invested,
Deborah Meaden was curious to know how their business plan was panning out.
So financially, by now, where did your backers
believe they were going to be and where are they now?
We expected it to be profitable by now, and we're not.
-We're going to make a loss this year.
'At that point, maybe he should have said, "Sorry, guys,
"it's been a massive misunderstanding,"
and he should have just tiptoed down the stairs, with a little bit of pride.
'It was pretty...'
It was terrible.
With such an unprofitable track record, all five Dragons declined to invest.
I think you're kidding yourselves. For that reason, I'm out.
'Sometimes, you need that sharp shock.'
You've had a go, it didn't work, cut your losses, go.
It's been a year since Stephen and Michael entered the Den.
But did the duo turn their back on their business plan?
Did I feel like giving up? Well, in parts I didn't want to be there, but we're still running,
they're still manufactured.
We've sold just under 2,000 in the last 18 months.
I've still got a very tiny stake in the business, it doesn't generate any cash for me.
But Stephen's entrepreneurial spirit is still strong
and he's just embarked on a new and very different business plan...
a website that compares prices... for funerals.
What we aim to do with Comparethecoffin.com is allow people to make a plan online,
and then we send it to funeral directors, who bid for the business.
This one is my favourite.
Stephen's online service will be free,
but he's hoping customers will choose to buy their coffins from him.
There is very few occasions in business life
where you get to change a whole industry, and this is going to be one of them.
In fact, Stephen is so confident his new business plan is a dead cert
that he's invited Theo Paphitis to his latest coffin catalogue shoot
in the hope the Dragon will want to invest.
'I would love to have Mr Paphitis as a partner,
'I think he could bring a lot to the party.
'You can carry on selling ladies' underwear
'or come with me and change the world.'
-Nice to meet you again, sir.
-How are you doing?
-Where's your mate?
-I left him in America, I thought it was safer.
-And you have gone into the coffin business?
-With a twist.
Although Stephen's new business may not have the instant appeal of ladies' lingerie,
he's hoping the profit potential in his stock will impress retail giant Theo.
What does it sell for?
-To the trader or the consumer?
The trade price is roundabout 450, 500.
The consumer price can be anything between 2,800 and 3,500.
-It is. Do you know the average spend on a funeral in this country?
But is it enough to persuade the Dragon to part with his money?
Looking around me, I'm seeing nothing but the grim reaper.
I found it difficult to get passionate about death.
-But isn't it unique? Nobody else...
-Nothing is unique.
Listen, if you were doing it and it was any good,
there'd be 1,000 websites doing the same thing.
If you make three years, you've got half a chance.
On that note, I'm out.
Theo may have passed on the chance to invest in Stephen's business,
but there's no way this determined entrepreneur is giving up the ghost.
I still think this is the best idea I personally have ever had.
Like he said, it's just not for him. I think it would be for Peter Jones.
We've learnt that a successful business plan is all about setting realistic targets.
We are projecting, conservatively, £1.2 million for this year.
You making it happen.
Knowing your figures.
You should know.
Absolutely, you should know.
Pricing it right, timing, and knowing when to give up.
I've put in £1,300,000.
But after nine series of the Den,
whose business plan ticked all the boxes?
Well, there's one entrepreneur whose meticulous planning
blows most of the competition out of the water.
Imran had everything in place.
He had a great pitch, got everything right,
but above all, what he got right was his business plan.
He managed to pull every cord, tie them all up in a beautiful not,
and I think he had the dragons eating out of his hands.
iTeddy brings the teddy bear into the 21st century by incorporating
a personal media player...
He gave a great visualisation of his product.
And then he gave us a complete stepping-stone
of all the things he would do to make his business successful.
It's a very simple-to-use
child-friendly menu system.
I can put a movie clip on for you.
If I wanted to go on to the audio player, just scroll to the audio player,
and I can now play myself a bedtime story.
I put together the strong plan.
The initial idea, the product specifications,
the technical aspects, how much I was going to make it for,
how much I was going to distribute and retail it for.
-Did you develop it?
-Yes, from scratch.
-What price are you looking to sell it at?
-For the MP4 version, £28. For the MP3 version, £20.
We can make a 46% margin on the MP4.
'He knew his margins,'
he knew what the retailer margins were,
he really had a solid business plan behind his product.
The iTeddy, I would definitely have invested in.
It's a sustainable business model, it can continue to create revenue
and it can continue to innovate. Those are the best business models.
Imran's impressive business plan
generated offers from computer expert Peter Jones
and retail giant Theo Paphitis.
He made a joint deal with both the Dragons.
If I had been sitting there as a Dragon, I would have invested in Imran.
I think that's one of the best businesses I've seen out of Dragons' Den.
Within months of leaving the Den,
the company had signed an exclusive deal with one of the UK's leading high-street toy retailers,
which they say enabled them to achieve its three-year sales forecasts
in just the first six months of trading.
From then on, we started selling in 45 countries around the world,
it was a top-10 toy in quite a few countries around the world.
You take one of these away...
Imran's business plan has been so successful,
he's now passing on his knowledge to up-and-coming entrepreneurs.
Approach the market from a completely different angle from everything else out there.
He's a shareholder in an organisation that helps start-up companies find investors.
What I'm going to try and do from today is establish where the gaps are in the business plan
and hopefully, between us, we can try and strengthen that up a bit.
But with a reported £23 million worth of retail sales from his first product,
what is the next step in Imran's business plan?
The toy industry is a fashion industry.
And once you've got a product that sells very well for two or three years,
you have to quickly come up with a product that takes its place.
We've got development on the table, we've got to make sure we get the technology right,
when we bring it to market the timing is right,
and we're very excited.
Watch this space.
If you think you've got what it takes to impress the Dragons, why not visit our website:
Where you can apply to enter the Den online.
Subtitles by Red Bee Media Ltd
E-mail [email protected]
How To Win In The Den casts an analytical eye over the highs and lows experienced by the hundreds of brave entrepreneurs who have dared to enter the Den over the last nine series. We'll be breaking down the key ingredients that lead to a successful outcome and explore the tough lessons that have been learnt at the hands of the Dragons. This week they share their expertise on how to create a successful business plan - six vital lessons for any up-and-coming entrepreneur.
Chris Barnardo and Richard Blakesley entered the Den in 2010 with a magical product and a solid business plan. They shook hands with Duncan Bannatyne, but a year on, have they conjured up the impressive sales figures they expected? Liz and Alan Colleran stood before the Dragons this year with their innovative caravan sleeping bag. New Dragon Hilary Devey invested in the couple in spite of their shaky financial knowledge. Find out how the deal is coming along. Deborah Meaden and Theo Paphitis both thought Patrick van der Vorst's timing was right on the money when he entered the Den last year with his online antique valuation website. But when one half of his Dragon duo pays him a visit, will they still think the time was right to invest? And after nine series of the Den, find out which entrepreneur's business plan was good enough to deliver a masterclass.