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'These are the Dragons. | 0:00:25 | 0:00:27 | |
'Five of Britain's wealthiest and most enterprising business leaders. | 0:00:27 | 0:00:31 | |
'Over the coming weeks, they'll make or break the dreams of dozens of budding entrepreneurs.' | 0:00:31 | 0:00:38 | |
-Oh, what? That's weird. It's so ticklish! -You've got fish on your feet! | 0:00:40 | 0:00:45 | |
I'm going to make you an offer, but I want a higher percentage. | 0:00:45 | 0:00:49 | |
You stand in front of a group of people who could change your life overnight... | 0:00:49 | 0:00:55 | |
How do you hope to grow your business if you can't even motivate yourself | 0:00:55 | 0:00:59 | |
to do what should've been the biggest pitch of your life? | 0:00:59 | 0:01:03 | |
Have you ever heard of the saying, "A mountain to climb"? | 0:01:03 | 0:01:06 | |
You've got several. | 0:01:06 | 0:01:08 | |
'The multi-millionaire investors have each built up their fortunes from scratch. | 0:01:12 | 0:01:18 | |
'Hotel and health-club owner Duncan Bannatyne. | 0:01:19 | 0:01:23 | |
'Leisure industry expert Deborah Meaden. | 0:01:23 | 0:01:27 | |
'Retail magnate Theo Paphitis. | 0:01:27 | 0:01:30 | |
'Telecoms giant Peter Jones. | 0:01:30 | 0:01:33 | |
'And Hilary Devey, who made her millions in the haulage industry. | 0:01:34 | 0:01:40 | |
'The Dragons have the credentials, the contacts, the commitment and the cash ready to invest. | 0:01:40 | 0:01:45 | |
'But only in the right business. | 0:01:45 | 0:01:48 | |
'Will any of these hopeful entrepreneurs walk away with their money?' | 0:01:48 | 0:01:52 | |
Welcome to the Dragons' Den. | 0:02:00 | 0:02:02 | |
Our five multi-millionaires are ready and waiting | 0:02:02 | 0:02:05 | |
to put that all-important investment into business ideas and inventions | 0:02:05 | 0:02:10 | |
that come before them. But it's their own money at stake, | 0:02:10 | 0:02:13 | |
so only the best entrepreneurs can expect to walk away with any cash. | 0:02:13 | 0:02:18 | |
Hong-Kong born Karen Ho and husband To Chan are first into the den. | 0:02:18 | 0:02:23 | |
The beauty industry is notoriously hard to succeed in, | 0:02:23 | 0:02:27 | |
but can their new concept overcome the challenges? | 0:02:27 | 0:02:30 | |
-Good afternoon, ladies and gentlemen. I'm To. -And I'm Karen. | 0:02:51 | 0:02:54 | |
And we're representing Aqua Sheko Fish Spa. | 0:02:54 | 0:02:57 | |
We're looking for 150K investment | 0:02:57 | 0:03:00 | |
in return for 30 percent of equity. | 0:03:00 | 0:03:03 | |
In June 2010, we opened our first venue. | 0:03:03 | 0:03:08 | |
It was one of the first fish spas in London | 0:03:08 | 0:03:12 | |
and we soon attracted a lot of customers. | 0:03:12 | 0:03:14 | |
December 2010, we opened our Soho venue. | 0:03:15 | 0:03:19 | |
And this is an illustration of the facilities. | 0:03:19 | 0:03:23 | |
A garden feature fish pedicure hall. | 0:03:23 | 0:03:26 | |
Also a modern Japanese bar with fish manicure areas. | 0:03:26 | 0:03:31 | |
Our first year turnover is a bit over £400,000 | 0:03:31 | 0:03:35 | |
and the £150,000 investment will be used to open two more shops. | 0:03:35 | 0:03:41 | |
The further expansion would establish our brand | 0:03:41 | 0:03:46 | |
as well as broaden the customer base that we have. | 0:03:46 | 0:03:50 | |
-Erm, please feel free to try it. -PETER: I'll try it. | 0:03:50 | 0:03:54 | |
'An orderly pitch from husband and wife team To Chan and Karen Ho. | 0:03:57 | 0:04:03 | |
'To expand their new beauty treatment brand, | 0:04:03 | 0:04:06 | |
'the couple are prepared to give away 30 percent equity | 0:04:06 | 0:04:09 | |
'but need a £150,000 cash injection in return.' | 0:04:09 | 0:04:13 | |
'Peter Jones is keen to put their claims to the test.' | 0:04:14 | 0:04:19 | |
-You put one foot in? -Yes. | 0:04:19 | 0:04:22 | |
Oh, what? They're all grabbing for me. | 0:04:23 | 0:04:25 | |
-That's weird. And so ticklish! -You've got fish on your feet. | 0:04:26 | 0:04:31 | |
-After two minutes, you enjoy it. -Two minutes? | 0:04:31 | 0:04:33 | |
You must do better than our lady customers who are fine after five seconds. | 0:04:33 | 0:04:37 | |
-HILARY: What does it feel like? -Like they're sucking on me. It feels weird and it's making me sweat. | 0:04:37 | 0:04:43 | |
-Very quickly. -What fish are they? -They're called garra rufa. | 0:04:43 | 0:04:47 | |
-What are they doing? They're eating part of my skin? -Yes, your skin is protein to them. | 0:04:47 | 0:04:52 | |
They're gently sucking away on your feet. | 0:04:52 | 0:04:55 | |
I usually describe to customers as a thousand kisses. | 0:04:55 | 0:04:59 | |
-Have you not fed these fish for ages? -No, no. -They were fed yesterday by a few customers. | 0:04:59 | 0:05:05 | |
How long does it take for them to clean his feet? | 0:05:05 | 0:05:08 | |
For the optimal effect, it's around 25 minutes per session. | 0:05:08 | 0:05:13 | |
I will say that I do feel very different than when I first went in. | 0:05:13 | 0:05:17 | |
It is quite strangely, weirdly cleansing. | 0:05:17 | 0:05:20 | |
'One successful demonstration and one Dragon convert.' | 0:05:28 | 0:05:32 | |
-Feel your feet. Are they softer? -I can feel that they're amazingly soft. | 0:05:32 | 0:05:36 | |
'But now spa and health club owner Duncan Bannatyne wants to focus on the business itself.' | 0:05:36 | 0:05:42 | |
-Karen and To. -Yes. | 0:05:45 | 0:05:47 | |
So, in year one, your turnover was £400,000. | 0:05:47 | 0:05:51 | |
-Yep. -Right. What was your gross profit? | 0:05:51 | 0:05:54 | |
About 100... | 0:05:54 | 0:05:56 | |
180-something. | 0:05:59 | 0:06:01 | |
-What was your net profit? -Er, about 112. | 0:06:01 | 0:06:06 | |
That sounds a really big profit margin in this industry. | 0:06:06 | 0:06:13 | |
Is that growing on a month-by-month basis? | 0:06:14 | 0:06:17 | |
Or do you have blips when it goes up and when it comes down? | 0:06:17 | 0:06:20 | |
There would be, of course, blips, but what is important is that | 0:06:20 | 0:06:24 | |
we are seeing people saying, "It's great, we'll come back," or "We'll recommend to friends" | 0:06:24 | 0:06:29 | |
-and that people start using our loyalty cards. -So are you the only people doing this in the UK? | 0:06:29 | 0:06:34 | |
-We are not the only people in the UK, no. -Other people are doing it? -Yes. | 0:06:34 | 0:06:39 | |
-How many competitors have you got? -It's not that important to count the competitors. | 0:06:39 | 0:06:43 | |
It's more important to decide in this new market how we're going to play in three years. | 0:06:43 | 0:06:48 | |
'Assured and reasoned responses from the confident entrepreneurs. | 0:06:52 | 0:06:56 | |
'Theo Paphitis looks intrigued.' | 0:06:56 | 0:07:00 | |
So this is something you just decided to do? | 0:07:00 | 0:07:04 | |
Yes. We went to Macau and there was a hotel in Macau and they had a fish bar there. | 0:07:04 | 0:07:10 | |
We tried it. It was amazing. | 0:07:10 | 0:07:13 | |
We came back and we quit our jobs and we started this. | 0:07:13 | 0:07:17 | |
And we think business is fun. We really like business. | 0:07:17 | 0:07:20 | |
What's your background? | 0:07:20 | 0:07:22 | |
-We studied at the University of Oxford, both in science degrees. -What degree did you get? | 0:07:22 | 0:07:27 | |
-First class honour, Gibbs prize. -Karen? -Merton College Oxford and I did physics. | 0:07:27 | 0:07:33 | |
-And what did you do after that? -I went to Lehman Brothers to become a quantitative trader. | 0:07:33 | 0:07:39 | |
-You went to Lehman Brothers? -Yes. | 0:07:39 | 0:07:42 | |
Consultant for one of those consulting firms in London. | 0:07:43 | 0:07:48 | |
Magnificent. | 0:07:48 | 0:07:50 | |
'The impressive duo may be garnering praise from the Dragons, | 0:07:53 | 0:07:56 | |
'but it's their £150,000 To and Karen really need. | 0:07:56 | 0:08:01 | |
'Will Hilary Devey find a reason to invest?' | 0:08:01 | 0:08:05 | |
Is your vision to continuing opening shops | 0:08:07 | 0:08:11 | |
or is your vision to sell this product to existing spas? | 0:08:11 | 0:08:16 | |
I mean, I go in nail bars, | 0:08:16 | 0:08:20 | |
and the turnover is phenomenal in such a small place. | 0:08:20 | 0:08:23 | |
I've actually sat there and calculated their profit | 0:08:23 | 0:08:26 | |
whilst I've been having my nails done. | 0:08:26 | 0:08:29 | |
Now, I could imagine that product going into a salon-type operation like that | 0:08:29 | 0:08:35 | |
and that would make that salon more profitable. So is that element part of your business plan? | 0:08:35 | 0:08:40 | |
We cultivate our brand very carefully. | 0:08:40 | 0:08:43 | |
We will not open too many, we will not spread it everywhere, | 0:08:43 | 0:08:47 | |
in one capital, we will only have a few. | 0:08:47 | 0:08:50 | |
But we are prepared to expand overseas if need be. | 0:08:50 | 0:08:53 | |
Explain your logic there. | 0:08:53 | 0:08:56 | |
It is most important for us to make sure our brand is good. | 0:08:56 | 0:09:00 | |
If an independent spa decides to cut on the cost, | 0:09:00 | 0:09:03 | |
then we have further to control, and once damage is done, it's done. | 0:09:03 | 0:09:07 | |
I'm sorry, but I do disagree, cos I'm all about growth and profit. | 0:09:07 | 0:09:12 | |
Yes, I'm very brand conscious, but I think there's ways you can do it without brand denigration. | 0:09:12 | 0:09:18 | |
So I think your whole business strategy, for growth, for profitability, cos let's face it, | 0:09:18 | 0:09:23 | |
that's what we're all in business for, to make money, | 0:09:23 | 0:09:26 | |
and I think you've missed a trick somewhere. And because of that, I think we conflict. | 0:09:26 | 0:09:30 | |
So I'm out. | 0:09:30 | 0:09:33 | |
'A first blow, as strategic differences cause the couple to lose one Dragon. | 0:09:35 | 0:09:41 | |
'And Deborah Meaden looks to have something on her mind, too.' | 0:09:41 | 0:09:46 | |
Can you breed these fish? Have you thought about breeding these fish? | 0:09:48 | 0:09:52 | |
Yes, we have thought about it, but at present, we have not put that into plan. | 0:09:52 | 0:09:56 | |
-So you buy live fish and they're all live. -Yeah. | 0:09:56 | 0:10:00 | |
Do you know, tanks and cages make me feel sad. | 0:10:01 | 0:10:05 | |
I think you guys are very good and you've come up with a very good business model, | 0:10:05 | 0:10:09 | |
but I don't like export trade in live animals at all. | 0:10:09 | 0:10:12 | |
-Yeah. -It's not a type of business that I would operate in. | 0:10:12 | 0:10:16 | |
-I'm out. -OK. -It's fine. -Karen and To. | 0:10:16 | 0:10:19 | |
I don't doubt for one minute that you're two great young entrepreneurs. | 0:10:19 | 0:10:24 | |
And what you've done I think is absolutely wonderful. Magnificent. So I think you should continue. | 0:10:24 | 0:10:29 | |
But you don't have something that can't be copied. Everybody can copy it. | 0:10:29 | 0:10:35 | |
So I'm not going to invest. | 0:10:35 | 0:10:37 | |
I'm out. | 0:10:38 | 0:10:40 | |
'Two more Dragons out and the investment tides looks to be turning against To and Karen. | 0:10:43 | 0:10:49 | |
'But can high street expert Theo Paphitis | 0:10:49 | 0:10:52 | |
'see a money-making future in this business?' | 0:10:52 | 0:10:55 | |
I've got to be honest, I find it very difficult to make a decision. | 0:10:58 | 0:11:01 | |
Because you two are good. You qualify. You get a tick in the box. | 0:11:01 | 0:11:06 | |
I worry about the barrier to entry. It's not a lot. | 0:11:10 | 0:11:14 | |
I then worry about how you move the brand across. | 0:11:14 | 0:11:19 | |
Cos I'm pretty certain, within a short period of time, | 0:11:19 | 0:11:22 | |
this market will be congested. | 0:11:22 | 0:11:24 | |
And I'll then be relying on how you separate your business from the crowd. | 0:11:24 | 0:11:30 | |
When I take all those things into account... | 0:11:33 | 0:11:36 | |
..I don't quite get to a yes. | 0:11:37 | 0:11:40 | |
-Mm. -OK. -OK. -That's fine. | 0:11:40 | 0:11:42 | |
-I'm out. -Right. Thank you. -Thank you. | 0:11:42 | 0:11:44 | |
To, Karen, erm... | 0:11:45 | 0:11:49 | |
You've without question proved your level of aptitude when it comes to looking at a business | 0:11:53 | 0:11:59 | |
and trying to make a business work and I enjoyed it and I'm sitting here thinking, "This is great". | 0:11:59 | 0:12:05 | |
One last question that I've got, though, you're in here wearing dirty trainers. | 0:12:06 | 0:12:12 | |
Is there a reason for dressing in oil-based jeans? | 0:12:12 | 0:12:16 | |
I can explain why. We painted the floor ourselves. | 0:12:16 | 0:12:21 | |
We did the sawing ourselves. | 0:12:21 | 0:12:23 | |
We are very hands-on people. | 0:12:23 | 0:12:26 | |
And if need be, we will get ourselves dirty. | 0:12:26 | 0:12:28 | |
-That's a really good answer, by the way. -Mm. | 0:12:28 | 0:12:32 | |
In terms of the business opportunity, I am literally, on a balance, that close. | 0:12:32 | 0:12:38 | |
The 112K that you made, how much of that would you normally have taken as salaries? | 0:12:39 | 0:12:46 | |
We take minimum wage. | 0:12:47 | 0:12:49 | |
But how much, realistically, would you like to see yourself taking in the next 12 months? | 0:12:49 | 0:12:54 | |
We are going to put most of our money back into investment, to realise our strategy of opening more shops, | 0:12:54 | 0:13:01 | |
so our current position of taking minimum wage only will hold. | 0:13:01 | 0:13:05 | |
Erm... | 0:13:08 | 0:13:09 | |
Does your business have any debt in it? | 0:13:09 | 0:13:12 | |
63,000. | 0:13:14 | 0:13:16 | |
-63? -Mm. That's the loan to support the opening of the Soho venue. | 0:13:16 | 0:13:21 | |
To, Karen, I think it's just tipping the balance the other way, unfortunately. | 0:13:28 | 0:13:33 | |
I don't see how I can make money | 0:13:33 | 0:13:38 | |
at 30 percent of your business. | 0:13:38 | 0:13:40 | |
I'm going to say to you, I'm not going to invest and I'm out. | 0:13:40 | 0:13:45 | |
'The Dragons may have been tempted by the proposal, | 0:13:48 | 0:13:52 | |
'but none could find a reason to invest their £150,000. | 0:13:52 | 0:13:56 | |
'To and Karen leave with nothing. | 0:13:56 | 0:13:59 | |
'This year, the den has played host to a number of products | 0:14:04 | 0:14:07 | |
'aimed at the health and fitness market. | 0:14:07 | 0:14:10 | |
'But so far, we've yet to see the Dragons invest in one. | 0:14:10 | 0:14:13 | |
'Business partners Scott Robert Shaw and Lee Collinson James | 0:14:13 | 0:14:17 | |
'wanted £100,000 to get us all skipping to a different beat.' | 0:14:17 | 0:14:22 | |
We believe that skipping is for everybody. | 0:14:22 | 0:14:25 | |
We wanted to bring a fusion of sport skipping and street dance, which is Skip-Hop. | 0:14:25 | 0:14:31 | |
DANCE MUSIC | 0:14:32 | 0:14:35 | |
'It may not have been a scientific assessment, | 0:14:48 | 0:14:52 | |
'but the den demo achieved only a 50 percent success rate.' | 0:14:52 | 0:14:56 | |
-Shall we skip together, Peter? -Duncan can skip. I've never tried it. | 0:14:56 | 0:15:00 | |
-Hang on, Duncan, hang on! -SHE LAUGHS | 0:15:00 | 0:15:03 | |
Give me half an hour, I could have you skipping. THEY LAUGH | 0:15:03 | 0:15:08 | |
'Having tried the skipping, the Dragons got down to numbers. | 0:15:08 | 0:15:12 | |
'Was the duo's success rate any better there?' | 0:15:12 | 0:15:14 | |
Have you ever heard of the saying, "Mountain to climb"? | 0:15:14 | 0:15:17 | |
-Certainly have. -You've got several before you can convince me | 0:15:17 | 0:15:21 | |
-to invest £100,000 on a skipping rope. -OK. | 0:15:21 | 0:15:25 | |
You've got a business that you're valuing at half a million pounds. How? | 0:15:25 | 0:15:30 | |
-The... -Come on, snap, snap! You should have the answer! | 0:15:31 | 0:15:35 | |
You're coming here asking us for 100 grand. | 0:15:35 | 0:15:38 | |
We've done a lot of study and we believe the turnover is more than achievable. | 0:15:38 | 0:15:42 | |
Do you know what? I don't believe it. | 0:15:42 | 0:15:45 | |
'In the end, it was 100 percent of the Dragons who chose not to invest. | 0:15:45 | 0:15:52 | |
'And that signalled the end for Scott and Lee.' | 0:15:52 | 0:15:54 | |
-Tell me your background. -I was a self-employed skipping coach. | 0:15:54 | 0:15:58 | |
I was making a very good living until I decided that we ought to start my own business and do it my way. | 0:15:58 | 0:16:04 | |
So you earned really good money, things were great, and then you started this businesses? Yes. | 0:16:04 | 0:16:09 | |
What do you think the conclusion would be if I said that to you? | 0:16:09 | 0:16:13 | |
Yes, I can see where you're leading. | 0:16:13 | 0:16:15 | |
-Don't suggest where I'm leading, what would your advice be? -Don't do it. -And that's why I'm out. | 0:16:15 | 0:16:21 | |
The Dragons know nothing about the products or the entrepreneurs they see | 0:16:24 | 0:16:29 | |
until they walk up the stairs into the den. | 0:16:29 | 0:16:31 | |
So don't be surprised if the multi-millionaires ask searching questions | 0:16:31 | 0:16:35 | |
before deciding whether to invest. | 0:16:35 | 0:16:38 | |
Is successful entrepreneur Alan Pearson from Middlesbrough ready for the challenge? | 0:16:38 | 0:16:43 | |
Hello, my name's Alan Pearson. I'm a sign manufacturer from Teesside | 0:16:59 | 0:17:04 | |
and I have two products here that I'm going to pitch to you. | 0:17:04 | 0:17:09 | |
The first, which is street nameplates, | 0:17:10 | 0:17:13 | |
and the second is a new product called Strim Base. | 0:17:13 | 0:17:17 | |
The street nameplates, it's a recycled plastic product, | 0:17:18 | 0:17:24 | |
and a recyclable plastic product. | 0:17:24 | 0:17:26 | |
It, erm... It, er... | 0:17:26 | 0:17:29 | |
We've been selling around £100,000 worth of them a year. | 0:17:31 | 0:17:35 | |
Erm... | 0:17:35 | 0:17:37 | |
The other product I have is something that I developed off the back of this product. | 0:17:37 | 0:17:43 | |
One of my councils I was selling to | 0:17:43 | 0:17:45 | |
was putting a concrete base round the bottom of the street nameplate. | 0:17:45 | 0:17:49 | |
It's cheaper to do that in the long term than actually strim round them. | 0:17:49 | 0:17:54 | |
So I came up with a product that can be mowed over, | 0:17:54 | 0:17:56 | |
will stop the grass growing round the post, and, er... | 0:17:56 | 0:18:01 | |
-Is that it? -Sorry. I'm looking for £100,000, | 0:18:05 | 0:18:11 | |
to give a ten percent equity in the company for £100,000. | 0:18:11 | 0:18:15 | |
Erm... Thank you very much. | 0:18:17 | 0:18:19 | |
'An understated pitch from nervy Teessider Alan Pearson. | 0:18:23 | 0:18:28 | |
'He's looking for a cash investment in his new business specialising in street signs | 0:18:28 | 0:18:33 | |
'and a maintenance-friendly accessory. Deborah Meaden is in need of some clarity.' | 0:18:33 | 0:18:39 | |
Erm, what I'd like to understand | 0:18:40 | 0:18:44 | |
is what your business looks like at the moment. | 0:18:44 | 0:18:46 | |
-Because I think you said you sold £100,000 worth of this product. -Mm-hm. | 0:18:46 | 0:18:51 | |
But that kind of implies there's another business that's sitting behind all of this. | 0:18:51 | 0:18:56 | |
Yeah, this would form a new business. I have an existing business, Ensign, which... | 0:18:56 | 0:19:01 | |
Sorry. So the business that you've currently got, is it profitable? | 0:19:01 | 0:19:05 | |
-Yes. -How much profit? -The turnover this year was about £800,000 | 0:19:05 | 0:19:11 | |
and we made a good profit. | 0:19:11 | 0:19:13 | |
-A good profit? -Mm. -What's a good profit? | 0:19:13 | 0:19:16 | |
Well, yeah, er... | 0:19:16 | 0:19:18 | |
That... I'd rather not... That's... | 0:19:22 | 0:19:26 | |
We're looking at... This year, we made about £60,000. | 0:19:26 | 0:19:29 | |
So £800,000, net profit £60,000. Park that business to one side | 0:19:29 | 0:19:34 | |
and this product here that you've sold £100,000 of, how much profit did that make? | 0:19:34 | 0:19:40 | |
-We'd be looking at about £60,000 gross. -Right. | 0:19:40 | 0:19:43 | |
-So presumably you've got accounts. -Yes. | 0:19:43 | 0:19:45 | |
-So what do those accounts... -Well, this is part of the Ensign business at the moment. | 0:19:45 | 0:19:50 | |
This has been... This is part of Ensign. | 0:19:50 | 0:19:53 | |
So you've got a product, a new product, sitting inside your existing sign business. | 0:19:53 | 0:19:59 | |
I'm really interested to understand why you've decided to take them out of your existing business. | 0:19:59 | 0:20:04 | |
Because I think that these products would be of interest to you. | 0:20:04 | 0:20:08 | |
The sign business, standing on its own, doesn't need the investment... | 0:20:08 | 0:20:12 | |
Investing in a business that has a proven track record | 0:20:12 | 0:20:15 | |
and is making a profit is always of interest to a Dragon. | 0:20:15 | 0:20:18 | |
'An awkward first exchange from the tongue-tied entrepreneur. | 0:20:20 | 0:20:24 | |
'Will he fare any better under questioning from Peter Jones?' | 0:20:24 | 0:20:29 | |
-I think it's quite appropriate that you've brought in a sign with "Dragons Court" on it. -Yeah. | 0:20:31 | 0:20:37 | |
Because if I was a judge, I'd be sentencing you | 0:20:37 | 0:20:41 | |
to making probably the worst presentation | 0:20:41 | 0:20:45 | |
that I've ever seen in the den. | 0:20:45 | 0:20:47 | |
Is there a reason why your pitch was so... | 0:20:47 | 0:20:51 | |
..slapdash, amazingly average? | 0:20:51 | 0:20:54 | |
I had it all in my head when I came up the stairs, Peter, | 0:20:54 | 0:20:57 | |
and it all fell apart as soon as I got to the top of the stairs. | 0:20:57 | 0:21:01 | |
Could we start again and I just want to see whether you are | 0:21:01 | 0:21:04 | |
at all interested in engaging in a conversation that actually says, | 0:21:04 | 0:21:09 | |
"I'm willing to change my pitch and you can invest in the overall business | 0:21:09 | 0:21:15 | |
-"and have a slice of the overall business, rather than the separation of products." -Yes, I would. | 0:21:15 | 0:21:21 | |
OK. So let's talk about the future. | 0:21:21 | 0:21:26 | |
If things go according to plan, based around the current business you've got, | 0:21:26 | 0:21:30 | |
what is your current forecast for the next 12 months? | 0:21:30 | 0:21:34 | |
I would expect to turnover £1.1 million, £1.2 million. | 0:21:34 | 0:21:37 | |
And what do you think your gross profit will be? | 0:21:37 | 0:21:40 | |
I'd be looking at 100 to 120 gross. | 0:21:40 | 0:21:45 | |
-Gross? -Yeah. Oh, sorry, net. Net, sorry. -What's your gross? | 0:21:45 | 0:21:49 | |
Erm... Erm... | 0:21:49 | 0:21:53 | |
If you take the average of the last three years, in percentage terms, | 0:21:54 | 0:21:58 | |
-what have you made, gross profit, in percentage margin? -We make round about 100 percent. | 0:21:58 | 0:22:02 | |
-Well, you can't. -Yeah, with overheads, costs. | 0:22:02 | 0:22:06 | |
-Mark-up. -Sorry? -Margin or mark-up? | 0:22:06 | 0:22:10 | |
-So your gross margin is around 50 percent? -Double what we... | 0:22:10 | 0:22:14 | |
-That's 50 percent gross margin. -Yeah. | 0:22:14 | 0:22:16 | |
'The proposition may have changed, but Alan's nerves have yet to settle. | 0:22:21 | 0:22:25 | |
'Can Theo Paphitis make sense of the Teessider's business?' | 0:22:25 | 0:22:30 | |
So 100,000 of the 800,000 | 0:22:32 | 0:22:37 | |
comes from that sign. | 0:22:37 | 0:22:39 | |
-Where does that other 700,000 come from? -Potentials. | 0:22:39 | 0:22:42 | |
No, you said your turnover last year was 800,000. | 0:22:42 | 0:22:45 | |
Yeah, the sign manufacturing as a whole. | 0:22:45 | 0:22:49 | |
-700,000... -Because... Hold on, let me just speak. | 0:22:49 | 0:22:51 | |
-Selling to people like you. -Whoa. | 0:22:51 | 0:22:54 | |
-At the moment, what you've said to us is you're happy to throw the whole business in. -Yes. | 0:22:54 | 0:22:59 | |
So now I'm saying, I understand where £100,000 | 0:22:59 | 0:23:04 | |
-of the turnover of your business comes from. -Yes. | 0:23:04 | 0:23:07 | |
The other 700,000, talk me through it. | 0:23:07 | 0:23:11 | |
We, er... We're general sign manufacturers. | 0:23:11 | 0:23:14 | |
-Shop signs? -Shop signs, van signs. | 0:23:14 | 0:23:18 | |
-Do you have any big repeat customer base? -Yeah, we have a number of big customers, blue-chip companies. | 0:23:18 | 0:23:24 | |
-And you made 60,000 profit. Have you always made a profit? -Yes. | 0:23:24 | 0:23:28 | |
-And what's your wages? -I take as I need. I don't have a specific amount that I take. | 0:23:28 | 0:23:34 | |
OK, just as an example, you made 60,000 profit after how much drawings? | 0:23:34 | 0:23:38 | |
Erm... I would probably say about 40. | 0:23:38 | 0:23:41 | |
Alan, in your company accounts, every year at the end of the year, | 0:23:41 | 0:23:45 | |
you have to state what salary you've taken. You must know what it is. You can't just say, "I just..." | 0:23:45 | 0:23:51 | |
-What did you take in your last year as a director? -£4,600. | 0:23:51 | 0:23:55 | |
-£4,600? In the full year? -Mm-hm. | 0:23:55 | 0:23:59 | |
I thought you said to Theo you took 40,000. | 0:23:59 | 0:24:02 | |
Yeah, I have a director's loan account that I draw it out of. | 0:24:02 | 0:24:06 | |
-You've got to clear that. -That's a little bit misleading, | 0:24:07 | 0:24:10 | |
cos Theo specifically asked you what you were taking from the business. | 0:24:10 | 0:24:16 | |
And what I was taking from the business was £40,000 a year. | 0:24:16 | 0:24:19 | |
-But you just answered Duncan £4,000. -No, a wage, £4,000. | 0:24:19 | 0:24:24 | |
That's a little disingenuous. The information we glean from that | 0:24:24 | 0:24:28 | |
is you're able to draw £40,000 and it still makes £60,000 profit. | 0:24:28 | 0:24:33 | |
-Yeah, OK. -Now that is a world of difference from a business that can only afford £4,000 of wages | 0:24:33 | 0:24:39 | |
and make £60,000 profit. Cos you turn from a business that might have potential | 0:24:39 | 0:24:44 | |
to a business that's just about paying your wage. | 0:24:44 | 0:24:47 | |
Alan, your job was to take me down a path that led me to a conclusion | 0:24:48 | 0:24:53 | |
-that made me want to invest in your business. -Invest, yeah. | 0:24:53 | 0:24:57 | |
-And you haven't done it. -Aye, I appreciate that entirely. -So I'm out. | 0:24:58 | 0:25:03 | |
'Confusion reigns in the den | 0:25:06 | 0:25:09 | |
'and a dazed-looking Alan loses his first Dragon. | 0:25:09 | 0:25:13 | |
'Theo Paphitis is not looking impressed, either.' | 0:25:13 | 0:25:17 | |
Alan, in some ways, I can forgive you | 0:25:19 | 0:25:23 | |
for not knowing all the figures | 0:25:23 | 0:25:27 | |
like the back of your hand. | 0:25:27 | 0:25:29 | |
But I don't think there was any doubt in your mind the difference between salary and drawings. | 0:25:29 | 0:25:36 | |
I wasn't asked that, Theo. I was asked what I took out of the business. But, yeah, misleading. | 0:25:36 | 0:25:41 | |
Misleading. You were misleading in your answers. | 0:25:41 | 0:25:44 | |
And, actually, a bright little product. | 0:25:45 | 0:25:49 | |
Potential. But I'm sorry to say | 0:25:51 | 0:25:55 | |
you have not covered yourself | 0:25:55 | 0:25:58 | |
-with too much credibility here today. -I appreciate that. | 0:25:58 | 0:26:02 | |
So I cannot invest in you. | 0:26:02 | 0:26:06 | |
-And for that reason, I'm going to say I'm out. -OK. | 0:26:06 | 0:26:10 | |
-And I didn't mean to be misleading. That's something I had no intention... -Alan. | 0:26:10 | 0:26:14 | |
If you can't come here and prepare yourself for the interrogation that you know you would get... | 0:26:15 | 0:26:21 | |
If you're looking at anybody to invest, | 0:26:21 | 0:26:24 | |
they would be asking for this information. | 0:26:24 | 0:26:27 | |
So why wasn't you prepared? | 0:26:28 | 0:26:31 | |
-Er... -And secondly, how do you hope to grow your business | 0:26:34 | 0:26:37 | |
if you can't even motivate yourself to do what should've been the biggest pitch of your life? | 0:26:37 | 0:26:42 | |
How on earth do you expect anybody to invest in you, | 0:26:44 | 0:26:48 | |
your product or this company? | 0:26:48 | 0:26:51 | |
You would make my foot itch. | 0:26:51 | 0:26:54 | |
I'm sorry, Alan, it just doesn't go. I'm out. | 0:26:54 | 0:26:58 | |
'Two more Dragons out, and Alan's changes of investment are looking slim. | 0:27:02 | 0:27:06 | |
'Will Duncan Bannatyne throw him the financial lifeline he badly needs?' | 0:27:06 | 0:27:12 | |
I think you would be such hard work, Alan, | 0:27:15 | 0:27:18 | |
I just can't understand how you work. | 0:27:18 | 0:27:21 | |
And so for that reason and that reason only, I've got to say I'm out. | 0:27:21 | 0:27:25 | |
Alan, "Have you got a business that could be invested in?" is the bottom line. | 0:27:28 | 0:27:32 | |
And I think there lies the biggest issue. | 0:27:32 | 0:27:35 | |
It is still a quagmire. And I think the only major mistake that you've made, | 0:27:35 | 0:27:39 | |
and you're going to regret this, is not knowing your core business | 0:27:39 | 0:27:44 | |
as well as perhaps you should. | 0:27:44 | 0:27:46 | |
I can't invest in you. I'm out. | 0:27:48 | 0:27:51 | |
'A devastating end for Alan. It was a shaky start and his pitch never gained momentum. | 0:27:54 | 0:28:00 | |
'He leaves with nothing.' | 0:28:00 | 0:28:02 | |
I walked up the stairs and immediately when I was up there, | 0:28:03 | 0:28:06 | |
all what I had in my head to talk about went. | 0:28:06 | 0:28:09 | |
We barely touched the products that I brought to show them and hoped that they'd invest in. | 0:28:09 | 0:28:14 | |
And I came away feeling a complete idiot. | 0:28:14 | 0:28:18 | |
'The higher the investment an entrepreneur demands, | 0:28:23 | 0:28:26 | |
'the greater the scrutiny they must expect, because it's the Dragons' own money that's being put at risk. | 0:28:26 | 0:28:32 | |
'So when Londoner Jonathan Caplan asked for a £275,000 stake | 0:28:32 | 0:28:38 | |
'in a new poker console, he was on the receiving end of some tough questioning.' | 0:28:38 | 0:28:43 | |
Our flagship product is the wireless poker controller. | 0:28:44 | 0:28:46 | |
It's a handheld joystick that enables you to play the poker game in a faster, | 0:28:46 | 0:28:51 | |
more accurate and more efficient manner. We've currently sold 10,000 to date | 0:28:51 | 0:28:57 | |
and the product is currently being used in over 25 countries worldwide. | 0:28:57 | 0:29:01 | |
'It was an assured pitch from the entrepreneur.' | 0:29:01 | 0:29:04 | |
-Can I use it? -Absolutely. Please. | 0:29:04 | 0:29:06 | |
'And enthusiastic poker player Duncan Bannatyne enjoyed the demonstration.' | 0:29:06 | 0:29:12 | |
-Is this a real game? -It's a real game, real money. -This is real? | 0:29:12 | 0:29:15 | |
You can do everything from the controller. If I turn my finger, the bet goes up and down. | 0:29:15 | 0:29:20 | |
OK, we want a flush. OK, I've lost. OK. | 0:29:20 | 0:29:25 | |
'But then the business interrogation commenced.' | 0:29:25 | 0:29:29 | |
-Jonathan, what did you do before you did this? -I decided to go and start my own company. | 0:29:29 | 0:29:33 | |
It was an online gaming company, but it took the aspects of what the poker rooms do and... | 0:29:33 | 0:29:40 | |
-How much money was invested in that company? -£4.8 million. | 0:29:40 | 0:29:43 | |
You got £4.8 million worth of investment? | 0:29:43 | 0:29:46 | |
-Mm-hm. -And how much of that company did you own? -Er, about 14 percent. | 0:29:46 | 0:29:50 | |
-What happened to that company? -As I started the company, I raised the majority of the first money... | 0:29:50 | 0:29:55 | |
-What happened to it? -At the point that I took the company to, it was successful. -What happened to it? | 0:29:55 | 0:30:01 | |
-I left before... -Where is that 14 percent today? -They liquidated the company a year ago. | 0:30:01 | 0:30:05 | |
'In the end, it was Theo Paphitis who summed up the mood in the den.' | 0:30:05 | 0:30:11 | |
Jonathan, your previous track record shows that I'm likely to lose my money. | 0:30:11 | 0:30:18 | |
I appreciate I don't have amazing successes to show where I have returns on investment... | 0:30:18 | 0:30:24 | |
-With all due respect, you have no successes to show. -OK. | 0:30:24 | 0:30:27 | |
I reckon the odds probably are better just to go to a casino | 0:30:27 | 0:30:31 | |
and put £275,000 on red or black. | 0:30:31 | 0:30:35 | |
-I'm out. -OK. Thank you for your time. | 0:30:36 | 0:30:39 | |
'So far tonight, the entrepreneurs have failed to convince the Dragons to part with their cash.' | 0:30:40 | 0:30:46 | |
You would make my foot itch. I'm out. | 0:30:46 | 0:30:50 | |
'To find out what our newest Dragon, Hilary Devey, makes of her experience so far in the den, | 0:30:50 | 0:30:55 | |
'press the red button at the end of the programme.' | 0:30:55 | 0:30:58 | |
29-year-old London-based twins Polly and Charlotte Vickery | 0:31:00 | 0:31:04 | |
are experienced in the fashion sector and they've recently launched their own range. | 0:31:04 | 0:31:08 | |
But to expand, their company needs investment, and that's where the Dragons come in. | 0:31:08 | 0:31:13 | |
Will they see potential in these two young entrepreneurs? | 0:31:13 | 0:31:17 | |
Hi, Dragons. My name's Polly and this is my sister and business partner Charlotte, | 0:31:39 | 0:31:44 | |
and we're here today to ask you for £65,000 worth of investment | 0:31:44 | 0:31:48 | |
for 20 percent of our company. | 0:31:48 | 0:31:51 | |
Since Brat & Suzie launched, we have established a reputation | 0:31:53 | 0:31:58 | |
for our unique, hand-drawn, illustrated animal T-shirts and tops. | 0:31:58 | 0:32:04 | |
-Our customers are... Sorry. -15 to 35-year-olds. -Yep. | 0:32:04 | 0:32:08 | |
We work with different illustrators to create our one-off, quirky prints | 0:32:08 | 0:32:12 | |
and we follow the trends. | 0:32:12 | 0:32:15 | |
We've had great press. We've been in magazines such as Closer, | 0:32:15 | 0:32:18 | |
Look, Company and Cosmopolitan | 0:32:18 | 0:32:21 | |
and we're also loved by girl band The Saturdays. | 0:32:21 | 0:32:24 | |
Since starting trading in 2009, | 0:32:24 | 0:32:27 | |
we are now in 60 stores as well as a major high-street department store. | 0:32:27 | 0:32:33 | |
Thank you for listening. We'd now like to invite any questions. | 0:32:33 | 0:32:37 | |
'A bright pitch from East London twins Polly and Charlotte Vickery. | 0:32:41 | 0:32:46 | |
'In return for a 20 percent stake in their online and high-street fashion label, | 0:32:46 | 0:32:50 | |
'they need a £65,000 cash injection.' | 0:32:50 | 0:32:53 | |
-I notice a few people have got a horse. You've given me a pig. -We thought it was rock 'n' roll. | 0:32:53 | 0:32:58 | |
'Retail fashion expert Theo Paphitis | 0:32:58 | 0:33:01 | |
'is first to question the young entrepreneurs.' | 0:33:01 | 0:33:05 | |
Guys, hello, I'm Theo. | 0:33:05 | 0:33:07 | |
How many pieces in the range? | 0:33:07 | 0:33:09 | |
-About 25. -Is that normal? | 0:33:09 | 0:33:12 | |
-No. Our autumn/winter range is a lot bigger. -Yeah. -Give me numbers. | 0:33:12 | 0:33:16 | |
-About 35. -And up to this stage, | 0:33:16 | 0:33:20 | |
-you've just been T-shirts? -And sweatshirts. | 0:33:20 | 0:33:24 | |
OK. So what makes you comfortable about moving into other products? I assume it's dresses? | 0:33:24 | 0:33:31 | |
-Dresses, tops. -Tops. -And skirts. -Skirts. | 0:33:31 | 0:33:34 | |
-Well, most of our customers have asked us for different products. -They want to see a full range. | 0:33:34 | 0:33:40 | |
And also, I think, with our previous experience dealing with factories, | 0:33:40 | 0:33:45 | |
we know all the problems that can go wrong. | 0:33:45 | 0:33:47 | |
-We've dealt with that. -We're quite comfortable with how to move forward. | 0:33:47 | 0:33:51 | |
What sort of margin are you achieving? | 0:33:51 | 0:33:54 | |
-38 percent? -Gross profit is 41 percent. | 0:33:54 | 0:33:58 | |
And net profit is 15 percent. | 0:33:59 | 0:34:03 | |
A typical order will be how much presold and how much for stock? | 0:34:03 | 0:34:07 | |
Probably 80 percent presold | 0:34:07 | 0:34:10 | |
-and then maybe 10 to 20 percent stock. -So you're not being that adventurous. -No. | 0:34:10 | 0:34:16 | |
Well, cash flow, isn't it? So we have to be careful. | 0:34:16 | 0:34:19 | |
'Targeted questioning and detailed responses. It's a good start for the duo. | 0:34:22 | 0:34:27 | |
'But what of the brand itself? Duncan Bannatyne wants to know.' | 0:34:27 | 0:34:32 | |
-Erm, Brat & Suzie. -BOTH: Yep. | 0:34:33 | 0:34:37 | |
-Where did the name come from? -We had two cats when we were little and they were called Brat and Suzie. | 0:34:37 | 0:34:43 | |
-And we really loved them. -And that became the name of your business. | 0:34:43 | 0:34:46 | |
-When was the company formed? -Two years ago. -Yeah. -Two years ago? -Yeah. | 0:34:46 | 0:34:52 | |
-And what was the turnover for the first year? -Er, 77,000. | 0:34:52 | 0:34:56 | |
We made 9,000 net profit. | 0:34:56 | 0:34:59 | |
-And the second year? -105,000. | 0:34:59 | 0:35:01 | |
And we made 15,000. | 0:35:01 | 0:35:05 | |
When you say you're in stores, what kind of stores? | 0:35:06 | 0:35:09 | |
-Independents or chains? -Independents and then Joy and also House Of Fraser. | 0:35:09 | 0:35:15 | |
-What did you do before? -I used to work in production at River Island, | 0:35:15 | 0:35:19 | |
-my background is fashion production. -And I was a designer at Miss Selfridge | 0:35:19 | 0:35:23 | |
and I've worked for high-street suppliers as a designer. | 0:35:23 | 0:35:26 | |
'The confident fashion twins are going down well in the den. | 0:35:30 | 0:35:35 | |
'But Peter Jones thinks he's spotted a flaw in their business model.' | 0:35:35 | 0:35:39 | |
Your gross margin seems to be very low. | 0:35:41 | 0:35:44 | |
-41 percent? -Mm. -Yeah, we're working on that. | 0:35:44 | 0:35:48 | |
Because we don't have the larger orders, | 0:35:48 | 0:35:51 | |
we're still paying quite a high cost price for our T-shirts. | 0:35:51 | 0:35:56 | |
But once we get larger orders, | 0:35:56 | 0:35:58 | |
we'll be able to negotiate better prices with our factories. | 0:35:58 | 0:36:02 | |
The second issue is the copycats. Cos it means you've got to continue to innovate | 0:36:02 | 0:36:07 | |
-and come up with new designs. -I think with our design, especially Charlotte's design background, | 0:36:07 | 0:36:13 | |
we're always moving with the trends anyway, | 0:36:13 | 0:36:16 | |
so we won't have things on the rails, hopefully, for too long. | 0:36:16 | 0:36:20 | |
-We'll have new things coming in. -And we do have loyal customers and we're selling it on our personalities. | 0:36:20 | 0:36:25 | |
And the high street are always going to copy something. | 0:36:25 | 0:36:28 | |
-So, Polly, Charlotte, hi, I'm Deborah. -BOTH: Hello. | 0:36:29 | 0:36:32 | |
-What are you paying for your illustrations? -We pay... It's quite small. | 0:36:32 | 0:36:36 | |
-We pay £20 to each illustrator. -Flat fee. | 0:36:36 | 0:36:40 | |
We blog about them and we help them out as much... | 0:36:40 | 0:36:44 | |
-So they see it as a way of getting their illustrations around. -Yeah. -I think it's great. | 0:36:44 | 0:36:49 | |
-I love the illustrations. -BOTH: Thank you. -But I don't see this | 0:36:49 | 0:36:54 | |
as a strongly-branded clothing range. I know you'll say it's your illustrations, | 0:36:54 | 0:36:59 | |
but as Peter said, it's quite easy to find another illustrator and print on a T-shirt. | 0:36:59 | 0:37:04 | |
So to turn this into a real, "That's brand Suzie," | 0:37:04 | 0:37:08 | |
-you need to come up with something a lot stronger. -Yep. | 0:37:08 | 0:37:12 | |
You've got a good eye, you've got a good turnover, you're in some good shops, | 0:37:12 | 0:37:17 | |
just keep going at it. But it isn't yet a strong brand. Hone that down so it's got a look. | 0:37:17 | 0:37:24 | |
-Thank you. -For that reason, I won't be investing. I'm out. -BOTH: Thank you. | 0:37:24 | 0:37:29 | |
'A first blow to the duo's investment hopes. | 0:37:31 | 0:37:35 | |
'But four Dragons still remain. | 0:37:35 | 0:37:38 | |
'Will retail expert Theo Paphitis take a different view?' | 0:37:38 | 0:37:41 | |
I love seeing new designers. | 0:37:44 | 0:37:47 | |
I love people who bring out new ranges. | 0:37:47 | 0:37:49 | |
It's like the life blood of the industry. But I've got to agree with Deborah. I'm looking... | 0:37:49 | 0:37:56 | |
I think, though, with investment and with going forward, with more time to expand on the range... | 0:37:56 | 0:38:03 | |
Look. Your margins are rubbish. | 0:38:03 | 0:38:05 | |
You need to be able to work a lot sharper than that. | 0:38:07 | 0:38:10 | |
You won't be able to do that without substantially bigger volumes. So for a long time, | 0:38:10 | 0:38:15 | |
unless you are actually able to get big orders from the multiples, | 0:38:15 | 0:38:19 | |
you're not going to be able to work those margins down. | 0:38:19 | 0:38:22 | |
That, necessarily, is not the end of the world. | 0:38:22 | 0:38:25 | |
Problem is, the name's great but there's no overriding brand yet. | 0:38:25 | 0:38:32 | |
I think we're close. I think with the magazine coverage, as well, that we've had, | 0:38:32 | 0:38:37 | |
because it's really hard to reflect the brand just on a rail, here, now. | 0:38:37 | 0:38:44 | |
-No, it's not. I'm sorry. Remember, that's what you've got. -Yeah. -That is you. | 0:38:44 | 0:38:48 | |
-And that rail has to represent you and your brand. -Yeah. | 0:38:48 | 0:38:54 | |
-So I'm out, but real good luck from me. -BOTH: Thank you. | 0:38:54 | 0:39:00 | |
Charlotte, Polly, you know, the fact is, you're in the industry. | 0:39:00 | 0:39:03 | |
I'm not. So there's not really anything I can add to your company. | 0:39:03 | 0:39:08 | |
-Mm-hm. -I can't really bring you any expertise to help you sell your product. So I'm out. | 0:39:08 | 0:39:15 | |
Polly, Charlotte. | 0:39:15 | 0:39:18 | |
-I invested in the den in a business with Victoria McGrane called Neurotica. -BOTH: Yeah. | 0:39:18 | 0:39:24 | |
We're right in talks at the moment about actually having to go in and invest more money today, | 0:39:24 | 0:39:29 | |
purely on the basis of the fact that as she scaled her business, | 0:39:29 | 0:39:33 | |
-she can't fulfil the orders... -Yeah. -..without a fair amount of cash. -OK. | 0:39:33 | 0:39:38 | |
-It's a capital-intensive business. -Yeah. -It's not something I can invest in so I'm out. | 0:39:38 | 0:39:44 | |
'Three Dragons walk away from the deal | 0:39:48 | 0:39:51 | |
'and the crest-fallen twins have just one opportunity left. | 0:39:51 | 0:39:56 | |
'Can Hilary Devey find a reason to invest?' | 0:39:56 | 0:40:00 | |
So, it just leaves me. I've had experience in the rag trade. | 0:40:01 | 0:40:05 | |
And I know how difficult a market it is. | 0:40:05 | 0:40:09 | |
-But it's so much fun working in the rag trade. -I know so many companies that have gone under. -Mm. | 0:40:09 | 0:40:14 | |
Come back, go under, come back, so many brands that were top of the... | 0:40:14 | 0:40:19 | |
But we are sensible. We're not going to do anything irrational. | 0:40:19 | 0:40:23 | |
I can't think of any other sector that's more high risk | 0:40:23 | 0:40:28 | |
in every possible facet. | 0:40:28 | 0:40:31 | |
Down from production, to the logistics of it, | 0:40:31 | 0:40:34 | |
to the manufacturing, to the sourcing of the garment, to the retailing of the garment, | 0:40:34 | 0:40:38 | |
-to getting it there in time, you know... -That's all part of the fun. | 0:40:38 | 0:40:42 | |
Well, it's part of the fun if you're doing it with my money. | 0:40:42 | 0:40:46 | |
-But it's not part of the fun if it is my money. -Agreed. But we... -I mean, what is your vision? | 0:40:46 | 0:40:51 | |
We want to get into doing denim, accessories and outerwear, maybe have a shop, and then... | 0:40:51 | 0:40:56 | |
Oh, God. I was hoping you wouldn't say that. | 0:40:56 | 0:40:59 | |
I don't think we do want to have a shop. That's her idea. | 0:40:59 | 0:41:02 | |
-Don't listen to her. -Don't listen to me. -I don't think we should have a shop. | 0:41:02 | 0:41:06 | |
My heart is saying "I'd really love to work with you, it would be fantastic fun." | 0:41:06 | 0:41:10 | |
I'm really into fashion. I love it. But my head, commercially, is saying "Wow, Hilary. No! No! No!" | 0:41:10 | 0:41:17 | |
-But you're both clearly very, very talented girls. -BOTH: Thank you. | 0:41:17 | 0:41:22 | |
-So I'm out. -Good luck. -Thank you. -Bye. | 0:41:22 | 0:41:26 | |
'Polly and Charlotte charmed the Dragons, | 0:41:28 | 0:41:31 | |
'but couldn't convince them there was a big enough financial future for their business. | 0:41:31 | 0:41:35 | |
-'They leave with nothing.' -Amazing. All of us really liked them. But they didn't get investment. | 0:41:35 | 0:41:41 | |
They're not going to be a success this time round. We all recognise that. | 0:41:41 | 0:41:44 | |
-They only need one bad order and they're finished. -Correct. | 0:41:44 | 0:41:49 | |
'Other entrepreneurs who tried and failed in the den included Michelle Smith from Dorset. | 0:41:56 | 0:42:02 | |
'She needed £80,000 for her aptly-named motorbike accessory | 0:42:02 | 0:42:06 | |
'that gives pillion passengers a more secure ride.' | 0:42:06 | 0:42:10 | |
StickiButt is a two-part harness system that stops a person from sliding whilst seated. | 0:42:10 | 0:42:16 | |
Part one is the harness, which is worn by the individual. | 0:42:16 | 0:42:20 | |
The second part is a seatbelt that fits on the motorcycle. | 0:42:20 | 0:42:24 | |
'In the absence of a test track...' | 0:42:24 | 0:42:27 | |
-You're welcome to try and destroy it. -Don't tempt me. | 0:42:28 | 0:42:31 | |
'..the innovative entrepreneur had an unusual method of demonstrating her product.' | 0:42:31 | 0:42:37 | |
-Can you do it with no hands? -No! -THEY LAUGH | 0:42:37 | 0:42:42 | |
'But whereas The Den-Destroyer couldn't fault her invention, | 0:42:44 | 0:42:48 | |
'the remaining Dragons did destroy Michelle's hopes of investment.' | 0:42:48 | 0:42:52 | |
You're dealing with such a niche market that it isn't a business. | 0:42:53 | 0:42:58 | |
You may sell a few, but I don't think | 0:42:58 | 0:43:01 | |
it's going to keep you in luxury or even comfort. So I'm out. | 0:43:01 | 0:43:06 | |
'David Baker from West Sussex wanted £150,000 for just ten percent | 0:43:07 | 0:43:13 | |
'of his modern take on a layout originally patented back in 1878.' | 0:43:13 | 0:43:17 | |
I've been developing a new style of keyboard for these screens. | 0:43:17 | 0:43:21 | |
They use a triangular key. This helps to stop hitting two keys at the same time. | 0:43:21 | 0:43:27 | |
'One multi-millionaire gave a rare glimpse of what he gets up to in his spare time.' | 0:43:28 | 0:43:33 | |
-How many do you think you can sell? -Well, can you name a popular App? Any one. | 0:43:33 | 0:43:38 | |
-Angry Birds. -44 million on the iPhone alone. | 0:43:38 | 0:43:42 | |
I don't think you can compare that with Angry Birds. | 0:43:42 | 0:43:45 | |
Not only have we downloaded Angry Birds, we've downloaded Angry Birds Christmas Special, Easter, | 0:43:45 | 0:43:51 | |
-Angry Birds Guy Fawkes Night. -OK. -There's so many. | 0:43:51 | 0:43:54 | |
'But it was an angry Dragon who marked the end of David's time in the den.' | 0:43:55 | 0:44:00 | |
You stand in front of a group of people who could change your life overnight. | 0:44:00 | 0:44:05 | |
You come in here and you say, "I value this at 1.5 million, | 0:44:05 | 0:44:09 | |
"although I've only got £1,200 of turnover." | 0:44:09 | 0:44:12 | |
Well, if you would like to, sort of, put forward what you deem to be a better offer... | 0:44:12 | 0:44:17 | |
Listen, I wouldn't give you £150,000 for 100 percent of it at the moment! | 0:44:17 | 0:44:22 | |
-And therefore, the next two words that come out of my mouth are... -I'm out? -I'm out. | 0:44:22 | 0:44:28 | |
Didn't even need a predictive text. | 0:44:28 | 0:44:30 | |
Entrepreneurs often have ideas for businesses from their own hobbies. | 0:44:33 | 0:44:38 | |
Former fireman Andy Bates from Suffolk turned his passion for motor racing into his own company. | 0:44:38 | 0:44:44 | |
Now he wants a Dragon on board to help bring his latest development to market. | 0:44:44 | 0:44:48 | |
My name is Andy Bates and I'm here today to ask you for an investment of £50,000 | 0:45:17 | 0:45:23 | |
for ten percent of the equity in my company, AB Performance Ltd. | 0:45:23 | 0:45:27 | |
I set the company up after a high-speed racing accident effectively ended my racing career, | 0:45:27 | 0:45:32 | |
and my Fire Service career of 24 years. | 0:45:32 | 0:45:35 | |
During some long, enforced days in hospital, I had time to consider the future. | 0:45:35 | 0:45:39 | |
The area that interested me was motorsport. | 0:45:39 | 0:45:42 | |
At the same time, British motor racing circuit owners were throwing their doors open to the public. | 0:45:42 | 0:45:47 | |
Anyone could take to the track in the car of their choice. | 0:45:47 | 0:45:51 | |
It became obvious to me that the bike-powered car had a large part to play in all of this. | 0:45:51 | 0:45:56 | |
Relatively low build costs, and the ability to out-accelerate, out-brake | 0:45:56 | 0:46:01 | |
and out-turn many factory supercars costing ten times the amount. | 0:46:01 | 0:46:05 | |
So, first came my engine business. | 0:46:05 | 0:46:09 | |
Sourcing, supplying, importing, stripping, | 0:46:09 | 0:46:12 | |
rebuilding and tuning superbike engines specifically for use in cars. | 0:46:12 | 0:46:17 | |
The next logical step was Sabre. Take all of the information and produce our own factory supercar. | 0:46:17 | 0:46:23 | |
Sabre, at its first race this year, went from position 26 to position two in 18 laps. | 0:46:23 | 0:46:29 | |
Thank you very much for your time and I'd like to open the floor to questions now. | 0:46:29 | 0:46:34 | |
-Can I have a look? -Yes. | 0:46:34 | 0:46:36 | |
'An eye-catching pitch from automobile enthusiast Andy Bates. | 0:46:39 | 0:46:43 | |
'He's hoping that by having two sides to his business, | 0:46:43 | 0:46:47 | |
'manufacturing racing cars, as well as servicing the motorbike engines, | 0:46:47 | 0:46:51 | |
'he'll tempt the Dragons to invest £50,000 for a ten percent stake. | 0:46:51 | 0:46:56 | |
'Something seems to have intrigued Duncan Bannatyne.' | 0:46:56 | 0:47:00 | |
Andy, tell me a little bit more about your accident. | 0:47:03 | 0:47:06 | |
Erm, I basically ran out of talent. | 0:47:06 | 0:47:10 | |
I made a mistake one day and hit the wall at Oulton very, very fast. I broke my spine in four place, | 0:47:10 | 0:47:16 | |
-and basically shattered my right knee. -How long did it take you to recover? -About two years. | 0:47:16 | 0:47:22 | |
-And when you were racing, was it part-time and you were also a full-time fireman? -Yeah. | 0:47:22 | 0:47:27 | |
When I then went back, I had to prove that I was physically fit enough to do the operational side of the job. | 0:47:27 | 0:47:33 | |
I knew the damage to my right knee was the big problem. | 0:47:33 | 0:47:36 | |
So I basically went out on ill-health in the end. | 0:47:36 | 0:47:40 | |
-Right. -This business came as a change I wasn't expecting. | 0:47:40 | 0:47:44 | |
I'd worked for the Fire Service for so long, I think you start thinking, | 0:47:44 | 0:47:48 | |
"Cos I've done this for so long, it's all I can do." | 0:47:48 | 0:47:50 | |
I had to find something and the only thing I knew how to do was motorsport. | 0:47:50 | 0:47:55 | |
'A compelling story from the passionate entrepreneur. But what of his company? | 0:47:57 | 0:48:03 | |
'Theo Paphitis is next to cross-examine the Suffolk-based race engineer.' | 0:48:03 | 0:48:08 | |
-Andy. I'm Theo. -Pleased to meet you. | 0:48:11 | 0:48:15 | |
Before I get to the serious questions, | 0:48:15 | 0:48:18 | |
what's its 0 to 60, 0 to 100? | 0:48:18 | 0:48:21 | |
-Probably around about 3.6 to 3.8 second mark. -OK. That's the 60? | 0:48:21 | 0:48:25 | |
-Yeah. -OK. You haven't given me a price. | 0:48:25 | 0:48:29 | |
To give you an example, this car here retailed at £25,000. | 0:48:29 | 0:48:33 | |
-What chassis have you got them on? -We make our own. | 0:48:33 | 0:48:36 | |
You said the investment is to go into your main holding company. | 0:48:37 | 0:48:41 | |
-Yes. -How long have you had that, and what's the numbers on that? | 0:48:41 | 0:48:44 | |
If I can give you the background that led to where I am now. Five years trading as a sole trader, | 0:48:44 | 0:48:49 | |
during which time, total turnover | 0:48:49 | 0:48:51 | |
£630,000, | 0:48:51 | 0:48:53 | |
of which I generated £67,000 net profit. | 0:48:53 | 0:48:58 | |
I didn't see the profits I should've because I ploughed it into this project. | 0:48:58 | 0:49:02 | |
This year, I changed the company to a limited company, | 0:49:03 | 0:49:06 | |
I've got fixed assets of about £120,000, | 0:49:06 | 0:49:10 | |
-and I've got work in progress in the unit valued at £15,000 at the moment. -OK. | 0:49:10 | 0:49:15 | |
What do you think I, or any of the other Dragons, | 0:49:15 | 0:49:19 | |
can add to your business? | 0:49:19 | 0:49:22 | |
Er, if I'm totally honest with you, I have a very, very high understanding of this, | 0:49:22 | 0:49:26 | |
of this, the mechanics of all of this. The business lessons have come hard and fast, | 0:49:26 | 0:49:32 | |
I was never a businessman. I know I can make money doing it. | 0:49:32 | 0:49:36 | |
What I am looking at now is getting somebody on board who has an interest in the company, | 0:49:36 | 0:49:41 | |
and helping me push it to what I know the next level is. | 0:49:41 | 0:49:44 | |
'Fluent and articulate responses. The Dragons have certainly warmed to Andy. | 0:49:46 | 0:49:51 | |
'Now Peter Jones wants to drill down into the company financials.' | 0:49:51 | 0:49:56 | |
Hi, Andy, I'm Peter. Erm, compelling pitch from a visual perspective. | 0:49:59 | 0:50:03 | |
I love cars. You're taking a passion, a love. | 0:50:03 | 0:50:07 | |
The reality is now you're getting to a stage where, | 0:50:07 | 0:50:10 | |
"How do I turn this into some sort of business that is going to give me a bit of a future?" | 0:50:10 | 0:50:15 | |
You know, where could this go? | 0:50:15 | 0:50:17 | |
-Where is the money? -My projections are as follows. I've assumed ten percent growth, | 0:50:17 | 0:50:22 | |
I've based it on the sale of two cars in year one, | 0:50:22 | 0:50:26 | |
five cars in year two... | 0:50:26 | 0:50:29 | |
-Give me a profit number. -The first four months of the year are usually quietest. | 0:50:29 | 0:50:33 | |
-I've had my best four months of trading this year. -OK. | 0:50:33 | 0:50:38 | |
So I think we will turnover £200,000 this year | 0:50:38 | 0:50:41 | |
-and I will make £40,000 net profit. Year two... -Hang on, hang on! | 0:50:41 | 0:50:45 | |
You sell the cars at £25,000 each. You're only going to sell two. That's £50,000. | 0:50:45 | 0:50:50 | |
-Where's the other £150,000 coming from? -From the rest of the business, it's investment in the whole company. | 0:50:50 | 0:50:56 | |
So where's the rest of the business, in terms of that profit, that 150K? | 0:50:56 | 0:50:59 | |
I've already turned over 60,000 in the first four months of this year. | 0:50:59 | 0:51:03 | |
-And what else do you do? -Servicing, tuning, rebuilds of cars that have crashed. | 0:51:03 | 0:51:08 | |
Anything to do with racing, driving bike-engine cars, we do at AB Performance. | 0:51:08 | 0:51:13 | |
'A quick-fire exchange | 0:51:15 | 0:51:18 | |
'and Andy seems as knowledgeable about his numbers as he is with his engines. | 0:51:18 | 0:51:22 | |
'But he is yet to receive an offer. | 0:51:22 | 0:51:25 | |
'Has Hilary Devey heard enough to part with £50,000?' | 0:51:25 | 0:51:29 | |
Andy. | 0:51:33 | 0:51:35 | |
Have you thought of any other markets for this? | 0:51:36 | 0:51:39 | |
Yes. I've got a chap in America | 0:51:39 | 0:51:42 | |
who's been asking questions about, "What are we doing with the car? Could we get one?" | 0:51:42 | 0:51:47 | |
A guy in Switzerland has enquired about it, | 0:51:47 | 0:51:49 | |
but it's not cast in stone, and I wouldn't dare say, "Look, we've got a marketplace." | 0:51:49 | 0:51:55 | |
OK. | 0:51:57 | 0:51:59 | |
I'm struggling to find a bigger market than what you're currently looking at. | 0:52:00 | 0:52:04 | |
-I mean, they can't be used as a road car, can they? -Yes, you could have this car on the road. | 0:52:06 | 0:52:10 | |
As long as we comply with emissions, the position of the lights. | 0:52:10 | 0:52:14 | |
-This one's too low. We'd have to jack this up a bit. -How safe is it? | 0:52:14 | 0:52:17 | |
We have an issue with the fact that we've got to make the bodywork lighter, | 0:52:17 | 0:52:21 | |
I wouldn't compromise the chassis. It's a fully-triangulated chassis. The side... | 0:52:21 | 0:52:25 | |
You've lost me now. I haven't got the slightest clue what you're talking about. | 0:52:25 | 0:52:29 | |
It's not really my market, and what worries me more is what could I bring to you. | 0:52:30 | 0:52:37 | |
-I'm out. -Thank you very much. | 0:52:38 | 0:52:39 | |
'Andy's impressive run comes to an end, as Hilary Devey fails to spot money-making potential. | 0:52:42 | 0:52:49 | |
'Will Deborah Meaden find a reason to invest?" | 0:52:49 | 0:52:52 | |
Andy. | 0:52:55 | 0:52:57 | |
How many of this type of car will be in existence right now? | 0:52:57 | 0:53:00 | |
Right now, there's no way of putting a number on the bike-engine cars that are used on the road. | 0:53:00 | 0:53:06 | |
Race series, there are probably | 0:53:06 | 0:53:08 | |
400 or 500 serious race cars | 0:53:08 | 0:53:12 | |
with bike engines that I'm aware of. I think it's a market that will increase. | 0:53:12 | 0:53:16 | |
I've got to say, you come across really well, | 0:53:16 | 0:53:20 | |
but the trouble is, you haven't been able to show a clear way | 0:53:20 | 0:53:25 | |
to make money with this car. So, I'm sorry, for that reason, I'm out. | 0:53:25 | 0:53:29 | |
Thank you for your time, I appreciate it. | 0:53:29 | 0:53:31 | |
Andy. | 0:53:31 | 0:53:33 | |
You sound great, you're having a ball. | 0:53:34 | 0:53:37 | |
You're looking for a partner, not just a financial partner, | 0:53:37 | 0:53:40 | |
you're looking for a pretty hands-on partner. | 0:53:40 | 0:53:44 | |
I'd have to be spending more time with you and your business than I spend on my own business. | 0:53:44 | 0:53:49 | |
-Fine. -So I'm going to wish you the best of luck, I'm out. | 0:53:49 | 0:53:54 | |
'Two more Dragons walk away from the deal. | 0:53:57 | 0:54:00 | |
'But has Peter Jones spotted an opportunity where his rivals have not?' | 0:54:00 | 0:54:05 | |
Andy. I love your honesty. | 0:54:11 | 0:54:14 | |
And you've been very straight in terms of how you got to this stage. | 0:54:14 | 0:54:20 | |
But it's a pretty limited market, so you're going to need a lot of time, or at least... | 0:54:21 | 0:54:27 | |
..a lot of effort in turning what you've currently got and making it into a business. | 0:54:28 | 0:54:34 | |
And I think that makes it, unfortunately, a very difficult decision for anybody to invest. | 0:54:34 | 0:54:39 | |
That's where it kind of falls down. | 0:54:41 | 0:54:43 | |
Erm... | 0:54:44 | 0:54:46 | |
But it also falls up, in terms of... | 0:54:48 | 0:54:51 | |
..I've got some thoughts, of what could be done, and... | 0:54:53 | 0:54:58 | |
..I am annoyingly into cars, | 0:55:00 | 0:55:02 | |
and I'm not being blinded by it, | 0:55:02 | 0:55:05 | |
but I have got some ideas. | 0:55:05 | 0:55:08 | |
So, I've decided to make you an offer... | 0:55:11 | 0:55:14 | |
Thank you. | 0:55:14 | 0:55:16 | |
..for all of the money. | 0:55:18 | 0:55:20 | |
But in return, I want 35 percent of your business. | 0:55:25 | 0:55:30 | |
Right. OK. | 0:55:35 | 0:55:37 | |
'A dramatic about-turn and Andy's thrown a financial lifeline. | 0:55:40 | 0:55:45 | |
'But Peter Jones is demanding three-and-a-half times the equity originally on offer. | 0:55:45 | 0:55:51 | |
'With one more Dragon remaining, can the likeable entrepreneur negotiate himself a better deal?' | 0:55:51 | 0:55:57 | |
Andy. I'm really surprised that Peter made you an offer | 0:55:58 | 0:56:02 | |
without getting a second and third years' turnover and profits. | 0:56:02 | 0:56:07 | |
-So what are they? -Second year was £300,000, | 0:56:07 | 0:56:11 | |
-net profit at £60,000. -Yep. | 0:56:11 | 0:56:14 | |
And year three, £500,000 turnover, with a net profit of £100,000. | 0:56:14 | 0:56:20 | |
So I am going to make you an offer. | 0:56:24 | 0:56:26 | |
But I want a higher percentage. | 0:56:28 | 0:56:32 | |
I'll offer you £50,000, | 0:56:35 | 0:56:38 | |
but I want 50 percent of the business. | 0:56:38 | 0:56:40 | |
But, you reach those projections over the next three years | 0:56:40 | 0:56:44 | |
and I'll reduce that to 25 percent. | 0:56:44 | 0:56:47 | |
Thank you. | 0:56:55 | 0:56:57 | |
Sorry. I wasn't expecting to have one offer, let alone two on the table. | 0:57:00 | 0:57:04 | |
I think I'd like to take your offer, Peter. | 0:57:25 | 0:57:27 | |
-Thank you very much. Appreciate it. -You're welcome. | 0:57:28 | 0:57:31 | |
-Well done. Fantastic! -'Andy has done it! The investment comes at a price, | 0:57:31 | 0:57:36 | |
'but he walks away with the backing of a passionate and influential Dragon on board.' | 0:57:36 | 0:57:41 | |
Well, Andy, well done! Tell me why you took Peter's offer rather than Duncan's, | 0:57:44 | 0:57:48 | |
cos Duncan's could have been better if you met all your targets. | 0:57:48 | 0:57:51 | |
Well, I did some research going in, knew Peter's interest in motorsport. | 0:57:51 | 0:57:55 | |
I think for what we need, you need passion, | 0:57:55 | 0:57:58 | |
and I wanted Peter on board, really, to drive the project. | 0:57:58 | 0:58:01 | |
So the offer was a bit tighter, but I think he's the man we needed in place. | 0:58:01 | 0:58:06 | |
They say that perseverance pays, and it certainly has for Andy Bates. | 0:58:14 | 0:58:20 | |
Five years of hard graft building up his business, | 0:58:20 | 0:58:23 | |
and he had two multi-millionaire investors vying for a share in his company. | 0:58:23 | 0:58:28 | |
To hear more from the entrepreneurs about their time in the den, press the red button now. | 0:58:28 | 0:58:33 | |
You can also visit our website, bbc.co.uk/dragonsden | 0:58:33 | 0:58:37 | |
Goodbye. | 0:58:37 | 0:58:39 | |
'Next time on Dragons' Den.' | 0:58:39 | 0:58:43 | |
-A fatality has happened in the den. -Duh-duh-duh! | 0:58:43 | 0:58:46 | |
-How much money have you put into this business? -£200,000. -Oh, my God! | 0:58:46 | 0:58:50 | |
You can see it going, "Tweeky-weeky-weeky-whoo!" | 0:58:50 | 0:58:54 | |
Shouldn't you have investigated why your turnover's growing | 0:58:54 | 0:58:57 | |
-but your profitability's remaining static? -Perhaps, yeah. | 0:58:57 | 0:59:01 | |
I like the product. I'll make you an offer. | 0:59:01 | 0:59:03 | |
Subtitles by Red Bee Media Ltd | 0:59:06 | 0:59:10 | |
E-mail [email protected] | 0:59:10 | 0:59:14 |