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Lessons from the Dragons

Dragons’ Den Series 10 on BBC Entertainment – what lessons can entrepreneurs take away from episode two?

Alison Job

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Eat with a local: Make a meal, make a friend

  • The entrepreneur: Vicky Edmunds
  • Investment: £50 000 for 15% of the business.
  • The idea: A website that connects tourists with locals who will host them, cook traditional, home-cooked meals for them and introduce them to the local culture. The idea is to unite food lovers across continents.
  • What the Dragons had to say: Consensus was that the numbers don’t work. Vicky asked for too little investment to achieve her goals. There was no clear indication of how the investor would get a return and the Dragons felt it was too big an investment for too little equity. It’s extremely difficult to monetise a concept like this and while the website works – and is a wonderful idea – it’s not clear whether it can be a viable business that generates revenue and makes a profit. The Dragons also felt that Vicky needed more commercial acumen.
  • What she did right: Vicky had a very infectious enthusiasm for her idea. She came across as extremely personable and engaging – the judges enjoyed her energy. She is in touch with her target market and remembers each of her customers by name. Vicky clearly had a real passion for what she does. While she has come up with a very nice reciprocal model, the question is, does it have a business angle? As she points out, she has accumulated 1 000 members without even trying.
  • What she did wrong: The idea was initially presented with enthusiasm but very little business information was provided, such as the target market, the revenue model or what the £50 000 investment would pay for. Vicky also cooked a meal for the Dragons, which was lovely, but she wasn’t selling her cooking skills. It was a neat trick, with no real purpose. She also didn’t have a firm grasp of relevant facts, such as how many of her members charged tourists for meals. When Georgia (her daughter) joined the panel to discuss figures, all amounts were presented as ‘we think’. Vicky and her daughter were unclear of what the tourism industry in the UK was worth, ranging from millions to billions. When asked how the investment would be spent it became clear that they hadn’t done sufficient research as the response was £20 000 on the website and £30 000 on advertising, but with no clear plan of how the money would be allocated if the website cost more other than to take money from the advertising budget. Vicky didn’t place sufficient focus on the financial side of her business and how her idea could be monetised to generate a return for the investor.
  • Verdict: No
  • The lesson: An engaging personality and a great idea aren’t enough, you need to have a clear plan for how your business idea is going to generate money. In addition, know how much working capital you will need and ask for enough to get your venture off the ground.

Third Door: Office come nursery

  • The entrepreneur: Yusuf Shatz and Shadi Mustafa
  • The investment: £120 000 for 20% equity.
  • The idea: Providing office space that comes with childcare for working parents. Childcare services can be inflexible and expensive, while working at home with a small child in the vicinity can prove distracting. This new way of working enables the parent to rent office space in a building with an on-site nursery. The business is already up and running, the couple is asking for an investment to grow the business and turn a profit.
  • What the Dragons had to say: A lot of questions were posed around set-up costs and the return to date over the 2 years that the business has been operational. The couple was unable to answer all of the financial questions to the Dragons’ satisfaction. What was very clear was that unlike the previous pitch, as this was an existing business, the Dragons posed some very tough questions pertaining to numbers, especially regarding profit and loss within the business. They pointed out that businesses make money and the couple would be well advised to close the nursery, which was not making a profit, and just concentrate on the office space, which is where the revenue lies. However, the couple insisted that the nursery was their USP (unique selling proposition) and as such gave people a reason to rent their office space.
  • What they did right. The concept is excellent, as shown by the fact that their child – who was in the room – was kept occupied by a carer throughout the entire pitch. This gave a good indication of how well the concept works and the quality of care available. Initially, Yusuf knew his figures off the cuff, both in terms of the investment and losses made by the business. He was very upfront and honest about the fact that his start-up had lost money. Being open about this showed that he understood the business and its figures. In addition, the fact that he had thus far £400 000 of own skin in the game, demonstrated his faith in his own business idea. The business showed very good growth from year one to year two, with a projected profit for year three.
  • What they did wrong: When the Dragons started asking for more detail about the year-on-year results, Yusuf went blank and couldn’t remember his accounts. When pitching to investors you need to be able to provide numbers asked for off the cuff. The Dragons pointed out that even though the couple’s research had told them that office space was profitable, much more so than nurseries, they had still chosen to pitch the unprofitable business idea. This begs the question: does having a USP justify the costs? The couple ended up ignoring the most commercial profitable part of their business. It’s also why they’ve had such high losses. Not enough information was provided, an issue that might have been addressed had they prepared a proper business plan. The Dragons advised that the couple prove the workability of the concept by operating at a profit for a number of years before seeking investment.
  • Verdict: No
  • The lesson: Sometimes your business idea needs to pivot once you’re operating. You also need to be completely prepared when pitching to investors. It’s extremely important to be able to provide detail when asked for it.

Dirty Beach: Sandcastles in the sky

  • The entrepreneur: (S) Andy Robertson
  • The investment: £100 000 for 10% of his business.
  • The idea: After spending six years building sand castles at events and festivals, Sandy is convinced that there’s money to be made from selling food and drink to the crowds attracted by his sand castles.
  • What the Dragons had to say: More information was required about how he would ship sand to inland venues, seating arrangements for customers and profit margins on food and drink. The Dragons were incredulous at Sandy’s lack of firm detail as to how the business would actually work and make money that would provide a return for investors. It’s important to have a proper business plan that includes financial projections of how the business is going to make a return. Speaking to a guy who runs a bar and finding out how much he makes isn’t real research and figures. These need to be stress tested and proven. Far too little firm detail was provided. Consensus was that the beach bar won’t make money and Sandy should drop that idea and focus on what he’s good at, ie building sand sculptures.
  • What he did right. Sandy was passionate about his business idea and he’s clearly a talented sand sculptor. His idea to make furniture out of sand was innovative and novel. His idea to ship sand to locations inland was a good one.
  • What he did wrong: Sandy didn’t cover the cost of shipping sand inland and focused more on making money from selling beer, although he had no idea what his margins on that would be. He needed to show how he’d make money by providing concrete figures. There was no clear business plan indicating how he would make a return. Sandy valued his business at a million pounds but couldn’t show where that figure came from. He was unclear on what he would need for set-up or what his turnover will be. Or his margins. His grasp of the numbers was lacking. While he knew something about running a bar he didn’t know anything about the financial side of the business, which is vital.
  • Verdict: No
  • The lesson: To get investment, you need to have something that others can’t do. That’s your USP but you still need to understand the mechanics of making money. Passion and talent can’t replace business acumen.

Shampooheads: Bubbles and babies

  • The entrepreneurs: Geoff and Collette Bell
  • The investment: £75 000 for a 15% investment.
  • The idea: The couple has developed a kids’ shampoo brand that features fun characters on the bottles, encouraging kids to look forward to bath time, which is an important parent/child bonding time. The bottles are pump action – designed for kids aged 2 to 6 years – and by eventually allowing them to wash their own hair, will create independence as kids get older.
  • What the Dragons had to say: The Dragons unanimously loved the idea. They were very impressed with the product and extremely impressed by the deal in hand with a high street retailer. The couple’s negotiations with Boots have resulted in them getting free promotional space in-store for four weeks.
  • What they did right. When pitching, the couple quickly jumped into their thorough market research. Their brand was registered, as were domain names for the characters and the products have the necessary approvals. They have all been dermatologically tested, tear-free and clinically approved and the couple paid for this out of their own pockets. A lot of thought has gone into what kids (and parents) need at bath time. The business already has a deal in place with UK’s leading chemist chain and Geoff knew the relevant figures off hand. He readily provided his cost price and profit margins as well as sales forecasts. The negotiation of the free in-store promotional site indicates buy-in from the retail chain to assist in launching the brand. The business needs the investment because the couple has built the business from scratch, boot-strapping it as they went. Now they have exhausted their resources and have a cash flow issue. They need the investment to grow. Geoff mentioned his background in shampoo and hair care products, another plus as he demonstrated his strengths to the Dragons. They ended up in a position where the Dragons were pitching to the entrepreneurs – that’s a real place of strength.
  •  Where they did wrong: Not much.
  • Verdict: Yes
  • The lesson: If you’ve done your research, approached the right clients, signed good deals, know your numbers, demonstrated there’s a market and have the details at hand – you’ll get investment.

If you have a great business, choose who you approach for investment carefully – you need to be able to work with your investor – closely. In the end they chose two of the Dragons as investors after evaluating who would bring what to their business.

Are you an entrepreneur with a viable new idea and an investor-ready business? Could you handle the heat in the Dragons’ Den? Enter BBC Entertainment and Entrepreneur Magazine’s exclusive Dragons’ Den Series 10 competition and you could win a business makeover worth R140 000 with business guru Pavlo Phitidis and Aurik Business Accelerator.

Alison Job holds a BA English, Communications and has extensive experience in writing that spans news broadcasting, public relations and corporate and consumer publishing. Find her at Google+.

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How SMEs Could Cash-In On Black Friday And Cyber Monday

Provided that SMEs prepare ahead of Black Friday and Cyber Monday, there is an opportunity to leverage off the global hype, where some simple alignment to the theme can result in big benefit without much investment into promotion.

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Jesse Weinberg

Provided that SMEs prepare ahead of Black Friday and Cyber Monday, there is an opportunity to leverage off the global hype, where some simple alignment to the theme can result in big benefit without much investment into promotion.

In the midst of low consumer and business confidence, tapping into the opportunities presented by these two days could contribute significantly to boosting the cashflow of SMEs.

“To benefit from Black Friday and Cyber Monday, the two big focus points would be the thinking around what the business will offer to customers and how it will promote the offerings ahead of the days. This allows customers to plan their purchases ahead of time, which also ensures traffic for the SME,” says Jesse Weinberg, Head of the SME Customer Segment at FNB Business.

Related: How To Prepare Your Business To Win Big On Black Friday

Weinberg provides useful tips for small businesses to help SMEs take full advantage of Black Friday and Cyber Monday:

  • Use social media – Businesses should make full use of social media as a tool to support their offers on these days. A powerful tactic seen recently is for businesses to actually ask customers what they might like to see as a special offering by the businesses to assess the potential demand from the market.
  • Gauge customer appetite – A simple poll survey offers great insights into what customers want. The real trick for business on these two days is to ensure that the special deals on offer will actually be desired by customers, especially if the business plans on taking-on extra stock in for these specials.
  • Pre-promotion of specials – Another powerful example of using social media would be to communicate the specials that you plan on running on these days to create sufficient awareness and demand by persuading customers to plan their wish lists, with the idea that the special the business wants to run will be on their list.
  • Stock management – Businesses should avoid over-buying with the hopes of profiting from the additional demand. Getting in touch with customers may help the business buy the most desirable stock to ensure it sells.

SME’s should take full advantage of special global trade days like Black Friday and Cyber Monday – it’s like being able to plug your specials into someone else’s marketing campaign for no extra charge,” concludes Weinberg.

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Leading South Africans Inspire Guests At The Standard Bank Business Breakfast In Association With Jacaranda FM

A full house of business owners, professionals and entrepreneurs emerged inspired from today’s Standard Bank Business Breakfast, in association with Jacaranda FM, held at the Montecasino Ballroom in Johannesburg.

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Standard Bank Business Breakfast

A full house of business owners, professionals and entrepreneurs emerged inspired from today’s Standard Bank Business Breakfast, in association with Jacaranda FM, held at the Montecasino Ballroom in Johannesburg.

The latest event in the ongoing Business Breakfast series featured a star-studded line-up of South African leaders and achievers in various fields sharing insights and motivational learnings. Attendees from the corporate world and the Jacaranda FM audience drew inspiration and shared networking opportunities as the speakers talked about their respective journeys to success and what kept them motivated.

“This morning’s speakers are all examples of South African excellence,” said Jacaranda FM General Manager Kevin Fine.

“They showed grit and dedication in overcoming hurdles to succeed in their fields and inspire others to do the same. We’re glad to join forces with Standard Bank to help them connect with our audience and to give our listeners insight into Standard Bank’s business offerings.”

The audience remained glued to their seats throughout the morning, as the speakers gave their views on life, what motivates them and lessons that can help business people excel in their respective sectors.

Speakers at the breakfast were principled political leader Dr Makhosi Khoza, Springbok rugby captain, Warren Whiteley, Astrophysicist and Mars One candidate, Adriana Marais and philanthropist and businesswoman Basetsana Kumalo.

dr-makhozi-khoza

Dr Makhozi Khoza speaks at the Standard Bank Business Breakfast in association with Jacaranda FM

Dr Khoza spoke on her political and business life path, and the importance of speaking truth to power. She encouraged South Africans to accept that “none but ourselves – the good men and women of this country – can save SA”. She ended her talk with an enigmatic reference to the need for “a new vehicle to take us to a prosperous society”.

Related: 10 Successful SA Women Entrepreneurs’ Top Advice On Balancing Work And Family

martin-bester

Martin Bester, Jacaranda FM breakfast show host interviews Warren Whiteley at the Standard Bank Business Breakfast in association with Jacaranda FM

In conversation with Jacaranda FM morning drive show host Martin Bester, Whiteley spoke about the need for cohesion, commitment, continuity and morale in sport and in life. He explained how the successful Super Rugby team saw purpose as more important than winning.

“Our purpose is to inspire people through what we do on the field and off it,” he said.

dr-adriana-marais

Dr Adriana Marais speaks at the Standard Bank Business Breakfast in association with Jacaranda FM

Dr Marais is one of the 100 finalists to be part of Mars One, the first manned space expedition to the red planet. She emphasised the power of inspiration, reminding the audience how the Apollo moon-landings had inspired a generation of young people to embark on science careers, which led to advances in technology and communications. She explained how the innovations that solved resource scarcity in space could be used on earth to improve inefficiency and to resolve resource disputes.

Related: 13 Female Entrepreneurs Rising To The Top

basetsana-khumalo

Basetsana Khumalo speaks at the Standard Bank Business Breakfast in association with Jacaranda FM

In her address, Basetsana Kumalo reflected on her journey from Soweto schoolkid to Miss South Africa 1994, to trail-blazing businesswoman and serial entrepreneur. Having founded TV production companies, resources ventures, travel and property firms, she said her guiding wisdom was to “show up and raise your hand”.

“Challenge the status quo”, she said. “Resist gender stereotypes and help others. Your success can create a generational legacy for those that come after you.”

Jacaranda FM Marketing Manager, Minisha Patel, said the breakfast was a great success, “We offer a full spectrum of informative and entertaining content, and sharing business knowledge is part of that. It was great to see a packed house and so much passionate engagement during and after the event. Clearly our speakers’ messages resonate with the Jacaranda FM audience.”

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SEDA Launches A Centre For Entrepreneurship And Rapid Incubator In Upington

The Centres for Entrepreneurship (CfE) and Rapid Incubators form a strong link between institutions of higher learning and enterprise development.

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The Centres for Entrepreneurship (CfE) and Rapid Incubators form a strong link between institutions of higher learning and enterprise development. It is in this spirit that Deputy Minister of Small Business Development, Ms Nomathemba November will be launching the Vaal University of Technology (VUT) CfE/Rapid Incubator in Upington.

This centre will service graduates from the university and broadly young entrepreneurs from Upington and neighbouring towns such as Keimoes, Kakamas and Groblershoop.

Related: Small Enterprise Development Agency (Seda)

The VUT CfE and Rapid Incubator centre strategically located to focus on predominant economic sectors within the area they are located. The VUT centre will focus on renewable energy, agriculture and tourism sectors.

These sectors are key the local economic activities within the Upington area with a potential of accommodating new entrants in particular graduates with innovative ideas who would like to take advantage of opportunities within the area. These are young people who are going to be developed into entrepreneurs through CfE/Rapid Incubator programme.

The programme is designed to develop viable innovative ideas into small enterprises after 18 months.

The CfE/Rapid Incubator is divided into two parts, the first part is CfE which is six months theoretical training programme focusing on business entrepreneurship training, innovation and idea generation training and product conceptualisation.

Related: Funding And Financial Assistance For SA Women Entrepreneurs

The second part of the programme is the 12 month rapid incubation open only to qualifying selected candidates. It is during this period that actual product development and refinement takes place.

During this period the commercialisation of the product entails advanced sector specific technical training, seed funding and other business support also takes place. After the 18 months the SMME is expected to be ready for the open market and will graduate from the programme.

The CfE is able to accommodate up to 60 clients but only around 20 graduates are selected at enterprise start-up week for rapid incubation by the incubation team and Seda. This is the eighth rapid incubator to be launched out of the nine planned across the country.

Related: Tender Process For The Tough-Minded

Other provinces which have launched are: KwaZulu Natal (Esayidi TVET College); Northern Cape (Northern Cape Rural TVET College); Limpopo (Vhembe TVET College); Western Cape (False Bay TVET College); Free State (Motheo TVET); Free State (Goldfields TVET) and North West (Orbit TVET College).

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