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Lessons we learned by appearing on Dragons’ Den

March 06, 2014 by Guest Blogger

Lessons we learned by appearing on Dragons’ Den{{}}When running a business there are two key things you must always try to do. Firstly, you always need to be improving. Secondly, you should always be trying to test yourself.

We knew our business, TreatmentSaver, was going well, because our customer base was growing in line with our revenue. It took us a number of attempts to find the best business model, but we knew right away that online appointment booking was a winner for both clinics and our site visitors. Clinics benefited from acquiring new customers and our visitors got to save money on treatments such as laser eye surgery and Botox. From this point onwards, it has always just been a case of trying to scale up the business.

We figured we needed both investment and exposure, so going on Dragons’ Den was potentially an opportunity to kill two birds with one stone. As well as this, we saw it as a great way to test ourselves and take us out of our comfort zone.

Initially we applied to appear on Dragons’ Den more than a year ago and having gone through a number of online and phone interviews we had to do an audition. This basically involved going to the BBC studios in Manchester and doing a mock pitch and interview in front of a BBC producer.

Everything went well and we were consequently chosen to appear on the actual show. After a few months of due diligence by the BBC (basically to check we were who we said we were), we were invited to film for real.

The whole day was surreal – it was certainly the first time I’d ever worn makeup. Once we were ready, having met the producer, etc, we spent about five hours in the green room, basically biting our fingernails until we were summoned in front of the Dragons.

When our time came to meet them, the adrenaline was definitely pumping. By far the worst bit is when the lift doors open for the first time and you see all five of them in front of you. It was a relief to get the pitch done, because for me this was the most nerve-wracking part. From then on it just became a Q&A with the Dragons, with a few curve balls thrown in for good measure.

After a fairly heated battle, unfortunately we did not manage to secure investment, but we gave it our best shot. After the initial disappointment had died down, we started to reflect on what a great experience it had been and how we could bounce back.

Ironically, being turned down was a shot in the arm for our business. It gave us the motivation and determination to prove the Dragons were wrong not to invest in us. Since the show was recorded we’ve doubled the traffic on our site and increased the number of clinics and offers on the site, while saving our customers more than a million pounds when booking online through our website.

But for me it’s some of the less tangible benefits that the whole experience has brought us that are more valuable. It has helped to reinvigorate our business, given us the extra drive to succeed and the confidence to seek out investment elsewhere. We will prove the Dragons wrong!

  • Blog supplied by Dr Ganesh Rao of TreatmentSaver. You can read about his first business steps here.

Further reading

Deborah Meaden on how to fund a new business

December 19, 2013 by Guest Blogger

What advice would I give to someone starting out in business who may be worried about funding? Today, I think people in need of funding and hoping to start a new business tend to approach the banks automatically, by default. Then, if they’re declined, the big question is – ‘What next?’

To those people, I would say that I think it’s never been a better, more exciting time to explore different avenues.

The difficulty with the banks and getting loans through conventional methods has meant other opportunities have had to appear through necessity. There are plenty of different models and lots of people actually looking to invest in new businesses – look at crowd funding, for example.

It can be worth considering friends and family, too, and approach them for investment, although you’ve got be careful that you’re very clear on the terms early on.

Which investment am I most proud of? I find it really difficult to pick a favourite investment. When I’m visiting a business or I have to be especially focused on one in particular it has 100% of my attention. It becomes all that I can think of, all that I can see and it becomes the one that I love the most. But when I walk out the door or shift my focus to another investment, that becomes the one I absolutely want to do.

I’ve got a portfolio of 19 businesses that I’m currently invested in. It’s been known to flux up to a maximum of 30 and down to ten.

There is one that I’m very pleased I got involved in and it was a cloth mill called Fox Brothers, which started in 1772. It was the last cloth mill left in the South West and it was dead – absolutely on its knees. I didn’t know that when I invested.

I’m pleased to say that now it’s doing well and I’m really proud to have been involved. I like to think that if I hadn’t found it, and it hadn’t found me, it would have died and a part of our heritage would’ve been lost.

This exclusive insight was taken from an interview conducted by cityindex.co.uk when Deborah recently participated in the city index celebrity trader challenge. Find out more about Deborah and her views by visiting her website.

Further reading

Eight tips on attracting investment for your business

December 13, 2012 by Warren Knight

Eight tips on attracting investment for your business/investment word{{}}Having your own business is difficult but going through the investment route makes things a lot more difficult. Here are my eight tips for getting investment into a business.

1. Do your research

When looking for investment, you will need to do your research. If you haven’t looked into potential investment organisations, such as LBA (London Business Angels), I suggest you do immediately. There are also a lot of ways to help secure investment, such as going through the Seed Enterprise Investment Scheme, which is what I did. 

2. Have a great business plan

You won’t find investment for your business if your business plan is flawed. It is worth spending time and money on getting your plan right before approaching investors. The last thing you want is to build negative awareness before even securing any investment. 

3. Be transparent

When approaching Investors, you need to be transparent. There is no point going in there and avoiding difficult questions, they will see this as a weakness. If you don’t have the answer, tell them that, but also say you will be able to give them one. When answering negatively, give them a positive to work off, too. 

4. Be realistic

Going back to the business plan, predicting your business worth at £1bn after two years isn’t going to appeal to investors. They will see this as overly optimistic and unrealistic. Give them numbers you can deliver.

5. Look at your team

One of the reasons why Gloople received investment is because we have a solid team. We have our whole team in-house and outside mentors who offer sound advice when needed. The investors need to see that your business has stability – which should include having a good accountant and lawyer.

6. Be prepared to negotiate

Going down the investment route, you need to be willing to change your outlook on your business. Take Dragons’ Den for instance; entrepreneurs go in looking for £150,000 but want to give away only 5% of their business. If they are lucky enough to get an offer, it, without a doubt it will be at a higher percentage than the business owner initially wanted to give away. This is an extreme case, because it is a TV programme, but you will have some hard decisions to make when negotiating with investors 

7. Listen

You will find that some investors have a lot to say. You will need to sit there and listen. It is a great quality to have and will be looked at as an advantage when an investor feels their views are being taken onboard.

8. Risk over reward

An investor will be putting their hard-earned cash into your business, which is a huge risk. Make sure this risk is worth the reward. They will need to be able to see that their investment is being used to benefit the business. 

I hope my eight tips will help you find investment for your business. I would love to hear about any investment success you may have had.

Facing hard facts on the route to success

December 10, 2010 by Chris Barling

When you start a business, you need to be a raging optimist. That’s because, frankly, it’s hard and many people don’t succeed. So to stand a chance, you really need to have a sunny view of the future.

However, you also need to be a realist. A friend of mine was working in a new start up. He asked me if I was interested in investing, so I took home a sample of his product. In the meantime, he had managed to place it with a couple of major high street chains. I tried it with my wife and daughter who were in the target market. Neither of them liked it, so I declined to invest.

The business in the meantime continued. A while later they were back to the drawing board, because the product hadn’t sold through the retail channel at all and had been dropped by the retailers. Fortunately they have now completely changed the offering and are doing okay, albeit on a much smaller scale. My friend is no longer involved.

Another business planned to sell a website monitoring service to small companies. After a few months of selling, it was clear there wasn’t much of a market. The management team changed direction and started selling to big corporate sites instead. This was a raging success and several years later they still have a razor focus on the same market. I was happy and this time invested in the company when they changed direction.

What are the lessons from these stories? It’s about realism and facing the facts. The lesson isn’t to chop and change, as the second company had to stay their new course for several years. However, the quicker you face difficult facts the better, particularly when it comes to customers.

The most important thing any start-up can do is to get some happy, paying customers. If the prospects won’t buy or don’t like the product after they do, don’t try to tell them how they’re wrong. Instead, change direction and provide something that they want. Then press on. A dose of realism is worth a ton of investment. In fact, having the money to continue backing a losing strategy can be the biggest disaster.

Chris Barling is Chairman of ecommerce software supplier SellerDeck

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Start-up funding advice

June 23, 2010 by Sadie Hopkins

Starting your first business can be a daunting task and raising finance can often seem impossible. So what are your main options?

1 Savings and self-finance

Start putting money aside soon as you can. If your long-term aim is to start a business, cut down on your spending and save as much as you can from your current wages. I moved in with my parents, paid a much lower rent and saved hard to ensure I had as much money as possible before starting my first business.

Cash in any ISA’s or savings accounts. If your business is successful, you may get a much greater return on your money than you currently get, with interest rates as low as they are.

2 Loans

If you have no capital, it is difficult to get finance, especially post credit crunch and with no trading history. Banks require a detailed business plan, preferably with three years projected forecasting and profit/loss models.

However, as interest rates are currently low, a business loan can be a reasonably cheap to borrow. The new Enterprise Finance Guarantee (which has replaced the Small Firms Loan Guarantee Scheme) is useful for start-ups with no capital. Under the scheme, the Government guarantees 75 per cent of the loan should the business be unsuccessful. The EFG is available for businesses with a turnover of less than £25m and offers loans up to £1m. If you borrow under this scheme, you will have to pay a set-up fee, plus a quarterly fee for the borrowing.

Shop around for the best deal on any bank loans – interest rates can vary dramatically. With my original business loan, I naively accepted the first one I was offered (at an extortionate rate) as I was convinced I would not be offered another. Six months later I approached a second bank and moved it, saving me 5 per cent interest.

3 Investors – family and friends

It can be worth approaching family and friends to see if they will invest in your new venture.  Discuss various levels of involvement; some may expect a share of your profits, while not wanting involvement in the running of the business (a silent partner). Others may be happy to lend long term, receiving only interest payments, as does one of my investors.

Whatever the situation, always make sure both parties take independent legal advice and draw up an agreement outlining the terms. This prevents any potential problems if the future relationship breaks down.

4 Investors – business angels or venture capitalists?

Look for financial involvement from established business people, either in the form of a business angel (ie a local businessperson who lends money to businesses) or a private equity provider (ie usually more suitable for larger businesses with higher turnovers). Both can provide a wealth of information and assistance, especially if they have relevant contacts. In return, they will expect a share of profits and possibly a share of the equity.

Be cautious about giving away too much control over your business. You must also find an investor that is right for you and the business – having a good working relationship is a must. If you feel this is unachievable, don’t take the risk.

5 Grants

Whilst notoriously difficult to gain Government or EU funded grants, it’s worth making enquiries in your local area to see if you are eligible for help. The EU has a wealth of grants available, especially in rural areas, but they are badly advertised and difficult to access.

The Princes Trust is useful to young people starting up a small business, but the loans offered are fairly small and the criteria strict – although they are helpful for people from disadvantaged backgrounds.

If you are restoring an older property as part of your business, see if you are eligible for support from the local council, English Heritage or local conservation trusts.

6 Reducing Costs

It pays to keep your start-up costs as low as possible, of course. You could get equipment on hire purchase or loan or use a ‘rent a desk’ scheme, for example.

Utilise your friends and acquaintances – perhaps you know designers, IT professionals or PR experts? Set up a social networking account (eg Twitter) and find others in your area who are setting up businesses – perhaps you can exchange skills. I’ve done this many times – exchanging free coffee for help with my website.

7 Don’t put all your eggs in one basket

Share the risk when starting up. Spread the borrowing and the repayment terms. This will make everyone – including you – feel less vulnerable.

Sadie Hopkins is founder of York Coffee Emporium

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Money, money, money

March 08, 2010 by Marcela Flores Newburn

I developed a business idea which I know is a strong, feasible proposition but, with only having normal jobs, no mummy or daddy to hand me large amounts of cash and no major savings in the bank, I knew that I would need external funds to realise the plan.

Back in March I decided to learn how to be “investment ready” so that my business could grow with the support of some external investment from a bank, Business Angel, private investor or venture capitalist. I went to some excellent courses run by Connect Midlands to understand the process of writing a good, solid business plan and understand the business from an investor’s perspective.

It took me a good eight months to write that business plan with a convincing proposition and a solid set of numbers to show investors. It seems like a long time, but I needed to:

  • prove my market
  • write realistic figures, but keep them ambitious to make it interesting
  • learn the jargon

I went to the bank. Here are the lessons I learned:

  • raising funds is a tricky business, even with a solid proposition and plenty of passion to make things happen.
  • it’s close to impossible to borrow money from the bank if you are not prepared to secure the investment from assets, such as your own house.

I know everyone is talking about banks not lending but I must admit I was sceptical to believe this, as I fiercely believe that entrepreneurship is vital for the recovery of the economy and it should be supported by the banks.

As a consequence, entrepreneurs have the option of turning to investors/business angels. These investors receive many plans to review. I have now sent my plan to the Growth Investment Network (East Midlands) who have a range of investors in their network. I sent the plan as soon as I felt it was ready and I have to be open to feedback even if it’s hard to take. Fingers crossed.

I have to keep trying, and persevering, believing and visualising that I will be successful in raising the funds I need.

You can find out more about Marcela on the new interactive business website www.inafishbowl.com

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Sources of start-up funding

January 08, 2010 by Chris Barling

Back in the mid-1990s, my company, SellerDeck, was set up using my own money and some I borrowed from family and friends. My business partner and I then raised £165k from an angel investor, and later a further £1.5m from venture capitalists, 3i.

At the height of the dot-com boom in 2000, we went public on the London Stock Exchange, raising £25m. A couple of years later, the company de-listed and became a limited entity again.

When you are seeking funds, you won't feel it, but there is plenty of money around. You just need the right formula to tap into. So it's important to understand the keys to attracting investment – particularly from business angels and venture capitalists.

The challenge is that investors – just like those on Dragon's Den – receive numerous approaches, but make few investments. How can you make yourself stand out, and get the cash you need to grow?

I’m assuming that you have a workable business, and a well-written plan that covers finance and marketing without boring too much with detail. However, even when you have these, you still have a long way to go.

There are three keys:

  • You must excite investors with the chance to make a lot of money.
  • You must convince them that the risk is low.
  • You must explain how they will get their profits out. This is what they care about. Get it right and the cash will follow.

Incidentally, the way to generate excitement is to provide hard data on the size of market you can address and what margin you can obtain. This must be evidence backed. Simply saying: “we estimate the market at £100m and will take 70% share” without any facts to back it up is a real turn off. But don’t go into too much detail.

Once there is an initial attraction, the key questions will be about the credibility and commitment of the management team and business generally.

The best answer to is to have a great track record. If you don't, get people involved who do and get experienced people onto your board. This will have a cost, probably in shares. You also need to listen to their advice – no one who is good will stick around if they are ignored.

Investors will also want to be certain of your commitment. Don’t mention any alternative business ideas, because this will be a big turn off. If they put their money in, they want you to be fully devoted to making it grow, becoming profitable as soon as possible.

The next question is whether the business itself is credible. This is best demonstrated by having real sales and customers. In fact, if you don't already have these, you need to ask yourself some tough questions.

Investors will sometimes ask you to put your house on the line. Personally, I’ve always refused, arguing that I had already taken a pay cut to start the business, risked my career and was utterly committed anyway. Finally, I pointed out that such a high price runs the risk of the directors behaving desperately if things get tough – which doesn't promote good business practice or the protection of their investment. I’d suggest you sharpen these arguments up, too.

Many people obtain their investment from family and friends. Assuming you know people with sufficient capital, this has the advantage that it’s easier to tap them. The disadvantage is that if the business fails, which is bad enough, you may also face losing key relationships. And I'm afraid to say that if you believe there is no chance of that happening, you probably don't understand risk and should reconsider your career direction.

I myself borrowed money from family and friends to help get the business going. But I deliberately took the loans on personally, so if the business failed I’d still have to pay them back. And I kept the loans at a level that I would just about be able to pay them off over a few years.

Finding potential sources is the easy part. You can find a list of angel investor organisations at www.bbaa.org.uk, while VCs can be found at www.bvca.co.uk.

Remember, the key lesson is to look firstly at the needs of investors. Only secondly present your need for money and how much sense the business makes to you.

I can’t pretend raising money is simple, and a pre-requisite is having a viable business and plan anyway. We presented to more than 70 investors before getting our first funds. However, if you follow the advice here, your chances will be improved. Good luck.

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The problem with money (too much)

December 17, 2009 by Chris Barling

Last month we talked about starting a business on very limited resources. This time, I would like to think about the problem of having too much time or money.

Having too many resources can distract you. In contrast, when money is tight, you’re focused on just doing what is truly important. In any start up situation, you should only care about discovering two things:

  1. What customers want and your capacity to deliver it.
  2. How to get it into the customer’s hands at a cost that makes a profit.

Cracking the above two points and then becoming cashflow positive is the surest route to business success. Failing to focus on this is the surest route to failure, whatever the bank balance. I speak as someone who has not only started their own company, but who has invested in a variety of start ups, some with tremendous success, and one that has been an abject failure.

Two of my investments (actually the ones with the most potential and both of whom have raised millions), are also teetering on the brink of failure. The reason? Too much money, with one having raised more than £10m over several funding rounds. Having too much money encouraged both to try and tackle multiple markets before they had fully established themselves in one. It made them feel that becoming cash positive was an optional extra. After all, they could always raise more capital. And they seem to pay enormous salaries, far above what I pay for higher caliber staff in my own business.

In my opinion the lesson is simple. Focus your efforts on providing what is wanted. Then deliver it at a profit. Don’t do anything else. Becoming profitable as fast as possible makes long term success much more likely.

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Guerilla tactics

November 27, 2009 by Chris Barling

I’ve always felt that there were two types of startup – those with too much money and those with too little. I’ll leave the topic of too much money for another day, and instead think about the more common problem of having too little money.

When you’ve got too little money, the key is not to spend a penny you don’t need to, and to make sure that every penny you do spend is effective. That’s pretty much common sense, but I think that it’s worth drilling into much more deeply.

One of the pitfalls when starting a business is mixing up the keys to business success with the stuff that has to be done as you become successful. In start up mode, all your effort needs to go into the former and virtually nothing into the latter.

A business bank account, business cards, business premises and the services of an accountant can all be vital ingredients – but not if your business isn’t yet making any sales.

Your efforts and resources should go into working out your business proposition, finding customers and delivering that proposition to them. Make sure that you keep 100% accurate records, and probably set up a limited liability company to protect you from personal bankruptcy, but otherwise focus on starting to make sales and money.

When I set up SellerDeck (formerly Actinic), providing ecommerce services for SMEs, we had two vital objectives. We were trying to sell critical technology to small companies and ISPs, and we also needed to raise funds. I renamed my house “Actinic House” which was perfectly legal and cost nothing. I also joined the Institute of Directors and met all prospective investors in the IoD offices in Pall Mall.

These are the sorts of techniques that I would describe as “guerilla” – getting to your objectives by low cost and unconventional means. You can find all sorts of ideas both online and from other successful entrepreneurs. You won’t get them from the bank manager or the accountant, these techniques tend to be anathema to them. But it’s these that will help you to succeed, not having leather bound accounts.

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If you are looking for funding right now, watch this ...

November 10, 2009 by Mark Sinclair

It's not easy raising finance for any business right now, least of all a start up.  Which is why it's worth taking a few moments to find out how Simon Woodroffe managed to finance Yo Sushi, when the banks were turning him down.

Has anyone else out there been creative with early stage funding for their business?  Please share your story.

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Your business idea is fundamentally flawed (you'll be pleased to know)

August 24, 2009 by Mark Sinclair

You're probably reading this blog because you are in the process of starting up a new business or you've got a great business idea that you want to develop and launch.

First of all, congratulations! It's a great feeling when you make that decision to start a new business. And if you’ve never done this before, you're at the beginning of a very exciting journey.

Now for the bad news. If you've just come up with a great idea and are now rushing to get it to market, you've probably got a really serious problem. And that problem is that your idea is quite likely to be fundamentally flawed. Or to put it another way, it's likely to go really badly wrong and it's probably not going to work.

I know that doesn't sound very encouraging, but before you rush off into the distance and start investing a lot of time and money into implementing your idea, you need to do something very important indeed...

You need to challenge it.

You need to look at your idea from different perspectives. You need to put yourself in the shoes of potential customers. You need to put on Edward DeBono’s black hat and challenge your idea seriously. While all of this may sound terribly negative and destructive, it's really important that you take this advice on board. So many businesses are launched with insufficient planning, insufficient testing, not enough feedback from people and poor advice.

If you actively approach your idea from a balanced and objective point of view, where you've considered the huge upsides as well as any potential downside which exists, then you'll be in a much better position to get it right.

Like with anything, starting up a business takes patience and a whole lot of learning. Market conditions change so quickly that you need to always approach you business holistically, and be willing to take advice on board. With those things in mind, it seems like you’re half way there having found this Donut!

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A lesson from the Den

November 16, 2007 by Simon Wicks

What does Dragon’s Den tell us about the world of small business? Not a great deal if you view it solely as entertainment. After all, this is reality TV, and reality TV’s stock-in-trade is the ritual humiliation of hapless members of the public. There are times when I find it excruciating to watch yet another hopeful squirming under the unforgiving scrutiny of the Dragons, their dreams visibly crumbling as Duncan Bannatyne spits a mocking question about sales projections that he knows they cannot answer. It’s like watching someone being skewered and roasted over an open fire.

Thankfully, there’s more to it than this. Dragon’s Den is not actually a game – these are serious investors with real cash to put into real businesses, and they’re not going to throw it away on a whim. Harsh as it is, their scrutiny has a purpose; they have to be sure that the risk is going to be worthwhile.

I know we’re supposed to boo and hiss at the Dragons whenever they grunt the dreaded “I’m out”, but I can’t help siding with them when I’m watching the show. Most of the entrepreneurs are so ill-prepared for their ordeal that they don’t deserve to be given any money to develop a business. This staggers me. There’s no secret here - they know the format, they know what sort of questions they’ll be asked and they know what’s going to happen if they can’t answer them.

Granted, it’s a nervewracking business and that’s going to affect their ability to recall information quickly and easily. Even so, if you’re seriously asking for £150,000 to open five retail outlets selling baseball caps in five major cities, you really should be able to demonstrate some sort of understanding of leases, health and safety regulations and employment law, as well as offering realistic cashflow forecasts, sales projections and some sort of basic marketing plan.

Unfortunately, too few of the applicants standing in the Den seem to grasp the fundamentals of running a sound business. They’ve got where they are on a wing and a prayer and a following wind. But the Dragons are hard-nosed business folk who don’t invest in dreamers – unless they can see a healthy profit at the end of it.

And I suppose that’s what makes the show compelling. We see, vividly, the collision between an entrepreneur’s dream and the realities of the marketplace. Every business reaches this point eventually, some sooner than others. If the entrepreneur has done their homework, they stand a good chance of getting over the wall, or around it or under it or even smashing straight through it. Their dream continues - a little tarnished maybe, but in a much better state to survive in a competitive environment.

What the Dragons offer is a reality check. It has to be harsh. It’s not easy to get a business up and running, but it is possible. And when it happens, nobody is more pleased than the Dragons who, after all, just want to invest in good businesses.

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