Flames of entrepreneurial wisdom from the Dragons' Den
09 December 2014
Feel like roasting your business brain in the fires of genius for a few tips on how to grow your firm? Well, you’ve come to the right place: here be Dragons
Starting a business and trying to make it grow can be a baffling, lonely experience, so it’s always constructive to follow flames of wisdom dispensed by those who have gone before you, and done it well. As implacable current and former panellists of bosses’ TV favourite Dragons’ Den, these four individuals have plenty of flames to spare. Let’s brave the heat, and hear what they have to say…
“Pick investors you can be friendly with”
Meaden says she had an overwhelmingly positive relationship with Phoenix Equity Partners, who invested in her business Weststar Holiday Parks. From her experience with the firm she learned the importance of good relations between the business’ management team and their backers.
She applied lessons learned from that experience to her own investing strategy on TV show Dragons’ Den, and firmly believes entrepreneurs should find investors who they get on with – not just those with the deepest pockets.
“It is absolutely essential to be a fair investor as well as a shrewd one. I don’t want to work with people who are not happy with the deal.
“I really appreciated my time with Phoenix, I found them extremely good to work alongside; they were honest and if things had to change we discussed it and we made the decision together. I never once felt ‘I wish I hadn’t done this’.
“Through their behaviour I learned the things that made me happy and I’m very keen that other people think the same way when I invest in them. I think about the deal and I offer what I think is fair, because there are two parties involved.”
“Ask for time before money from investors”
As a celebrity investor, famous for his turn in the Den, Doug Richard has put money behind numerous entrepreneurs. But he argues that the relationship between investor and entrepreneur is as important as the money itself.
For entrepreneurs looking for funding from a business angel, he suggests taking a “pre-investment trial” to see whether you bond – and whether you can reasonably expect to develop a mutually beneficial relationship.
The alternative is jumping in with investment, which could lead to problems later on.
“It’s my view that as an angel investor, I should work with people before I invest to make sure that we can work together. If you’re going to work with an angel investor, he or she should be willing to put in some time upfront for free.
“It can be incredibly valuable for the entrepreneur as well as the investor. Both parties’ risk goes down enormously.
“The alternative is two strangers wondering whether it’s going to work out, and real money being involved before they get to know each other.”
“Build in some optimism”
Jones describes his approach to business as optimistic. He believes that start-ups should front-load confidence into their business plans.
For him, entrepreneurs should express caution when it comes to cash flow and growth projections – but their calculations should come under an umbrella of unquestioning self-belief.
“Unfortunately, we have developed a little bit of a negative mindset in this country and we could do with a cultural shift. At the moment we think, ‘Can I do it? Maybe. I’ll give it a go.’
“It should be, ‘I’m going to do this – I can do it’.”
“I lost everything before I started Phones International, and I had no other thoughts in my head than ‘this is going to be a success’. Having said that, because I had lost everything it was easy to have that mindset – things couldn’t really get any worse.”
“Recessions aren’t all bad”
Recessions mean different things to different businesses.
For some, they are a period of painful cutbacks and belt-tightening. For others they represent an opportunity to grow by acquiring struggling competitors.
For James Caan's Hamilton Bradshaw, the recession of 2008 and 2009 was a mix of both scenarios. His private-equity firm has investments in a range of businesses encompassing several industries. Investments in retail and construction were hit by the downturn – but in other sectors there were plenty of enticing opportunities.
“The business climate is very challenging – but from Hamilton Bradshaw’s perspective it’s a very exciting time in the cycle, because we are in the business of buying businesses and that is all based on valuations and competition.
“In 2009, we found a limited amount of competition about. It’s dropped significantly, and price is a factor of competition. It’s supply and demand, so prices come down considerably.”
Quotes taken from The New Rules of Business by Dan Matthews, with kind permission of Harriman House
For further entrepreneurial wisdom, sign up to this forthcoming CMI seminar SMEs – Taking Your Business Forward.
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