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What’s your business worth? Part 4

  • Date: Monday 9th November 2009
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What’s your business worth?  Part 4

Right, we’ve said that a business is worth what someone will pay for all or part of it.  The key to proving the potential value of your company to an investor means not only selling the idea but selling yourself as well.  Truth be told, I invest in people as much as I do in ideas and products.

It’s surprising to me how many people come into the Dragons’ Den with a very poorly prepared presentation of themselves.  Some so lack structure that we have to ask questions just to find out what the product is and what benefits it offers potential customers.

So, what sort of presentation are investors looking for?  To begin with there’s a quite simple opening - I would like you to invest £x in my business.  We all know that you are looking for a sum of money so you might as well air that right at the beginning.  In the Den we expect the person at that stage also to tell how much of their business we will be buying.  With other investors you might want to leave that for later negotiation.  It’s a bit early to make your fist bid. 

Now give a bit of background into the market you are attacking.  (Notice the market at this stage, not the product.)  Keep it short because investors will get frustrated if time passes and they still don’t know what you’re selling.  But knowledge of the market and how you got it is much more impressive than the detail of how your product works.  So, you have put into our minds the fact that a lot of people out their have a problem or a need and that you have a solution to that.

Now tell us a bit about the product itself and demonstrate where appropriate.  Make sure you knock investors out with the weight of the benefits your product brings to the people who will buy it.

Now to the numbers, what are your margins, what are sales to date where do you expect to be without further investment in say one year’s time and so on.  Give evidence to back up your assertions wherever you can.

Move next to what you plan to do if you do get an investor interested.  Is it just money you want or expertise as well?  Take care to be realistic about how much time you will need from the investors themselves.  They can have lots and lots of money but they only have exactly the same amount of time in the day as everyone else.  Tell the investor exactly how you will use the money and why that will cause the huge upswing in sales and profits, that hockey stick again, that investors are looking for.  Then try to close the sale by asking for the money again.  That will get the questions going and then its up to your ability to think on your feet.



Tip from Shaf – Time is more than money

If you want a mentor or someone to lead the company forward then you will have to pay for it with lots of equity.  If your presentation makes it look as though you can more or less do it on your own with only occasional intervention from the investor you will probably keep a lot more of your company to yourself.




If you’re passionate about your idea don’t let yourself down by presenting it badly.  Do the preparation and be prepared to prove your assertions.  Show what your business is worth.


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