5 August 2016 09:00
What not to do on Dragons' Den
New research by small business platform Geniac reveals the main reasons why business pitches fail to impress the investors.
With the Dragons currently back on our screens for a fourteenth series, Geniac analysed recent episodes of the show to identify where unsuccessful pitches fell down.
More than half (56%) of participating entrepreneurs went home empty-handed after bidding for investment from the multimillionaires. 51% of those failed because of concerns from the Dragons about basic financial inaccuracies in their business planning.
Of those, 43% of pitches overestimated the value of their business. More than a third (35%) failed to demonstrate how they would make a profit with their business, and, most shockingly, the remaining 22% had little or no solid financial planning in place at all.
The Dragons also said they were out because of:
- a lack of appropriate legal documents (10%);
- poor management practices (12%);
- the products themselves (23%).
Mike Galvin, co-founder of Geniac, said,
“The series is a reminder of the importance of key business fundamentals for starting and growing a business. It is alarming to see the high number of basic errors made by entrepreneurs and small business founders making the pitch of their lives.
"Our research is evidence that not having solid financials in place will cost a small business dearly, particularly fledgling companies with limited budgets."
By contrast, successful pitches to the Dragons displayed solid financial planning, an appealing product with great potential, and a passionate and inspiring pitch performance by the founders.