The first entrepreneurs to tentatively enter the Den were Faizal Khan and Gary Hilman of Peel Engineering, who wanted £80,000 for 10% equity and "a little piece of history". Faizal and Gary had created the smallest cars of all time, and had already sold 14 to the museum chain, Ripleys Believe it or Not, with the aim to sell more. They hoped that with thousands of children viewing the cars each day, they could develop toys and board games to sell as part of the brand.
Theo, Duncan, and Peter all had a ride in the cars, and then it was time to talk business. Peter discovered that Faizal and Gary had a two year deal with Ripleys, meaning they couldn't sell the cars anywhere else. The entrepreneurs stood firm, though, stating that the cars were only part of their business: their ambitions lie with selling the merchandise. Unfortunately neither Fiazal nor Gary seemed particularly sure about how they'd go about doing this. This annoyed Peter, who asked "So you want me to make a business plan for you?"
Deborah also found issue with the apparent lack of business plan, stating that the men seemed "completely half-cocked."
Faizal and Gary looked to be out of luck, as the Dragons quickly began declaring themselves out. Their one ray of hope lay with the only remaining Dragon, James Caan, who'd remained quiet throughout the interrogation. Whether James was feeling charitable, really saw an opportunity for profit in the business, or just has a weakness for tiny cars, he made an offer. All the money they needed, but for a whopping 50% of the business!
After quiet deliberation, Gary and Faizal suggested a creative alternative: 30% equity, two of the cars, and the promise that if he doesn't recoup his investment within two years, they'll return it. This was a shrewd negotiation tactic: and James quickly accepted their proposal.
Faizal and Gary definitely got lucky that James saw the potential in their business: without a clear business plan they seemed doomed to fail.
Of course, no episode of Dragons' Den would be complete without the traditional 'it started so well, but then rapidly went downhill until you were covering your eyes' pitch. This came in the form of Jacqueline McKay, founder of Angel Cot. She wanted £150,000 for a 40% stake in her suitcase-come-baby cot and changing station. Everything seemed to make sense, and soon it was time to crunch the numbers…Oh, no actually it was time for Jacqueline to sing a song about her product.
Once that was over, I mean, finished, Deborah began her questions. It seemed that Jacqueline had a very unsteady understanding of estimated turnover. This wasn't the only thing to annoy the Dragons, as none of them actually liked her product as a whole, thinking it didn't really solve a problem, and tried to do too much.
The Dragons all declared themselves out, and while several offered words of advice, Duncan was quick to give his own opinion. He told Jacqueline that her product was "ugly" and "ridiculous", and that she should give up. She dejectedly left the Den.
Jacqueline had tried to do too much with her product, and had no real business plan. As Deborah said, "Sometimes the answer isn't to bundle everything together." If you can do one thing well, just do that!
The last contestant to enter the Den this week was Ralf Klinnert of Funky Moves. He needed £120,000 for a 20% share in his electronic interactive sports cone game. Ralf's pitch was strong, but ended awkwardly when all Dragons declined to try his product.
Things didn't go well after that. When asked how he'd spend the money, Ralf shocked the Dragons by revealing the staggeringly high quotes he'd been given to mass produce his product. The disclosure that he'd received a government grant for £148,000 also worked against him, making Duncan very angry. Duncan stated he was "sick and tired of government grants that are given out to worthless businesses". He said only an idiot would invest, and declared himself out, alongside Deborah and James.
Peter, however, liked that Ralf had already expanded his target market from primary schools into football clubs, and his suggestion that production costs could be lowered. Peter soon offered £60,000 for 25%, quickly matched by Theo.
Ralf seemed unsure, and unconfidently asked if the Dragons would negotiate, however after some words of advice from Peter, happily accepted the deal.
This episode demonstrated quite obviously the importance of a clear business plan. If you're looking for investment, you've got to be able to actually explain both what your business is, and how it's going to make money. If you don't have that, then unless you're very lucky, you'll be turned away regardless of how great your product is.
If you missed this episode of Dragons' Den, catch up here!