Jonathan Elliott, managing director of Make It Cheaper, spots a recurring theme in the
latest episode of Dragons' Den and sees Hilary Devey invest in a
hair-related business for the second time in as many
weeks.
The huge marketing opportunity offered by the internet means
businesses are continuously attempting to make their commercial
propositions sociable, but it struck me that the companies featured
on last night's episode of Dragons' Den flipped that challenge
around. At the heart of all four pitches was a sociable
proposition, which they all attempted (with varying degrees of
success) to make commercially viable.
Former children's entertainer Vicki Edmunds presented
EatWithALocal.com, a website that enables authenticity-seeking
tourists to arrange an informal dining experience in members'
homes. The idea went down well, but Theo Paphitis suggested that
the £30,000 Edmunds sought to market her website was not enough to
generate the number of hits it would take to make the company
profitable.
I'm not sure I agree. It's true that a budget of that size will
not pay for an above the line campaign - but that kind of
advertising is generally only viable for mass market websites
anyway.
At my company, Make It Cheaper, we see sites such as Go
Compare and Money Supermarket plunging huge budgets into national
television campaigns - and although we offer a very similar service
to those companies, we wouldn't see similar returns on the same
kind of activity. This is because the fact that we save money for
businesses rather than the general public means our target market
is much smaller.
EatWithALocal.com has similarly limited appeal - but thirty
grand would surely give Edmunds a chance to create smaller, more
targeted campaigns, develop her social media activity and start to
build strong partnerships with influential companies.
Still, the Dragons had a bigger issue with the company's ability
to yield significant revenue - as they did with two other
'sociable' companies that failed to secure investment. For
EatWithALocal.com, dinner-hosting members are able to choose
whether or not they charge a fee to diners, so the only current
revenue comes via a one-off sign-up fee of ten pounds (plans to
host advertising and sell merchandise notwithstanding).
Shazia Mustafa and Yusuf Chadun's Third Door gives freelance
workers the chance to hire office space on a flexible basis while
their children attend an Ofsted-approved nursery in the same
building. Why bother, argued the Dragons, when you could make more
money by scrapping the educational USP and just rent out more
office space?
Andy Robertson of Dirty Beach, meanwhile, demonstrated an
ability to draw a crowd and create buzz with his impressive sand
sculptures, but the Dragons felt his plans to build a bar-based
business around the artwork were not sufficiently
thought-through.
The only pitchers who received investment (which came from Theo
Paphitis and Hilary Devey) were Colette and Geoff Bell, who
proposed that children's bath time should be embraced by parents as
an opportunity to socialise with their sons and daughters.
Their company Shampooheads facilitates this with a range of hair
care products featuring fun, aspirational characters such as
Awesome Annie and Busy Bob. The products had already received
orders from Boots at a healthy margin per unit and the high street
retailer had forecast big sales in the future. Plans are also in
place to produce books and other merchandise based on the
characters. All five Dragons ended up competing to offer the Bells
the £75,000 they asked for, which showed just how compelling a
sociable idea can be when there's a strong business model to go
with it.
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