If you are a start-up business entrepreneur, it’s quite probable that you already know the Dragons’ Den brittish tv show, or its versions that received other names when exported and filmed in other countries (like “Shark Tank”). If you never watched the show, you probably should*: take notes of its main lessons, and use GitScrum to manage your start-up and empower it for any pitch!
The original British version is presented by the economist and journalist Evan Devis and broadcast on BBC. During each episode, contestants present what they believe to be a business with high potential for growth and profitability. They try to convince angel investors to participate in their businesses with significant funding, to make their operations viable. The “judges” are exceptionally successful entrepreneurs who often make risky investments. However, they are extremely picky about numbers. The debates between the two sides guarantee exciting moments.
* Seek for episodes of “Dragons’ Den” and “Shark Tank” on Youtube to watch for free.
LESSON 1 – Benchmarking and Basic Research
Do you know what’s curious? Many contestants are courageous enough to apply for a Dragon’s Den pitch, and some of them are already having a little success with their starting business. However, as you watch their debate with the potential investors, you identify they never watch that show. If they did, they would not do the same recurring mistakes that are commented on during most episodes. So before you consider stepping into an arena, please know a little bit about who you will talk to. Here, we are summarizing some hints for you, and how you can manage them over the months with Gitscrum. As a result, when you present your start-up at a venture capital tv show, you will be stronger.
GitScrum is the ideal tool to manage your start-up business. You can organize your Workspace and:
– Start a project for your main product, managing the progress of its development and release;
– Create a project for your business management, with investment opportunities and data about target investors;
– Invite counselors and partners to collaborate with you and improve your projects;
– Manage the workflow and tasks of all your team members, and yourself.
All this background will be important in the future.
LESSON 2 – Focus and Differential
After you watch a few episodes, you will probably notice that many contestants are eliminated for lack of focus. Presenting many products, incompatible items with different distribution strategies or niches have already banned very talented individuals from the stage.
Others almost did it, but got a “no”, when investors realized they did not have the necessary licenses, patents and records that protected their innovative products from being imitated by other industries.
So, if you don’t want to leave an investment pitch penniless, please watch a few more episodes (or many more), and plan an excellent strategy on Gitscrum:
- Choose YOUR NICHE – create Tasks inside your projects to check the markets’ potential growth;
- Define your target buyer personas – define Tasks for collecting consumption data;
- Design a product portfolio with a few items – manage GitScrum User Stories to drive innovation;
- Identify which product is “your main” product – schedule/monitor the records’ requests with GitScrum Gantt Charts;
- Set one or two kinds of selling channels, and your main selling strategy – manage sales goals with GitScrum Sprints.
It’s ok to do some tests and change ideas. Just, when you go to a contest, know how to indicate this information, and why they make sense.
LESSON 3 – Scalability
Scalability is one of the main basic principles of growth, from an angel investor standpoint. For this reason, they are usually not interested in products that demand high-level customization for individual customers, involving craft processes. The same applies to products that use limited source raw material. Prioritizing sustainability is great, just remember that balancing it with material availability and industrial processes is essential.
LESSON 4 – Accountability
Another common criterion that separates Dragons’ Den winners from rejects is the dominance of their numbers. Investors are not charity funders. Even though they are willing to offer venture capital, they need to mitigate risks and check if you did “your homework”. Naturally, it’s comprehensible for someone to be nervous during an important pitch, imagine on TV! Nevertheless, there is no other way to ensure their participation in your business, but to demonstrate accurate measurability.
With GitScrum Task Effort, you can standardize all the value for your production process from the start. Gitscrum Time Tracking allows you to hold all your team tasks accountable and monitor the complete development process, to make exact task estimates and ensure profitability.
Use GitScrum Spreadsheet to calculate:
- fixed costs of the business;
- production costs;
- distribution costs;
- variable costs per product;
- product contribution margin;
- product profit margin;
- ROI estimates (based on actual validated sales average, and pent-up demand, never the market growth).
LESSON 5 – Product Validation
This is one of the most vital and complex stages of the business, and also the most critical that you could debate about. On the other hand, it’s essential that you are aware this process must be completed, or quite advanced, on your pitch’s occasion.
Validating a product means releasing it to the market, proving its acceptance in your niche and growth potential. You have a validated product when you already produced, sold a significant number of your initial product version, and you have a good percentage of recurring sales. If your product is not something you can sell more times to the same customers, maybe it’s not the best idea. You have recurring sales when your product offers a better version than the previous one, or when it needs replacement with some time. Recurring sales is the key for investors to believe in your business.
LESSON 6 – Business Valuation
This is another critical point that eliminates many contestants of Dragon’s Den, and other similar pitches worldwide. Please don’t be emotional when valuing your business. If necessary, hire a counselor. Just because you think your business is worth USD$ million, it doesn’t mean it does. On the other hand, you also run the risk to negotiate with them, and end up delivering 50% of your business for a lower value it is worth. Then, again, watch more episodes, take notes on basic lessons and plan your basic steps on Gitscrum Spreadsheet:
- Investors are usually not interested in very small businesses percentages (it’s preferable to ask a higher value and offer a higher percentage);
- As in any negotiation, fix your initial offer and your limit offer (minimum acceptable value);
- List justifications for every value, based on your last year income and profits;
- List acceptable conditions you can include, if your primary offer is not accepted (like gradual investment, according to the confirmed results).
LESSON 7 – Seek the Smart Money
Ok, now you already validated your product and you are sure you have great growth potential. You need funding to scale operations and production to bite a wider market share. Of course, you must present a preliminary plan of what you intend to do with the investment you are proposing to receive, which is also evaluated by investors. One good possibility is to make it clear that your plan is a primary purpose, but you are looking for their guidance, and you are open to changing it.
You can include part of the purpose value as one of the investor’s consultancy, to value them. This is highly motivational. Some entrepreneurs that went to DD making clear they were only looking for money had to answer why they did not look for a bank loan… so, don’t underestimate your potential giant partners. Make it clear you are looking for “the smart money” and their network.
You know your judges in advance, you can create a GitScrum project simulation for each one of them, of one as an example, to demonstrate how this specific partnership could make a progress. Create tasks including the expertise niche of your potential partner, create emotional appeal, and be miles ahead of your competitors.
We wish you success on your start-up business, with or without dragons. If you ever miss a pitch, it’s ok, another great opportunity to learn and return. The intention here is to help and partner with you in this journey. Innovate with GitScrum and skyrocket your results!