How To Know Your Numbers For Dragons’ Den

Monetary literacy isn’t a typical talent. We’re not taught it in school or school and (being proud and British) cash isn’t one thing we discuss over the dinner desk. 

It’s no surprise we see enterprise house owners crumble when beneath questioning on the BBC TV present Dragons’ Den. 

The excellent news is, for those who’re getting ready to pitch to traders, you don’t need to be a maths whizz to know your numbers. You simply want to organize for what you’re going to be requested. 

1. Know the place your numbers come from

You could be spectacularly good at what you do, and you may have an incredible services or products. However for those who don’t know your numbers, and you may’t reply the Dragons’ questions, they’re not going to speculate. 

Traders need low danger with excessive return, which implies they need a enterprise proprietor who is aware of the right way to handle their cash, an organization with a confirmed monitor document of not losing money, and the potential for progress and wholesome earnings. 

If you happen to’re going to indicate them that you simply’re funding, you’ve received to know your numbers inside out. You do this not simply by memorising and regurgitating the figures however by understanding why you achieved these numbers. 

Take time earlier than your pitch to actually perceive what the numbers imply and why they occurred. Take a look at your income, your gross revenue, and your working revenue. Be capable to discuss your forecasts and the way you propose to realize them, intimately. Work with an advisor beforehand for those who need assistance understanding all of it.

2. Put your self of their footwear

An investor’s purpose is to earn a living. So that they’re not going to companion with anybody the place they don’t assume they’ll make a return on their funding. Put your self of their footwear; why ought to they belief you? You’re successfully asking them to take a large punt on you and your small business, so that you’ve received to see it from their perspective. 

With a lot in danger, it’s precisely why traders are well-known for asking troublesome questions. You want to have the ability to defend all your small business choices, the great ones and the unhealthy, and show you can run your small business in a accountable means. 

When you’re attending to grips together with your numbers, take into consideration what jumps out. Any anomalies which are more likely to increase questions are those you want to put together for alongside the fundamentals of realizing how a lot income and revenue you’ve made.

3. Be assured, not cocky

No founder goes to have an ideal understanding of their numbers, and traders are conscious of this, however for those who go in there with confidence, you usually tend to win them over. 

They don’t anticipate an ideal historical past with no hiccups or bumps within the street, that’s not life like. What they anticipate is confidence within the choices you have got made and a capability to defend them with out being boastful. 

If you happen to’ve made errors alongside the way in which, personal them and clarify what steps you’ve taken to ensure they haven’t occurred once more. Dragons aren’t anticipating perfection. If there’s no worth for them so as to add to your small business by partnering with you, there could be no level in them investing! 

In case your solutions are properly ready and also you’re assured in your skills, while realizing your limitations, they’ll see the story. In the end they’re shopping for into you as a lot because the enterprise, so don’t put them off by being boastful.

4. Don’t pluck a valuation out of the air

Dragons know the right way to worth a enterprise so swanning in there with some absurd figures will put them off right away and cause them to dig even additional. Determining how a lot you want and the proportion you’re prepared to provide away isn’t a valuation, it’s wishful considering. 

If you happen to’re asking for £500k in return for 20% of your small business, you’re valuing your small business at £2.5m. Whether or not you’ve primarily based it on present earnings, anticipated earnings or the property of the enterprise, you want to have the ability to again it up.

These are astute enterprise house owners you’re speaking to so don’t deal with them like market merchants haggling over fruit costs. Be sincere with them and yourselves about what the enterprise is price. You’re asking them to take a danger, so make it price their whereas.

5. Don’t let the highlight burn you

All traders are human. They understand how nerve wracking it’s to be in your footwear and so they’ve all constructed companies and made errors alongside the way in which. They’re there as a result of they wish to discover funding worthy companies; to not make a idiot of you or journey you up. 

They’re asking you questions to provide them confidence that you simply’re a protected wager so hold that in thoughts and attempt to hold your cool. All you’re attempting to do is present them that the particular person to put money into is you, and the time is now, so take a deep breath and present them you’re the one.