How many stuttering entrepreneurs have you seen pitching their business plan on Dragons’ Den” I’ve lost count. But, nearly always, their dreams of securing any investment are extinguished with that well-known catchphrase – "I’m out".
Which is why it’s somewhat amusing that according to latest research, nearly 65 per cent of SMEs would now turn down a deal from any one of the Dragons, as they don’t believe it represents good value for money.
Just under 750 SME owners recently took part in the research carried out by UK-based accounting software company Kashflow, with almost 65 per cent of them saying they would instead turn to banks or private backers for a more reasonable rate or split of the business.
When it came to reasons why SME owners would accept an offer from the Dragons, 36 per cent said it was for the experience they would bring to the company. A further 27 per cent said they would accept in order to try and grow their company, 24 per cent said they would only accept because of the positive public relations opportunities, 6 per cent said they would only accept if they had no option, and a few jokers said they would accept an offer from Duncan Bannatyne just to get a discount off his gym fees.
KashFlow commissioned the research to try to get a better understanding of small companies’ financial requirements.
“When KashFlow was looking for private financial backing, I would have never dreamt of going on television and giving away 50 per cent of my company just for a bit of extra publicity, and I think many business owners realise this after they have appeared, and this is why so few deals complete following an offer on camera,” said Duane Jackson, Managing Director of KashFlow.
(Indeed, an investigation by the Sunday Mirror newspaper in September 2006 claimed that most of the deals were unfulfilled after the programmes were shot.)
A good example of an entrepreneur who turned down an offer from the Dragons and has gone on to achieve enormous success is Ling Valentine from LingsCars.com: "I had two joint offers from Dragons Bannatyne and Farleigh. When I refused their first offer demanding a massive 30 per cent of my business, they reconsidered and improved their offer. But they always wanted too much. I flat refused both of their offers."
Her comment that “Chinese eat dragons for breakfast” became a cult phrase with business owners across the UK, and she’s still having the last laugh.
"LingsCars.com has more than doubled turnover to £28m in 2007 and I’m really glad I walked away. Businesses who jump at their first offer must be either desperate or barmy."