Dragons' Den review: Linkee and Gousto’s figures set alarm bells ringing

posted on 27/08/2013 09:28:41 by Dan O'Sullivan

Worrying losses and limited profits proved to be the sticking point for two promising looking ventures that entered the Den on Sunday.

We don't need no education: Linkee's "inclusiveness" was one of many selling points claimed by its ambitious owners

One of the most important aspects to consider when preparing to face the Dragons is that you need to know your numbers inside out - you're going to be asked, quizzed and questioned relentlessly before securing any sort of investment.

Yet even if you can recall your figures in your sleep, if they don't impress the panel then you're in trouble - something that was very much apparent in the latest instalment of the show.

This theme first came to the fore with James Carter and Timo Schmidt - creators of Gousto, the ambitious organic food company.

Know your onions

While James and Timo had a perfect grasp of their finances - not to mention the attention of all the Dragons, who initially seemed eager to invest - they couldn't avoid the fact that their venture was haemorrhaging £25,000 every month.

Indeed, despite already being on the verge of securing £250,000 worth of investment from unnamed angel investors, the pair were so desperate to plug the gaps in their leaking books that they wanted a further £100,000 from one of the Dragons.

Having previously worked in advertising, the three entrepreneurs from Linkee delivered a tempting pitch - even Kelly Hoppen, who admitted she normally hates board games, was captivated

With such figures flying around, the entrepreneurs would ordinarily have been sent packing: Duncan Bannatyne would have thrown an organic apple at them for good measure, with Kelly Hoppen wincing as if she'd just sucked on a genetically-modified lemon.

Yet the problem was that the Dragons genuinely loved the product - they were impressed by the pitch and eager to get involved in something that appeared to have the potential to make a huge amount of money.

Profits before losses

After much deliberation and a number of attempts to convince themselves that there was a profitable business in front of them, each member of the panel pulled out. Timo and James had learned the hard way that even a great idea with definitive figures won't be enough to tempt the Dragons unless it's already producing attractive returns.

A similar problem faced the lads from Linkee - Tris, Ben and Dean, who'd created a family game with a view to having it on shelves throughout the country by Christmas.

Having previously worked in advertising, the three entrepreneurs delivered a tempting pitch that clearly caught the Dragons' attention - even Kelly Hoppen, who admitted she normally hates board games, was captivated.

With rave reviews from customers and an infectious enthusiasm, the trio looked dead certs for investment. Then it turned out they'd only made a profit of £6,000, and the playing cards came tumbling down.

As Peter Jones talked about how competitive the market was and Duncan Bannatyne made an offer that was never going to be accepted, another great project fell by the wayside because - despite being a brilliant model - it simply wasn't lucrative enough for the Dragons.

All about the money

If there's one thing for businesses to take from the episode it's that the best idea in the world won't work unless it's going to produce some tangible returns - and sometimes that means you've got to focus on cutting your expenditure and reducing your losses before driving for profits.

As Timo and James will tell you, improving your bottom line and shoring up the accounts has to be a constant consideration if you're going to succeed as the owner of an SME.

Image credit: playlinkee.com

Dan O'Sullivan

Dan O’Sullivan is Make It Cheaper's Web Content Manager, which means much of his time is dedicated to ensuring we have plenty of online material to help business owners understand the energy, insurance and telecoms industries. With years of experience working alongside SMEs, Dan is committed to making life as easy as possible for smaller firms. You can email Dan at dan.osullivan@makeitcheaper.com

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