Dragons den tips - how to prepare for dragons den

Explain clearly what you do
Many entrepreneurs get caught up in detailed technical aspects of their product or business and fail to explain, in simple and easy to understand language, what exactly it is that the business does. This is probably the most common mistake made when pitching an idea.
If an investor cannot readily and easily grasp the opportunity, he/she will quickly lose interest. So prepare and practice a simple and concise explanation, and rehearse this in advance with others to see if they can understand it.

Is there a Market?
Entrepreneurs can often be guilty of falling in love with their product or their technology. There may well be a gap in the market for what they are planning to offer, however, what investors want to know is if there is a market in the gap. It is critical that you have done your research and can demonstrate that a market exists for your product and that customers have indicated that they will be willing to pay for it.

How will you compete and what is Your Unique Selling Point?
The law of the marketplace determines that you will most likely have to deal with competitors. Have you established if you have competitors, and if so, how will you compete against them? Do you have a unique selling point that differentiates your product or business? This could include quality, price, service, delivery or the innovative nature of the product or service itself. Keeping a close watch on competitors is crucial, not just at start up stage but throughout the life of a business.

Patents and Protection
If you have come up with a new or innovative product, there is often a danger that you will end up competing against "copy cat" or "me too" businesses. An investor will want the security of knowing that your product cannot be copied once the market has been established. In this regard, you should try and secure a patent. This is a complex area and generally requires professional advice.

Financial Information
Investors are risk takers but we are not gamblers. We want to get a return on our investment. Therefore, it is important that you can demonstrate how the business can become viable and profitable. You will need to prepare realistic financial projections regarding sales, costs and profitability and have comprehensive knowledge of financial performance to date if appropriate.

Valuing Your Business Realistically
Another of the mistakes that many entrepreneurs make is to over-value their business. When an entrepreneur says he/she is looking for an investment of €100,000 in exchange for 10% of their business, in effect they are saying that their business is valued at €1m. In some cases these businesses haven't even started to trade yet and do not have any sales to substantiate the potential viability of the business. It is, therefore, important to be able to explain on what basis you have arrived at the proposed valuation. Otherwise, you could undermine the credibility of your entire presentation.

What do you need the money for?
As investors, we are always keen to know what you are going to spend our money on. Some entrepreneurs may fall into the trap of wanting to use investors' money for their own salary, to launch elaborate marketing campaigns, rent and fit out expensive offices or to buy flashy 4 x 4 jeeps on which to stamp their new corporate identity. While these may have some value, investors know from experience that start up capital is best spent of items that will generate revenues quickly in order to fund further growth.

How much have you invested to date?
If you are going to ask investors to take a risk and invest our money in your business, we will be looking to see if you have invested some of your own money. This is important to demonstrate your own level of commitment and belief in the potential of your business.

How far have you taken it? Do you have any Customers?
Most investors are not interested in investing in mere ideas or concepts. We would rather see that you have progressed your idea to, at least, product development stage or have secured solid orders or "letters of intent to order" products or services. This helps demonstrate that a potential market actually exists and helps reduce the risks associated with investing.

Tell us about yourself
Finally, as investors, we back people just as much as we back business ideas. Do you have relevant skills or experience? Are you likable and do we think we can work with you? How convincing are you that you can deliver on what you say? Do you have drive and passion? How can you demonstrate that you have what it takes to be successful?