DRAGON’S DEN: The Quickest Way to Lose Your Company
The widely popular Canadian TV show that pits aspiring entrepreneurs against five Dragons (Multi-millionaires), each with the expertise - and the money - to turn burgeoning business ideas into incredible fortunes. The problem is that the Dragons chew them up and spit the entrepreneurs out like chum. Why? Well because these Dragons did not acquire their wealth for nothing; they knew how to protect their interests and make sure they made as much money as quickly as possible.
Launching a business is no small task. No matter how big an idea you think you have, it still takes a lot of work and a ton of cash. Or does it? Yes, it does take a lot of hard work, but the ton of cash is the part that I begin to question. The Dragons are ruthless, and rightly so - it's their own personal money on the line. I understand that with the credit crisis around the world, finding funding is not easy. But they use their money to bully around the entrepreneurs in order to take control of their companies. Any idea that the Dragons see that they know could make money, they instantly go for the jugular, and ask for 51% of the ownership. What many entrepreneurs miss is that even though they sell 51% of the company, it does not mean they need to give up 51% of the voting shares, or control of their company.
All companies take calculated risks in order to grow. Some of these risks can threaten a company's profitability or even its survival. Entrepreneurs who intend to stay in business for the long haul have to acknowledge risk and then put programs and policies in place to manage it. They should ask three questions as part of their business planning:
- What are the worst things that could happen to the business?
By answering this question, an entrepreneur can then take steps to defend the business against the risk.
- How likely is it that they will occur?
By answering this question, the entrepreneur can set priorities in managing risk.
- Is the company taking the right steps to prevent them?
Entrepreneurs have to answer this question honestly, tempering their optimism with realism. In some cases, an entrepreneur may need the help of an adviser.
So then what is the risk of going on Dragon’s Den? Giving up control of your company? Being rejected? Many entrepreneurs feel that money is the answer to all their problems. They think that once they have this money, all the doors in the world will open and then revenue will just flood in. Well I am sorry to tell you that is not the case. What these entrepreneurs need to do is develop a sound business development plan. This is not as expensive as you may think.
With the power of social media and the internet, these entrepreneurs can spread the word themselves. They have spent so much of their time focusing on their product or service that they have not spent the time spreading the word. With the help of an advisor, they could put that same passion and drive that developed their product into spreading the word and building a community on-line.
We have worked with many entrepreneurs to implement inbound marketing channels that deliver 60% lower cost per lead than traditional outbound channels. These entrepreneurs can share their passion and expertise in their blogs. Social media and blogs are becoming marketing powerhouses. Contrary to the rumours, businesses are generating real customers with social media and blogs. Some businesses are still unsure about the utility of social media and blogs. They ask: “Are potential customers really reading Twitter? Does Facebook do anything more than build brand awareness?” The answer is, “Yes!”. Over 40% of companies who use the services of Twitter, Facebook, LinkedIn, and company blogs for marketing have acquired customers through each of those channels.
My recommendation to these entrepreneurs is don’t waste your money on outbound marketing techniques that are getting less and less effective over time. The average human today is inundated with over 2000 outbound marketing interruptions per day and is figuring out more and more creative ways to block them out, including caller id, spam filtering, Tivo, and Sirius satellite radio. Rather than do outbound marketing to the masses of people who are trying to block you out, I advocate doing "inbound marketing" where you help yourself "get found" by people already learning about and shopping in your industry. But most of all, don’t give up control of your company - it’s your baby - and only you can have the drive and passion to take it to the next level.
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