I’m not a huge reality fan but I love shows that are inspirational, motivational, entertaining and educational –>The Dragon’s Den is all four.

The part I want to talk about in this post is the education I get as a business owner by watching the show. I’m listening to five very smart people make decisions that will affect and change lives.

Every episode, The Dragons get pitched by small business owners for venture capital to grow their businesses. Sometimes the pitches are just wacky, sometimes very smart but almost always they’re interesting.

And these are extremely savvy business people being pitched to:
Arlene Dickinson, Robert Herjavec, Jim Treliving, Kevin O’Leary, W. Brett Wilson are some of Canada’s top entrepreneurs who’ve made billions of dollars through their companies. I greatly admire Arlene who’s the only female on the show (and a marketing lady too!) but all of the Dragons seem smart, fair and great peeps!

What I’ve noticed time and again is that when it comes to deciding on what business to invest to, it all comes down to dollars and cents.

The Dragons want to know the bottom line. They often ask questions like:

Many people come into the den with a very weak business plan and expect the Dragons will invest their money to pick up the pieces. n’uh uh – it doesn’t work that way! Startup venture capital is pretty much a myth because smart business owners want a proven model with a great profit margin before they’re going to touch your business – and rightly so.

I read a good blog post on Freshbooks about raising venture capital. Mike McDerment, the owner of the company, has great insights into raising money to grow your business. Here is what it all boils down to:

So, when is the time to raise Venture capital?

When: you don’t need the money

Exactly the same sentiment you see on the Dragon’s Den. The Dragon’s don’t invest in ANYTHING UNPROVEN. And when your company is proven, making money and cash flow is positive you really don’t need the money – you just want it to move your business ahead even faster.

So how do we apply this to smaller, home based businesses?

Same way.

Start thinking about your cash flow, profit margins, your expenses, track how much you’re making really closely (maybe even obsess about it just a little) and get profitable!

And then maybe I’ll see you shaking hands with a Dragon