Small Business: How to win in the Dragon's Den

Jens Mueller, University of Waikato associate professor, who specialises in governance and entrepreneurship. Photo / Supplied

Jens Mueller, University of Waikato Associate Professor, a former Chair/CEO of large global enterprises, works with MBA participants at Waikato Management School, specialising in governance and entrepreneurship.

He also is a company director for several organisations, including Pharmac. The university's MBA students have recently taken part in the first of the management school's Dragon's Den competition.

How should you prepare for a Dragon's Den situation as a young business?

It is not merely enthusiasm and interest to succeed that matters, but it is the demonstration of a serious, sustainable business concept. You evidence this with a solidly prepared business plan, you do market research and find a group of quality advisors and board members (check the local university for a connection to MBA graduates, many of whom are glad to contribute), and you carefully prepare realistic financial forecasts.

The vast majority of young businesses fail, due to lack of knowledge and poor funding, so these hurdles need to be overcome quickly if you want to impress outsiders.

At what stage in your business should you be when you start looking
for external finance?

You should have completed a business plan, tested its key assumptions through discussions with prospective customers, business partners, suppliers and directors, and have satisfied yourself that this business is viable.

No one is interested in a business that cannot last long, never truly leaves a mark and cannot create solid customer appeal. It takes more than pure desire to create a sustainable business opportunity; many hours of hard work, reflection and discussions go into business planning, and you are ready for external venture financing when you are ready to move from planning to a "real life" start-up.

What particularly presses the buttons of Dragon's Den judges? What are they wanting to hear?

Dragon's Den judges live in the real world. They see and hear many opportunities each year - most of which will not rise to the level of clarity and detail needed to be considered. It is the hearts and minds that matter for most judges - the pocket book comes afterwards.

This means the business proposition needs to connect and engage. It is relatively easy to earn money with new ventures but more likely than not, Dragon's Den judges look at the quality and positioning of the business.

How many people will it touch? What has the new business learned from the existing ones? Have the new business operators demonstrated they have the skills to run a business, not just during the initially exciting start-up phase but when the business needs strong leadership to grow?

Do they understand 'governance' and how to be accountable to themselves and the outsiders? Like with any other sales job, it needs sizzle to sell the steak, so Dragon's Den presentations are usually well practiced, polished in appearance, full of engaging content and great detail, and of the utmost professionalism.

How does the University of Waikato choose the judges for its Dragon's Den exercise? What knowledge should they have?

As the No 1 Management School in New Zealand, we have a large number of our MBA alumni working in the highest corporate roles in the country, and our prior graduates are always willing to 'give back' time and effort for our MBA participants. We also recruit leaders from different industries, i.e. non-profit organisations and global firms, so that each Dragon's Den panel includes a varied set of experiences and skills.

Our most recent panel included judges with a total annual budget/sales responsibility of more than $1.6 billion and thus is an excellent sounding board for our emerging leaders, about-to-graduate graduate with their Waikato Management School degree.

The Icehouse has recommended the following links on start ups: Business.govt.nz website. They offer a lot of information around starting a business. Rob Adams' books (Also spoke at ICE Ideas) "If you build it will they come" & " A good hard kick in the ass" Guys Kawasaki " The Art of the Start" The list of blogs and books here. Within the list, recommended is "The Lean Start-up" Eric Ries and "The Start-up Genome Project" Research Report.