EP 6 Preview: Five things you should at least pretend to know when pitching numbers

28 October 2014
It’s a numbers game.
EP 6 Preview: Five things you should at least pretend to know when pitching numbers Image : 110

If it’s fire you're after, it’s fire we have. Dragons’ Den SA episode 6 sees Dragons tear into a pitcher, why? He simply didn’t have his numbers in order, rookie mistake. We’ve included four key financial considerations to account for when pitching to investors.

Start-up costs: If you have not started operating, you need to figure out how much capital you’ll need to acquire assets a start-up needs to operate. If you’re are already up and running, the next step is to identify what assets are needed for the next level of growth. It’s elementary math; if it’s a service business you’re running, start-up costs might include office rent, telecommunications, internet access, utilities, computers, office furniture and supplies, employee salaries, marketing, insurance, and an all important contingency budget.

Know your numbers: You need to know your numbers, your potential investors want assurance your company is financially watertight. Prepare to answer questions about your company's financial stability. You can be sure investors will interrogate your company’s numbers, losses to date, trajectories and how you intend to stimulate growth. Lest you forget to present a contingency debt repayment plan and prove beyond reasonable doubt your business is capable of handling financial obligations.

Financial goals: Potential investors want assurance there will be a reasonable return on their investment. It's your job to make clear where their money will be going and, specifically, what it will help you to accomplish and where it will help you grow. Investors want hard proof as to where you’ll be plugging their cash.

Realistic valuations: Pitchers with lofty, flighty valuations of their businesses will be shot down before they’ve begun. Choosing to share impressive numbers over an honest value will not only rile investors but also discredit you; you’ll be silently blacklisted. Instead, track your numbers and be as accurate as possible when reporting them.

Asking a potential investor to part wither their hard-earned cash and then presenting a bullet-riddled financial forecast simply will not fly. Remember, investors got to where they are through shrewd financial acumen, never underestimate how quickly they’ll see through fiction.

Watch Dragons’ Den tonight at 19:00 on Mzansi Magic!

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