There have been some truly scary episodes of the Dragons Den recently.
Ones where you see the Dragons look horrified at the amount of savings that have been invested in bad business ideas by really nice people.
One lady had invested £92,000 in a device that lifted up toilets. She was lovely but, as Duncan Bannatyne said: “I have seen these before… and prior to the date that the lady first began developing the idea.” This is not an original idea and therefore there is competition.
Another man had sold his house in order to invest in his ‘male hygenic wipes’, without fully assessing the potential of his competition.
This type of blindness to what is obvious to the outsider is not exclusive to either gender. It is about passionate enthusiasm that is determined to override good business sense.
In many cases, the Dragons seem as if they’re being unkind but sometimes the best advice they can give is to stop investing in this idea because it isn’t going to work.
This is particularly obvious in the case of businesses that make a continued loss year on year… and yet still the owners continue to pour money into the bottomless pit. They have no exit strategy and their dogged determination just digs them even further into a dive to disaster.
I am lucky in that my business does not need large amounts of machinery of equipment to make it work. I do have to invest in software but I try to keep a close eye on how much I am spending and whether those programs continue to provide a good return on my investment.
It is very easy to let expenditure run away with any profit.
But it is also crucial to do proper market research before embarking upon major expenditure… and to continue to do that research in case a new contender arrives on the scene.
These are points that Duncan Bannatyne bangs on about a lot in his book about business mistakes.