Dancing with Dragons - by David Hawthorn
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Dancing with Dragons - by David Hawthorn

Dancing with Dragons - by David Hawthorn

Dragons’ Den, car-crash TV for the more discerning BBC2 audience

I must have watched dozens of episodes of the popular BBC television series Dragons’ Den. I’m sure you have too, but just in case you have missed this visual feast, let me outline the premise.

Budding entrepreneurs pitch their business ideas to a panel of four wealthy individuals, the titular Dragons. The applicants are asking for money; investment for their businesses. Typically, they are looking for something in the region of £30,000 to £70,000 in return for a stake in their idea, which, of course, they assure the Dragons, cannot fail.

What makes it unmissable viewing, though, is watching some of their ill-prepared, poorly thought-out and deeply unprofessional pitches being ripped to shreds by the Dragons. I must confess that despite wincing at the cringe-worthy attempts to impress there is, to my shame, more schadenfreude in me than I would care to admit. This is car-crash TV for the more discerning BBC2 audience. But among the left-handed screwdrivers (not literally) there are occasional moments of genius. You can’t help but get hooked by some of the better, creative and often the simplest of ideas. If only I had a spare £30,000 to invest!

There have been some notable major successes from the show. I can vividly remember the episode in 2007 when Jamaican–British businessman, Levi Roots glided into the Den playing his guitar and singing as he launched his Reggae Reggae Sauce. With the help of the Dragons the sauce was on Sainsbury’s shelves nationwide within a month. Mr Roots is one of the standout successes of the show with the Reggae Reggae brand now worth millions. His story is the exception and there is another, less popular side to the series.

In February 2015, The Sunday Telegraph survey of all 143 entrepreneurs who had successfully agreed an investment1 found was that despite promises made on screen, over half never received the investment. Of those that did, around a third were no longer trading when their report was published. One in three had failed already.

Dragons’ Den is an entertaining presentation of the concept of equity investment, where money is injected into a business in return for a stake.

The failure rate from investments made in the Dragons’ Den is much lower than the norm, according to the Centre of Private Equity Research at the University of Passau.2 They concluded that two-thirds of businesses that receive investment (specifically venture-capital in this study) do not result in the management staying in ownership, the most common outcome being that the investment was written off, presumably as the business had folded, with ‘selling the business to a competitor’ the next most likely result.


You don’t need to be in debt to be in business

Debt kills businesses. It is a simple fact that all the available statistics support. According to government figures, each year 14,000 UK businesses become insolvent3 – that’s 50 every day! The need to service business debt is the single largest factor in business failure. The Business Angel investor that I met may have been happy with the one in five that would succeed, but spare a thought for the other four that won’t make it. Each insolvency represents someone’s dreams being dashed, and sadly in some cases, may lead to their bankruptcy. Around a quarter of all bankruptcies are the direct result of business failure.4

And yet none of this is necessary. You don’t need to be in debt to be in business. If there were no venture capitalists, no business angels or no bank loans, do you honestly think there would be no business? Clearly not, and history proves that was not the case.

Consider the great Victorian social-reforming businesspeople, chief among whom would probably be George Cadbury. Living and working in central Birmingham, George Cadbury was stirred into action to try to help the poor and deprived masses that he encountered around him. Initially he helped in what we would now call a drop-in centre, but this felt just like putting a sticking-plaster on a gaping wound. He could see a better alternative. He could use the family chocolate business to introduce real and lasting change for his employees, and from that, affect society.

He had a vision and was charged with evangelical zeal (or in his case, a Quaker zeal). As his business grew and prospered, he reinvested the profits into housing, education and recreational activities for his workforce with a great transformative effect. This is something he would not have been able to do if he had had a bank manager or equity partner breathing down his neck. In addition, he introduced changes to the weekly hours worked, giving time off for education and family life. He also introduced a pension fund out of his own pocket. These changes, among others, were a catalyst that brought about wholesale social reformation in the nation. None of which could have been possible if the person holding the purse-strings did not share his vision.

The ability to bring about social change through business is completely negated if the business carries debt.
Who said the ‘get rich quick’ philosophy was possible?

Having visited several business schools, my observation is that assumption that third-party investment is required to launch any business is typically being taught as the norm. The esteemed Harvard Business School, many would say the world leader in business training, runs a course on entrepreneurship entitled The Entrepreneurial Manager, TEM for short. The outline syllabus of TEM has the first two steps as: 1) Identify potentially valuable opportunities, then 2) Obtain the resources necessary to pursue an opportunity. In other words; Get an Idea – then Get Funded. Entrepreneurs are being set up as bait to those who seek to ensnare them in debt with a promise of get rich quick. Whatever happened to patience? As a direct consequence of this philosophy, banks fund small businesses to the tune of £100bn in the UK alone, with the average loan amount being around £88,000.5

There are, of course, many successful entrepreneurs in the world, but for every Mark Zuckerberg, there are hundreds, if not thousands, of business owners working hard to passionately pursue their millionaire dream. Sadly, many these single-minded entrepreneurs are also having to meet the expectations and demands of a financial stakeholder. Whether those demands come from equity investors or simply the requirement to keep up bank loan repayments, these additional expectations can so easily lead to the wealth-creative flame being extinguished.

Bank loans and other third-party investment are by no means essential for the establishment and growth of a business. In fact, such debt is positively dangerous and should be avoided at all costs. The alternative philosophy, that it is possible to launch and grow any business without any long-term debt, lies at the heart of the book Dancing with Dragons, Swimming with Sharks (Springmead, 2017).


Dancing with Dragons, Swimming with Sharks

When I set up my business in 2000, I made the conscious decision to do so debt-free and as such embarked upon a get rich slowly plan. In common with any small business owner, the years since then have been a roller coaster, but thankfully with a few more ups than downs.

The business started as just myself in a borrowed office with second-hand furniture and an old computer. I spent what I could afford and little by little, success was built upon success. The pace was manageable but by no means slow; our annual growth rate has averaged around 20% year on year. We are now the market leader in our field and blessed with a strong management team and great staff. If we had borrowed, would the business have grown faster? Possibly. There have been plenty of times I had considered it, and had several offers from funders who could see the potential. But I turned them all down and I am so glad I did. The absence of anyone looking over my shoulder has given me the freedom to diversify, the freedom to be creative and the freedom to pursue business that I might not have otherwise done. Which, in some cases, of course, was the freedom to make mistakes! It is interesting to note that of the various motives given for starting a business, a desire for freedom is often quoted in surveys as one of the main reasons entrepreneurs give. Saddling yourself with a debt gives you anything but freedom.

I have encapsulated all that I have learned over the years into the book, Dancing with Dragons, Swimming with Sharks. It is not an autobiography, but it is a positive statement of what can be achieved. I have collected the wisdom, practical tips and experiences that I have used over the years in an easy-to-digest format. Uniquely for business books, this is a light-hearted novel charting the story of Bob Cashmore as he launches his business and the pressures he faces on the way. The story is interwoven with 50 ‘top-tips’ that really work. There is plenty in this book that you will not read anywhere else, not least of which is the philosophy that you don’t need to be in debt to be in business.



1. www.telegraph.co.uk/business/2016/02/11/half-of-dragons-den-investments-fall-through-after-the-show/

2. The 2014 European Private Equity Activity, Statistics on Fundraising, Investments & Divestments EVCA, Brussels and Buchner, Axel, The Alpha and Beta of Private Equity Investments (24 October 2014). Available at SSRN.

3. The Insolvency Service: Insolvency Statistics – July to September 2016 (Q3 2016) adjusted pro-rata. Used under Open Government Licence v3.0. https://www.gov.uk/government/collections/insolvency-service-official-statistics.

4. The Insolvency Service: Bankruptcies by age gender and cause of insolvency 2015. Used under Open Government Licence v3.0. https https://www.gov.uk/government/statistics/individual-insolvencies-by-location-age-and-gender-england-and-wales-2015.

5. Bank support for SMEs – 4th Quarter 2015, BBA, London.