"You Didn't Bother Because You're Australian?" | Dragons' Den

Which one will be tempted? I like Peter. Yes, I'm a big fan of Harry James. When I decided to open my business, I read his book and I loved it. I am very excited and excited to have the opportunity to present my business to you today. We're ready to slay some

dragons

. I'm ready to tempt the

dragons

. Hi, I'm Sarah Hilary and I'm the founder and director of gluten-free cake temptations Be Tempted. I'm here today to request an investment of £75k in exchange for a 5% stake in my business A few years ago I decided to go gluten-free and was shocked by the lack of great tasting gluten-free products on the market, so I made the my own.

I made a business with was born it and be tented we have built an excellent customer base every week we deliver to Harrods Whole Foods Selfridges and Fortnum and Mason our product range consists of nine flavors in a variety of formats since 2012 we have turned over over £500,000 , our gross margin is between 51 and 73 percent. I'm here today

because

we have a potential opportunity to launch our brand to a national retailer and we anticipate increasing monthly revenue by over 300%. This is an incredible opportunity. and one that I hope you find tempting. I have one of my temptation officers with me.

Would you like to be tempted? Oh sorry, I'm absolutely tempted to tempt the dragons with their Pisa range of gluten-free cakes, we know you like them. It's hot, oh I like it, it's sweet, chatty businesswoman Sarah Hilary, now I realize why she keeps winking at us. Thank you so much. He hopes to get £75,000 for a five per cent share of his business. It's a bit greedy, isn't it? I think so, you're right, a little greedy, but it's the valuation he's given to her company that has caught Touka Suleiman's attention. Thank you. I see you've tried to please us all.

You think your business is now worth 1.5 million. so let's talk about those numbers ciao year 1 2012 turnover how much 40 6046 year to 82,000 year free 86 yes via for $99.99 but one-two-one one-two-one okay, what was the gross profit? What was in that profit? I don't remember year one I can't remember one throughout Killing you last year Last year's gross profit That year's gross profit Sorry, it just slipped out of my head now Sorry, I can't tell you You can't tell me that you should know the rule number one in rubbish and that you have to get your numbers right, yes Sarah, yes, so I don't want to surprise you, that's right, your products look fantastic, they taste delicious, I thought you were.

It's really going to come in with quite considerable numbers and growth, but you still don't know what your forecast is for this year: three hundred and sixty-seven thousand pounds and what has changed. How are you going to achieve the jump from 120 to 360? So this potential option. Or what we have with the national retailer is for Khufu with Tesco and they said they would order three products in a minimum of 150 Express stores, so what was the revenue that gave you a hundred and eighty thousand pounds that your business has made over four years? It hasn't really grown at all, yeah, and you're forecasting no real growth this year other than one account, so what's going on there?

First, years of relatively flat variety of reasons. I guess I

didn

't have enough money or investment behind me to invest in new products or any kind of marketing to grow the business, well that's one reason, another reason at that time I wasn't really interested in growing the business, did you? Why weren't you looking to grow the business? Well, to be honest, I'm Australian, yes. I wasn't really sure how my visa situation would work, so you went four years without growing your business

because

you're Australian. I don't understand, it would just give you a hard time, but now I do it and that's how it is.

You're not answering my question, you just said it's because you weren't fully committed because you thought you might go back to Australia, yeah that's what you're saying, why don't you repeat that to Peter? Because that's what I'm doing. I'm sorry, but I now have indefinite leave to stay in the UK. Oh okay, it took me a little while to extract a frustrating trade for the Dragons, as Peter Jones has to work hard to get to the bottom of the temptation of slow growth, but with Sarah's dedication. To the business finally established days LaVon is letting his taste buds do the talking.

I must say this is delicious, thank you, it is absolutely amazing, the chocolate brownie, what is the next step you plan to take? I would like to enter another retailer. I also like. to target the cafe market and we had an inquiry about possible supply of gourmet ral to the UK, so you will be the first to sell gluten free products and Tesco in terms of high end luxury artisanal production, we would be the first to the competitor I would compare it to: it would be Tesco's best brownies and they sell for two pounds fifty two pounds fifty and yours will be what two pounds 49 and there are no preservatives handmade yeah well I like that the product is good. exactly what you want from the dragon.

I'd like to have some contact so it would be great to be introduced to some of the people you know and I think it would be a lot of fun. Sarah, you mentioned Brownish and I automatically realize I'm conflicted. I know the brownie is, for that reason I really have to say I'm out. I get it. Can I ask you what you think about brownies? Sorry no, but that's over Sarah, sorry, hi Jenny, hi, have you heard about the sniff test? It's not about your cakes because they actually taste delicious, it's the best gluten free product I've ever tried.

The sniff test is what an investor does when he looks at a business and decides whether he is going to invest or not, and something doesn't work. You don't smell here at all to me you walked in and gave a very confident tone you sent miss temptation to wink at us oscillator eat your cakes but you don't know your numbers talk to me about how to get to you one- Million and a half rating, okay, Of course, because everything is in motion at this moment, it is no reason for it to be a million and a half.

They told you it's worth a million and a half. I had someone who was a financier. director at a restaurant chain is fine for the numbers, but do you think it's a million and a half valuation? Are you really happy that they are giving you a great night? Know? Honestly, I think it's based from there onwards and forward value and with a terminal value for the exit, well, if you look at the good, between twenty and twenty-five million pounds, the same as the green and the black. It fascinates me that you can't look at something like the good, they broke a market with a huge amount of marketing. behind and it was a different type of product yours is lovely but they are gluten free brownies with a cute brand your reviews are crazy I'm afraid I'm out Sara I think the size of the opportunity and what you've done again the last four years They have really shown where the business is, everything is very good and everything looks very good, but it is just: very small cottage industries.

Tesco Express. I don't think it works for you at 2:49. I think so. I think it would be 149 very quickly and margin pressures will appear as volumes potentially increase. I also think the valuation is not just crazy, it's absolutely ridiculous, stupid and crazy, so for all those reasons I'm not going to be able to invest and say that. I'm fine, thank you very much Sara, your business strategy and evaluation are half-baked and that shows naivety in understanding how that works in business. You know, I don't see how much help I could give you with such a ridiculous valuation. and a small percentage, so I have to say that I am often tempted, but on this occasion I am not convinced.

I'm out of appearance. I like the product, it's great, it tastes good and you've been able to break into quite a few retailers and I think you're doing well, but with a dragon on board you could do even better. I think the risk is too high for what you are asking for the business. I'll make you an offer, but I'm not going to like it, okay, all the money has to be there, but I want 40% of the business. Tej la Ghani's offer of £75,000 for 40% of the company requires eight times more capital than Sarah put on the table, slashing her value. company at over a million pounds, would there be any chance of buying back some of your stake if we hit our revenue target for years 1 and 2?

The first year's income would be how many another three 367 and then 900,000 pounds with 166 thousand. net profit if you reach the target of years 1 and 2, I will reduce it by 10% so from 40 to 30 it would be possible to make it to 20 sorry, it's a good deal. I'm tempted, I would be tempted, but not that much. as long as year 1, year 2, it is reduced to 30% and can I ask you how you see this with your contacts? Who has the reason? Basically, I can consider introducing you to Asda Sainsbury's in Waitrose and opening those doors for you. I'm going up the wall, yes, thank you, a difficult decision for the businessman.

Our Varney's revised offer, which reduced its stake from 40 percent to 30 percent in a buyback agreement, still leaves Sara giving up six times more equity than she wanted. She hoped it was a little. more competitive and apart from this because I think it is a great opportunity. I see the value of having a dragon on board and for that reason I would like to accept your offer. Great, thank you, well done, good luck sir, finally after a tense negotiation Sara comes out of the den with an investment I think you got a good deal although it was a bit greedy What is greedy?

I love brownies. You came here today to take a dragon on board and that's exactly what it is? it happened I'm very excited I'm very excited you you