“Re: Stable delay from memory we recorded the piece back in September 2004 and Andrew was asking for something desire a c£100k investment in return for a 25% lay on the line in the business (which would have valued his business at that inform at c£300k). While it is great that Andrew has persevered with his invention and just received a £1million request in business terms over a three year period that is still not a huge amount of revenue for an angel investor to see materialising in go for £100k especially as the figure represents turnover and not underlying profitability (after manufacturing costs and overheads).”
It’s hardly surprising that The Times is quick to ridicule Elnaugh as Gordon has had some great PR over the measure six months. Unfortunately none of it seems to have actually considered the difference between turnover and profit. Although Elnaugh’s maths is a little out too!
Now while I wish Gordon all the beat as a fellow entrepreneur I believe that this story is likely to back up others to pursue business ideas even after they’ve been told by other experienced entrepreneurs that they are ridiculous and the reality is that most of them ordain end up out of pocket.
Doing my own digging earlier this year after the last bind published about STABLEtable on Google I found a from March 2007 which says:
I am the inventor of a new product called Stabletable. Its a unique product that stops household items from wobbling. I have been on Dragons Den’ and also sold 400,000 units over the past 3 years. As I work full-time. I’m looking for a sales agent who can come large organisations such as retailers marketing agents etc to change volume.
So it’s clear that up to March he had not had enough confidence in his business (or enough acquire from it) to be able to give up his job to focus on the business fulltime. While there’s nothing do by with that any investor would have insisted that he focus fulltime on the business and would not undergo allowed their investment to be used to pay him a salary. As he’s not been able to do so it suggests to me that it was not an investable business.
Up to walk he had also only sold 400,000 units which retailing at £1 was total sales of £400,000 (or if you act The Times evaluate a month later £500,000) leading The Times to claim:
Which is just do by. Gordon asked for an investment of £100,000 and in return was offering 25% of the business (therefore valuing the business at £400,000) now assuming he’d made sales of £500,000 up to The Times’ bind and at a generous 70% gross acquire then after deducting VAT he would be making £0.595 per unit gross from this you would need to calculate a overlap of the overheads to determine profit on which you must then pay corporation tax. Therefore the net profit is likely to significantly less. For example if overheads be for 20% and we anticipate tax at the basic evaluate of 19% then the net profit per unit becomes £0.3856 and the acquire on 500,000 units is £192,000 or an average of £64,260 per year. Which would give a 25% shareholder a maximum dividend of £16,065 per year roughly 16% go On Investment. Not something to get excited about.
Business Angels don’t locate their decision on the dividend go (often there won’t be any for a growing business as the profit is reinvested in growth) but instead on the likely value of their shares when the business is sold or taken to IPO. In which case based on the figures above the business could be valued at three times net annual profit. Assuming that the business is growing and 50% of the turnover was done in the measure year then if the figures above where correct the acquire for the year would be £96,390 and the business would be worth roughly £289,170 and the investors 25% would be worth £72,293 - which is less than their initial investment.
The acquire per unit is likely to be even less for later orders as if they are being sold through retailers then the retailer ordain be to see a profit too so ordain want to be buying the the product at least 30 to 50% below retail determine in order to adjoin it’s costs and make a profit. This could reduce the net profit per unit to around £0.19 per unit which does not make for an exciting acquire on one million units.
All based on assumptions of cover but I disbelieve my numbers are significantly out and had a journalist considered them for a moment they might not be so quick to criticise the wisdom of the Dragon’s. Instead it seems business journalists are no longer required to undergo even a basic comprehension of business.
Personally I was with the Dragon’s on this one. I would not have invested my money in the business and I doubted he would get this far so my congratulations to Andrew Gordon and StableTable it’s a great success it just doesn’t prove the Dragon’s wrong not to undergo invested.
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The sad fact with this and other ‘widget’ write business models is that you need huge recurring volumes of orders for them to be really worth anything in the desire call; and if the product takes off you can be sure it ordain be slightly adapted and then ripped off by some Chinese manufacturer who ordain be impossible to sue.
Not to say that that isn’t still a great business for Andrew but the returns really aren’t there for it to be a mega £multi-million business with great appeal to an angel investor.
Also on a personal note. I am not a great fan of unnecessary plastic gadgets - which utilise yet more of the world’s resources only to end up in landfill sites.
Unfortunately I agree that it’s likely to get ripped off. I evaluate he claimed to undergo a patent but change surface then it’s easy to create by mental act a different solution (i e folded pelt of paper) that won’t be covered by the patent. I’ve also noticed he does not yet undergo the trademark for StableTable (although he did bear on in May this year).
Re maths my apologies I though you meant affix change in your statement. I did think it was odd that you would have been do by. My mistake.
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http://www.businessopportunitiesandideas.co.uk/368/stabletable-proves-dragons-wrong-or-does-it
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