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Dragon's Den Star Deborah Meaden Warns Of The Dangers Of Underestimating Cashflow

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DEBORAH MEADEN
Deborah Meaden warns start ups not to underestimate how long people will take to pay you | PA

The key mistake start-up businesses make is underestimating how long it takes for customers to pay them, according to serial entrepreneur Deborah Meaden.

Speaking to The Huffington Post UK, the Dragon's Den star said: "The one thing I always find is people underestimate the length of time it takes people to pay them; they'll think if I do the job on day one and I'll get the money off them on day 28 - and they underestimate the amount of cash the business will need.

"Entrepreneurs are optimistic and believe everything will work out, but they consistently underestimate cash flow."

Meaden feels passionately that young businesses are in desperate need of more than just funding help - they need guidance and mentoring to get them through the first few tricky years.

"It's always been the case that once businesses get through their first year, they've got through the great expectations and the momentum's kept them going; but when it comes to the second year when they're supposed to be delivering on their business plan, and they're supposed to be getting into profit, it's now that they start to come under pressure," she told Huff Post UK.

"For me, it's about making sure that these people, who are after young, that they're given the absolute best chance possible to make sure their business comes through this extremely vulnerable period."

This is why Meaden is fronting the Local Business Accelerators campaign for the second year running - the competition invites businesses between one and five years old to enter their details for the chance to win £10,000 worth of advertising in the local press, thanks to a partnership with more than 500 local newspapers.

Around 1,500 businesses will receive support and mentoring from local business leaders through the initiative, but the ultimate winner will also receive mentoring from Meaden for a whole year on everything from developing and delivering a business plan, marketing and public relations, distribution and more.

Last year, Yorkshire-based independent brewer the Ilkley Brewery was crowned the overall winner - in the past 12 months has seen the company expand significantly culminating in securing a listing with Sainsbury’s for its Mary Jane beer and becoming the first regional beer brand to have part of its core range stocked in Harvey Nichols stores across the country.

dragons den

Deborah Meaden has invested more than £1 million in start ups on Dragon's Den

The LBA initiative has been backed by prime minister David Cameron and Mervyn King, the governor of the Bank of England.

Cameron said: “The Local Business Accelerators campaign has provided tremendous support to fledgling businesses across the country and I am delighted that it will be running for a second year.

“Local newspapers play a vital role in their communities and are uniquely placed to support small businesses, giving them the boost that they need to grow, which is good for local areas and good for the economy as a whole.”

King added: “In all parts of the country, I am impressed by the companies that I visit. Exciting innovation and imaginative entrepreneurship are plain to see in many companies. That deserves recognition and support.

And Confederation of British Industries director general John Cridland added: “Regional newspapers provide a unique platform for young business talent looking for new ways to grow and develop.

“The CBI wishes the new Local Business Accelerators initiative every success and hopes that this unique partnership devised by the local newspaper industry goes from strength to strength.”

Research from polling group Toluna found more than 80% of small business owners said they relished the challenges of business but wanted more advice and support.

In addition, 88% of owners confident their firms won’t face financial difficulties in the next 12 months and more than a third (35%) predicted their companies would prosper in 2012/13.

Any business aged between one and five years can enter the LBA competition by visiting www.accelerateme.co.uk – the closing date for entries is 16 November.

Filed by Charlie Thomas