Magic Whiteboard is a rare thing. It not only secured funding on Dragons' Den and actually received the money, but last year it also returned triple the original investment to it's backers.
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Neil Westwood, CEO of Magic Whiteboard, one of the most successful entrepreneurs to win investment through the TV show Dragons' Den, admits he had sleepless nights after deciding to buy back shares from Theo Pathitis and Deborah Meaden.
Describe Magic Whiteboard and how it came about?
I was working in training for the NHS. Much of my work involved traipsing from one presentation to another, carrying a rather unergonomic flip chart in my wake. I thought there must be an easier way to make presentations and came up with the idea of Magic Whiteboard.
Basically, it’s a roll of A1 whiteboard sheets that will stick on anything thanks to static. Myself, and my wife Laura, set the business up back in 2006 once we knew we were on to something.
Why did you decide to go on Dragons' Den?
Although we were doing well, both our backgrounds had been in the public sector. As well as an injection of cash, we needed mentors who could help us take the business beyond being a successful regional company.
What was the experience like?
We were thrilled to leave the Den with an investment of £100,000 split between Deborah Meaden and Theo Paphitis. In return, we handed over 40% of our business.
We were both really impressed with their expertise and experience. In the end we went with them because we felt they would help us to achieve the fastest growth for the business.
Theo owns Ryman Stationery so thanks to him you can now buy Magic Whiteboard on the high street at a local Ryman Stationery store or online.
What are your tips for pitching for investment?
You have to describe your product or service very clearly and don't waffle. Be honest and don't lie or mislead your investors. State clearly all of your costs and how much money you will make.
It's important to work out what you're gonna say well before you get here
What is your best advice for people starting and building a business?
My best advice is to think about the market size, are there enough customers to make any money? Also keep your costs low, if it doesn't add value to your business, don't waste money on it. Finally, I would say, increase sales and also make sure people pay you on time. Cash flow is essential and also remember you need to make a profit.
What is behind Magic Whiteboard’s success to date?
Simplicity. Our products provide a simple solution to make people’s lives easier. They’re straightforward to use and do what they say on the tin.
We have the same ethos regarding the way we run the business. We don’t spend a lot of money on large, sleek offices. We keep overheads low and run the business with a small staff.
Why did you decide to buy out the Dragons?
Having increased sales from £45,000 to £1.2 million a year, and consistently delivering healthy profits, we decided to ask Theo and Deborah to sell back their shares. We wanted give our children, Ella (8) and Morley (5,) the shares to secure their future.
How did it make you feel?
I will always remember sending over £300,000 (having checked the sort code 10 times to make sure it was correct) to both Theo and Deborah from the Lloyds Bank desk in Worcester, just like I was paying a gas bill.
Their share certificates were posted back to us and that was that. I was surprised how easy it was. Ryman continue to stock our full range of Magic Whiteboard products. We now get to keep 100% of the profits, which is a great incentive to work hard.
What are your tips for dealing with investors?
Investors need to feel their investment is safe and delivering a good return. Answer any questions investors have honestly and quickly. Provide regular updates to investors about sales, costs, profits and how you plan to grow.
How have the last six Dragonless months been?
Having taken the big decision to buy back the shares, I then had to focus on increasing sales and cash flow. It was an unsettling 3 months, but it has proved worth it.
Six months later, sales have increased thanks to new products such as the reusable Magic Notebook and the Magic Blackout Blind. Cash flow has increased and is back to normal, and confidence is high.
Magic Whiteboard is targeting new markets in France, Spain and Germany. The products have recently been taken up by 142 Tesco stores, and continue to sell strongly online with Amazon.
We’re just about to start a major education programme for primary schools in the UK too to encourage young children with their literacy.
And we’ll never stop inventing new products to provide simple solutions.