Everyone enjoys seeing a so-called expert proved wrong. Especially Michael Gove, he bloody loves it. It’s a particularly British tendency – we don’t like a know-it-all, and we don’t like to see someone become too big for their boots; so when they trip up, we all have a field day. It’s the classic press tendency: build-them-up and knock-them-down.
So it’s understandable that a story in the Birmingham Mail covering just this sort of event has gone viral.
It describes how a Birmingham businessman turned down by BBC entrepreneur show Dragons’ Den has now been offered ‘£90 MILLION’ for his company, health food business Professional Gains.
Marco Hajikypri went on the show last year looking for £125,000 for 5% of his company (meaning that it was valued then, by him, at £2.5 million) , but failed to receive an offer after being pulled up by Deborah Meaden on his claim that he owned the trademark – a letter produced by him revealed merely that he had an acceptance of an application for a trademark.
Now, Hajikypri claims that he has turned down an offer of 90 million big ones for his business, which provides tailor-made fresh meals, with balanced protein, carbs, fat and vegetables, costing an average of £4.90 a time, by a local multi-millionaire.
Marco, from Great Barr, Birmingham, says: “It’s not worth that yet, but the potential investor – Coventry multi-millionaire Jojar Singh Dhinsa – has the vision to see what I could be making in a few years time. Unlike the Dragons… The business is now valued at around £16 million, when the Dragons didn’t even think it was worth £2 million. I’ve certainly proved them wrong.
“I am glad they turned me down now, as I have done very well without their help. I didn’t want their money anyway, I just wanted their contacts, but I’ve worked hard to achieve success on my own. I have turned down the offer to buy the business, even at that huge figure, because I want to build it up myself. I think it’s going to be worth a BILLION pounds. That’s because of my multi-level marketing system which gives people the opportunity to earn money and eat for free.”
And what, pray tell, is this ‘multi-level marketing system’?
Well, when you subscribe to the Pro Gains app, you then get paid a £65 bonus for every time you introduce someone else to the service.
Marco says: “All you have to do is share the app with four people, who each get four people on board and so on. Within three months you will be eating for free and by month seven you should be earning a minimum of £5,277 a month. There’s no contract so you can cancel at any time and you don’t have to get other people involved if you don’t want to.”
Sounds great doesn’t it? A victory for the underdog. Take that Dragons!
But one thing we’ve learned from years of bitter experience – and by looking at Donald Trump’s Twitter account for about five minutes – is: don’t believe everything you read on the internet. A few questions, if we may.
1. That ‘valuation’
Why would someone offer £90 million for a company that is only worth £16 million? Why would you name the person who has offered the cash? No one likes conducting business in public. And why would you turn it down? Oh, it’s going to be worth a billion pounds isn’t it. A billion pounds.
2. That other ‘valuation’
A quick look at the Companies’ House website reveals a company registered under the name ‘Professional Gains Meals Limited’, which was only incorporated on 27 April 2017. It has filed no accounts. In order to be worth £16 million, it would require a turnover of £6.4 million (using a standard 2.5 turnover multiplier). According to Hajikypri, the company began employing 20 people and prepares 7,000 meals a week. At an average of £4.90 per meal, the entire income (turnover) of the company is £1.8 million. And its profit? A lot, lot less than that, once you’ve taken into consideration staff, preparation, packaging and delivery costs. With a very healthy 10% profit margin, you’re looking at £180,000. It’s hard to imagine how a company bringing that in could possibly be worth £16 million.
The company has now expanded to 33 people, so you can charitably suggest, by scaling up, that the income might have grown to £3 million, and the profit to £300,000. Still way short of a £16 million valuation.
3. The ‘multi-level marketing’
This bit – “All you have to do is share the app with four people, who each get four people on board and so on. Within three months you will be eating for free and by month seven you should be earning a minimum of £5,277 a month” – might (might, see below) be theoretically possible, but it’s absolute nonsense.
You do apparently receive £65 when you sign up to the app, but there’s nothing else on the site to suggest how you get paid for referring other people. And, even if this is true, the idea of being paid for people you’ve referred getting other people to refer is, surely, completely unsustainable for the business – each layer of referring would multiply the cost to the business (the third generation of referrals would see three different people being paid when one person signed up). However the mechanic works, Marco is suggesting that people could be earning £63,000 a year in just seven months’ time. If that’s true, and just three people do it, he can wave goodbye to his entire profit margin.
Our best guess? A nice ruse to get some free publicity. Which, judging by the fact that the Professional Gains website has been down most of this morning, is exactly what he’s achieved.
For our money, we’re fairly sure the Dragons will be sleeping easy tonight.