It seems the fascination of the British TV watching public continues with two new business programmes just launched. Million Pound Menu, which I have yet to watch, looks at serious business propositions for new restaurant chains looking for big money investment, whereas Karen Brady’s “Give it a Year” looks at the small end of the business spectrum, with assessing micro-businesses and how they have developed during a year, which we see all in the space of 10 minutes. For me, there is not enough detail on “Give it a Year” and we do not have enough information to make the programme interesting for business owners. A whole programme devoted to one business rather than two would make for better watching.
However, one recurring theme is obvious. The businesses that have done well during the year are the ones that are prepared to take a risk. Those playing a safe game have achieved far less. I meet several people each year who are never going to achieve anything at all because they are too risk-averse. Calculated risks are necessary to make a business prosper. That is one of the reasons people say that behind every successful business there is at least one failure. Last week I was in Switzerland and met someone who had launched a brand and yet had not reduced her working hours for another company. She wanted to give all her profits to an animal charity. What was going through my head as I talked to her (but did not say it) was why did you just give away the money you have spent developing the brand. The animal charity would have gained a lot more. If people are not prepared to take a risk as they start their business a) they will not be hungry enough and b) why should I take a risk on a new brand if they are not doing the same?!
So, risk is important, but it needs to be calculated risk. As I alluded to in last week’s piece, there are companies in the market at present that are, in my opinion, taking risks that are not calculated. There is only a finite period that producers and wholesalers can ‘buy’ business by offering silly prices to retailers that are unsustainable. Whether the initiative is coming from the buyers or the suppliers, it only has one ending if the risk is not calculated. We have already seen several businesses within the sector come to a sticky end within the last 6 months. When you are working on tiny margins, there only needs to be something go wrong that needs finance to sort that can send companies like this over the edge. If it can happen with a company as large as Bibendum, it can happen with much smaller operations too. The warning signs to suppliers and customers are usually obvious for a while, late payments and poor service. As I have mentioned before with both the significant bad debts we have had this year, the warning signs were certainly there very clearly with one of them. So if you spot the signs, do not delay, do something about it now.
Meanwhile, enjoy the summer, which seems to have already lasted longer than last year’s. Both farm shops and garden centres are reporting record sales across the UK. Happy summer days!