Thursday, 30 August 2007

Vanity vs Sanity

Some comments just come back to haunt you - and none more so than my 'I think it's a ridiculous idea' comment on Series 1 of Dragons' Den, made of course in relation to the 'StableTable' anti-wobble device which has just been back in the news in the past week, allegedly having won a 'million pound order' from the States.

What has been interesting about all the stories, lead by an initial piece in the Times by Steve Hawkes, is that they all focus on the topline figure - yet nowhere has anyone bothered to ask the fundamental business question of how much profit has been made along the way.

It reminds me of the time Red Letter Days won a deal 'worth £2.6million' with Sainsbury's to supply them with a bespoke experiences range. We PR'd that one from the rooftops too, and yes we gained lots of great PR coverage. When the consignment (which had been supplied on sale or return) winged its way back to us less than 12 months later - and we had to issue a refund cheque for £2.3million - we were a little less mouthy in the Press.

Once all the bespoke manufacturing/fixture/design costs were totted up, we were sitting on a loss of c£250k, not to mention a skip full of unusable scrapped merchandise.

It all goes back to the old business adage 'Turnover is Vanity, Profit is Sanity'.

However, to me what is most scandalous is that here we have an apparently leading business journalist creating an article for what is still an influential, opinion forming leading business title, who didn't even ask basic screening questions in researching his piece regarding these small factors of manufacturing/supply cost, deal terms and underlying profit. I know because I directly asked him when he called me for a statement on the story - on which I was also misquoted. Here's the statement I actually issued:

"Re: Stable Table, from memory we recorded the piece back in September 2004 and Andrew was asking for something like a c£100k investment in return for a 25% stake in the business (which would have valued his business at that point at c£300k). While it is great that Andrew has persevered with his invention and just received a £1million order, 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 return for £100k, especially as the figure represents turnover and not underlying profitability (after manufacturing costs and overheads)."

It may help readers to know that the journalist in question formerly worked on the business pages of The Sun (not normally known for its thoroughness or integrity of reporting); the worrying thing is that it sends the message to businesses to keep chasing splashy headline number deals without understanding that big retail deals can be very expensive to service as well as low margin, and often also come with a huge sting in the tail - if you don't look after the sell through.

Anyway, just to end on a positive note, I received a really sweet email from Andrew today (the inventor of the StableTable) to apologise for the negative comments in the Press and to say how he had also been misquoted...

Par for the course when it comes to mainstream media I'm afraid Andrew.

Perhaps that why sales of newspapers are declining - while the amount of news circulating via blogs and open forums (comments made by real people with real experience, and no editorial axe to grind) are mushrooming exponentially.

Tuesday, 21 August 2007

Thanks but no thanks, Dragons...

Bravo to Maks for declining to appear on the next series of Dragons' Den to obtain funding for her Wu-Chi skincare range, by way of the following email she sent to the production team:

Dear ****, Thank you for contacting us with regards to possible consideration and participation for series 5 of the Dragons Den investment opportunities. Although we welcome investment, partners and growth in our business, we do not believe that this programme is the way forward for us. We are realistic, determined, passionate and committed to the Luxury, Ethics and Quality of our Natural & Organic handmade skincare company and do not want to be caricatured or seen otherwise having watched the programme on a few occasions. Thank you very much again for the invitation.

How refreshing to just 'say no' to the Show - rather than appear, and then spend the next few years whingeing to anyone who will listen about 'How I was mis-treated' or 'How the Dragons made a Big Mistake not investing in me' - in the hope of just a little bit more desperate free publicity for your business.

If you seriously need investment for your business, Dragons' Den is probably the last place you should consider.

It's a BBC primetime entertainment show - and YOU are the entertainment - in case you didn't realise that already !!!

Sunday, 12 August 2007

Cheap - but at what price?

The front page of today's Sunday Times reveals that at least some of retail tycoon Philip Green's vast fortune is coming from the exploitation of Far East Workers, who are being paid as little as £25 for a 70 hour week to produce the latest Top Shop fashion ranges.

Elsewhere in the same paper, we read that accountants Grant Thornton have just brought out a report showing that the major supermarkets are abusing their powers to put food suppliers under.

Personally, I don't think the blame lies with Philip Green or with Tesco et al. There will always be capitalists ready to take commercial advantage of any situation.

The blame actually lies with us as consumers.

While we continue to opt for cheap cheap cheap, the 'alphapreneurs' will be more than willing to supply it.

Whatever the (human) price.

Friday, 10 August 2007

In Praise of 'The Week'

Seems like an eternity ago now, but last December I was a guest on Evan Davis' Radio 4 show 'The Bottom Line ' - along with the charismatic Felix Dennis (founder of Dennis Publishing and author of the brilliantly written and highly entertaining book 'How to Get Rich') and the ultra-healthy, ultra-handsome Bill Jordan (who created Jordan's Oats).

After we had recorded the show, Felix was most insistent that we all receive a free subscription to his latest mega-success title 'The Week'. He said he had no problem at all giving the subscriptions away - on the basis that the publication was 'like heroin'.

Once hooked and we would all be addicted forever.

And so, every Saturday morning, my copy arrives full of the last week's news - a kind of 'briefing-note' style round up of all the best media articles and comment on all the major stories that have unfolded. It takes an hour or so to read from cover to cover and is an absolute boon for someone like me - who gets her headline news via the internet, TV and radio, doesn't have a daily commute and only picks up a daily newspaper on plane or train trips.

And so, yes Felix, I am now hopelessly addicted! I also have a horrible feeling that my subscription is about to expire and thus dread the day when I go down to unlock the post box and find that my issue isn't there any more...

Not surprising then that The Week is one of media's great success stories of recent years - almost entirely through word of mouth and viral marketing - at a time when other publications are dwindling.

I thoroughly recommend that you get yourself hooked.

Monday, 6 August 2007

How To Create A Vast Fortune, In Three Easy Steps

One of the greatest luxuries of my new existence is having the time to read all those business books that I have seen reviewed or have had recommended to me.

Two I've just finished (hey, I know I'm way behind the game here - both were released back in March) are Richard Branson's latest update of his Screw It, Let's Do It and The Tao of Warren Buffett , a collection of Warren Buffett's reflections on investing - which led him to become one of the world's wealthiest men.

There are now hundreds of books on wealth creation out there, all promising to reveal the magic 'Secrets of Success', but to save you a little time and money, here's my 5 minute simple guide:

1) All great fortunes are built on GIVING great value

...whether through creating companies which give customers brilliant products, fantastic services or unforgettable experiences (like Branson), or investing in them (like Buffett).

The judge in this process is always The Customer - whose perception is your only reality - so if what you're offering isn't turning them on (or enough of them on), then you need to change what you're offering until it does.

[There are virtually no exceptions to this rule, apart from a few dotcom millionaires. Then again, if you think about it, the commodity the dotcoms were selling which made them rich was actually the SHARES in their companies, which their 'customers' (the investors) held the perception would make them very rich. The promise of quick wealth is, in itself, a very seductive product... even if totally illusory.]

2) Most fortunes are built on 'One Big Thing'

Branson = Virgin, Gates = Software, Sugar = Electronics, Murdoch = Media. Even Buffett admits the majority of his vast fortune was built on major investments in just 10 great US companies. The moment most entrepreneurs start to diversify is the moment they tend to run into trouble. The problem most entrepreneurs have is that they throw off an idea a minute and consequently spread themselves far too thin. You're far better to choose the one thing that really turns you on - and then focus, focus, focus.

3) It takes time...

In Branson's case, probably at least 20 years until he really got past the point of worrying about money - according to the book even his purchase of Necker Island was highly leveraged. In Buffett's case, he always played the longer term, buying vast tranches of stock in great companies when they had fallen out of favour with the stock market and holding them often for over a decade while the market corrected itself and the underlying value continued to grow.
Take a look at The Rich List and you'll see that the vast majority of those included are 50+.

By the way, three small corollaries to the above:

- Many of those Rich List 'businessmen's' fortunes were not based on business at all - but on the underlying value of the property contained within their companies' balance sheets. Probably not such a great bet now, but over the long term, property is a great base upon which to build your wealth.

- Most of the people who you think are wealthy, aren't really wealthy at all.

- Most people who achieve great wealth see that it's all an illusion - and end up giving it away anyway.

So, to me, the more I read the more it reinforces one great fact: don't chase money; spend your time in business doing the thing that you love - and everything else will come to you naturally in the end.

Have a great day!


Friday, 3 August 2007

The Power of Rubber

I was amused to see that research undertaken by Abbey Business amongst Britain's SME Bosses reveals that 3% would choose me as their mentor - ahead of current Dragons Theo Paphitis and Deborah Meaden, who each scored 2%.

While I would love to think that this was a result of my all-round skills in entrepreneurship and excellent business acumen, I suspect it has more to do with THAT picture of me, dressed in rubber astride a red Ducati motorbike.

Just think, if the Dominatrix pics which were shot at the same time had ever been released, I could be rating ahead of Duncan Bannatyne :-)

Have a great day!