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.