The Business of risk – Wedding Academy January edition

“It’s impossible,” said pride.  “It’s risky,” said experience. “It’s pointless,” said reason. “Give it a try” whispered the heart.

Quote Unknown.

 

Having set myself up in business, just under two years ago, I firmly believe in taking risks.  But, finding your niche and believing there is a gap in the market for you and your product or services, isn’t easy and comes with some sleepless nights.

First comes courage

Having found the courage and taken the plunge, despite having an amazing career to date, it is one of the most rewarding things I have ever done within my professional life. However, what was important to me, was that any risk, should never be at the jeopardy of my reputation, as that was what I intended to found my business upon.  Secondly, it could not threaten the relationship with my husband, the single most supportive person I know and trust.

So, now, as a niche wedding venue consultant, when meeting venue owners and discussing their desires and aspirations to successfully grow their business, I talk openly about risk, applying the same principles to their business, as I would my own.

Firstly, I explain that, no matter how big or small the venue, taking risks and achieving growth, go hand in hand.  Then I make it clear that if they do nothing, they will gain very little and that in fact is a risk in itself and could result in them losing market share.  Then, I make it clear, that when taking risks ideally they need not only the support of their financial backers but importantly, also their nearest and dearest.  Finally, I make it clear that any risk must never compromise theirs or the reputation of the venue, as this is essential to their survival in the marketplace.   In this age of social networking and other methods of instant communication, venue owners must be protective of their reputation and be ready to respond to any crisis that may happen during the investment, that could, unfortunately, have an immediate and long-term negative impact on their business – as the loss of trust and confidence of couples can have a direct and profound effect on a venue’s bottom line.

Why take risks?

Before undertaking risk I recommend venue owners should consider their own resilience, perseverance, judgement and vision, as these are crucial qualities essential for determining personal and business success during, what can be, stressful times.  Before undertaking risk they should assess their own knowledge and skill set, and if they don’t have the experience then buy in that experience, in the form of a professional coach, or consultant, as mistakes can be costly.  Prudent, planned expenditure, on sound advice, is better than costly mistakes, that can have a long term negative effect.  They must also carefully consider the underlying motivator; vanity risk-taking or “nice to have”, are unacceptable reasons to me, as they can undermine profit.  So they need legitimate reasons to take risks.

 

Risk motivators, for venue owners, might include, the desire to:

  • increase profit margin – investment could enable a venue owner, and their existing team, to effectively manage more than one wedding a day, so radically increasing profit margin
  • increase capacity – market research and consumer trends might have revealed that the venue’s capacity no longer meets couples needs or expectations, so expansion is a necessary risk
  • convert into an all year round wedding venue – the venue owner no longer wants a seasonal venue but one that can deliver weddings all year round
  • increase market share – the owner could acquire another wedding venue and could capitalize on their existing business model, for example, already having a strong sales team, and, if there are already weddings on the books, could result in immediate cash flow into the existing business
  • differentiate from competing venues – perhaps the market is becoming saturated and the venue’s unique selling point (USP) is being undermined
  • improve their technology – with couples increasingly researching venues online, if a venue owner hasn’t continually been investing in their website, they are likely to be losing revenue
  • better support the business through a secondary business – perhaps not having any or little onsite accommodation is putting couples off booking the venue, but there are outbuildings ripe for development or land that could be developed
  • react to couples’ feedback – if venue owners collate feedback (from post-show arounds who didn’t go on to book), it might be really obvious where investment is needed to transform the venue.

So how can venue owners ensure they are making sound risk-taking decisions?

When innovating, the level of risk can be mitigated by ensuring that all possible calculations have been made to evaluate whether it is the best option moving forward.  An example for a venue owner would be around the company’s cash flow.   When diverting monies to a project they must be sure they have sufficient funds to meet both the project costs, but also, its ongoing financial obligations.  So they need a good business plan; an accurate and up to date cash flow, strong financial backing to maintain liquidity, as well as a realistic forecast on how long the investment will take to payback.

Another consideration for venue owners to bear in mind before investing, is that couples, on average, book their weddings 18 months in advance.  So if an aspect of the risk means that the venue could be disrupted both physically and visually – venue owners need to factor in, when the work is best undertaken.  For example, owners need to ask themselves can they continue to deliver a quality service whilst the works are being undertaken?   If there is any doubt they should then consider when will it be least disruptive to their current booked couples (as this could have a negative impact on their reputation), or might it negatively impact on potential sales, so effecting revenue negatively?  The final stage is to consider a pricing strategy, such as a compensation strategy for existing couples or early-bird discounts for new couples.   Fundamentally, consideration must be given to anyone (including staff and suppliers) that the changes might have a negative effect upon, as if not taken seriously, this is how a venue can lose its good reputation!

 

Once a decision has been reached to take an informed financial risk, what are the next steps?

Wedding venue owners operate in a highly competitive market,  so once a decision to implement change has been agreed, I recommend that venue owners need to, for example:

  • draw up a timeline, set benchmarks and realistic deadlines
  • constantly evaluate and assess the project, to ensure it is in line with the original goal, and if not then quickly adapt and refocus
  • put a contingency plan in place
  • put together a marketing plan, to ensure existing and future couples are communicated with effectively and transparently, to help increase trust
  • focus on controlling potential negative outcomes
  • communicate and train staff, to ensure they are well briefed and are delivering the right message.

 

However, venue owners should also understand that when risk-taking, sadly, mistakes are (almost) inevitable, but the lessons learnt are critical to future success.  So, to help conquer the fear of risk-taking, I recommend, they take measured and informed steps, and work hard to prevent any damage to their reputation.  By correctly managing the business of risk venue owners can reap the romantic rewards of investing in weddings.

 

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