Christmas is a bust for Lawrence Llewelyn-Bowen – But how can new ventures be a success?
Lawrence Llewelyn-Bowen’s Birmingham based Christmas company Magical Journeys Limited has been placed into Liquidation owing creditors approximately £875,000.
The festive attraction closed down shortly before Christmas amongst a barrage of complaints from angry parents who questioned it’s magical status due to cheap unwrapped gifts being given to the kids and for suffering long queues.
The directors attributed the Liquidation of the Company to a combination of poor weather, bad publicity and higher than anticipated ticket sales. Well with excuses like these, I think that Lawrence should stick to interior design (wait, I have seen changing rooms and I am not certain he’s good at that either). Nevertheless, the Christmas spirit certainly wasn’t there in December this year for the West Midlands parents inflicted with this debacle.
I am certain however that where this company has failed other can succeed as a well run seasonal attraction can bring joy to many whilst also being very profitable. Therefore entrepreneurs should not be put off in giving it a go.
Here are my top 5 tips on how to make new ventures a success:-
- Cash flow – Always ensure that you are properly funded as it is very rare for a new business to require very little funding. Directors should produce cash flow statements which forecast future income and expenditure and always be pessimistic on sales and add in contingent costs so that the worst is planned for. Continual management accounts on actual results is also a must.
- Research – Try and do extensive market research so that the demand for the product of service can be accurately gauged. The more of this done the more likely that you can anticipate the actual sales volumes you will receive and plan ahead for coping with these amounts of sales.
- Pricing – Always ensure that you price accordingly based on the quality of the product or service in comparison to competitors and the expectation of your customers. It goes without saying that if you give a poor service but charge highly for it then this will not bode too well. It is far better to make less money initially but to grow steadily year on year due to repeat custom as there is less risk of failure. Also be certain that your prices cover all your costs including your fixed costs to ensure that you do not trade at a loss.
- Drawings – Do not take too much out or spend away your profits on frivolous luxuries because it is the downfall of many if sales are less than anticipated in the second year or if you haven’t put enough away to pay your taxes.
- Focus on what you are good at – If you keep to your strengths and employ specialists to do the things that you are not good at then you will find that less mistakes will occur, you have more time to achieve the desired sales and often cost savings can be made (particularly if your weaknesses are the figures and accounts because a good accountant is worth their weight in gold).