One of the first things I do with clients who are seeking funding is chat through their business idea and ensure it is viable, sustainable and scalable. If a business has too many barriers to entry, is not going to appeal to a wide enough audience or doesn’t have any chance of growth, the chances are that investors will be wary.
With that in mind, and to help you conduct something similar on any business ideas you might be considering, I thought I’d share an example using a popular business I think most of you will be aware of.
Christmas Services Ltd t/a Father Christmas, Santa Claus, Saint Nick
Clear and simple with an attractive colour palette. Although the name varies slightly when used globally, it does seem to translate to roughly the same value set:
- Family friendly
- Celebrates good
The authenticity of the brand needs some consideration. Because of the strong links with the biggest dishonest collusion any adult will ever enter into, this may be called into question.
Action: Gather and submit evidence which proves this is, in fact, a white lie (which we all know are ok).
- Presents for good children
- Lumps of coal for naughty children
- Goodwill to all men
Consider the definition of ‘good’ and ‘naughty’ including examples of what bad behaviour results in the delivery of coal. Customer satisfaction reports seem to imply that most clients recover their behaviour sufficiently to receive presents.
Action: Is the production and provision of coal still a valid part of the enterprise? If so, should the presentation be tailored for a modern generation?
Action: Update service descriptions to reflect modern society – “goodwill to all” is more diverse and inclusive.
The main consideration is the extremely seasonal nature of the business.
Operating ‘but once a year’ may be considered high risk by investors. However, due to manufacturing and workforce constraints it is not clear whether the operation could be scaled while maintaining standards.
Potentially, this is only an extreme example of the bias that many retail businesses have towards seasonal trading.
Action: consider whether service could be scaled to any other occasion annually. (NB: set up negotiations with key competitors; Easter Bunny, all witches, skeletons and ghouls, tooth fairy)
The workforce is seen as extremely loyal and effective at producing the required type of artisan goods that link with the brand. However, diversity is virtually non-existent, with almost the entire workforce being of a single nationality/culture. However, the mass employment of the vertically challenged has been seen to be of advantage to the local population as a whole and certainly assists in bringing in goodwill.
Action: consider recruitment campaign to attract a more diverse workforce. (NB: assess impact of this on elf and safety given size constraints of machinery and factory)
The requirement for 9 months of the year being used to prepare for 3 months’ worth of manufacturing and delivery is unusual. Consideration must be given to whether the workforce remains efficient.
Action: assess workforce capabilities with time and motion study. (NB: Particular reference to CEO who appears to be on holiday for those 9 months).
Finally, consider the overall wellbeing of the workforce, who reportedly work long hours at times. Night shifts should be properly staffed to ensure regular breaks are being taken and adequate facilities are provided for inclement working conditions. Anyone showing signs of illness (red nose, overly hot, red cheeks, or overweight bellies that shake like jelly) should be given a company medical.
The Supply Chain
The original brand USP was for artisanal products. However, in recent years, there has been increasing outsourcing leading to a dilution of the brand values and a prevalence of non-environmentally friendly materials being used.
Attention should be paid to the importance of the brand values and goodwill (of all men) towards the original business plan. Should the outsourced manufacturing be brought back in house?
How has the sugar tax affected profit margins? Have suppliers passed this cost on or absorbed it?
Action: conduct supply chain audit to identify contractors whose brand values do not match that of the organisation; rerun competitions for all contracts.
Distribution & logistics
The use of a non-fossil fuel delivery system is well established and appears to be working well. It might be of use to carry out a survey or surveys to establish whether the production of greenhouse gases (e.g. methane and carbon dioxide) might be seen as a negative and to establish the viability of sustainable alternatives, especially for the lead tractor animal who has his own branding with a red nose.
Are the towing animals at risk of extinction? What facilities are there to ensure regular fleet replacements? Is the red nose a common characteristic or deemed to be some sort of rare throwback gene?
The recent global pandemic has caused some issues for the survival of the business. The brand story has been tested and messaging needs to be clear to all clients: if 2020 doesn’t stop us, then nothing will (particularly because ‘magic’ seems to be the main rebuttal to any question concerning disruption of supply).
However, modern technology is yet to catch up with the iconic delivery system utilised by the business and this is a positive aspect to be included in any sale calculations.
Currently, options for exit are:
- Franchise and assume managerial/brand guardian role (beware quality control of franchisees, many less-than-convincing substitutes have been seen – beards on elastic, cheap wellies, rubbish plastic presents)
- Sale as going concern (consider location of new owner and possible impact on workforce, brand story and general authenticity – Superman will get cold in just tights, Iceman thought to lack empathy)
- Merger/acquisition (difficult to identify sufficiently similar organisation, but possible contenders are:
- Multinational drinks company with really nice lorry but likely not to embody brand values or extremely competitive pricing strategy
- Other cloaked heroes all of whom do seem to have their own battles ongoing, therefore present risk of lack of focus or departure from core business
- Tooth fairy, although concerns on size match mean this business might not be viable option – currently SME with little ability to grow.
So, what do you think? Would you invest?
Wishing all my clients, colleagues, collaborators and followers a very happy Christmas.