Dragons Den Deception

I think you can learn a lot from TV business shows, watching Dragon’s Den last night, I couldn’t help but come to the conclusion that they can be pretty missleading. The Dragon’s appear to base a lot of their investment decisions on ‘business plans’. Duncan Bannatyne is very fond of asking prospective partners, “So what will your turnover be in years 1, 2 and 3. These are people who have either yet to start trading, or have sold next to nothing.

Let me tell you what the true answer to that question is…”I don’t have a bloody clue.”

I’ve been in the same business for the past 20 years and have 20 years of trading data, but if you were considering investing in my business, I still couldn’t give you any reliable projections for what will happen in the next 3 years. I can tell you what I’d like to happen (wishful thinking), or what might happen if nothing changes (it will) but nothing on which you could make an informed decision. So what chance do these newbies have? And if they can’t accurately predict sales, any accurate cost projections they can make are useless, and so is their business plan.

Sales are the great unknown, and even more so when you’re just starting out. By all means put together a business plan if an investor/bank demands it – but don’t believe a word of it. Put it to one side and step back into the real world. Your plan won’t survive engagement with the market. They never do.

The £7,200 Car Wash

Go down to your local disused petrol station , and in all likelihood you can get your car washed by a production line of eastern European economic migrants for a fiver. On the other hand, you could go to Gurcharn Sohota and have him do the same job for you for £7,200.

This is no joke. Derbyshire based Somota can spend up to 250 hours forensically cleaning every last millimetre of his wealthy clients Lamborghinis, Aston Martins and Ferraris, after which they are presented with a bill for more than seven grand. He started his car cleaning business 5 years ago with a bucket and sponge, but quickly discovered that there may be more lucrative opportunities.

Now I’m not suggesting you become an upmarket car cleaner – although at these prices it doesn’t seem like a bad idea – but could you take Somota’s business model and apply it to your business. In other words, is there scope for a super duper, all-singing-all dancing version of the product or service you provide which a small group of wealthy customers would be prepared to pay a hefty premium for? If there is, it could give your business a whole new direction.

That Sinking Feeling

I keep reading about subsidence in the papers this week…

Generally, it’s caused by trees and hedges etc sucking moisture out of the soil. The ground shifts. Foundations start to crack. By and large, most subsidence damage is caused by shrinking clay soil. As an easy check, if you can roll the soil into a ball, it has a high clay content. Halifax Home Insurance offers some good advice…

When buying a property, don't skimp on surveys and searches. Information on historical activity such as mining can be valuable as around 15 per cent of subsidence claims are due to previous mining activity beneath a property.

Tree removal solves 84 per cent of tree-related subsidence claims. Before removing trees, check with the local town planning office that there is no tree preservation order or other restriction as you could be fined a considerable sum for breaching these. If removal is not possible, reduction followed by regular maintenance can be the next best thing.

Cutting down trees can be a dangerous task so if in doubt seek advice on the safest way to do this from the Arboricultural Association - www.trees.org.uk

When planting trees, consider the fact that some species can grow very large and initiate subsidence. The ABI website provides a helpful guide to safe planting distances at http://www.abi.org.uk/Information/Consumers/General/691.pdf

If you suspect a problem, contact your insurer as soon as possible. The sooner the cause is identified and remedied the sooner repairs can be carried out and the value of the property preserved.

Now’s the time to check. With prolonged, drier and warmer weather,  clay soil can dry out and shrink. The larger and closer to the property trees are, and the older and shallower the foundations of the home, the greater the potential problem.

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