Eky's 2Cents

Wednesday, July 02, 2014

Why Entrepreneurs Should Hate Weddings

As a little boy, I loved attending weddings. It was the one special day in the year that everyone got to have extravagant fun. There were sumptuous amounts of food, free flowing drinks all wrapped up in the ostentatious beauty of a heavily decorated hall splattered with lots of radiant people beaming in their best clothes. 




It was literally heaven on earth…that was until I hit my late twenties and then heaven started coming a bit too close to my earth. This was the period in time where close friends of mine began getting married, from secondary school classmates to college friends everyone was getting married. Even my enemies were getting married. And like anyone going through that period knows, you are hit with a plethora of questions that can be summarized in one sweet and annoying phrase “so when are you getting married?”




This was really not an issue, I had trained myself in the act of neutralizing the questions dwindling effects on my mind. As I said before, I really truly enjoyed weddings. But the problem was that as more and more people close to me began getting married they began sharing wedding planning stories with me. And the more they shared their stories the more it ruined weddings for me. But that was nothing compared to the day a real close friend of mine shared his entire wedding expense with me…It was like the day you found out your parents actually had sex, it was not like you never suspected but confirming it actually messed up your mind. After hearing what he told me, I felt guilty for loving weddings and started resenting society’s illogical obsession with weddings. What exactly did he tell me?


It was his wedding cost. An astronomical $55,000 for a single wedding! And his wedding was one of the simpler weddings I had attended in my short life; So when he told me the figure, I was blown away. No wonder I enjoyed weddings so much it was created from extravagant riches. “How could someone possible spend that amount of money on one single wedding?” I pondered to myself. Now I am not anti-romantic or some weird money conscious individual. I am simply a realist and $55,000 spent on a wedding seemed quite extravagant to me. But even more bothersome was the fact that most people felt that $50,000 was relatively cheap for a wedding! Ironically the 50K figure did not include the wedding ring…which cost an additional $7000. Figures that are driven by phantom wedding laws…for instance the popular rule to thumb is that an engagement ring should cost at least 2 times the grooms monthly salary. Anything less than that is somehow not enough. Other rules state that you have to have an engagement party, followed by a white wedding and in case such as Nigeria a separate traditional wedding. As an ROI (Return on Investment) addict I tend to question these figures. If weddings were actually treated as a business then people will think twice before spending such large amounts of money.


According to the American National Center for Health Statistics (NCHS) about one-third of new marriages among younger people will end in divorce within 10 years and 43 percent within 15 years. But yet people are more than willing to plunge their life savings into an institution that has statistically shown a low ROI. It is like putting money into a bank that you know has a 50% chance of shutting down. This is the reality that is hidden by a wedding industry that pushes the fairy tale marriage wedding that lasts forever. So they convince couples that they should indeed break the bank to fund their once in a life time wedding dream…and couples do exactly that as they are fueled by a frentic media that sprinkles the tales of fairy tale weddings on our TV screens. Weddings of celebrities that cost anywhere from a $1,000,000 to $10,000,000 are forced onto our TV screens and media blogs across the globe touting the notion that weddings should be extravagant. If there was anything that could summarize the craze, it will be none other than the “wedding of the century.”


As recent as 2011, Kim Kardashian was slated to get married to NBA player Kris Humphries. It was a normal celebrity marriage affair up until news got out that Kris had spent a cool $2,000,000 on a 20.5 carat engagement ring. Then the media frenzy and scrutiny picked up…everyone was talking about this wedding and analyzing every single details of their financial expenses. The main wedding ring was designed by Lorraine Schwartz and that too racked a cool $1,000,000. The wedding invitations were created and delivered by Lahr & Black for $10,000 just in case some of the guests were not aware of the wedding date! $400,000 was spent on Perrier Jouet Champagne with  an additional $60,000 for three Vera Wang wedding dresses. The icing on the cake literarily was the $15,000 spent on a Hensen Bakery wedding cake…I crave to know what a $15,000 slice of cake taste like! All in all the wedding was estimated to have cost about $20,000,000 in total and truly lived up to its tag as the wedding of the century. An expensive wedding for a marriage that lasted only 78 days! That is like blowing all your lifesaving in less than 3 months.


What people fail to realize is that Kim is quite an exemplary entrepreneur. So even though her wedding on the surface cost $20,000,000, she was able to leverage her image to get some critical discounts and in most cases freebies. For instance the famous $2 million wedding ring was greatly discounted by Schwartz Jewellry, the $10,000 wedding invitations were sponsored for free by Lahr & Black wedding, the $50,000 bachelorette party was all paid for by Tao restaurant in exchange for free publicity and her 3 wedding dresses? Each of them was donated exclusively by Vera Wang herself. But that is still not the crazy part, E! entertainment reportedly paid her $15 million for a four-hour, two-part E! wedding special. A hefty price that does not even include the additional 2.5 million dollars gotten from People magazine for exclusive coverage of the wedding. So not only did Kim not spend much on her wedding but her wedding was a money generation machine. From the magazine to the media to the wedding industry…everybody profited. The only victims were gullible couples across the globe who believed the hype! Unfortunately, too many people are believing the hype as the numerous front pages of blogs and tabloids fail to highlight the intricate truth behind the wedding. Instead they offer coverage of a fairy tale wedding with smiling faces splashed across the pages of newspapers across the globe further feeding the cycle of mandatory expensive and lavish wedding. Thus causing people to ignore one critical fact that makes Kim way smarter than a lot of us “she ran her Wedding strictly as a business!” Ironically many entrepreneurs are doing the reverse and running their businesses as weddings.


According to Statistics from New Zealand, 53 percent of small to medium-sized enterprises (SME) fail within the first three years. Research also suggests that two-thirds of business collapse is due to financial difficulties associated with poor financial management. Sounds familiar? Then do this replace the word “business” in the stat above with “marriage,” and you would end up with a strikingly similar stat as I shared above except that bussineses tend to fail faster. Figures erringly similar to marriages and all because people are starting businesses like marriages…with a huge expensive wedding!


I have been blessed to work with a lot of new businesses and one of the quotes I love to share with entrepreneurs is one I learnt from my mentor James Malinchak “Don’t Do What’s Cute, Do What Sells.” Renting out a lavish apartment in the middle of downtown is cute…but if it does not cause sales to increase…then it is not smart! Designing a state of the art customized website is cute…but if it does not pay for itself in ways of online sales or publicity then it is not smart! Spending tons of money for radio adverts and TV arts is super cute…but again if it does not generate revenue to offset the advertising cost then it is not smart! These are wedding idea thinking that put new businesses into financial trouble early. At any given time businesses should be focused on the profit margin and not the cuteness margin. Because at the end of the day that is what really determines if your business would survive.


A recent start-up business in Lagos wanted to replicate the US group-on business idea in Nigeria. They were able to raise $50,000 in capital seed money to fund their idea…so they did what every wedding entrepreneur would do…they rented out an expensive office, hired several staff and paid for a state of the art website. The only problem was that they had not spent enough time marketing their business or adapting their business idea to the new market. To them having an office was what every new business should have and hiring a staff an absolute necessity. But with no funds or efforts allocated to researching the market and marketing their products, their business failed within a months. However, if they had started out the same way people like Mark Zuckerberg started out, in a dorm room without an office or huge staff, they would most likely have succeeded or if they failed their financial loss would have been minimal. But all too often, new entrepreneurs focus on the end product of successful businesses and fail to acknowledge the early struggles that preceded their success. Almost all successful tech firms started out from a garage or home. When I decided to build my website Ofilispeaks.com I got several quote ranging from $2000 to $3000 for a customized website, but I realized that financially such an investment would not make sense for me at that time. Instead I opted for a cheaper template design that cost me only $25 (plus sweat and labor) and that website is what I have up and running today. Although it is restricted in many areas, it still helps me get the key things I need to get done. In the future if $2000 customized website makes financial sense for me…I would create it in a heartbeat. But for now I will stick with my cheap but efficient template design.


A similar thing to a blogger I know, who currently makes a living by blogging from her bed all day. Initially when her business began to grow she fell into the trap that I have talked about so much in this article…then need to do what everyone does. So she rented out an office. But she soon found out that she did not really need an office and besides it detracted her from her comfort of blogging on her bed. So rather than stick with having an office just to say she has an office, she quickly abandoned her office and went back to blogging at home. Today she still makes as much money as she did in the office but she gets to keep a larger chunk since she does not have to pay any office rent. So the next time you are faced with a key business financial decision, strive to stay away from the resplendent/ostentatious decisions and instead focus on your hardcore bottom line “the finances.” Because at the end of the day that is what matters. It is not the size of your office or staff or website but rather the size of “customer base” and “profits” that matter. Remember again “Don’t do what’s cute, Do what sells!” Happy married life…


Wishing You Extreme Success,


Source: ofilispeaks.com/

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