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DIVERSITY IN BUSINESS … STICK TO WHAT YOU KNOW In a rapidly changing environment, Peter Savage urges those looking to diversify to trust their head, not their hearts to drive business decisions. by Peter Savage I n a slight divergence from the usual broadcast focused article, this month will explore business diversity and some universal rules that should be adhered to when looking at expansion into new and sometimes unfamiliar markets. The broadcast market is changing faster than ever before and with increased demand for things like multiplatform content it can seem extremely tempting to expand and diversify outside of your core business. To bring what can be a somewhat dry topic to life, I’ll give you an insight into a business which was very close to my heart that I was recently invited to invest in and the problems that occurred through business naivety and good intentions (which are often misguided or misplaced). The business in question was my local pub. It had - along with many others in the trade - fallen on tough times to the point where the landlord actually upped and left overnight owing the brewery large amounts of rent. In all of these types of businesses there are always people who, after a couple of pints to loosen their tongues, think they know how to run the business in question and understand what it takes to turn it around. Locals poured in when the brewery put the site up for sale, up in arms at the thought of losing their pub to dreaded developers. It was a cause I supported. Forget emotion, business rules must apply A pub that has had three landlords over five years - the last handing the keys back with a large debt - cannot be considered a going concern. Its regulars can’t have been as loyal as they claimed and its income must have been far too low for years. customers and cutting their chances of turning the pub’s fortunes around. Many rallied together and raised enough pledges, including one very generous anonymous donor who was prepared to invest a six-figure sum, to keep the community together and save it from developers. As a business owner with experience in setting up and running successful companies I was asked to shed some light on the government initiatives that could help us realise our aims such as the Enterprise Investment Scheme (EIS) that provides tax relief for investors. Know your market We found ourselves in a position where we had money, 15 shareholders (including one with a much bigger stake than the rest), and a collective of pub goers who not only believed that running a pub was easy, but also had their own agendas. In one of my earliest articles for TV-Bay I proposed that the first rule in business is to have a clear blueprint to follow. You need to know what you are going to do and have a concise business plan which – most importantly - details how you are going to make money or, in this case, not lose it all in one go. A prospect of success As the prospect of a successful bid came closer we were still without these crucial aspects. The group - or shall we say the regulars – began discussing in earnest how they thought the pub should look, the characteristics they would like it to have and the type of pub they would like it to be. “Keep it the same, no ghastly gastro,” they said. In the process, other regulars who weren’t involved with the venture left to seek solace elsewhere. It became a sort of “us and them” scenario, where we would own and run the pub and they would pay for the beer. In trying to take over the pub, the committee had made a grave error - alienating their The last straw for me came when a knight in shining armour appeared - a man who had successfully bought and run pubs, had the capital to invest and had a long-standing relationship with the brewery. He wasn’t afraid to make changes to attract customers and encourage those customers to spend money. He had the plans to make it happen and a blueprint for success. Our well-minded community conservationists were outraged at the prospect of their cherished pub changing at the hands of an interloper and sought to raise yet more money to outbid him. Thinking with their hearts not their heads meant that the consortium thought they knew better than an experienced publican with a history of success. As yet, I don’t know the outcome but I fear for the worst for a project that started with well-intentioned people who then, unfortunately, let their hearts drive business decisions without the rudimentary skills they needed to build a successful business in this new market. C M Y CM MY CY CMY K When setting up a business in any industry - be it beer or broadcast – the lessons are near-universal. Have a blue print, build a business plan, do not alienate your customers, make decisions with your head and not your heart and, in my view, stick to a business world that you know and understand. If you would like to know more about diversifying your business to stay ahead of the competition, do email me on and/or write to the TV Bay editor. For more information about us, or to read other articles in this series, look at our website: 42 | TV-BAY MAGAZINE TV-BAY071NOV12.indd 42 06/11/2012 18:09