All posts in August 2019

If you’ve been thinking of opening a wedding invitation business, let me just say, Do It! It’s very easy to do and, depending on which way you decide to go with your business, the start up cost can be as little as a few hundred dollars.

There are three types of wedding invitation businesses. The first type, where you work as a manufacturer’s representative, is probably the least expensive in terms of start up costs, and also probably the easiest way to get into the business, especially if you’ve never had your own business before.

In this business model, you simply sell the manufacturer’s ready made cards, you act as their representative in your area. They provide you with samples and order forms, and there’s usually some type of training or support system in place to help you when you have questions. Although there may be some small investment required to get sample books from the manufacturers, you don’t have to invest in any stock or supplies with this method.

If you’ve never sold wedding invitations before, this is a good way to start. All the work is done for you. The invitations are already printed and packaged, the order forms are already created and the pricing is already set by the manufacturer. All you have to do is sell the invitations and you earn a commission for each sale from the manufacturer. This way, you can concentrate on learning how to run a business, and the ins and outs of selling wedding invitations, without investing any of your own money.

Another option you have is to sell Bespoke. These are invitations that you create yourself from card stock, pretty papers and embellishments like ribbons and pearls and flowers. This type of invitation business requires the largest investment of time and money, usually $1000 to $3000, but also has the largest profits because you can set your own prices. And if you’re the artistic type, you’re creations can command a very pretty penny. This business model, though, requires that you have more than a basic understanding of business because, since you’ll be making the invitations yourself, you’ll have to know how to control your costs and how much mark up to include in order to make your business run profitably.

The third type of wedding invitation business, which is the best method in my opinion, is the combined business. In this case, you sell sell pre-made blank wedding invitations and stationery, that you get from a supplier, and you finish it off on your home computer. With this method, you’re not working for a manufacturer, you’re purchasing the blank invitations from a supplier. The cards are already decorated on the outside, all you have to do is print inserts for the invitations and other assorted cards, and then put the inserts inside the invitations.

Opening a wedding invitation business that concentrates on selling the combined invitations is really the best way to go because you have very little initial investment, only the few blank cards that you want to start off carrying, and you get to set your own prices. While not quite as profitable as selling Bespoke, this method is more profitable than if you were a manufacturer’s agent.

Maximising value when selling a business can often mean selling to a customer or competitor and with the current market conditions as they are the return of the trade buyer has made this situation even more likely. Competitors are often the ones who are prepared to pay the best price, but this raises a number of tricky issues and careful management of the sale process is critical to achieving the right result.

Research, research, research
The value of research cannot be underestimated s, with the initial research playing a major role in the sale process and final outcome. The first step when selling a business is to prepare a list of likely buyers. Potential candidates need to be identified by in-depth research of the market the business for sale is currently operating in. This includes speaking to the major players, using the contact networks of the advisors and shareholders and utilising the international networks of corporate finance specialists to determine whether the likely purchaser will come form overseas. The next step is to agree a shortlist of parties to approach.

It is important to understand the strategies of the potential buyers, in particular their M&A plans. Some of this information will already be in the public domain but pre-screening buyers is an important step. The pre-screening process will involve speaking to, or meeting with, potential buyers to reach an understanding of their specific plans. This may even extend to asking questions relating to the area of the business that is for sale though not disclosing who the client is at this early stage

Understanding the key selling points of the business for sale and matching these to the strategies of the potential buyers is critical. There are key questions that need to be addressed at this time. Who is the business worth most to and what are the potential synergies available to the buyer – both sales driven and cost driven? Is there a gap in the potential buyer’s strategy, in terms of their product lines, market segment or geographic coverage that could be improved by acquiring the business that is potentially for sale. Which competitors would find the clients business attractive to buy, perhaps because it would rather own it than compete with it?

Lastly, it is important to understand the key individuals who drive the potential buyers business. Are they longstanding players? Perhaps they have a track record of buying and building businesses. Will they be able to gain support within their organisation to get a deal done?

What we often find is that the ultimate buyer is one of the first names on our list of potential buyers because it tends to be a competitor or a customer who ultimately sees most value in acquiring a business.

When Catalyst worked closely with a heating and plumbing equipment supplier the buyer was its major competitor.

The deal was quite a delicate one because we had to let the other side look at the details of the business but we could not reveal everything in the first instance. It had to be handled extremely sensitively.

The business was finally sold to its major competitor the outcome being a successful result for the vendors of the business who achieved an excellent price. The fit of the business with its major competitor made perfect sense but it was important to ensure that an advisor we understood the sensitivities of the deal without losing the buyer.

Tactics
In a transaction such as this you cant rush in and declare your hand too quickly when you are selling to a competitor and the same applies when selling to a customer. The first step is to prepare a tightly worded confidentiality letter which protects the client from potential buyers using information they learn from their discussions with you. This would include preventing them from using such information to target staff and customers, for example.

it is also imperative to hold back sensitive information until the last minute. Customer information is one such area, as it is vital to head off any attempts by the acquior to approach the customers of the business that is for sale until late on in the sale process. It is also at this stage that it will be important to make sure that there is a synergy between the two businesses. It should be clear that the two cultures are going to be a good fit and that all of the key individuals will be happy in their new roles.