Business Lessons from a Rock Concert
by Gareth Cotten on 11/06/10 at 12:00 pm
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Having gone to the Masters of Rock concert at GrandWest Casino last Tuesday night – featuring Wishbone Ash, Uriah Heep, and Deep Purple (all big in the 60’s and 70’s) – I couldn’t help but be reminded of a few pertinent business lessons:
1. Target baby-boomers if you can.
If you haven’t heard the phrase before, a ‘baby boomer’ is used to define the group of people born between 1946 and 1964. Having been born in the post-WWII period, they represent an above-average burst of population growth, and thus form an outsized ‘bubble’ of consumers. It’s been said that all one has to do to make money is to target this particular group of people, as the sheer size of the demographic will make up for a number of weak spots in your business model. This group is currently in the approximate age band of 46 to 64 years old – incorporating a period when most working people are at the pinnacle of their working and earning lives. They are also often in a position of no longer having to support their grown-up children, and thus have large amounts of disposable income. Importantly, they are now in a phase of life where they are looking at retirement, and major trends are resulting from this (just look at the number of old-age homes and retirement villages built lately, and the amount of marketing pumped into them as compared to before).
2. People will always spend money on leisure.
People always ask me why I want to be working in a business where the other people are having a good time, but this truism is the reason I’ve been involved in so many businesses in the leisure industry. The world works off a system of balance. With people working harder these days than they ever have before, they also want to play harder (and are happy to spend money doing so). This also ties into another business mantra I follow, which is to never get involved in industries that are ‘grudge purchases’. So, you’ll never see me selling fuel or insurance – I’d rather be the one people are happy to pay for a positive, memorable experience.
3. Everybody wants to relive their youth.
And I mean everybody. Why do you think clothing trends repeat themselves in cycles every so often? How can music artists still make money re-releasing the same album for 30 years? People want to go back to the carefree times of their lives – before the mortgage, before life insurance, before too much responsibility – and any business that taps into this is onto a good thing. Tied to this is how much people are prepared to pay to go back to feeling young – look at the boom in gym memberships, exercise fads and plastic surgery. There’s a reason the health and wellness industry is now seen as the second-biggest industry in the world.
4. Know where you make your money.
While I’m not privy to the casino’s financial breakdown, I have a strong feeling that they didn’t make much money from the actual concert itself (after three big-name acts, and paying for the rigging, equipment, etc). They could well have used the actual concert itself as a loss-leader. Where they made their money was from the directly attributable value-add services – alcohol and snack sales from the in-house vendors and booths had some pretty sizeable margins, and were absolutely pumping; thousands of extra cars paying ten bucks a pop for parking – and then from overflow of people moving onto their casino floors before and after the event (their core offering, and definitely a profitable one). The lesson here is to know where in your business you actually make your money, and focus on swelling those areas.
5. You can learn more from people on the ground than from management.
If I ever want to do some research on a business or a business model, the last people I speak to (if I even speak to them) are the managers and executives. If they even entertain your request for a chat, they will generally give you a diluted, sanitized version of what you’re looking for. This is fair enough, though, as they want to protect their trade secrets, and wouldn’t want any Tom, Dick or Harry replicating their business model. To find out the really juicy bits about a business, though (like margins in a specific business unit, internal hiccups, major customer complaints, etc), speak to the lower-level managers and people on the ground. With subtle, pointed questioning, you will see that they know more than they think they do, and they’re not quite as tied up by secrecy and loyalty to the business as those in the higher echelons. At the concert, there were two epically long queues to get in the main entrance, and I had no intention of joining either one. So, instead of asking the security supervisor at the main entrance (who would have just told me to join the queue), I struck up a conversation with a shuttle driver, who mentioned in passing that there was a smaller entrance in the underground car park which was opened for big events. It was only a small thing, but it turned a 45-minute wait into a 45-second one.
6. Always have an exit plan.
One of the main issues about going to staged events like this is the logistics. People arrive over an extended period of time, reducing the traffic and queuing effects, but everyone leaves in one shot afterwards – making getting out a nightmare. We got around this by buying a prepaid exit ticket – this allowed us to skip the maniacal queues waiting to pay at the ticket machines afterwards, and head straight for the exit. The lesson then extends to business: Whatever business you’re in, know how you want to get out at the end, and plan for it. Do you want to build it up and sell it off (are your systems strong enough to change ownership without disruptions)? Leave it to your heirs (do they want it)? Have it run by your employees, and draw a monthly income (have you identified who could run it in your absence)?
Gareth Cotten is one of the growing breed of SA entrepreneurs with that ‘world-domination’ look in his eyes. Gareth runs the coaching and consulting practice 'Good Advice'. Gareth is also the 'course convener' for the University of Cape Town (Law@Work) Start and Manage a Small Business course and the University of Cape Town Basics of Financial Management course. View more articles by Gareth Cotten.
Tags: business, business tip, Business/Finance
