For many viewers, one of the most enjoyable aspects of watching Young Apprentice (and its parent) is the way we can see the teams’ mistakes unfolding in front of us, sometimes before they even happen. Of course, the candidates are having to work in highly pressurised situations, and there are many thing that can go wrong. Even so, it is usually possible to predict in advance where the key errors will occur.
With that in mind, here are my pre-episode thoughts ahead of tonight’s floristry task as to how it will be won and lost.
The task
This week’s task is a variant on a tried and trusted Apprentice favourite. The teams are given £800 to start up their own floristry businesses. Each must pitch to three corporate clients for potential contracts, and also spend a day selling to the public.
This is one of the tougher tasks the candidates are asked to do, as it tests a number of different facets of business ability. They have to sell in a market-trading style as well as making pitches to businesses – two different skill sets. Pricing and product mix are crucial, as is the ability to judge the end-of-day ‘dumping’ strategy to generate vital last-minute sales. And they also need to run an efficient factory operation which churns out the desired volume of products with minimal wastage.
Consequently, there is plenty of scope for things to go spectacularly wrong, as we have seen many times in the past. The team which gets most of the following five aspects right will win tonight.
1. Pricing is critical
As in the opening frozen treats task it is important to resist the temptation to go too low on pricing. As with ice cream, flowers are typically a high margin product because they are perishable in nature. Even so, pricing remains important.
For instance, let’s say both teams invest their £800 in a range of flowers which cost them an average of £1 each. Team A sells their flowers at £2 per unit, team B at £3. To break even, team A must sell half their stock (£400 at £2 each) and can only ever achieve a maximum profit of £800 (£1,600 sales minus their £800 fixed costs). Team B only needs to sell 267 units at £3 to cover their costs and can achieve a maximum profit of £1,600 – and need only sell 534 units to surpass team A’s ceiling of £800.
Of course, team A’s lower price makes it likely that they will shift more flowers, but this task is won on profit, not volume and flower-selling is not a particularly price-sensitive market. This puts team B at an advantage – and, of course, they have greater scope to adjust their pricing if sales are sluggish early on.
2. Winning the contracts can be a bad thing
Winning contracts provides guaranteed sales, but if it is achieved by a win-at-all-costs approach it can prove to be a suicidal move. This was demonstrated clearly in the identical bakery task in the 2010 main Apprentice series. Project manager Shibby Robati won a contract to supply a hotel by promising them everything under the sun at a knock-down price, for his team to collapse around him trying to fulfil the order.
Contract pricing is also a critical element. Knowing you are in a competitive auction with the other team, it is easy to be too aggressive in pursuit of the contract award. Too often teams have won a contract which delivers minimal profit and occupies a significant proportion of their overall capacity, leaving insufficient spare production to make up the shortfall elsewhere. By contrast, a team which gains no contracts can focus on making the products they want to make (i.e. the most profitable ones). Which brings me on to …
3. Get the product mix right
There is no one right answer here, but some basic economic principles nonetheless apply. Obviously, teams should make products that are attractive to potential consumers, but too often they focus on high volume lines which generate low-level sales and profit.
The teams are time-constrained in their task, and in producing cheap, ‘popular’ products they often do not consider how rapid a rate of sale is required to shift all their stock. For example, if team A buy £300 of roses at 25p each and sells them singly for £1, they must shift 1,200 units to clear their inventory. In an eight-hour selling day, that is 150 sales per hour – a lot. More than likely, at the end of the day they will have to ‘dump’ large volumes of product at a knock-down price. Now consider team B, who buy £300 of a different product at the same unit cost that they then sell for £6 each. They only need to make 200 sales, generating the same sales and profit, but in reality are likely to be left with less excess stock at the end of the day – it is not six times more difficult to sell a £6 product than a £1 one.
A winning team is likely to have a reasonable balance between cheaper, high volume products and more expensive, profit-busting ones. It may be less satisfying making a small number of high-value sales, but it is often a winning formula.
Certainly, any team which has to devote a large proportion of its production capacity to servicing contracts it has won should have a greater balance of high value/high profit items for its public sales, as they should be starting from a base where they have already covered their costs and are producing for pure profit. A team which has won a relatively unprofitable contract and then focuses on low-priced products to the public is almost certainly going to lose.
4. Making is just as important as selling
As a rule, teams are rarely able to make as much product as they think they can. This should be obvious, but it is often ignored in a haze of over-optimism. Teams are unfamiliar with the manufacturing process, so they will be relatively slow and there will be a lot of wastage – remember the boys spilling things everywhere in the frozen treats task? – so they will never operate at anywhere near 100% capacity. (Assuming they have even bothered to work out what their capacity is, of course.)
In the aforementioned bakery task, one of the key reasons Shibby’s team lost was that his factory was poorly organised and struggled as they tried to produce a wide variety of different products. The other team, however, had a tight, efficient process run by former military man Christopher Farrell, and producing a smaller number of lines. Shibby’s team made 16 rolls out of the 1,000 they had promised the hotel. Unsurprisingly, they lost.
The moral of the story? Teams are too easily seduced by the glamour of selling, and forget that without a productive factory they will not actually have anything to sell.
5. A focussed and flexible sales effort
In the portion of the task where the teams sell to the public, there are a few golden rules to consider. Winning teams generally get most of the following right:
- Start early. Generally speaking, there are three key times when customer traffic is at its highest: the morning and evening commuting periods, and lunchtime. For this floristry task, the morning rush hour may be less important – how many people are going to buy flowers, take them to work, and then take them home at the end of the day? – but the principle still stands. Selling time is limited: don’t waste it.
- Location, location, location. If you have a choice over the location of your pitch, think carefully. Go somewhere where the right customers will be in a receptive frame of mind to make a purchase. Don’t try to sell Ferrari experience days in Portobello Market. (Yes, that means you, Michael Sophocles.)
- Find your customers. Don’t wait for them to come to you. Be loud, be bold, be mobile. You are asking people to make an impulse purchase. Make them notice you.
- Don’t be afraid to move. If customer footfall is low, admit you have made a mistake and move on. Or send part of your team out to scout an alternative location. Don’t cross your fingers and hope for the best.
- Use your resources efficiently. Not only do you have limited time, but you also only have a small team. Don’t send people out on fools’ errands just to keep them busy. How often have we seen teams trying and failing to sell products door-to-door? Selling flowers that way won’t work. When was the last time you saw some enterprising soul doing that? Do what works for others. In the evening rush hour, go and sell at busy traffic lights instead.
Seems easy enough, doesn’t it? Now watch as it goes spectacularly wrong tonight …
Young Apprentice continues on BBC1 on Monday at 9pm.
Link: BBC official website
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