A lot of people (including me) like to tell prospective entrepreneurs that, when it comes to starting up a new business, the sky is the limit. Just come up with a good idea, add a dash of hard work and sticktoitiveness, and — presto! — you’ll have a successful business on your hands before you know it.
Of course, as every entrepreneur knows, things aren’t quite that easy. In addition to a good idea and hard work and sticktoitiveness, you’ve got to have a few more things, including enough financial resources to get your business up and running and to support operations for the first year or so — at least until the business either starts generating sufficient cash flow on its own, or attracts investment capital. You’ve also got to have enough customers to make your venture worth its while, along with a sufficient supply of whatever it is that you want to sell, whether it’s a product or service. And you’ve got to have a a strong team of people in place to manage the business and its growth.
I recently read an article about a new business that seems to have many of these startup essentials in place, but that is missing a vital element — an element that may very well lead to the business’s premature demise.
Bridal Brokerage is a unique business started in May 2012 by Lauren Byrne — a graduate student at the University of Virginia’s Darden School of Business — and three school friends. The idea behind the business is as innovative and attractive as it is simple: to re-sell cancelled weddings at a discount. Weddings are an expensive proposition nowadays, with tens of thousands of dollars easily being spent on a wide variety of necessities — from flowers, to ministers, to wedding venues, to reception halls, to reception caterers, to photographers and videographers, to limos, wedding dresses, bridesmaids gowns, DJs, and much more.
So, what happens when a wedding is cancelled? Depending on the individual agreements for each of these necessities, significant deposits may be lost and much money may still have to be paid out to the many vendors, whether or not the wedding takes place. This is especially the case as the actual date of the wedding approaches and more of the cash outlays become non-refundable. This financial reality can put significant pressure on couples to stay the course and go through with a marriage, even when their heads are telling them that they should put their wedding on ice.
Enter Bridal Brokerage.
The company offers to match couples looking to sell a wedding with those wanting to buy one and then takes a cut of the transaction. As the Bridal Brokerage Twitter account summarizes, "250,000 weddings are called off every year. Lots of money gets lost on deposits. We buy cancelled weddings and resell them."
So far, Bridal Brokerage has attracted a lot of attention — and 675 couples to its site that are hoping to buy a wedding on the cheap.
Sounds good, right?
Before I tell you the answer to that question, keep in mind that Byrne originally pitched the idea at a Darden entrepreneurship competition (check out her video at the end of this post) and the judges were so enamored with the idea that they allowed her to develop the business in lieu of completing her required summer internship. Not only that, but Bridal Brokerage has received great press — being the subject of articles in the New York Times, US News & World Report, and lots of bridal blogs. And there are those 675 prospective client couples.
So, I’ll ask that question one more time: Sounds good, right?
The problem is that while there are plenty of couples interested in buying a discount wedding — even if they have to travel across the country to do it — there seems to be a shortage in the supply of couples who actually want to cancel their weddings and sell them to someone else. According to the company’s COO, Heather Gates, to date Bridal Brokerage has brokered exactly zero — that’s 0 — weddings, and only four couples have inquired into the possiblity of selling their weddings.
So while Bridal Brokerage sounds like a great idea, it may ultimately be doomed to failure because it is missing a supply of products — failed weddings — to sell.
Keep the example of Bridal Brokerage in mind when you make the decision about what kind of business to start. Some businesses are better than others, for a variety of different reasons. And just because a business idea sounds good doesn’t make it good.
Unfortunately, this is a lesson that the owners of Bridal Brokerage are likely to learn the hard way.