Jack Cheetham – 14th June 2011
Just a Rich Man’s Hobby? From a man who wants to get rich in real business
I will start off by defining a ‘business’ and a ‘hobby’…
A Business is “the purchase and sale of goods in an attempt to make a profit”
A Hobby is “an activity or interest pursued for pleasure or relaxation and not as a main occupation”
Business is a complex subject and every person has an opinion on it. Whether it is good or bad, business rules our lives. Nowadays the spotlight is on the hobby of a rich man, but by the definition above, are terrible businesses.
Alan Sugar the other week presented a documentary on the Premier League aired on BBC TV, about how it runs its “business”, this example may be at one extreme, but looking at this industry and the amount of teams that run on eye-watering amounts of debt, it is ridiculous! A business financed by a very rich individual who, without him, would have been bankrupt years ago I feel is ridiculous. Are Premiership clubs that run this way little more that a rich mans hobby? Looking at the definition above, these clubs are “activities pursued for pleasure” by these men and do not even try to “attempt to make a profit”. In some clubs their annual revenue doesn’t even come close to the cost of one player! 16 out of the 20 Premier League clubs recorded a loss last season. Take Manchester City for example, in the season 09-10 the wages alone they paid out were 106% of their turnover that year.
Real businesses don’t run like this.
Another example of debt-laden business is touted as the future of the music industry: Spotify. With 10 million users in Sept last year and this number increasing. It still to this day has not made a penny and in fact every day increases its debt. It relies on millions of pounds worth of investment to continue trading, and would make more sense to cease trading, but due to its huge brand and marketing plus winning the Telegraphs Start-Up 100 Awards – it is deemed a successful business. Is this right?
Mentors constantly come into the school and ask about my business and one of the first questions they ask me is “where is the money coming from?” When I reply with the whereabouts they then ask “is it enough?” Maurice Collins, a very clever shrewd businessman, came into the school a few weeks ago. Maurice believes in the traditional morals about business and the one think he told us to remember was “as long as your incomings outweigh your outgoings you have a business”. Now this surely is what business is all about, making profit. So it makes you think what these so called ‘businesses’ are. Where do you place them when educating young people about how to run a business?
Some may argue that Not-for profit businesses don’t aim to make profit but looking at it from the same angle they still at least try and break-even!
Thanks for taking your time to read this, you may disagree or agree, if you do please leave a comment. Rant over.
