Dear valued Bridebook Business Community,
Since March 2020, our industry has experienced the most challenging times in recent history. Amidst the hundreds of thousands of wedding cancellations and postponements, our industry has maintained its strength and resilience through unprecedented challenges. It has been wonderful to see business owners coming together virtually to support one another through the UK Venue Slack group, the ABWB, the #whataboutweddings campaign, our Bridebook government petition, industry letter-writing to MPs and more.
I’d like to share some key considerations based on my unique experience as not only the CEO of wedding planning app Bridebook, but also as a fellow wedding venue owner of Hedsor House. I also co-founded HelloFresh and was formerly an investment banker at UBS during the last financial crisis, so have had a varied career with some very relevant experiences. I’ve also been in direct communication with the CMA and a panel member of the Law Commission overseeing regulations for wedding venues, all of which enables me to gain insights into the current state of the industry from many sides.
Looking ahead, we unfortunately know that 2021 will be a challenging year too. However, we all have opportunities that we can leverage to position our businesses as best we can at this time. I encourage you to think about each of these key considerations.
- Key Consideration 1: Prioritise Cash Flows
- Key Consideration 2: Optimise Your Team
- Key Consideration 3: Understand the Current Market
- Key Consideration 4: Understand the Government Regulations
Key Consideration 1: Prioritise Cash Flows
Cash is vital. This can not be emphasised enough. Focus on cash. We know that weddings will be back at some point, we now need to secure enough cash to ensure that our businesses are around for that moment. Make sure you understand the implications of postponements and deposit amounts to your cash flows, and make adjustments accordingly.
- A. Adjust deposit structure to frontload sales. Beware the underlying cash flow issues that postponements may have on your business. Take a close look at your cost to host a wedding, and compare that with to the deposit you charge clients. If your cost to host a wedding is >50% of the clients’ total fee, and you charge a 50% deposit, you may have an upcoming cash flow issue.
For example: Suppose you charge £10,000 for a package wedding, it costs you 70%/ £7,000 to host the wedding, and you take 50% deposit. Whilst receiving the first £5,000 deposit is useful and lucrative, beware being lulled into a false sense of security on the second payment. Though you will receive a second £5,000, you will have £7,000 outgoings so will actually have a net cash outflow. Postponements stack these outgoing up. If your hosting costs are less than your second deposit, then you don’t have this issue.
In a normal year, hosting weddings and selling weddings balances out, so you have positive cash flow. However, a year filled with hosting postponed weddings and selling weddings 2 years out may have a new cash impact for your business. Know your costs, know your cash flows, and make adjustments to your cost structure or deposit structure to ensure you stay cash flow positive. Frontloading sales early on is a key way to address this issue. The further out you can sell dates, the smoother your cash flow will be.
- B. Give upgrades, not discounts. A discount hits your cash flow and net profit instantly, while an upgrade doesn’t. Think about the timing when your business is impacted from these types of incentives, and encourage your sales team to promote incentives that affect your bottom line as late as possible, with the least amount of impact to your cashflow.
For example, let’s consider £1,000 off venue hire versus £1,000 off champagne on the wedding day. The first option costs you instantly from net profit and cashflow now, while £1,000 champagne, likely only costs you £330-£500, and the cash flow impact is only at the wedding. Consider that actually £2,500 of free champagne might have the same net profit impact for you as £1,000 upfront discount, still has a later cash flow impact, and is likely much more persuasive to the couple!
Key Consideration 2: Optimise Your Team
Making sure your team is equipped to handle your upcoming business needs is vital. As we approach the biggest engagement season of the year, with 40% of the year’s engagements occurring between December and February, a huge opportunity awaits and a capable sales team should be in place to maximise results.
- Be mindful of redundancies. Ensure your business is ready not only to host weddings like mad in 2021, but to sell like mad into 2022. You may be considering redundancies, but I urge you to think seriously about the repercussions. For most venues, the cashflow saving of a redundancy will be less than if that person sold one (1) additional wedding a month, or took administrative duties off a salesperson so that salesperson could sell an additional one. Beware of a vicious cycle, that if you cut costs too heavily, you may be unable to sell due to administrative overload on your sales team which can become increasingly unproductive.
A key consideration when considering the difficult decision to make someone redundant is their replaceability and the actual saving. For example, if you are making an employee redundant you may give them 2-months settlement. Hiring their replacement may cost a 20% recruitment fee, and training up the new colleague may take another 2 months. In this scenario, if you believe their role will be required within 6 months from November, then it would be a false economy to follow a redundancy route. A mutual agreement of reduced hours / sabbatical / temporary role reassignment may be a more optimal route for both parties and for morale.
- Be prepared for engagement season enquiries. Be ready for another 100,000 engagements at Christmas, and have your team ready to secure business. Position your team wisely, and consider shifting roles to prioritise sales. If possible, get operational team members handling relations with existing couples and postponements, while your sales time focuses all their efforts on gaining new business. Think ahead how your entire team can work together to maximise time dedicated to new sales. Cross-training your team now will pay off later.
Key Consideration 3: Understand the Current Market
- Beware increased competition. As with the last financial crisis, the competition for wedding business will increase significantly thanks to corporate business shifting to weddings. Corporate business will be affected by COVID much longer than weddings, so corporate venues will focus more on weddings in the absence of corporate events. In a recessionary environment, the first business expense cut is corporate events. Businesses have a responsibility for their employees’ health and safety so will feel very nervous about arranging large gatherings for a very long time. Just like personal travel will recover much quicker than business travel (eg Summer holidays bounced back rapidly this August, but business travel was still firmly on hold) corporate events will follow the same pattern. Ensure you are well positioned to capture and compete with this new competition for wedding business in the coming 6-12 months. We have seen this first hand, as we launched Hedsor House to focus on corporate business in 2008 until the financial crisis hit, which was when we pivoted to the stability of weddings. We already see many corporate businesses following this path.
- Get timing and pricing right. Focus on late 2021 and 2022 wedding sales. Bridebook already has a backlog of over 100,000 2020 couples waiting to find their venue and we all need to be ready for this backlog to release. At this stage, venues should be booked around 40% of 2022. Across the country, 2022 is already getting booked due to postponed Covid weddings taking 2021. In fact, 57% of all Bridebook’s bookings in September were going into 2022, and 62% in October.
Filling 2022 key dates with new business, rather than postponements, is crucial for your future business viability. Selling these dates early is key to this.
Dynamic pricing for your business is incredibly important too. This will allow you to maximise sales by actively shifting couples into weekday rather than weekend bookings. If you need any guidance on dynamic pricing, do message your Bridebook venue consultant.
Key Consideration 4: Understand the Government Regulations
While our industry is impacted significantly by COVID-specific regulations, we are also experiencing impacts from changes stemming from the Law Commission as well as CMA guidance. Make sure you’re up-to-date on the impacts these governing bodies have on your business’s opportunities, competitors and contracts.
- Easing of location and celebrant restrictions. On 3 Sept 2020 the Law Commission announced suggested changes to how and where couples can get married, that will ease the red tape experienced by couples and venues for approved legal weddings. I was on the commission panel during the consideration process, and feel that it is not only positive news that antiquated laws are being updated, but that new opportunities will arise for us amidst the easing of these restrictions.
The changes will likely allow weddings to take place outdoors, in a wider variety of buildings, with loosened restrictions on celebrants, ceremonies and notice-giving. While many within our industry may be wary of increased competition from non-traditional venues, we should not expect a rush to weddings in McDonalds. Couples will still want large groups of friends and family, in beautiful settings, where they can dine together in one room, and not be reliant on the weather, and that are run by experienced staff. This all leads back to the professional venues of today. We can also view the easing of these restrictions as opportunities for us to conduct wedding ceremonies more freely on our own premises and in our outdoor spaces, enabling us to enhance our current wedding offerings. Do note that celebrant weddings are already very popular, although not legal, and the vast majority of them take place at approved premise wedding venues anyway. The easing of these celebrant and ceremony restrictions benefit our venues by offering more freedom and flexibility to our clients while on our premises. We can expect further updates later in 2020.
- Post-covid refund rules recommended by the CMA. On 7 Sept 2020, the CMA released guidance on wedding services affected by COVID-19, specifically on cancellation and refunds, alongside the CMA open letter to the wedding sector. Their guidance was clarified in regards to Covid and where Covid means a wedding cannot be hosted without substantial differences to the agreed contract.
Further details of a CMA action involving Bijou Weddings Group were released which concluded the fair and reasonable non-refundable amount to be 37.2% of the total cost of the wedding. On 9 Oct 2020, Bridebook issued an update to the CMA Guidance Summary, which includes an assessment of the decision with Bijou Weddings Group and continues to add updates to this page.
I know these last seven months have been difficult, and I applaud all your efforts to keep calm and carry on, despite the many adversities your business has faced. I know that we are all poised for a boom in bookings come engagement season, only two months away. I strongly urge you to take some time to seriously think about all of these key considerations and make sure your business is in the best shape possible for the next 6-12 months.
I see plenty of hope for our industry. From Bridebook data in September, we see newly engaged couples’ predicted budgets have remained unchanged versus 2019. Couples still want the large weddings we all know and love, and they are willing to wait for when it is possible. 2021 and 2022 will likely be the busiest years of weddings ever. We want to be sure you are there to work with them when that time comes.
I also urge venue owners and managers to get connected with your fellow industry colleagues on the UK Wedding Venues Slack group, a forum of thousands of wedding venues across the country, supporting each other and discussing relevant issues on a daily basis.
Now is also a great time to ensure that your digital presence is in tip-top shape, in preparation of the Christmas influx of prospective couples to your website, social media and Bridebook profile. Make sure all your photos, videos and details are up-to-date. Remember that couples love social proof, so chase any outstanding reviews from clients and fellow colleagues (share this simple link to collect reviews), and add testimonials to your Bridebook profile and website wherever possible.
Additionally, book a call with your Bridebook venue consultant to learn about ways to boost your presence among local couples, by heading to THIS PAGE or emailing business.bridebook.co.uk. If your business doesn’t have a Bridebook profile yet, create a free profile and our team will be happy to welcome you to our wonderful community of wedding professionals.
There are so many moving parts in our industry right now, and I truly want you to be the best equipped business you can be to navigate the difficulties and come out on the other side stronger than ever.
If I or the Bridebook team can help with anything, do get in touch.
Thanks for your time. Stay strong.
Sincerely,
Hamish