Episode two of 2009’s series of The Apprentice saw the candidates starting a catering businesses. Unlike last time the boys weren’t frugal, spending far too much on ingredients, costumes and props. It seems they’ve forgotten the first business lesson from this year’s The Apprentice:

• when starting a business, keep your costs as low as possible as every penny you spend has to be earned back before you start making a profit.

Their theme, in the form of their costumes and products such as peanut butter sandwiches, made them look rather silly when trying to sell on the streets of London. They struggled to sell many sandwiches until they found a long queue of people and sales started to really take off. There are two business lessons to take from this:

1. Location, location, location – it’s not just true for property developers, but retailers too. If you are where the customers are (or will be) you’ll sell more.
2. Finding the right market matters more than finding the right product (or even business idea).

When it came to negotiating their prices the boys proved (again) they lacked even basic negotiation skills. Once again when pushed on price they just kept dropping it until the customer said yes. This time they pitched their fees at £65 per head and rapidly caved in, dropping all the way to £15 for (when pushed by the customer to clarify) exactly the same menu/service. Another two lessons from the boys:

1. Research – before entering into a negotiation you need to have a good understanding of your own position and goals and the position and goals of the other party. In this case they should have better researched the market rate for the service they were offering and tried to find out the budget the customer had.
2. Never ever make a concession unless the other party also makes a concession. If they want a cheaper price by all means offer one, but reduce what they get for it.

If your negotiation skills are as bad as theirs then I would suggest buying a copy of the excellent book Everything Is Negotiable by Gavin Kennedy.

Sadly the girls proved that you can do well in business by providing a poor service and shoddy product and, if costs are very low, still turn a good profit. Unfortunately The Apprentice didn’t emphasise that whilst you’ll make a quick buck doing this once, you’ll never get any repeat business and without repeat business your business will be doomed to failure. Thus this weeks business lesson from the girls is:

• deliver value for money. If you provide value for money your customer will be happy and you’ll be in a position to get repeat business from them.

So what did you make of episode two of The Apprentice?

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