Fairytale Weddings is an upcoming business venture that will offer wedding consultancy services. With the slogan “Making Dreams Come True”, the business is projected to be a force to reckon with in future. In the words of Kuratko (2008), entrepreneurship involves perceiving an existing business opportunity and coordinating various factors of production into a business entity that is focused to earning profits. In addition, the entrepreneur must be growth oriented, innovative, have a sense of determination and perseverance, and be hardworking and passionate about changes to the business. All these are reflected in Fairytale Weddings’ aspirations towards the future.
The company’s aspiration will be driven by a team of seven employees who will be trained in one or more of the following professions: interior design, hospitality and catering, financial accounting, marketing, economics and sociology. Each of the employees will be dedicated to serving in their roles to ensure that the objectives of the company are met. According to Peragine (2008), successful wedding consultants have to be experts in many different fields, including hospitality, decorating, event planning, and wedding trends.
In addition, they must have knowledge about a variety of wedding practices and traditions. They also must also have skills in the latest trends in wedding services and products, food, ceremony, reception decorations and design. Peragine (2008) also notes that wedding consultants must have a good sense of fashion, specifically the latest designs for grooming the bride, groom, and all their parties.
Fairytale Weddings’ projected team has all the above prospects and aims at having a financial accountant and a professional marketer to promote the company’s services. All these are aspects of a successful company since the company aims not only at having a large client base but ensuring that the finances it handles are well managed. Additionally, there will be an economist who will play an important role in critical decision making in the perspective of business trends, and a sociologist to offer counseling services.
There are many legal issues related to the wedding consultancy service business. Peragine (2008) notes that even through a wedding consultant can do everything right, he or she may still have some trying to sue them. Legal concerns in the business can arise because something went wrong with a vendor, or just because it rained on the wedding day, and thus the day’s events were scuttled. For these and other reasons, Fairytale Weddings has to obtain a liability insurance cover a think of the idea of retaining an attorney to serve in al the company’s legal matters in case any client or other party sues the company.
The company will offer a variety of services including financial matters, physical arrangement of reception and dealing in the dress code, how to handle relationships before and after marriage and so forth. All these are sensitive issues and could attract lawsuits by the clients should there be misunderstandings between them and the company. Additionally, the company will be involved in media advertising and this could attract a lot of legal concerns from the advertising companies, clients, and the general public regarding the services that are advertised and what is actually offered by the company.
There is a likelihood of clients suing the company if what it advertises is not what it delivers, some customers will go to the extent of demanding refund for services they perceive to be unsatisfactory vis-à-vis what is advertised by the company. Not only that, retainer attorneys will demand payment for the services they offer to the company.
A new idea such as the Fairytale Weddings investment can be funded through a variety of sources of capital. The business can rely on personal savings, contributions from friends and relatives, funds from other investors, funds borrowed from banks, and other sources. As well, the upcoming company can rely on suppliers for initial investments. There are many venture capital providers that specialize in high-risk investments, which Fairytale Weddings can turn to.
This is because most capital venture funds presently in vest in companies in their startup phases. Some of these funds also provide services that can be likened to those provided by incubators. However, the processes involved in such sources of capital are generally long, and capital venture funds are not the best option for seed financing (Pride, Hughes & Kapoor, 2009).
Fairytale Weddings can also turn to corporate investors for financial support. Corporate investors have been supporting starting business for a long time, and this they do by either providing funds directly or by investing in the funds. The investments are done through the creation of new ventures either within a company or in starting companies such as Fairytale Weddings.
Another option that can be considered by Fairytale Weddings is other venture capitalists. There are institutional entities and banks which participate in investment rounds. They seek to invest in companies that can provide them with a high rate of return, which is usually the case with most upcoming business ventures (such as Fairytale Weddings). Investing in rounds is a good way of sourcing capital since it may not be possible to find investors willing to put their capital in one venture, especially a starting one such as Fairytale Weddings.
Alternatively, the company can go for financing by debt, which can be a long term or short term form of credit. The lenders in this case can be venture capitalists, banks, or other bodies that specialize in offering capital. In such a case, Fairytale Weddings (the borrower) is bestowed the right to utilize the finances for a period that is predetermined in consideration for the settlement of the accrued interest.
Fairytale Weddings can also opt to go for an unsecured loan provided the creditor has ascertained that the company’s cash flow can suffice paying the interest that accrues on the principal as well as the initial loan itself. Alternatively, the company can borrow an unsecured loan, which is normally guaranteed by a saleable asset. However, this form of acquiring capital is only feasible if there is an assurance that the startup business has an opportunity to secure long terms contracts with clients (which is the obvious prospect of Fairytale Weddings).
There are many avenues that the company can exploit in order to secure a loan. It can go for a mezzanine loan or bridge loan. A mezzanine loan is meant for startups, such as Fairytale Weddings, which usually face difficulties securing loans. Such a form of investment lies between equity and debt.
The company could go for this type of investment because of the craving to avoid dilution, coupled with the inability to secure the ordinary bank loan. In addition, this kind of loan confers more security than ordinary loans. The bridge loan is suitable for startups that have gathered some momentum and is therefore not preferable for new ventures such as Fairytale Weddings.
Fairytale Weddings is likely to face many problems as it strives to secure capital for the new venture. It is commonplace that many financiers are wary of startup ventures since there is no guarantee that such businesses will eventually gather momentum and be able to stand on their own. As such, the company is likely to face difficulties obtaining loans from banks, or if it does, the banks may not be willing to grant a long repayment period. This is coupled by the fact that most financiers will demand a lump sum collateral, which most startup ventures such as Fairytale Weddings cannot afford or may raise with difficulty.
Another issue has to do with the company’s level of risk. As mentioned earlier, the wedding consultancy business has a significant level of risk. Such risks include events of fire, rain on the wedding day and so forth – which may generally put the company and its clients at crossroads. The risk that the wedding consultancy company may face many lawsuits, leading to huge losses in financial worth makes financiers shy from offering funds to the business.
Another risk associated with the company is that it will also be handling client’s money intended to be used for wedding preparation and during the wedding. The higher the risks associated with a business the more sensitive the business is when it comes to financing. This means that Fairytale Weddings needs to seek multiple sources of capital in order to be certain of securing the same and achieve its dream of “Making Dreams Come True”.
Kuratko, D. F. (2008). Entrepreneurship: Theory, Process, and Practice (8th edition). New York: Cengage Learning.
Peragine, J. (2008). How to Open and Operate a Financially Successful Wedding Consultant and Planning Business. New York: Atlantic Publishing Company.
Pride, W. M., Hughes, R. J. & Kapoor, J. R. (2009). Business (10th edition). Publisher New York: Cengage Learning.