ENERGISING BUSINESS: Trading on your name is risky

YOU ARE a star on the sports field. So does that make you a star on the business field?
Over the years, many sports people have set up businesses. The question is does the energy they exude on the field, translate to the business field? Well for those who stick to their knitting and act as sports commentators such as Ian Smith, promoters like ex-Black Cap captain Steven Fleming or talent coaches who set up player academies such as Wynton Rufer, there is a much better chance for success. But for those who don't, the results seem to be poor.
Unfortunately, Dan Carter is the most recent example. His fashion company, Gas Ltd, is in liquidation, owing creditors more than $1.16 million, and he stands to lose circa $250,000.
While the media seems to think Carter was unlucky in that he invested in a business just before the global economic crisis, one would have to question the size of the local market for expensive Italian men's clothing. The exchange rate would have made the clothing even more expensive.
 Perhaps the better model would have been to link up with a Kiwi designer and lend your name and not own the stores?
One of biggest flops was Craig McDermott, an Australian fast bowler, who got into property developing via a company called Maxen. This company owes $40 million. What a bouncer.
Last year, a chain of bargain furniture stores co-founded by All Black lock Ali Williams closed because of poor sales.
 Other sports people have made the career transition in a more measured way. Eric Rush, who is also a renowned corporate speaker, has recently become a supermarket manager. Of course Robin Brooke did the same but has had some major personal wobbles.
Marc Ellis, the former All Black, was a founding director of the natural juice company Charlie's in 1998 and was astute in partnering with other business people who had vastly more experience in juicing. Ellis studied commerce at Otago University, majoring in marketing/management, and graduated in 1995. He has leveraged his natural marketing skills, honing his business skills in a part-time marketing role with KMPG in Auckland before setting up
Charlie's.
In 2006, Kiwi cricketer Adam Parore started his own business, Adam Parore Mortgages as a mortgage broker. This business is still operating, although it would seem Parore has mastered the challenge of working on the business, not in it.
Steve Price is going about it the right way and is completing an MBA, before contemplating a business life away from the playing field.
From my anecdotal research, it seems few of our top sports people gained business qualifications before setting up in business, although I understand Rush and Brooke would have been given extensive in-house training. The raison d'etre of major sports stars setting up a business or investing in one was that their name would add celebrity weight and entice customers to purchase. Yeah right!
The assumption is that the sports player can leverage the respect they enjoyed as sports players with a new customer base. They can exert an influence over us to buy their products and services. If you liked the way they played, why not purchase their products?
Most sports stars do this after their playing career is over. A minority start them while still playing. The dangers of doing this are clear as their priorities are divided. Worries on the business might translate to the sports field.
If only these sports stars had got the business training first or selected partners who had the necessary strategic planning, business and implementation skills. It seems to me that no amount of sports celebrity status can make up for a business concept that does not consider these risks:
* Skills: What is the business experience and formal business training of the business partners?
* Market size: How big is the market and what is the growth potential?
* Economic: Is the concept able to withstand an economic recession.
* Regulatory: Does the idea meet legal, safety and other regulatory requirements?
* Technology: Is the idea vulnerable to changes in technology?
* Environmental: Does the idea have any impact on the environment. What are the by-products?
* Dependency: Will sales be dependent on something that is beyond your control?
* Set-up risks: Setting up a business is a major risk. How will this risk be managed? What assistance will be given by the major shareholders?
So good on Steve Price and Marc Ellis for getting the formal business training before taking the plunge into business. We should watch their progression with great interest.
Cliff Osborne and Associates is based in Tauranga.
View www.cliffosborne.com or
contact Cliff by email:cosborne@watchdog.net.nz