Howard Givner (@hgivner) is the founder and executive editor of the Event Leadership Institute.
Since selling my event planning firm five years ago, I’ve had the opportunity to meet and consult with the owners of a variety of event industry businesses, and in the process a few things became clear. For one, it’s a lot easier to identify why a company is struggling when you’re looking in from the outside. For another, many business owners in the industry tend to have a lot of the same issues holding them back.
In preparation for The Launching Pad: Starting Your Own Event Company, a six-week online course I’m teaching in September, I identified the top six reasons event businesses struggle, from what I’ve seen.
1. Not managing growth properly
I know it sounds crazy, but growth can kill a small business. How? If the company doesn’t plan for it properly.
There’s a woman in Chicago who runs a boutique event firm focusing mainly on fund-raising events whose business almost dies because of this. She had a team of three people, including herself, and had built a reputation for providing customized, dedicated service to a handful of clients. Her style was to be personally involved in almost everything, which worked fine until she took on a new client whose event was the same month as an existing client.
Suddenly she wasn’t able to go to all the board and committee meetings she normally did, so her existing client wasn’t happy, and didn’t rebook her the following year. And the new client didn’t get the level of service they were promised, so wasn’t happy either. Had the event planner built a reputation where she provided a certain level of service, but got her clients used to working with her associated for more of the details, she would have been in a better position to expand using that formula.
Lesson: Before taking on that new project, ask yourself if you can execute it at the same level as your normal standards.
2. Owners who can't get out of their own way
There’s a brilliant event planner in Los Angeles who doesn’t know how to prioritize. He fusses over the font on his invoices and personally selects the pump soaps for his office bathrooms. He simply can’t help himself. And yet when we were discussing strategies on how to grow his business, and when I asked why he wasn’t getting out more to promote his company—speaking at conferences and the like—his answer was, “Oh, I just don’t have the time.”
Lesson: Being your own boss has a dark side: nobody to tell you when you’re acting stupidly. Empower your staff to call you out when you could be spending your time more productively.
3. Lack of a cash cushion
Even the most reliable repeat client can cancel an event for random, unexpected reasons. If you’ve relied on that event and now it’s gone, you could be in trouble. Now magnify that scenario several times over for whenever there is an unpredictable occurrence that has the capability of wiping out a huge portion of the event or meeting business in a given region or industry.
In the past 15 years there’s been the September 11 attacks, the Great Recession, a SARS outbreak in Asia, the 2010 volcano eruption in Iceland that grounded air traffic in 20 countries, and numerous other “acts of God” that resulted in mass cancellations of events over a short time frame.
Lesson: A good rule of thumb is to have a cushion of six months of operating expenses to tide you over in case something like this happens. If not, you could be out of business despite having a stellar reputation and dedicated clients. I know too many great companies that, despite doing phenomenal work, went out of business in 2008 and 2009 for lack of a cash cushion.
4. Not knowing your numbers
By far one of the most frustrating things to a small business owner is finding out at the end of the year that, despite being super-busy doing great work all year, you didn’t make anywhere near as much money as expected. Typically, this is the result of not having a good handle on internal numbers, especially how much time it takes to produce a given event and how much you should be charging. Without having that formula figured out, the more you grow, the worse this problem gets.
Lesson: Track your time diligently and get a clear handle on how many events you can do a year, which will help determine what you should be charging. Otherwise, you don’t have a business—you have a hobby.
5. Owners who are afraid to sell
I’m not talking about cold-calling. I’m talking about the owner, who is usually the strongest asset in the company, not getting out there, networking, and spreading the company’s gospel. Even the shyest owners are doing themselves a disservice by not going to client pitch meetings; the clients want to see the owner. They want to see the creative persona, the organizational prowess, and the strategic thinking. That’s ultimately what they’re buying.
Lesson: Selling is like public speaking—the more you do it, the less fearful it becomes. Start small and build from there. But push yourself out of your comfort zone to do what’s best for your business.
6. Trying to be all things to all people
There’s a super-creative meeting and event agency in New York that’s been around a while. When it first started out the company did mainly entertainment, though it's steadily shifted toward more strategic, larger-scale projects. I talked to the owner last week about the discipline required to turn down the smaller projects the agency used to do. “We still get calls from people who knew us 15 years ago and want to hire a mime and an Elvis impersonator from us,” he told me, “but we have to turn it down, otherwise it’ll undermine our reputation for the bigger jobs.”
Lesson: Part of building a strong brand is knowing what your sweet spot is, and saying no to anything that detracts from that reputation.
Disclosure: BizBash is an investor in the Event Leadership Institute.
