Event management companies continue to surge in demand, creating opportunities in an already wide market. There are practically no barriers to entry. In principle, anyone interested in delving into an event management business can dedicate themselves to organizing events.
It requires you to have the necessary characteristics: creative mind, organizational capacity, commercial attitude, investment, dedication to service, and empathy. In general, it does not require expensive investments to start this activity. The organization of events can be profitable in the very short term, that is, at the end of each event, with average gross margins ranging between 10% and 30% on the total billing of outsourced services.
Back in the day, we found ourselves in a highly fragmented sector, in which a few large agencies compete and many small ones, generally disconnected from each other.
The expert Samit Gard, the CEO and Founder of E-Factor, the leading event management company based in India understands that the industry is now rather in a better state. Gard, with his passion for managing events and business acumen has developed his company to an enviable status. He believes, “the role of an event management company must go far beyond mere production or coordination. Success is focused on providing real value to the customer.”
Having a presence for 19 years, E-Factor has managed some of the most important events in diverse sector and high profile customers including The Mittals, The Goenkas, The Modis, and The Jindals. Furthermore, they have held the blockbuster wedding ceremony of Bollywood celebrities, Abishek Bachan and Aishwariya Rai. From weddings, social events to tourism and corporate events, E-Factor’s penetration in the market makes it a key player. With that being said, let’s look into the profile of an event management business:
Services to offer
The event organization sector is a tailor’s box, where the most disparate proposals have a place: the variety of events is practically unlimited, according to the different tastes, needs, and pockets of the clientele.
To start, it is convenient to identify the central core of the activity and your customer target. We shall take reference of E-Factor’s service portfolio. In this sense, there are four large blocks of event organization services that E-Factor offers:
- Social events for individuals (parties, birthdays, farewells, etc.)
- Weddings (high profile celebrity weddings, dream weddings, theme weddings)
- Corporate events for companies (incentives, motivation, meetings, presentations, conferences, product launches, team building activities, etc.)
- Tourism events
In addition, there is another important branch: public events for institutions, organizations, associations, etc. (shows, concerts, exhibitions, patron saint festivals, etc.)
The training and professional experience, the network of contacts, the eventual complementarity of the promoters of the company, the knowledge of certain sectors, or the mastery of some specialties, will also influence the offer of services but, above all, the observation of the environment and business opportunities.
The Business Model
The sector presents a high degree of heterogeneity. An event organization agency can handle an event in an integral way or only some of its elements: for example, the venue (restaurant, farm, house, tent), catering, invitations and gifts, photography and video, audiovisual media, lighting, decoration and music, celebrities, artists and shows, animation, hostesses and other professionals, transportation of assistants, hotel management, protocol advice, etc.
On the other hand, there is a disparity in the pricing criteria. About 80% of the agencies invoice the entire event to their client and settle on their own with their suppliers; approximately 8% charges for fees (fees for their services, without receiving commissions from providers); a similar percentage to the previous one receives commissions from suppliers and fees from their clients and, finally, there is another variant that consists of increasing the rates of some suppliers on the invoice of their clients.
There is consensus in the sector that the right thing to do would be to charge fees for the effective work of creativity and coordination and the many hours of work and dedication. In fact, in many cases, clients prefer to directly contract and pay for the catering or the hotel, services in which the value of an organizing agency often goes unnoticed or sometimes does not even occur.
Again, E-Factor as a company stands out and adds that, in addition, they can become excellent prescribers.
An event is a sum of details, and there are several suppliers that intervene to make it a success. It is essential to know how to develop a portfolio of suppliers capable of becoming strategic partners, managing to coordinate them and obtain optimal benefits in the best conditions.
From his own experience, Gard advises: “Relationship with different providers is not always easy: it certainly requires time, dedication, a left hand, and constant supervision. Nor should we forget that, generally, cheap is expensive. Excessively rushing supplier margins or choosing the cheapest ones can lead to unpleasant surprises.”
The usual suppliers of an event organization company are:
- Places and premises (restaurants, hotels, rooms and lounges, farms, entertainment venues, etc.)
- Food and drink (catering, cafeteria, kitchenware, etc.)
- Preparation of the place (furniture and accessories, design and decoration, decorative material, etc.)
- Event professionals (artists, speakers, hostesses, photographers, etc.)
- Equipment and technical services (audiovisual, special media, etc.)
- Transportation (coaches, travel agencies, etc.)
- Support services (advertising and public relations, graphic services, protocol, styling, interpreters, etc.)
It is a business that requires a strong investment in the search for new clients and suppliers, in the maintenance of those you have, in the organization of events, etc. It is also important that clients perceive that your company is solvent and that they can trust your financial possibilities to face the organization of an event before they pay you.
To set up such a company, an investment of $10,000 necessary to create a limited company are not enough. You need to have, at least, and as an example of $20,000 or more to rent a palace to hold a convention and many others to pay the suppliers and be able to organize the next event.
It should not be forgotten that providers are generally paid in advance, while customers always pay after the event. In addition, providers are not usually habitual because each act has different characteristics and needs, so they are not trusted and, depending on the degree of confidence that you maintain, they can demand cash payment 30, 60, or 90 days in advance.
An event organization company does not require a large staff. It is enough to have a secretary, an accountant, and one or two people to help you in the commercial work. You will outsource the rest of the services, so the fewer personnel expenses you have, the less you will weigh down your results.
The ideal company that begins in this market would be the one made up of a single person who would act as president and commercial director with the capacity and contacts to hire the best professionals for each event.” The staff must have training in tourism, public relations, interpersonal communication, etc. They also have to master several languages.
Location, decoration, and procurement
Before setting up your company, find out if there are enough companies in the area of influence of the future business interested in hiring your services, as well as infrastructures to provide them (conference rooms, hotels, restaurants …).
The ideal is to establish yourself in medium-sized cities where there is still a gap in the and provide services to clients from the surroundings. To locate your office, you do not need a very large premises, but it is located in an area that sells on its own when it appears on your business card. Decoration matters to the extent that it serves to enhance your image. Don’t forget that your office, your wardrobe, etc., give your clients a reference for the events you organize.
Regarding advertising investment, this will not be very high because the most profitable formula for an event organization company is commercial work and, above all, word of mouth. It is a business where contacts count a lot, and that is why advertising in large mass media is not effective. In any case, you can insert ads in highly specialized media and use advertising forms that reach your target audience more directly: mailings, yellow pages, attendance at fairs, etc.
Diversify or disappear
The organization of events covers many activities. This brings many companies and services into play. If you can take advantage of the common points that this business has with other sectors, you will be able to offer a better service and redistribute risks. There are several possibilities to expand the business:
Image and advertising. Don’t limit yourself to product launch events. If you gain the client’s trust and demonstrate your ability, you can also participate in the advertising campaign for the product presentation.
Communication. You can take advantage to help your clients in their relationship with the media and offer them to be their press office.
Salesforce. Offering support to a company’s sales force, not only for an event but on an ongoing basis, is a way of diversifying that also allows you to create better links with the customer.
Own products. You will have to delegate a large part of your services, but you can offer self-made products to increase the profit margin: photographs or videos of an event, PowerPoint presentations for companies, web page design, and hotel contracting.