Are You Running a Profitable Event? MICHAEL FOREMAN

Transcription

1 Are You Running a Profitable Event? MICHAEL FOREMAN

2 MICHAEL FOREMAN Born and Educated in Durban, South Africa 1994 started working as a registrafons exec in a European PCO based in Tel Aviv 1999 Moved to London and worked For InternaFonal PCO s in Business Development, ExhibiFon and Sponsorship Sales 2003 Set up Confab ConsulFng 2009 Sold and became Kenes UK 2011 Chair of ABPCO 2012 LeT Kenes to become and Independent Consultant to the AssociaFon Sector

3 OVERVIEW Profitability Event Organising a Professional Service ObjecFve SeZng Profitability Case Study Event and Staff CosFng Cash Flow Time Measurement RecommendaFons and Tips

4 PROFITABILITY What is profitability? The state or condifon of yielding a financial profit or gain Profitability is the primary goal of all business ventures. Without profitability the business will not survive in the long run. Measurement of current and past profitability and projecfng future profitability is very important. How does this relate to events? Every event should be treated like a small business, with A budget (income and expenditure) A business case A strategy A project plan An ongoing analysis through the phases of the event

5 Event Organising A Professional Service? In order to ensure profitability 1st and foremost we must recognise that Event OrganisaFon is a Professional Service!! Why will clients pay a lawyer by the hour without any quesfons but when it comes to Professional Conference Organising their brains go to jelly and they cannot get their head around paying a fair fee for a valuable service? Is Event management considered a profession or something that someone can bolt onto their day job? When charging a professional skill we must measure our Mme to ensure profitability.

6 OBJECTIVE SETTING Before any event is planned one should; 1. Define the ObjecFves of the Event Profile EducaFon Membership benefit Networking Fundraising 2. Define the measurement criteria for success Increased delegate adendance Profile Profit 3. Define the tools to measure those criteria Increased Adendance RegistraFon ReporFng System/Leads Tracker Profile - PR coverage Profit Robust AccounFng Systems

7 WHAT IS PROFITABILITY? Was your event Profitable? Typical Answers that I hear as a Professional Planner Yes, We had 1000 people adending, we only expected half of that!! Actually, the 1000 people caused the organiser to take on extra space at the venue, extra catering and extra staff at the last minute. The extra 500 were all students that paid a very discounted rate. Yes, we made much more sponsorship than we expected!! The addifonal sponsorship caused the organiser to put on extra social events, beder catering etc which let the event with the same bodom line Yes we made 10,000 from the congress!! Various key elements were not included in the event budget which actually cost more than the so called 10,000 profit.

8 Profitability Case Study Is my Annual Conference Profitable? Conference Income AssociaMon Income RegistraFon Fees 100,000 Congress Surplus 35,000 Sponsorship 50,000 Membership Fees 100,000 ExhibiFon 50,000 Journal 50,000 Other 35,000 Grants 50,000 TOTAL 235, ,000 Conference Expenses AssociaFon Expenses Venue 75,000 Rent 75,000 Catering 50,000 Staffing 50,000 Web, Print and PromoFon 50,000 EducaFonal AcFviFes 50,000 Other 25,000 PR and Comms 60,000 TOTAL 200,000 Total 235,000 Profit/Loss 35,000 Profit/Loss 0

9 Profitability Case Study Is my Annual Conference Profitable? Conference Income AssociaMon Income RegistraFon Fees 100,000 Congress Surplus 0 Sponsorship 50,000 Membership Fees 100,000 ExhibiFon 50,000 Journal 50,000 Other 35,000 Grants 50,000 TOTAL 235, ,000 Conference Expenses AssociaFon Expenses Venue 75,000 Rent 75,000 Catering 50,000 Staffing 15,000 Web, Print and PromoFon 50,000 EducaFonal AcFviFes 50,000 Other inc staff 60,000 PR and Comms 60,000 TOTAL 235,000 Total 200,000 Profit/Loss 0 Profit/Loss 0

10 WHAT IS PROFITABILITY Unaccounted Costs Part Fme CEO 50% on Conference Admin Assistant 85% on Conference Results are; Unprofitable Congress Huge amount of effort Distracted CEO 0 Profit or - 0% growth

11 EVENT COSTING One should recognise the cost of all resources associated with managing the event! Many organisafons do not consider the efforts/fme of their staff.

12 STAFF COSTING Project manager - 36,000 Project assistant - 24,000 Total Salary Cost - 70,000 Staff Overheads in London x 2-3 staff costs Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec TOTAL PM 3,000 3,000 2,000 1,000 1,000 1, ,000 4,000 5,000 5,000 28,250 PA 1,500 1,500 2,000 2,000 2,000 3,000 1,000 1,000 2,000 2,000 3,000 3,000 24,000 Overheads 4,500 4,500 4,000 3,000 3,000 4,000 1,750 1,500 4,000 6,000 8,000 8,000 52,250 Total costs 9,000 9,000 8,000 6,000 6,000 8,000 3,500 3,000 8,000 12,000 16,000 16, ,500 Margin- 20% Fee/ Revenue Generated To Cover Staff costs ,900 10,800 10,800 9,600 7,200 7,200 9,600 4,200 3,600 9,600 14,400 19,200 19, ,400

13 Profitability Case Study Is my Annual Conference Profitable? Conference Income AssociaMon Income RegistraFon Fees 100,000 Congress Surplus 0 Sponsorship 50,000 Membership Fees 100,000 ExhibiFon 50,000 Journal 50,000 Other 35,000 Grants 50,000 TOTAL 235, ,000 Conference Expenses AssociaFon Expenses Venue 75,000 Rent 75,000 Catering 50,000 Staffing + Overheads 30,000 Web, Print and PromoFon 50,000 EducaFonal AcFviFes 50,000 Other inc staff + overheads 95,000 PR and Comms 60,000 TOTAL 270,000 Total 215,000 Profit/Loss - 35,000 Profit/Loss

14 EVENT FUNDING IN SUMMARY If we have an in- house team we need to ensure that the events that they are working on are able not only to cover the running costs of the event (venue, catering etc ) but also the cost of manpower. In an agency, the fees need to cover overheads + margin

15 CASH FLOW BEWARE Most of the running costs of an event are staggered and are payable predy close to the event. These usually respond quite closely to income into the event. Generally these Fmings are in the last 6 months leading up to the event Staff costs are NOT, Salaries need to be paid monthly Therefore If the salaries of the individuals are dependent on the profitability or income from the events Profitability must be measured correctly You will need to find a way to fund salaries unfl the income comes in

16 EVENT FUNDING CASH FLOW CAUTION Profitability is not Cash Flow People oten mistakenly believe that a profitable event will not encounter cash flow problems. Although closely related, profitability and cash flow are different. Many event budgets list income and expenses with lidle regard for cash flow. RECOMMENDATION Include a cash flow statement which lists forecasted and actual cash inflows and cash outlows. An income statement shows profitability while a cash flow statement shows liquidity.

17 TIME MEASUREMENT IN ORDER TO ACCOUNT CORRECTLY FOR STAFF TIME, STAFF SHOULD BE LOGGING TIME DAILY 1. BY EVENT 2. BY DEPARTMENT/TASK for e.g. Project management Programme management RegistraMon Sponsorship ExhibiMon Social Events Speaker Liaison

18 TIME MEASUREMENT

19 RECOMMENDATIONS 1. Understand the objecmves of the event, what the success factors are and whether profitability is one of them 2. Define what profitability means 3. Understand the costs of delivery of the event including all manpower resources invested in delivery 4. Log Mme as accurately as possible 5. Report against agreed objecmves/success factors

20 Thank you for listening! QuesMons? For more informafon, contact me at: