Tips for getting down to basics with trade show number-crunching
By Linda C. Chandler
Sources of revenue ■ Exhibitor sales: booth/exhibitor square footage rates, including any bonus rates for special positions and minus any discounts ■ Sponsorships: from lanyards and coffee breaks to entertainment and title sponsors ■ Ticket sales/general registration: attendee and guest participation minus discounts and complimentary passes ■ Conference/activity fees: pre-show workshops, special entertainment or speaker events and special functions such as award shows and dinners ■ Advertising: show directory, Web site and dailies
Expense categories • Marketing: to exhibitors and attendees via all collateral and all media media — print, direct mail, Web sites, e-mail, radio, TV — plus list rental and maintenance • Exhibit sales: travel, commissions and promotional materials • Operations: facility rental, contractor services, security, insurance, food and beverage and transportation services • Staffing: salaries, commissions and bonuses, temp staff and travel and accommodations • Conference programming: speakers/entertainment, materials, AV and special productions • Printing: show directories and dailies • General/administrative: fixed costs like office, computer systems and clerical support
Budget lessons ■ You can control expenses by reducing or cutting variable line item expenses or by waiting until the revenue is there to do something considered optional. ■ Revenue projections are only assumptions and depend on a show’s history — or in the case of a new show, your research and the validity of your conclusions about a show’s potential — as well as on the effectiveness of your sales efforts. ■ Keep “miscellaneous” or “contingency” funds to small amounts and closely monitor how they’re spent. Limit who can spend discretionary funds. You should adjust the line items where such expenditures should be accounted for so your next budget reflects them.
Budgeting considerations for a new show • Know the market conditions. Read industry data and publications, paying attention to similar-sized shows, those in the same industry niche and ones in the same locations you’re considering. • Estimate the potential exhibitor and sponsor participation because these constitute the largest sources of revenues. • Study competing shows to get a fix on booth rates and attendance pricing. • Compare location and facility costs, including labor issues. • Establish budget categories and set up detailed line items in each category. • Examine and enter all fixed and variable expenses into the budget. Know exactly what you expect to spend to produce the show. • Develop specific revenue goals for booth sales, sponsorships and registration fees, based on covering expenses and the profit target you set. • Monitor revenue and payment deadlines. • Reforecast revenues frequently enough to make adjustments to variable expenses as necessary.
Benchmarking revenues and expenses EXPO’s benchmarking survey was published in November/December 2006.
- Revenues Survey feedback reflected averages from shows categorized at gross revenues of $500,000, $2 million, $5 million and more than $5 million. Because ranges are given, the columns won’t total 100 percent. 54% to 68% Booth sales 9% to 19% Sponsorships 20% to 23% Registration/conference fees 0% to 1% Show Web site (paid advertising) 3% to 13% Other
- Expenses These figures are industry averages from association and independent shows of all sizes. 15% Show staff salaries, commissions and bonuses 12% Exhibit/sponsorship sales 12% Exhibit hall 12% Decorating 11% Attendance promotion 11% Other 7% Food and beverage 4% Registration 4% Seminars/meetings 4% On-site expenses 3% Security 2% Exhibitor expenses 2% Miscellaneous 1% Computer/Web site
How will you measure success? • By growth — for example, a 5 to 10 percent increase in net square feet, total revenues or registration • By net profit — factors such as lower expenses (sometimes based on locale) or higher rates may result in larger profits • Comparative calculations — revenue per square foot, operations costs per square foot or marketing costs per attendee
Zero-based budgets vs. incremental budgeting ■ Essentially, zero-based budgeting requires looking at every line item and estimating expenses and revenues. The diligence of justifying every line can produce higher accuracy. Most startups have little choice but to use a zero-based approach. If you produce several shows, you may have histories from similar events that will help formulate costs for new shows. ■ Shows with histories don’t generally take a start-fromscratch, zero-based approach. Instead, the incremental approach to budgets builds on history, perhaps adjusting for inflation or changes in the marketplace as well as for variable costs based on different venues for the event and associated expenses. The disadvantage is that you may not be deeply re-examining the original line items and looking for hidden costs or savings. ■ A combined approach doesn’t begin entirely over with every show, but may require changes to some line items, while others remain static.
Expenses that might be overlooked in budgeting • Postal rate increases • UPS/FedEx bills • Travel increases • Gratuities • Payroll taxes • Additional temporary staff
Meet the Experts • Peter Craig, Bay Sherman & Craig, LLP; (310) 477-1400; www.baysherman.com • Daniel Hamm, The WSA Show, (818) 379-9466, www.wsashow.com • Michael Green, Hanley Wood Expositions, (972) 536-6300, www.handleywood.com • Sandra Ross, EJ Krause & Associates, (301) 493-5500, www.ejkrause.com
Linda C. Chandler is a freelance writer and editor based in Tyler, TX. She has written for association and convention publications for 19 years and is an active member of Tyler CVB’s tourism committee. Contact her at linda.chandler@earthlink.net. More on Expoweb.com
Tracking and reforecasting revenues • Estimate the number of square feet you expect to sell and the accompanying revenues. Don’t forget to adjust for discounts or trades. • After setting sales goals, continually monitor both booth and sponsorship revenues. Always know where you should be on the revenue target versus where you are. Start at least 10 months out from the event, whether you set monthly or weekly reviews or other landmarks (such as an early-bird discount deadline) for reforecasting. • Reforecast based on these reviews or target dates. Look at best- and worst-case scenarios between now and the next review deadline. • Be sure your budget is a working document, constantly updating both revenues and expenses, so you can reforecast revenues and adjust some expenses if needed. • Revenues may be coming in daily, but expenses are often on a schedule (such as deposits and food and beverage contracts). Many expenses aren’t paid until closer to the show date, so with effective monitoring, you can adjust some expenses if revenue targets aren’t being met. You may have some special things in your budget that you want to do, but commit not to do until the revenues are there. • Adhere to guidelines for determining projections, reforecasts and potential changes in plans. Set “alarms” for shortfalls of more than 10 percent, for instance, or of a certain dollar amount. • Know how changes in projections can affect the bottom line company-wide. For example, a show’s projections, combined with other factors, may indicate a market trend or may stall expansion plans.
Where to budget staff ■ Some shows embed salaries in categories related to job functions such as sales, registration, or conference programming. Allocating portions of salaries when employees serve more than one function can be challenging. ■ Others count salaries, commissions and bonuses — all staff compensation — in a separate category. Travel, accommodations and per diem expenses for staff may or may not be line-itemed in the staffing category. ■ Another accounting issue is whether salary expenses are deferred to the time when the event is held or simply budgeted by calendar year.
Accounting/budgeting technology Budgeting packages are included in most accounting software. Some import spreadsheets; others have built-in spreadsheets. Some have standard reports and customized report writers built in, while others work in conjunction with specific report-writing software. You can spend as little at $500 for a simple QuickBooks package to $15,000, $20,000 or more, depending on the number of users and how customized the system needs to be. Some typical options: - Your CRM system with a report writer like Crystal Reports - QuickBooks accounting software with built-in report writer - R:BASE, a relational database management program - Sage Accpac or Sage Mas90 with FRx report writer - Cognos business intelligence and performance analytics software
What to look for in accounting/budgeting tools • Functions that will forecast as well as track • Custom reports options • Ability to handle the number of users you want to have access to the system • Access security, passwords and read-only access • Real-time updates • Robust enough to handle your needs if you’re running several shows and want comparisons • Ability to interface with your CRM system
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