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
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.
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