In a recent survey of event service managers, the respondents were asked to write their biggest business challenge for the coming year. A review of these responses revealed four distinct themes: growth, controlling costs, people, and differentiation. What follows is an analysis of these challenges and thoughts on how businesses might address them.
One-third of the responses cited growth as their biggest challenge, perhaps an indication that more companies are meeting growth expectations and hope to sustain expansion. It could also mean that the other managers recognize expansion as an outcome of doing everything else right. Regardless of which group you fall into, growth is probably not far from your mind. Many of the responses emphasize diversification:
Before diversifying your client base, consider first whether you have captured all of the business available from your existing customers. It is easier to convince an existing customer to try a new service than it is to win a new one. For instance, could you be doing more to help them grow, perhaps through partnering on business development? Or are there products or services they need that you should be providing?
Other replies reflect the need for more control over outcomes:
Attracting the intended market share requires aligning your sales, operations, and marketing efforts under a clear strategic vision. When a company struggles with uncontrolled growth, it is usually operations that are not prepared. Difficulty maintaining market share reflects disconnection between sales and marketing efforts. And lost business suggests a system-wide failure of business strategy.
Health insurance, labor costs, commodity pricing, shrinking margins: do any or all of these make you queasy? As a business grows, costs, as a percentage of revenue, inherently increase. Keeping employees around requires pay raises and increased benefits, and the more people you have, the harder it seems to maintain efficiency. Then why are some large firms profitable, while smaller ones struggle? Studying the profit and loss statement each month and looking for trends reveal some clues. Event production managers can point to their company's revenue “sweet spot,” the volume that yields the greatest profit percentage. Seek to maximize profit at the income level you achieve most often. In general, growing companies should scale up operations to raise the sweet spot into the high revenue months. Flat companies should seek to optimize the middle range, and shrinking companies need to reduce costs quickly to maximize profits at a lower income level. Once there, they can outsource more for the busy months and closely monitor costs in the slow ones.
The survey respondents had a number of ways to describe their challenges on the people front:
The biggest challenge is finding (and keeping) people that get it. This translates into “people who do the right thing.” There are hundreds of books on how to find, qualify, and interview potential employees. Once you have hired someone, however, what steps are you taking to help that person understand what the right thing is? If your staff doesn't see the business the way you do, whose fault is it? Training needs to be more than procedures; it has to convey the philosophy and objectives of the firm.
Differentiation makes your company unique. It is something that cannot be bought, copied, or countered. When you ask, “How can we differentiate ourselves?” you are implying that your business strategy has failed, is not understood, or never existed in the first place. You are not alone. Many business strategies are reactions to opportunities rather than planned approaches. The only solution is to commit the time and effort required to refine or discover your strategic advantage. A product could qualify if you have exclusive rights and if no one can or would copy it, but in most cases, it is a philosophical approach. The best differentiators cause your competitors to ask, “Why would they do that?” or “Why didn't we do that?”
When a company is truly differentiated, it looks for customers that appreciate the unique combination of values and services they offer. Instead of battling competitors, they seek converts. Bottom line: understand what you do well, and do it better before trying anything new.
Thomas Stimson, MBA, CTS is president of Dallas-based consulting firm The Stimson Group. He is the current chairman of InfoComm's Rental & Staging Council and a member of the ETCP Certification Council. Contact him at tom@trstimson.com.