Last week we looked at four keys to moving up market and discussed how one of the biggest things we changed when moving from many intimate events to fewer luxurious ones was allowing potential clients to self qualify by telling them that our floral investments start at $3,000. However, the question remains: should your company follow suit and have a minimum for your events?
What's your maximum work capacity?
One thing that you need to consider is what your company's work capacity is. Are you a rental company that only has one person to help load the truck to make deliveries and set up an event? You may not be able to take more than a single large event in a single day. But if you have a team of people to help, you could probably handle set up for several events with extended installation times and complex pieces.
This doesn't only hold true while looking at weekly capacity but monthly and even quarterly capacities. For example, if you're a florist who also has a retail side, you know that Valentine's Day will bring a barrage of extra orders so it's probably a good idea not to book your biggest event of the year for the same day.
It's important to look at what you and your team can realistically expect to accomplish and plan to only execute events that reflect the highest quality of work your team can offer.
What's your overhead time per event?
Every event professional has had that one client who wants a dozen revisions to floral proposal or a few extra taste tests or who wants to sit on every sofa a rental company owns before making a decision on which one feels and looks the best only to change their mind a week before the event. The reality is that some of these clients may have a budget of $50,000 and others might have a budget of $500, but their big event is just as valuable to them as the other's and they deserve the same level of passion and excitement from the event professionals they're working with. While your clients may have different budgets, there is one thing they all have in common: the same amount of time. No client has more or less than 24 hours in a day. And when running an event business, time is money.
This is an overhead decision in your shop. Two clients may each require 4 hours of your team's time before you actually start working on the event itself. Simply expressed, that may be $2,000 of revenue per overhead hour for the first client and $150 per hour for the second. That's a BIG difference and something that needs to be considered when deciding whether or not you need to have minimums.
How much does your company need to bring in each month?
We've previously discussed how there is no such thing as a true industry average for markups and have advocated that event professionals mark up their florals, ingredients, and hardgoods in such a way that they are profitable. The same rings true for deciding whether or not your company needs to have a minimum. If your capacity is on the lower end and you are working with clients who have a higher overhead time, those clients should be paying you a bit more for the value of your time. Ultimately, you need to figure out what your company needs to bring in each month to be profitable and consider that number in light of the average overhead time for each event and your capacity for work to determine whether or not to have a minimum.
Wondering what your markups should be given your business' situation? Download our free markup calculator!
Simply put, if you can process through a large number of events efficiently, you can probably afford to take a lot of events with more intimate budgets, even with a few Pinterest clients in the mix. If you don't have a ton of time to work with--whether that's because you have a high overhead time for each event or because you have a second job supporting your event business--you need to have a minimum. Having a minimum doesn't necessarily mean you're wanting to move up market, and you may still focus on events with relatively intimate budgets, but it does mean that you're setting up your business to be sustainable and profitable. Now, sharing that minimum with potential clients can be a tricky thing to share though, so keep an eye out for next week's blog post where we'll share what has worked for us and why it's a great positioning point
Is your overhead time killing you? Curate helps event professionals save 75% of wasted administrative time. Schedule a consultation to see how Curate can help you.