Editor's note: This article was excerpted from our Event Planning Service start-up guide, available from the Entrepreneur Bookstore.
The special events industry has grown enormously in the past decade. According to recent research conducted by Dr. Joe Goldblatt, CSEP (Certified Special Events Professional), spending for special events worldwide is $500 billion annually. Goldblatt is the founder of International Special Events Society (ISES), the founding director of the Event Management Program at George Washington University, and co-author of The International Dictionary of Event Management. "Suffice it to say, the marketplace is large enough to support and sustain your endeavor," says Goldblatt. "If you're working in one special events area, there are many directions in which you can expand. If you're just entering the profession of special events, there's a lucrative market awaiting you on many fronts."
According to Goldblatt's research, profits in this industry continue to rise. Just a few years ago, Goldblatt says, the average profit margin for an event planning entrepreneur was around 15 percent. His most recent studies, however, show profit margins anywhere from 30 to 40 percent. He attributes the industry's good health to several factors, including the improved economy and the trend of corporate America to outsource their meeting-planning functions.
What Is Event Planning?
This question actually breaks down into two questions: What kinds of events are we talking about? And, what is event planning?
First things first. Generally speaking, special events occur for the following purposes:
- Celebrations (fairs, parades, weddings, reunions, birthdays, anniversaries)
- Education (conferences, meetings, graduations)
- Promotions (product launches, political rallies, fashion shows)
- Commemorations (memorials, civic events)
This list isn't an exhaustive one, but as the examples illustrate, special events may be business related, purely social or somewhere in between.
Now we move to the second question: What is event planning? Planners of an event may handle any or all of the following tasks related to that event:
- Conducting research
- Creating an event design
- Finding a site
- Arranging for food, decor and entertainment
- Planning transportation to and from the event
- Sending invitations to attendees
- Arranging any necessary accommodations for attendees
- Coordinating the activities of event personnel
- Supervising at the site
- Conducting evaluations of the event
How many of these activities your business engages in will depend on the size and type of a particular event, which will, in turn, depend on the specialization you choose.
Why Do People Hire Event Planners?
This question has a simple answer: Individuals often find they lack the expertise and time to plan events themselves. Independent planners can step in and give these special events the attention they deserve.
Who Becomes An Event Planner?
Planners are often people who got their start in one particular aspect of special events. Business owner Martin V.K. had a successful catering company before he decided to plan entire events. Many other planners have similar stories. This explains why planners often not only coordinate entire events but may, in addition, provide one or more services for those events.
Event planners may also have started out planning events for other companies before deciding to go into business for themselves. Joyce B.W. planned in-house events for a retail chain for 11 years and then worked for another event planning company before striking out on her own.
Consider getting a degree or certificate from a local university in event planning or management. A list of colleges and universities offering educational opportunities in this field is available from Meeting Professionals International (MPI). (See the Appendix for contact information.)
Also consider working to become a CSEP (Certified Special Events Professional) or CMP (Certified Meeting Planner). These designations are given out by ISES and MPI, respectively. Many corporations, and some members of the general public, look for these designations when hiring planners. Because of the research and study it takes to become a CSEP or CMP, clients know that these planners are professionals.
The Corporate Market
Broadly speaking, there are two markets for event planning services: corporate and social. The term "corporate" includes not only companies but also charities and nonprofit organizations. Charities and nonprofit organizations host gala fundraisers, receptions and athletic competitions, among other events, to expand their public support base and raise funds. Thousands of these events occur each year, and although the large ones require specialized event planning experience, you may find smaller local events to start out with.
Companies host trade shows, conventions, company picnics, holiday parties and meetings for staff members, board members or stockholders. In one year alone, the total number of meetings held in the United States was almost 1 million, according to a Meetings Market Report conducted by Market Probe International Inc. for Meetings & Conventions magazine. The same report showed that organizations spent a total of $40.8 billion on meetings that same year.
The Social Market
Social events include weddings, birthdays, anniversary parties, bar and bat mitzvahs, Sweet 16 parties, children's parties, reunions and so on. You may decide to handle all these events or just specialize in one or more of them.
The market for social events, especially birthdays and anniversaries, is expected to continue to increase over the next few years, as baby boomers mature. This group has children getting married, parents celebrating golden anniversaries, and their own silver wedding anniversaries to commemorate.
How much money will you need to start your event planning business? That will depend on the cost of living in the area your business serves and whether you work from home or rent office space. It will also depend, to a lesser degree, on your own taste and lifestyle choices.
Keep in mind that while working from home will keep your costs low, you can't start any but the smallest of event planning business on a shoestring.
This chart lists the startup costs for two hypothetical event-planning services. The first business is homebased and has no employees. The high-end business occupies 500 square feet of office space. The owner/manager of this business employs a full-time junior planner and a part-time bookkeeper, as well as temporary employees who handle clerical work and who may help prepare for various events. Both owners will derive their income from pre-tax net profit. Annually, these businesses will gross $78,000 and $185,000, respectively. The startup table lists pre-opening costs for the businesses.
|Licenses and Taxes||$250||$350|
|Legal Fees & Accounting||$650||$1,500|
|Insurance (1st Quarter)||$800||$1,700|
Few, if any, event planners have 9-to-5 jobs. By its very nature, event planning tends to involve evenings, weekends, holidays and sometimes even specific seasons. How much time you must commit to working will depend, once again, on the specialization you choose.
As a general rule, social events involve more weekends and holidays than corporate events do. Some areas of the country and some types of events have "on" and "off" seasons. However, no matter what your specialization (with the exception of parties for young children), you can count on working at least some evenings as you coordinate and supervise events. The planning of those events, however, will be done mostly during business hours.
Here are the main tasks you'll be completing as an event planner:
- Research. The best way to reduce risk (whatever the kind) is to do your homework. For large events, research may mean making sure there's a demand for the event by conducting surveys, interviews or focus group research. If you're new to the event planning industry, research may instead mean finding out all you can about vendors and suppliers. Research also may mean talking to other planners who have produced events similar to the one on which you're working. Or you may find yourself reading up on issues of custom and etiquette, especially if you're unfamiliar with a particular type of event.
Whatever kind of event you're planning, research should include asking your client a lot of questions and writing down the answers. Interviewing a client may not be what you immediately think of as research. However, asking too few questions, or not listening adequately to a client's answers, can compromise the success of the event you plan.
- Design. Your creativity comes most into play in the design phase of event planning, during which you sketch out the overall "feel" and "look" of the event. This is the time to brainstorm, either by yourself or with your employees. It's also the time to pull out and look through your idea file. (You do have one, don't you? If not, read on and take notes.) Don't forget to consult your notebook for the client's answers to the questions you asked in the research phase. These responses, especially the one regarding the event budget, will help you thoroughly check each idea for feasibility, preferably before suggesting it to the client.
- Proposal. Once you've interviewed the client and done some preliminary brainstorming, you should have enough information to prepare a proposal. Be aware that the production of a proposal is time-consuming and potentially expensive, especially if you include photographs or sketches. Sachs points out that only the larger companies producing high-end events can afford to provide clients with free proposals. You should receive a consultation fee (she suggests about $150), which can be applied toward a client's event if he or she hires you.
- Organization. During this decision-intensive phase, you'll rent the site, hire vendors and take care of more details than you might believe possible. You'll be on the phone until your ear is numb. But before you do any of this, make sure you have a contact person (either the client or someone acting on the client's behalf) with whom you'll discuss all major decisions. Having a designated individual helps ensure that communication lines are kept open. Also, social events in particular sometimes suffer from the "too many cooks" syndrome. Having one designated contact helps you avoid being caught in the middle of disagreements between event participants.
Generally speaking, the bigger the event, the more lead time that's required to plan it. Major conventions are planned years in advance. Although you may not be arranging events on such a grand scale, you do need to allow at least a few months for events like corporate picnics, reunions or large parties.
- Coordination. After you've made the initial plans, turn your attention to each of the activities that form a part of the overall event. At this point, your goal is to ensure that everyone is on the same wavelength. Good communication skills are important. Make sure all vendors have at least a general idea of the overall event schedule. Even more important, vendors should be clear about what's expected of them, and when. Vendor arrival times should appear in the contracts, but verify those times anyway. This is a "check and recheck" period. Make sure all your staff members know their roles.
- Evaluation. The obvious, and in one sense the most important, test of an event's success is customer satisfaction. The goal, of course, is to end up with a client who will sing your praises up and down the street, shouting it from rooftops. This is the client who will hire you again, and who will provide that famous word-of-mouth advertising for you.
There are several other ways to evaluate the success of an event. You can hire an event planning consultant; have someone who hosts extremely successful parties observe your event; plan a roundtable post-event discussion with your employees; obtain feedback from other industry professionals working at the event, like the caterer or bartender; or survey guests at or after the event.
Income & Billing
The goal in pricing a service is to mark up your labor and material costs sufficiently to cover overhead expenses and generate an acceptable profit. First-time business owners often fail because they unknowingly priced their services too low. According to industry expert and author Dr. Joe Goldblatt, fees are typically determined by three factors:
- Market segment served. Social events have a different fee structure than corporate events. In the social events industry, planners typically receive a fee for their services, plus a percentage of some or all vendor fees. The two income streams produce enough revenue for a profit.
In the corporate events industry, however, planners typically charge a fee for their services, plus a handling charge for each item they contract. For example, a planner buys flowers from a florist, marks them up (usually 15 percent) and charges that amount to the client. Another possibility is a flat fee, or "project fee," often used when the event is large and the corporation wants to be given a "not to exceed" figure.
- Geographic location. Fees are higher in the northeast United States, for example, than in the southeast. This difference reflects the variation in cost of living. In addition, areas of the country that have well-defined on- and off-seasons base their prices partly on which season they're in.
- Experience and reputation of the event planner. If you're just starting out in the industry, it's reasonable to charge less for your planning services while you gain expertise.
How, you may ask, are the above-mentioned fees-for-service calculated? Event planners we interviewed price their fees-for-service (the total cost to the client) using a "cost-plus" method. They contract out the labor, supplies and materials involved in producing an event and charge their clients a service fee of about 10 to 20 percent of the total cost of the event, with 15 percent being a rough average.
Marketing and Resources
Some new event planners spend hundreds of dollars on big ads in business magazines or in the Yellow Pages and wait for the calls to roll in. Dr. Jeff Goldblatt, CSEP, founding director of the Event Management Program at George Washington University in Washington, DC, says this is a mistake: "When was the last time you spent $10,000 on someone in the Yellow Pages?"
Goldblatt advises new entrepreneurs in this industry to "stay away from the mass market." While a listing in the Yellow Pages may help potential clients find you, spending large amounts of precious advertising dollars targeting the general public is usually not effective.
New business owner David G. agrees. The problem, he notes, is that customers need to see what you do, and a word ad won't accomplish that. He recommends networking and making friends in the industry. That way, he says, "People know you, trust you. They want honesty and integrity."
Networking can help your business in two ways. If people have met you and know what services you offer, they may refer business to you or use your service themselves. Furthermore, networking with hotels, caterers and so on will give you a chance to meet some of the people whose services you may need as you plan events.
Although networking and word-of-mouth are the most common industry strategies for acquiring clients, traditional forms of advertising do have their uses. A distinctive card or brochure sent to a mailing list or to local businesses may attract new clients. A small ad in a local business magazine can help build name recognition. A Web site on the Internet may allow you to attract customers unresponsive to other forms of media.
- Convention Industry Council
- International Special Events Society
- Meeting Professionals International
- National Association of Catering Executives
- Professional Convention Management Association
Magazines and Publications
- Corporate Meetings and Incentives
- The Meeting Professional
- Special Events Magazine
- Meetings and Conventions
- Successful Meetings
- Tradeshow Week
- Travel Weekly
- Behind the Scenes at Special Events: Flowers, Props and Designby Lena Malouf
- The Business of Event Planning: Behind-the-Scenes Secrets of Successful Special Events, by Judy Allen
- Dollars and Events: How to Succeed in the Special Events Businessby J. Goldblatt and F. Supovitz
- Event Planning: The Ultimate Guide to Successful Meetings, Corporate Events, Fundraising Galas, Conferences, Conventions, Incentives and Other Special Eventsby Judy Allen
- The International Directory of Event Managementby J. Goldblatt and K. S. Nelson
- Special Events: 21st Century Global Event Managementby J. Goldblatt
- Alan Shawn Feinstein Graduate Schoolat Johnson Wales University
- Convention Industry Council
- George Washington University Event Management Program
- International Special Events Society
Event Planning Software
- Complete Event Managerfrom Ekeba International.
- Meeting Planner Plus Version 2.1from Certain Software.
- PRO Xfrom PC/Nametag.