Crunching the Numbers: Successful Convention Budgeting
November 2008 Franchising World
by: Linda Goldman
http://www.franchise.org/Franchise-Industry-News-Detail.aspx?id=42970
What is successful convention budgeting? Simply put, a budget that not only reflects, in detail and comprehensively, dollars to be spent but one that reflects accurately the goals and objectives of the event. And what might those goals and objectives be? For many franchise companies, the convention is the most important event of the year as it provides:
• The best opportunity to educate, train and motivate franchisees,
• A venue to align franchisees’ goals with the franchisor’s core values and strategies,
• A forum to recognize and reward top-performing franchisees, and,
• The most cost-effective retention opportunity.
No wonder studies show that franchisees who participate in conventions grow their businesses faster than those who don’t. However, successful convention budgeting is a complex process and can be fraught with pitfalls, from venue selection and negotiation, to sponsor solicitation, to accurate projection of numbers of attendees and their advance and onsite needs, to pre- and post-event marketing, to production costs, and more. A clear and well-developed strategic approach from the early planning stages through onsite execution is essential to ensuring a successful budget, one that is both financially realistic and appropriate to the event’s goals and objectives. A successful strategic budget carefully considers spending in each category as much as it considers the total amount spent, and it allows for fluidity between departments.
For example, perhaps the cost of providing a teleprompter system for executive presentations is deemed prohibitive. However, looking across departmental budget lines, one sees that the prompter expense is about equal to the cost option of upgrading the awards banquet dessert. Which item will have greater strategic impact on the franchisees: a confident address from the CEO or dark chocolate truffles instead of chocolate mousse?
In recent years, as meeting budgets have decreased and economic and marketplace challenges have increased, many franchisors have sharpened their focus on the ROI of convention costs. Companies are growing more desirous of being able to track and report “total meeting spend” to accurately calculate the cost per attendee. This significant number can include not just the obvious travel, hotel and food and beverage costs, but also registration, speaker fees, convention marketing materials and corporate staff time.
To address the full scope of how to successfully budget a convention could fill this entire issue of Franchising World magazine. Instead, the focus will be on maximizing the ROI of budgeting for convention production costs.
The ABCs of RFPs
Appropriate presentation support in the form of staging, lights, audio, video, slides and additional physical production elements will be required whether the convention takes place in a hotel, convention center or other meeting venue. If these specific needs have already been quantified, perhaps from the previous year’s convention, it may be desirable to create a Request for Proposal for outside production vendors and the in-house audio-visual company, if applicable. Ideally, the RFP should include any specific information that will affect the budget. For example, in addition to the daily convention schedule, a production company will need to know when they can first access the venue to “load in” staging and audiovisual equipment, and when they are required to “load out.” Insufficient loadin time can result in onerous overtime-crew-labor rates. The franchisor’s meeting planner may be more focused on the attendees’ onsite schedule than on securing the general session meeting space well in advance of the first session; an oversight that may cost thousands of dollars.
Budget-cost overruns can be caused by inaccurate, incomplete or optimistic pricing. Even a well-written RFP does not guarantee that each proposal will address all needs appropriately or fully.
Comparing each proposal’s equipment, labor and management costs against the others can be like comparing apples and oranges. Requesting a detailed line-item budget from proposing production partners will help with this undertaking. Key questions franchisors can ask themselves when comparing submitted budget proposals include:
• Does the budget include a full itemization of all equipment, including projector lumens (brightness), number of lighting instruments, and other
details so that quality and quantity can be evaluated against dollars spent?
• Does the budget include all crew labor, including load-in and out, general sessions, breakouts and all other convention needs?
• Does the budget estimate venue costs for rigging, power and security?
• Does the budget include a realistic estimate for labor overtime?
• Does the budget include sales tax?
As with the selection of any vendor, the lowest bidder may not be painting a realistic picture. While surprising the audience may be desirable, surprising the client is never a winning move.
Selecting a Production Partner
In addition to providing quality and appropriate AV at competitive pricing, a production vendor who can offer the added value of creativity, strategic messaging, meeting planning expertise that can greatly increase the ROI of the convention, and help deliver the franchisor’s goals and objectives. These services can include advance coordination with company staff and convention venue, agenda planning, graphic design, consultation, presenter-coaching rehearsals, continuity scripting, staging, entertainment and complete onsite production management. The advantages of these services will likely far exceed their costs.
In evaluating a potential producing partner’s team, consider asking the team to review your prior-year meeting and offer suggestions for improving its effectiveness and impact. Ask which creative suggestions would be used to strategically support your objectives. Ask for examples of how the team has successfully brought cost-effective “high-touch” to previous projects. Which presentation methods are recommended for your situation? Ask how the team has handled recognition for large groups and how rehearsals are handled.
When checking production company references, it is important to inquire as to the accuracy of its budgeting and whether the client received any postevent cost surprises.
To spend or not to spend
Even with a relatively large budget, choices must be made on where to spend convention-budget dollars. A first-class, well-executed convention can tangibly reinforce a company’s commitment to quality and demonstrate to franchisees that they are held in high esteem by the franchisor. However, professionalism doesn’t need to equate to expensive special effects and supercharged videos. Today, dazzling visuals are everywhere: essentially anywhere a flat-screen monitor or projection surface can be found. Our society is currently overwhelmed with technology and as has been reported in several recent studies and books, people miss the human connection.
An option that is both strategic and cost-effective is to use the convention as an opportunity to present “live.” After all, if the message can be delivered solely via video, why spend the money on bringing franchisees face to face? Including franchisees and corporateteam members in general session presentations, especially in alternative formats such as interviews, onstage testi- monials and role playing, will engage the audience and in turn, will enhance learning and retention. Further, a live component can reach both the minds and hearts of attendees, creating a stronger bond between franchisor and franchisee.
While a company’s previous convention budgets can provide a helpful road map to the future, they can also lead to unnecessary or ill-advised spending. Taking an objective look at each year’s budget, line-item by line-item, will assure that spending is not based solely on “we’ve always done it this way” or “that’s what it cost last year so let’s plug that number in again” thinking. One can retain time-honored convention traditions and still find significant areas to rejuvenate such as agendas and presentation formats. A new look or dramatically-different schedule can offer significant cost savings while creating buzz and excitement to energize franchisees.
Monitoring the Process
Once the convention budget has been approved and distributed to stake holders, any and all subsequent changes must be documented. If the franchisor requests the change, the production partner should submit a detailed cost estimate for written approval prior to the event. The production company should be directed to promptly contact the franchisor any time there is a possibility of unforeseen additional expenses. A paper or e-mail trail is essential to keep the budget on track and to help clarify any questionable charges. If known early enough, unanticipated cost increases in one department may be offset with savings in another, without detriment to the overall event.
Following the convention, a debriefing with key players should be scheduled as soon as possible to review the event’s effectiveness and any cost savings or overruns. After carefully noting what worked well and what may need improvement, create a forwardthinking document that will help guide the budget process for the following year’s convention. For example, perhaps this year’s budget included a substantial cost to have a live dance band (with the related expenses of crew support, additional AV rental, and food and beverage) following the awards banquet. But only a few couples stayed to dance while the majority of franchisees left to mingle in the lobby or venture beyond to enjoy the convention city sights. Next year’s convention budget can then reflect the cost savings of eliminating the band or can incorporate those funds in another area.
A winning formula for successful convention budgeting combines equal parts number-crunching, key goals and objectives identification, and strategic planning, with a healthy dose of postevent evaluation and a fresh look at the coming year.
Linda Goldman, CMP, is vice pr esident of Harris Goldman Productions, Inc. She can be reached at lgoldman@harrisgoldman.com or 619-299-7951, ext. 13.
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