While targeting new markets can be vital to surviving a recession, the process takes time and brings surprises, according to those who have been through it.
Although breaking into new markets and offering new services can be vital to staying afloat in tough times, the process often takes more time and costs more money than special event businesses originally planned. These findings were presented at the session “Targeting New Markets in Challenging Times,” held in August during ISES Eventworld in San Francisco.
The team of Richard Foulkes (Imagination Group, London), Michael McCulloch (Regal Tent Productions, Stoney Creek, Ontario) and Sally Webb, CSEP (The Special Event Co., London and Durham, N.C.), shared the candid responses of a dozen special event companies they interviewed that forged into new markets. While the companies eventually succeeded, they learned some surprising lessons in the process.
IT JUST FEELS RIGHT
The businesses launched by respondents varied. Some began offering their products and services in new regions while others went into entirely new endeavors. For instance, one wedding planner opened a retail shop offering goods for brides, while an equipment supplier built a venue where its products would be needed. “In difficult times, your biggest revenue stream will come from your existing client base,” Foulkes noted.
Some respondents researched the potential new markets extensively before committing to the new venture, and others hired business-development consultants. Yet some relied purely on gut instinct. When asked how he assessed and targeted a new market, one respondent replied, “We didn't, unfortunately … We felt we could drive the market because we felt our region was about a decade behind other similar markets in regard to quality and price.”
Webb noted that her U.S. expansion of her London-based company was “totally client-driven.” As another respondent put it, “First, I merely fulfilled requests. When clients asked if I could do something internationally, I said yes.”
Many respondents admitted that they did not foresee problems they would encounter. These included international currency fluctuations (which led to money-losing projects), resistance of staff to the new project, culture clashes and the risk of diluting a strong brand. And no matter how great the owner's enthusiasm for the new project, its demands will come on top of running the original business. One respondent said, “Your client is in China. The event is in France. When do you sleep?”
HIRING CAN BE A HURDLE
Many respondents said that staffing properly was a huge hurdle. “There is nothing more important for success than putting the right people in the right places,” one respondent said. “One person might be incredible in one position but not qualified or experienced to handle another.” As another put it, “It is only now after nearly 10 years that we feel we have found the correct team.”
Cultural norms can come into play as well; for example, some cultures value punctuality while others do not. “Understanding the local culture needs to be the primary focus with a geographic expansion,” one respondent said. “Hiring locally is a must.”
And of course, the economic free fall has upset event ventures worldwide. As one respondent said, “It was sometime in 2008 when we decided to extend our operations to the Middle East, and Dubai was of course the location of choice. And then came the events of the latter half of 2008, the repercussions of which continue to be felt till today, most significantly, in Dubai.”
Many respondents said their new ventures took far more time and money than they initially planned.
Profitability took a hit, one respondent said, due to failure to include all new costs incurred. “Keeping my office running by phone and fax was something I forgot to charge for,” the respondent said. “I had no clue about work permits, and they cost a bundle.”
Delays in building out a new venue meant that one respondent's expenditures on marketing went to waste: “Some marketing efforts were done too early and rendered some of the leads unusable or less effective.”
And even careful planning was no guarantee of success; one respondent said, “You do everything 100 percent textbook and for some unexplained reason, the outcome was an absolute disaster.”
IF I KNEW THEN …
If they were to do it over again, most respondents said they would be prepared to invest more time and more money.
“Whatever your budget for expansion, add 25 percent,” said one. Said another, “Don't underestimate the amount of management time required, the amount of equipment that will be needed, the logistics of getting everything there on time, and the importance of having procedures in place to handle the inquiries and to convert these to confirmed business.” Said another, “Though the two entities feed each other business, they do operate separately, and that is creating a generous amount of duplicate work that I never anticipated.”
DO IT AGAIN
Although the way their new projects got off the ground surprised most respondents, most all said the new venture was worth it.
Indeed, one respondent said that launching the new venture even made the original business better: “We have been forced to be stronger operationally; we've developed more internal structure and are much more efficient.”
Despite today's tough challenges, McCulloch noted that half of the top Fortune 500 companies started in times of economic uncertainty. “Recessions are a great time to find the motivation,” he said.
Regal Tent Productions
The Special Event Co.