Preparation is over – It’s time to get back in the game
This week (March 8, 2021) marks two coincidental milestones. For many of my followers, it is exactly one year since the bottom fell out of the event industry as a result of the Covid-19 Pandemic. Secondly, as of this past week, we have learned that the Biden Administration is predicting that the US has secured the capacity to vaccinate all citizens by June.
In a nutshell, our potential reopening has, in a matter of the past several weeks, moved up by several months.
This good news strengthens previous predictions that in-person events will resume lightly in Q3, progressing into Q4. Next year we will see rapidly growing demand starting with true hybrid events. However, there’s a big “but…” that needs to be explored.
In the event production industry – especially in the asset rental segment – I estimate that 60% or more of our old workforce in not currently employed in our world. Many are ready to come back, but a huge number have moved on. To put this in perspective, my average client is operating at 30% of pre-pandemic FTEs (full-time-equivalent) staff compared to a year ago. They are also generating 50% of previous revenue – and get this – at a higher overall profit!
Having said that, most of them are not happy.
What would make them happy is loading trucks, rehiring teams, and doing shows. Well, your wish is coming, but if you didn’t prepare correctly, then kiss those hard-won profits goodbye.
Here’s the problem:
Without people, our supply is low. While demand would seem to be increasing, rebuilding supply ahead of demand has a major flaw. You weren’t really profitable before (compared to industries that require huge amounts of capital and high risk) and going back to business as usual will only make the problem worse.
Let’s look at this strategically. We are balancing three spinning plates: supply, demand, and quality.
How to Balance Supply, Demand, & Quality
Don’t panic. Supply, demand, and quality are controllable INPUTS. You can add or reduce energy to each element to suit your needs and maximize profit. Where does the energy go?
Supply is your ability to deliver. Many of you call this Operations, but it includes your entire supply chain (and your mastery over it). Organizing your delivery system to maximize throughput instead of output.
Demand comes from well-executed branding, marketing, and sales. I shouldn’t have to tell you how important this is, but you might want to learn how to do it more intentionally.
Quality isn’t about getting it perfect. It’s about getting it right. Don’t let perfect get in the way of good. Quality is more about meeting expectations than eliminating flaws.
Profit means you have figured out how to spend less money than the revenue that comes in. Why is it, then, that many companies have to create revenue to cover their overhead before they even hope to make a profit? Something’s wrong about that!
Balanced (Supply + Demand + Quality) = Profit
If we misjudge any ONE of these three inputs, profits will suffer. Do the thought exercise for each element:
If we neglect supply while maintaining quality to meet demand, supply will cost more. Profits will dwindle.
If you neglect demand but have lots of supply at good quality, you will lower your price and profits will drop.
If you over or under-deliver on quality, both your supply and your demand will become confused. You guessed it, profits will shrink.
The secret sauce of small business is keeping all three plates spinning through the ups and downs of the economic cycles that you have no control over. Fail, and profits shrink. If we get these plates spinning together, the profit will be there.
The first step in knowing what to do next is understanding where you are now.
If you feel like your strategy is out of balance, let’s discuss what we can do about that.