Why Event Planning Businesses Fail
Meet Melissa. (She did not want to share her last name.)
Melissa is an extremely accomplished event planner who spent 10 years working in-house planning events for corporations and non-profits, where she did incredible work.
Around 18 months ago Melissa decided to go out on her own and started her own event planning business.
Last month her business closed, after running up $45,000 in debt.
What happened? The quality of her work didn’t change. She still provided great service to her clients, still managed her events with care and precision, still brought creative and cost-effective ideas to the table.
What happened was Melissa had a lot of trouble running her business. “Honestly,” she said, “I didn’t realize how much was involved on the business side. I saw how much we paid our outside event companies when I was in-house, so I had a pretty good idea of what the fees could be, but I completely underestimated not only the costs of running the business, but the time I’d have to spend on non-client issues.”
Melissa is far from alone.
This past May marked the 5 year anniversary of when I sold my event planning firm, Paint The Town Red, which I ran for 20 years, to the Global Events Group of Spain. In the years since then, I’ve consulted, taught and lectured on the business side of running an event company, among other topics, and a common theme tends to emerge.
A Common Thread
Nobody wants any advice on how to plan, design, execute and manage their events. That part they have down cold. It’s all the other stuff on the business side that proves challenging to them. How to get more clients, what pricing model to use, how to know if they’re charging enough money, how to manage their staff, how much to spend on marketing and where, etc. It’s the business elements, not the event planning, that is causing these companies to struggle.
Two of the most common pitfalls I’ve seen are:
- Failure to manage their pipeline of developing new business. They get absorbed in producing events for their clients, and put off going after new ones until its too late.
- Pricing their services too low, because they don’t factor in the time it takes to run the company. They assume they can do X number of events a year, because that’s what they did when they worked for someone else, and forget to factor in the time it takes to manage the business.
Doers vs. Managers
I was continually amazed at how many people go out on their own, whether as solo independent planners, or heading up larger companies, without having much of an idea on how to run a business. In researching the broader small business market, however, it turns out it’s not that amazing after all.
It seems there is a fundamental disconnect among would-be entrepreneurs on the difference between being good at a craft (like event planning), and being good at running a business selling and providing that craft to customers. In fact those are two completely different skill sets. To produce successful events you must be a good doer; to run a successful event planning business, on the other hand, you must be a good manager of the doing.
It was no surprise, therefore, to find that of the six topical tracks of on-demand videos in our Class Library, the Business track was the most popular. This is also why the first instructor-led Professional Development Course we are rolling out is on this very topic. The Launching Pad: Starting Your Own Event Company will be a 6-week online course that I will be leading beginning September 9th, which will provide a blueprint for independent planners to build successful businesses. This course will focus exclusively on business skills such as finance, pricing, marketing, prospecting, branding, positioning, insurance and more. In other words, everything but the event planning.
To be fair, there are lots of independent event planners who are both skilled at their craft and at running a business. And there are those who bring on a partner to manage the business for them. The first step is simply recognizing the difference between the doing and the managing.
A great example of this is in sports. Phil Jackson and Pat Riley were mediocre basketball players in their day, at best. As coaches, however, they are among the best of all time, having won 15 titles between them. By contrast there are plenty of people who were great players in their day, like Hall of Fame guard Isaiah Thomas, who proved utterly inept at coaching a team.
They’ll all be the first to tell you that there’s a world of difference between excelling at playing vs. managing.
Interesting . Not only for event planners but also for other businesses. I like honest people who can be bold to say they failed at some point and would want people to learn from their mistakes.thank you.
Thank you for sharing this Great post! people who are planning to be an event planner should read this. to avoid failure on their business.
I believe we all have to be on our toes to meet the needs of the new generation that have free on their mind. Meaning they are using to be given things to do things themselves. Keep these things in mind when starting any new business in this area.
I see this happen also to many wedding vendors. I have always given the example as someone who make cupcakes and put all their attention on making cupcakes but forget the business side of making cupcakes.
Thank You for sharing this! I’ve been in business for a while and work full-time and I feel like I’m ready to go out and run my business full-time, but your story is a reality check and I will sign up to take the course.
It sounds like your course will be great. It holds true for most any business (event planners and professional magicians alike) that one must find the right balance between delivering the art or skill for which you are hired and actually running the operations of the business.
Very insightful article. Thanks for sharing.
This was an informative article and I am glad that you shared. It is easy to understand how someone who is an expert in a specific field can fail if they are not savvy in running a business.
Great article… Networking in different groups is a must and always be mindful of your Brand.
GREAT article. This is why NETWORKING is so important!
Good article but important to note that there a lots of independent event planners that have masteredthe art of running their own business and planning their clients’ event to operate successful companies event planning business.
Well said! Awareness is the first catalyst to change, and kudos for now paying it forward, and going to teach others from the lessons learned.
Very interesting article….the difference between to be a doer and a manager, yes for sure this can bring to a good awareness of what your business needs to be successfull.
Great read Howard.
Great content!
I particularly liked it when you said, “To produce successful events you must be a good doer; to run a successful event planning business, on the other hand, you must be a good manager of the doing.” As you guys note, those are two different things that people don’t always appreciate. Thanks for writing and sharing Howard!
Great reading. I will be following you and your class on Sept 9,2013.