We all read about the effects of the recession on a daily basis. For the exhibition industry this usually means staff cuts and show cancellations or worse still, organisers and suppliers going into liquidation or receivership. We rarely hear about the smaller entrepreneurs for who the failure of a show would mean the end of their business. Below are four accounts from the front line.
Carsten Holm, MD, Diversified Business Communications
DBC UK, a division of Diversified Business Communications in the US, employs 22 staff running five events, including Natural and Organic Europe.
“We started to feel the effects of the recession towards the end of 2008. We received great feedback from the launch of Lunch and then everything ground to a halt; the exhibitor leads just didn’t convert.
Across our portfolio of events, previous years’ sales patterns showed that contracted sales levels were 25 per cent of where they should have been in order to hit our targets.
“We wanted to avoid staff cuts and were honest with the team about the situation. We decided to spend more on travel as I felt we had to visit more overseas shows for sales leads and we also spent more on marketing. However, cuts had to be made somewhere and I encouraged the team to treat this as a game; how could we achieve the same level of features with significantly less spend? They came up with massive savings and the challenge completely changed their attitude to the cost base.
“In the end, we came out of our last financial year ahead of budget. The audience for the second edition of Lunch was up 30 per cent reflecting the focused boutique nature of the show and we launched our next new show, Office. Launching in a recession didn’t scare us as in a new event there is the opportunity for exhibitors to start with a smaller stand, meaning a better ROI.
“I feel 2010 will be tough but we have a rising star in Lunch and are looking at other launches. One of the main benefits of the recession is that we will come out of this with a fundamentally lower cost base.”
David Townsend, MD, M2 Events
M2 Events is the smallest organiser we interviewed with just two full time staff and two events.“For us, the recession started to bite in November 2008. At that time we only had one event, Triathlon Cycle Running, a consumer show for the Triathlon sector. We were fortunate that we had more or less sold the show for the February 2009 edition so the main effect was a slowing down of exhibitor payments, which obviously hit our cash flow. Staff cuts weren’t an option as it’s just me and the wife as full time employees.
“I was more concerned about the visitors, and the snow the weekend before the show didn’t help stress levels. However, we were delighted that the attendance actually increased year on year and onsite spend was up. Exhibitors can’t really downsize as they already have small stands, so the future of the show is looking good with the 2010 show almost sold out, which is unusual at this stage.
“I think we have benefited from the recession as expectations were very low and everyone was pleasantly surprised. People are running more as they cut back on gym memberships and cycling more to cut back on car usage.
“We also launched the London Running Show. Despite the recession I didn’t see it as a risk as we saw the gap in the market and were able to leverage existing relationships. It may be that the economic climate meant that the larger organisers didn’t want to take a risk on a new launch, so we had a free hand and our launch edition will have all the major brands exhibiting. So, despite cash flow and therefore bank problems, we’re having a good year.”
Thom Hetherington, MD, Moorfield Media
Moorfield Media is a Manchester-based organiser with 12 staff running six exhibitions including Northern Restaurant and Bar.“The media was already foretelling an economic upheaval in autumn 2007, which caused a slight tailing off in our 2008 Spring shows; small, but noticeable to us. It was through the poor rebook, off the back of good shows, which showed the first significant commercial impact on our business as clients said: “Good show, but no one knows where we’ll be this time next year”. Then it was a battle going through to the 2009 spring shows, although we delivered good and profitable shows, and had a better rebook than the previous year.
“In order to maintain profitability we went through a root and branch review of the show budgets and found significant savings. We also spoke to all of our major suppliers, from contractors to venues to landlords, and found them sympathetic and supportive. They were willing to be flexible on payment to sustain and indeed reinforce the ongoing commercial relationship.
“We didn’t want to compromise on the value we had built up over the years so we used our partnership relations to land a new management contract (Great Days Out), which helped a lot in spreading our overheads.
“We’ve also launched a new show, Hubbub, for the marketing sector. This could be considered a risk in the current economic climate, but the nature of the show means that most upfront costs have been offset on a contra basis, which is a great help when cash flow is tough. For example, the creative marketing cost is a contra against a sponsorship and this means greater involvement from a supplier than would otherwise be the case.
“2010 won’t be about growth, but our shows will be profitable. We will come out of the recession with more shows, more partnerships, the same staff who are now battle hardened and an all-round better team spirit than previously existed.”
Quartz had 20 staff running four exhibitions including IMHX (Materials Handling). Following the acquisition of the DMG Redhill business it now has 54 staff running 17 exhibitions and publishing seven magazines.“Our markets are very traditional; cleaning, materials handling and logistics. Unlike some of the newer, more sexy industries, there is always a tight hold on marketing budgets even in the good times, so we knew that in recession we would have a very challenging year.
“We decided that it would be the wrong approach to cut costs drastically and hope the economic situation would pass us by. Instead, we encouraged our sales team to get out even more, talk to their clients face to face and help them by looking at better ways to market their products.
“In March 2009 we had the big Cleaning Show at the NEC amid great negativity from the industry. Even though the show was sold out several exhibitors pulled out thinking it was better to lose the money for the stand space rather than commit to spending more money on participation.
“We knew we had to produce the right quality and quantity of visitors. We spent more money than budgeted on visitor promotion and put together marketing incentives to encourage exhibitors to invite their customers. We put on fun activities in strategic parts of the hall, such as time trials for rides on cleaning machines to draw the visitors through the show.
The end result was the best Cleaning Show for several years. There was a real buzz in the hall, visitor levels were slightly up on previous shows and exhibitors were ecstatic because the right people came and wrote genuine orders.
“We also decided that 2009 would be a very good time to buy shows as there would be a lot of people suffering due to cash flow. Keith Harris and I formed part of a syndicate called VOS Media to buy The Ski Show and Magazines, Vitality Show and the Outdoor Show, and we also bought the majority of DMG’s B2B business based in Redhill.
“2009 was a better year than it might have been and the next few years will prove whether or not our strategy of buy and expand in the recession was the right one.”What is interesting about the stories above is the refusal to compromise on quality or to downsize, because losing the value painstakingly built up over the years just wasn’t an option. What was more surprising was the appetite for launches and acquisitions.It demonstrates that entrepreneurs often think counter-intuitively and, as a result, each of these companies will emerge fitter and stronger from the recession.