The Cost of Doing Business

January 6, 2018 | Author: Anonymous | Category: Business, Economics
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The Cost of Doing Business

Society of Government Meeting Professionals Education Resources Networking A Gilmer Institute of Learning Presentation www.sgmp.org

Goals of Today’s Workshop • To demonstrate the factors that determine how a government meeting is planned • To explain the perspectives of both meeting planners and suppliers • To introduce you to resources offered by SGMP

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In today’s environment the cost of an event is influenced by many factors • • • • • • •

Demand versus supply Scope and size Potential cost Potential profit Cut backs Budget Others? www.sgmp.org

Most Government Meeting Planners… • Have limited on the job training in meeting and event planning. • Wear many hats – planning events are usually part of “additional duties as assigned.” • Plan most events with a bottom line, breakeven objective.

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While Most Suppliers… • Are “green” when it comes to the government market. • Do not know how to find a government meeting planner. • Receive limited training in event planning.

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Now let’s look at the cost of doing business from both the planner’s and supplier’s perspective

Let’s start with the planner’s side www.sgmp.org

Planners need to know their financial goals and limitations Cover costs

Make money

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Planners should identify all costs and potential revenues based on: • Meeting history • Estimates from printers, vendors • Hotel sales kit samples (F&B, AV, meeting room charges, taxes, gratuity) • Know current per diems • Sponsors, grant money, registration fees

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Planners should format their budgets so they can be clearly understood • Organize all expenses under cost centers • Show how registration costs are determined • Keep notes of how potential costs are calculated www.sgmp.org

Planners should determine break-even attendance • Use meeting history if available • Know your audience • Determine any potential conflicts (holidays, transportation) • Be realistic • Remember guarantee counts are paid for even if they do not attend!

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Break-even forecasting Fixed Cost – expenses not dependent on attendance. Examples: Meeting Room Rental A/V expenses

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Break-even forecasting • Variable Costs – Varies by number of attendees Examples: Food and Beverage Parking

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Break-even forecasting • Contribution Margin – The amount each attendee “contributes” towards fixed expenses

Contribution Margin = Registration Fee – Variable Costs

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Break-even forecasting Break Even Attendance – What you need to cover your costs

Total Fixed Costs Contribution Margin (Registration Fee – Variable Costs)

Break Even Attendance =

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Break-even forecasting It wouldn’t be any fun without an example!

Your registration fee is $20. Your supplier charges you $1,000 for room rental, $100 for audio visual, and you pay $500 for a speaker. You are charged $10.00 per person for food and beverage service. How many attendees do you need to cover your costs? www.sgmp.org

Break-even forecasting Your registration fee is $20. Your supplier charges you $1,000 for room rental, $100 for audio visual, and you pay $500 for a speaker. You are charged $10.00 per person for food and beverage service.

How many attendees do you need to cover your costs? Break Even Attendance = Total Fixed Cost / (Registration fee – Variable Costs) Break Even Attendance = ($1000 + $100 + $500) / ($20 - $10) Break even Attendance = $1600 / $10

Break Even Attendance = 160 www.sgmp.org

Planners should know the travel policies • Federal • State • County and Municipal

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Let’s Talk RFP!

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What will the Supplier be looking for in your RFP? • • • • • • •

Number of Rooms Rooms to Space Ratio Date and Pattern Catering Revenue Potential Meeting Room Rental Audio Visual Revenue Other Revenue Centers

Why is all of this important to Suppliers? www.sgmp.org

Planners, you know what your meeting should cost you, what will it cost the hotel?

82% of total costs come from: • • • • • •

Labor 31.6% Food 19% Benefits 8.2% Cost of Sales 4.5% Management fees 5% Security 2%

• Admin

and Accounting 3% • Laundry 2.6% • HR and Engineering 1.5% • China Glass Linen 3.6% • Uniforms 1%

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Learn hotel profit margins • Beverages 18%-21% • Banquets 35%-38% • Guest rooms 70% to 75%

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How can Planners be Suppliers’ partners in business? • Give accurate information • Be flexible with dates • Work with Suppliers that understand your business (like SGMP members!) • Keep histories of your past events • Don’t let the lowest price for your RFP be the deciding factor. Remember value also should be considered in your decision • Know the difference between your needs and your wants • Be realistic when making your budget

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How can Suppliers be Planners’ partners in business? • Understand the RFP process • Know your hotel’s profit margins and how to evaluate the business • Be willing to work with per diem rates and menus • Be able to offer value added incentives to help planners keep costs down • Be proactive and create government meeting package based on planners budget • Be flexible and offer more than one option on dates • Be creative with per diem priced menus

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How can you maximize your business skills & knowledge? • Education • Resources • Networking Your Keys to Professional Development Through SGMP

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Education • Consider earning your Certificate in Government Meeting Planning (CGMP) • Earn CEU’s for meeting management seminars and workshops • Participate in SGMP’s National Education Conference • Attend monthly chapter meetings

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Government Connections Naylor, LLC Is Our Only Official Advertising Partner

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Online Suppliers Guide

Naylor, LLC Is Our Only Official Advertising Partner www.sgmp.org

SGMP Web Site

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Networking • Attend chapter monthly meetings • Attend NEC & EXPO • Join professional meeting planning organizations -- such as SGMP! • VOLUNTEER!

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Shake hands… you are partners in the cost of doing business.

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Thank you for attending today’s session. You earned .125 continuing education units & enhanced your skills! Please don’t forget to complete the evaluation form before you leave.

A Gilmer Institute of Learning Presentation Created by Charles Sadler, CGMP, CHSP, CHSC

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