The Changing Face of Rental & Staging

By Tom Stimson On January 10, 2011

What It Means Today to be a Mid-Sized Stager

Today, only a few things divide the small stager from the large. Typically I would say a small stager is a company that as a rule doesn’t exceed its capacity. They tend to have mediumsized events going at the same time. A mid-sized stager will occasionally sell beyond those limits and to that end will grow in a good economy. They often shrink very quickly because they rely on inbound sales instead of seeking new markets. Mid-sized revenues tend to bounce around between $4 and $8 million. Large stagers are people that won’t take no for an answer. They regularly sell beyond capacity and know how to scale resources to meet demand. They attract business because they seem to have no limits to what they can do. We don’t see many $10-15 million companies because, once they’ve reached that level, they either get much larger or implode. The larger companies today start at $20+ million in revenue then take off from there in broadly diversified business models. What do the largest, most successful companies have that you don’t? Here’s what I notice:


Geniuses: Genius is a major differentiator in the eyes of the high-end event producer. Experts aren’t that hard to find, but many folks don’t recognize when they’ve found one. Geniuses are often high maintenance, and even harder to keep focused on billable work, but in a pinch they can perform miracles. The small stager I described above rarely has an in-house genius, but every midsized stager has had at least one. Large firms tend to have a genius in every discipline, plus one more all-around innovator. Most managers think that businesses get big first, and then hire this talent. It’s the other way around. Companies that first develop their inner mastermind are primed for growth. And for that they also need…

Sales: The big stagers have something else in common: a top business development person that exudes confidence, is capable of ferreting out profitable customers, can talk solutions without committing to plans, and knows how to change the course of a negotiation. The top stagers have more than one person like this or an owner or top executive that fits the description. Most mid-tier stagers lack this key person, and it’s one of the reasons they remain in the middle.

Before you inundate me with emails about how to find a rainmaker, please understand that this is the Holy Grail of the events industry (that, and really good operations executives). Take a look at your sales team. Your top sales people are probably very Before you inundate me with emails about how to find a rainmaker, please understand that this is the Holy Grail of the events industry (that, and really good operations executives). Take a look at your sales team. Your top sales people are probably very

Channels: Large companies have dominated the producer channel, especially at the national level, but that seems to be changing. The good news is that big shows seem to be back in fashion, but the price competition is fierce, and that creates opportunity for regional players. Large events seem glamorous and certainly help concentrate revenue. With larger events regularly running at $200,000 to $500,000, it doesn’t take many to turn an average month into a recordbreaker for a mid-sized stager. On the other hand, the margins for national production events are low compared to regional shows. Big stagers compensate for this by continually purchasing new inventory to maintain optimum depreciation levels.

The lesson here is that, in order to become a big stager, you have to start thinking like one. Invest in the right talent and equipment — which is not as simple as it sounds — and be willing to tax your resources on a regular basis. No pain no gain as they say.

 


Tom (T.R.) Stimson, MBA, CTS (tom@trstimson.com), is president of The Stimson Group, a Dallas-based management consulting firm that provided strategic planning, market research, and profit-throughprocess services to the audiovisual industry.

 

How to Analyze Your Revenue

If I were to ask you what your business mix is, how would you answer? Most companies struggle with this question and, as a result, they have difficulty finding more of the right kinds of business. This is important. Sending sales folks out to find new business without knowing what that business should look like is a formula for disaster. In addition, an operation has to be ready to handle a predictable mix of revenue or margins will suffer. By analyzing revenue you can get a clearer picture of what your prime business really is.

Step 1: Identify the top 20 percent of your customers (this is probably 80 percent of your revenue) and list all their projects individually for the preceding 12-month period. Going back too far might take you into another economic era. Keep the time frame tight.

Step 2: Define between five and ten transaction types for your company. My basic guidelines are to divide orders between rentals to the trade (sub-rental customers), dry-hire rentals to end users, small event orders (no more than one operator, generic equipment), staged events (stock systems, little or no customization), custom events, and one catchall category for everything else.

Step 3: Classify every project in Step 1 according to the guidelines of Step 2. Put it all in a spreadsheet. If you have the gross profit for each order available, add that in there, too.

Step 4: Generate reports for each segment in Step 2 and each customer in Step 1 (Pivot Tables are great at this). You will end up with a list of top customers for each transaction type and top transactions for each customer.

Step 5: Analyze the top ten customers according to where they spend money and who generates the most gross profit and why.

Step 6: Analyze the most profitable revenue types and who the top ten customers are in those segments.

Be prepared for some surprises in terms of which kinds of projects make the most money and bring in the most revenue. You’ll find that your best customers come in two flavors: [1] Companies that generate highblended gross profit and [2] Customers that need your most profitable services. Armed with this information, you should first work on making borderline customers more profitable by either selling them alternate services or increasing the per-project margins. Next step is to find more customers like your best customers — the ones that buy your most profitable offerings. Happy hunting.

—Tom Stimson CTS

 
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