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Event Profit Margins and Why You Need to Know Them

I had the pleasure of speaking at Biz Bash last week in Florida. I sat in on Todd Fiscus‘ Innovation Forum talk while I was there. He shared his thoughts on how to design events smarter.

Photo credit: Lending Memo - lendingmemo.com

Photo credit: Lending Memo – lendingmemo.com

Being the numbers girl that I am, I really perked up when he talked about event profitability… specifically managing your event budgets. I’m not talking about your client’s budget – tho it does apply. I’m talking about the budget that you have established for each event. You have that, right?

This is what I’m talking about…

client is paying you $20k to design their event
your cost budget for this event is $6k… meaning you have $6 to spend on materials, labor, etc.

If you track your profit and cost margins (and you should), you’ll know that a $20k wedding sale minus $6 k in costs, leaves you with $14k… or a 70% profit margin*. Nice!

You need to have a profit margin benchmark when preparing to service your client… this applies to you whether you are an event designer, or a photographer, or a filmmaker, or a stationer. If you’re a filmmaker, you need to know upfront how much money you have to work with when hiring a second shooter, when outsourcing to an editor for post-production. How much of a cost budget do you have to work with for a $5k job vs. a $10k job?

And… then… the trick is to manage that event’s cost budget… watch it closely. Being successful and profitable with events is so heavily reliant on that profit margin… the bigger the better. (We aren’t selling bulk widgets here at 10% margins… services need to have nice hefty margins.)

What’s a ‘good’ profit margin? Ahhh… it depends on so many factors: what you do, what you sell, who your clients are, what your overhead expenses are, how much you want to earn from your business. You need to find that profitability sweet spot that works with YOUR business model!

What are your thoughts on this? Have you seen this in your business? (Confused? Need help figuring out your profitability sweet spot? Shoot me an email and I can help: michelle@sageweddingpros.com .)

________________________________
*Profit Margin is calculated like this:
Gross Profit / Sales = Profit Margin %
or
Profit from one event / Sales Price = Profit Margin %

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May 14, 2014 - 8:18 am

The Mamones - This was a great reminder of the “numbers” information we learned all about during the Simple Plan Workshop. We use this calculation ALL THE TIME now to ensure we are hitting our target margins. As a photography team our margins are typically between 80-90% since we offer a VERY personal service and can only work with one couple on a given wedding day. Thanks for keeping us inspired to watch the numbers ;-)

D+E

Business Plan Case Study: Sugarcomb

We feel pretty strongly that a business plan can help you to define your business goals and give you a road-map for the future of your company. But, what makes a company that has used a business plan different from others? How has a business plan made the difference for that business?

Here’s a pretty cool stat: of the 15 business owners who attended the very first The Simple Plan workshop in Seattle 2009, 14 are still operating (and THRIVING at leaps and bounds!)

Kelsey Eads by James MoesWe recently talked with Kelsey Eads, owner of Sugarcomb. Kelsey was in her start-up phase when she joined us. I’m in awe of the strides she’s made in 4.5 years. We don’t see a lot of business owners in the wedding industry make it passed the 2 year mark, let alone accomplish what Kelsey has in the last several years since The Simple Plan.

Kelsey shares what business planning has helped her achieve…

Why did you decide a business plan was important/necessary?

I wanted to develop a strong business and hop out of hobby territory as quickly as possible. A business plan was the perfect way for me to focus my outlook from one structured point-of-view and direction. It makes such a positive difference when your business has a firm baseline to help you make decisions and growth from.

What were some of the biggest ‘A-HA’ realizations you had while working on the business plan?

For me, the biggest eye opener was learning to map out and forecast finances the right way. It’s an honest face-to-face with money, the short-fallings and potential, and I think it’s the point that really taught me how hard I’m going to need to work to make Sugarcomb the success I was aiming for. It’s a reality check that every business owner should experience.

How have you used the business plan to move your business forward?

Every year when I revisit Sugarcomb’s business plan I realize how much everything has evolved. It’s a great checkpoint to look back on and to help you refresh and feel growth as you make updates and dreams for the next year.

What are some of the biggest improvements you’ve made in your business?

I’m very independent, but over time as my business grew, I came to realize how ideal it would be to have someone to collaborate with and to have the flexibility to take on more projects. I wasn’t actively searching, but in the past year I met Tara, Sugarcomb’s new Planning and Design Lead, and working together was the perfect fit for where we were both at in our careers. It’s been a great learning experience for me to hand off responsibility and to balance what the business needs from the two of us now. For a Type-A like me, it was a scary step to take, but the growth, benefits and new potential have made me so happy with this new direction and the way that Sugarcomb can grow from its new normal.

Have you had measurable improvements?

It has taken time, but every year has brought increased revenue. In the beginning there was a lot of testing and guesswork that went into advertising avenues, pricing my services, and deciding what expenses were necessary to uphold the integrity of Sugarcomb, and which were not. It’s a balancing act, but the best way to figure out what is right for you and your unique business is experience and, when available, great advice. I’m constantly learning how to streamline finances; being diligent about keeping records and notes on what is working and what is not is a great thing to have by your side when you revisit your business plan every year.

Thanks Kelsey!

You can read more case studies here. Find our workshop schedule here.

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May 18, 2014 - 10:24 pm

Naomi - Thank you for this case study! Insightful especially keeping notes about what worked and what didn’t.

May 27, 2014 - 9:58 am

Michelle Loretta - You’re welcome! Glad you liked it, Naomi.

Branding Case Study: Doodle Dog Creative & Pretty Little Bash

From time to time we invite one of our Sage Branding Specialists to share some of their “before and after” design work with us.  By learning from these case studies you’ll be better able to see branding identity go through an evolution, gain strength, and come to life.

Nikki NuckolsThis is a super exciting brand redesign for me to share with you! Megan Papoi, owner of Pretty Little Bash, partnered with me for several months on her business strategy. One of the first challenges she came with was that of her business name at the time (A Perfect Plan by Megan). She didn’t feel that it represented where she wanted to be in her business. I agreed that it didn’t have the verve that she brings to her clients. It also wasn’t special enough. (And I’m always leery of anything being called “perfect”.) Megan came up with the brilliant brand name, Pretty Little Bash. Soon after, she partnered with one of our Branding Specialists Nikki Nuckols of Doodle Dog Creative to put her vision into visuals.

Here Nikki shares about the redesign…

Before the Redesign

The old look and site were functional. There were no major design flaws or functionality flaws but it was lacking personality and differentiation from the competition. After talking to Megan, I understood who she was and she was bold, energetic and eager to help plan some really great events, so that was constantly in the back of my mind when working on her new identity!

Old Website - A Perfect Plan by Megan

pretty_little_bash_final_blog

After the Redesign

I always try to make every brand that leaves our office embody the personality of the individual(s) who will be representing it in their market. To me, the Pretty Little Bash brand screams, modern, trendy, fun and memorable.

Megan shares her thoughts on the rebrand… 

“I hands down wanted to work with Nikki at Doodle Dog because she has the creative ability to really nail down what her client wants and her ability to create outside the box designs and not just give me something that is like everyone else.  I like the unpredictability that she helped me create in terms of what people might think a wedding planner’s page should look like and how we made it.  Nikki and her team are rockstars! My favorite part is definitely the colors!  Almost everyone I know uses pastels, which are pretty don’t get me wrong but that just wasn’t me.  I am absolutely loving my bright color combination!!  It gets me giddy just thinking about it.  It really shows my personality and helps people realize the type of experience they will get from me.”

Sage Wedding Pros Strategy Talk… Michelle shares…

“In working with Megan, one of the first things we did was talk about her vision for the company. “What is that you want to be known for?” We uncovered the following values that are important to Megan and Pretty Little Bash:

  • SERVICE… timely, not stressful, fun… anticipate a need before it arises (love this!)
  • FUN! …release and relax so that you can truly enjoy the event
  • CREATIVITY and ARTISTRY…. a love for details and design.

This foundation gave Megan a foundation for her branding. It’s more than just pretty colors and sparkle because it has a soul. This is such an important step in marketing for your business. We love how Nikki has interpreted our strategy work into beautiful visual identity for Megan and Pretty Little Bash!”

Want to see more? Look here for more images, including Megan’s brand reveal images:

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Your Internship Program is Probably Illegal

InternI’m going out on a limb to estimate that 95% of the interns in the wedding industry are likely NOT interns. And chances are, if you have an intern, you are breaking labor law. I’m purposefully trying to FREAK YOU OUT because I don’t want you to get audited and fined. (We’re talking unpaid interns here.)

Are you awake? Go ahead, grab another cup of coffee.

Here’s the layman’s definition (my definition) of an intern…

An intern is a short-term educational opportunity to learn from a company. This opportunity is 100% educational in nature.

Did you get that? 100% educational. The internship needs to be actual training... on-going training… not “I teach you some things for an hour on your first day and then you are off to file papers, post blog posts, assemble wedding invites, run errands, make DIY projects, and tweet.”

NOPE. That ain’t gonna fly with the US Department of Labor.

When you have interns, you want to think of creating a classroom within your business.

Here is some info that explains the labor board criteria. (There are 6 criteria you have to have in place.)

Got it? OK… here’s the thing…

Around the ‘classroom’ structure, the intern can do “work” that augments a lesson… In other words, they can practice what you are teaching them.

So, if you are teaching them sales techniques, they could accompany you to a client meeting and/or conduct a sales meeting. If they are learning about marketing strategies using social media, they would be able to practice by doing some tweeting for you.

But- chances are they are not learning anything by filing papers.

The best way to protect yourself with an internship is to create a classroom structure where:

  • YOU spend 1-2 hours teaching a new lesson
  • INTERN spends 3-5 hours putting the lesson into practice (this is “on the job training”)

Here and here you’ll find a guideline for creating an internship program. An intern manual and/or training manual can be helpful in a) guiding you in training them and b) justifying your internship program if audited.

And – if you aren’t quite sure whether your team-members should be employees, contractors or interns, you’ll want to check out The People Plan.

Talk to me… please tell me you have some of these things in place. And, if not… how are you going to fix it?

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April 2, 2014 - 8:44 am

Joelle - This is GREAT Michelle. I have an intern, and the way that I’ve always thought of it to be was that it should be for the benefit of the intern, NOT the company. I get people all. the. time asking me what it’s like having an intern and for tips, but they usually just want free labor and it’s terrible! Also, I’m a firm believer that if they can’t be compensated with a paycheck, they should be compensated with school credit. My current intern comes to weddings with me, and sometimes I need her to help with set up and breakdown and whatnot, but I try to compensate her for those hours. Everything else is shadowing us, going on Pinterest to see wedding trends, sitting in on phone calls with me, and just hanging out at our studio, seeing how we run things. It KILLS me when I see other people taking advantage of their interns, and their interns not doing anything about it!

April 2, 2014 - 9:12 am

Michelle Loretta - You got it, Joelle! And internship needs to be for the benefit of the intern… not the company. I love how you’ve structured your relationship with your intern! Compensating an intern for ‘non-educational work’ is a great solution – and a great balance – for those times when you do need to have *work* out of the relationship. I haven’t seen that before.. but, I really like that. Thanks for sharing this!

April 2, 2014 - 9:34 am

Talia Rogers - Awesome post! Thanks for the insight!!!

April 2, 2014 - 11:06 am

Andria Lewis - If a company needs clerical assistance, they can hire an intern from a local community college who is majoring in Administrative Management (which is what I looked into before finding my new person).

April 2, 2014 - 11:12 am

Michelle Loretta - Such a great tip, Andria! Colleges often have structured internship programs that make it easy for the employer to set up the internship program. I love this idea of specifically targeting the subject/study area to fit your business needs.

April 2, 2014 - 1:19 pm

Charlene @ Sweetchic - This is why I’ve never taken on an intern, and only hire paid assistants… too many grey areas.

April 3, 2014 - 9:11 am

Rachel @ Sincerely, Ginger Weddings - This is such a great post! I am currently on boarding my first interns and this is so helpful. Luckily I have a great book keeper who keeps me on track. I love teaching, so interns are great for my business. Thanks for sharing!

April 3, 2014 - 9:30 am

Michelle Loretta - You’re welcome, Ginger! I love teaching too… and I’ve always loved bringing on people because of this aspect of training. Good luck with your new hires!

April 3, 2014 - 7:12 pm

Antonia - Such a great post! We have always had interns that are receiving college credit through their accredited university and work closely with the students professor or mentor at said school to make sure we are on the right track! I think another key point is, an intern should NEVER fill the place of a paid/trained employee! Thanks for this post!

April 4, 2014 - 5:32 am

Michelle Loretta - That’s a great point to bring up, Antonia. I think most people think that the point of having an intern *is* to fill that void… but that isn’t correct. There really can’t be much benefit to the company… which doesn’t make it worth it to many employers. Thanks for adding insight!

Employee Handbook Template – Now Available

When you bring on a new employee, what is your ‘onboarding’ procedure? How do you get them up to speed on everything that matters in your business? And, how do you communicate your policies and procedures to them?

Do you have an employee handbook?

HandbookWhat is an Employee Handbook?

An employee handbook is a guide of company rules, protocols, and standards. It defines the following for employees:

  • Vacation and time off policy
  • Workplace expectations (attire, attendance, schedules, etc.)
  • Employee classifications
  • Safety guidelines
  • Review policies and compensation guidelines
  • Discipline and termination policies

… and soooo much more.

This is different from a process binder, systems procedures, or checklists for the actual doing of responsibilities. THE HANDBOOK gives the rules for what it means to be an employee of your company.

Why is an Employee Handbook so important?

As an employer you should consider incorporating an Employee Handbook into your company’s hiring procedures for the following reasons:

  • Ensures that new employees are given guidance on the expectations you have for them.
  • Consistent policies applied to all employees ensure that everyone is treated equally and fairly.
  • The handbook serves as protocol for confusion, conflict, and problem-resolution with employees.
  • Sets boundaries for both employers and employees.

We’ve created an easy-peasy Employee Handbook template!

Kelly has taken her previous experience as an HR Director for Starbucks and put it into an easy-handbook here for you. VOILA! The template will allow you to hit the ground running with your company’s employee procedures. No need to recreate the wheel… we’ve done it for you.;)

How to use the Employee Handbook template:

This is a guide for you to make your own. We have given you all the verbiage and mumbo-jumbo… it’s up to you to add and subtract the pieces that are relevant for your business.

Purchase The Employee Handbook Template Here for $49:

Add to Cart

And, through May, we are offering The Handbook bundled with
The People Plan, our easy-peasy HR toolbox…

You can choose to receive The People Plan bundled with The Employee Handbook template in one of two ways:

1. Both emailed immediately to you (electronically and bundled***) for $149 (a savings of over $71)

Add to Cart

2. Hard copy of The People Plan snail-mail in it’s beautiful packaging (you would still receive The Handbook in electronic format) for $189, including shipping (a savings of $30)

Add to Cart
(***We’ve traditionally only offered The People Plan in a snail-mail hard-copy… but we are going to give you the option of receiving it in snail-mail or electronic format.)

Need help with any of this? Reach out to us at kelly-at-sageweddingpros.com or michelle-at-sageweddingpros.com

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