Business Opportunity Search

Introduction

The process of starting a new event company involves more than just problem solving in a typical managerial position. An entrepreneur must find, evaluate, and develop an opportunity by overcoming the forces that resist the creation of something new. This process involves four distinct phases: (1) identification and evaluation of the opportunity, (2) development of the business plan, (3) financial management of the company, and (4) operational management of the company. Although these phases precede each other, no one stage is dealt in isolation or is complete before the other phase; they run seamlessly, and in conjunction with each other.

Let us make a quick review of the key services in the Indian events and activation industry:

Intellectual Property (IP) is an original creation or idea for which exclusive legal rights are recognized. Some examples of original creation could be a novel concept for the event, logo, name, symbols, designs, etc. The event company may partially or wholly own the IP(s). For example, the India International Film Awards (IIFA), Mirchi Music Awards, event shows organized by the Kingdom of Dream in Gurgaon, etc.

Managed Events include corporate or personal events administered by the event company, which owns the IP of the event (if any). These include social events (like festivals, weddings, birthday parties, etc.) and MICE (meetings, incentives, conferences and exhibitions). Brand launches, dealer meets, and audition management for TV shows such as dance, music or comedy competitions.

Activations are events organized by a company to promote or sell its products and / or services. These activities are typically small scale and carried out at multiple locations. Local customization according to customer segmentation and cultural habits are the key considerations while organizing activations.

Digital Event is that event which brings an audience together where some or all of the attendees are not physically present in the same location but are connected in a common digital environment. Digital events are increasing due to increasing internet penetration, and mobile smartphone penetration, making people capable of digital interactions. Advertisers are also able to look at rural markets for their digital activations. Digital is used to market events, see tickets, enable registrations, obtain feedback and continue to engage the community after the event, and demonstrate RoI (return on investment) to clients.

Opportunities like Digital Integration, Rural Opportunity, Sports and Government Events: Many event management agencies are providing some level of digital integration in their events. This is because this involves low cost per person, who is reached by the event. Digital activations in rural areas focus on rural markets. The government is focused on rural development and the implementation of many development schemes at the grassroots. The event industry is seeing a clear opportunity in rural marketing, by focusing on rural BTL (below the line) / activations. With the increase in telecom marketers, including both handsets and services, rural consumers are being targeted. The sports industry has been emerging and throwing opportunities as a strategic marketing platform. Ever since IPL (Indian Premier League) was launched in 2008, several leagues emerged in India, combing sports and entertainment to a wider audience. Sports leagues, federations, teams, athletes, broadcasters and sponsors are using digital for fan engagement, and a lot of sports are consumed on digital. The government and state government events have also increased, throwing opportunities in this sector. For the implementation of various development schemes, the government announces and propagates these schemes through large marquee events and multi-city activations. Some of the key events have been in areas like digital projects, Make in India campaign, skill development, girl child education, social themes, tourism, manufacturing etc.

To successfully identify and evaluate an opportunity, an entrepreneur must have the knowledge of common services offered in the portfolio of an event company. These services can be identified by assessing the local needs. It should also be noted that not all business opportunities are created equal – some business opportunities are better than others. So how do you decide which business opportunity is right for you.

 

Scanning the Potential of the Indian Event Management

India is one of the fastest growing economies in the world. Various industries have contributed to this growth, and the event industry is one of them. In the last decade, this industry has paved its way to reach new heights and has become a multi-crore industry.

Early 1900’s witnessed a steep rise in the graph of the event industry. The industry spent approximately INR 20 crores per annum on events. This growth further accelerated in early 2000’s. According to Ernst & Young and EEMA (Event and Entertainment Management Association), the organized events and activation sector in India witnessed over 20 percent annual growth, estimated at around INR 2,800 crore in the year 2011-12. The growth of the industry is expected to take the size of INR 10,000 core by 2021 and more beyond 2021. Moreover, there is a large segment of unorganized events, which could be as large as or even bigger than the organized sector of the industry.

Factors that make the event sector in India a profitable business choice for entrepreneurs are:

• Ability to ‘get things done’ under any circumstances
• Ideation and creativity
• Efficient cost base / efficiency
• Suitable vendor-based production
• Ability to create Intellectual Property (IP) and earn from it over time
• Resource pool
• Reputation of transparency and credibility
• Digital integration

The fast and steady growth of this industry has resulted in tough competition as new event managements companies are flooding the market, each with its unique idea. Availability of skilled manpower and talent is a major requirement by the event industry. Therefore, to get a head start in this industry one must emphasize on developing the following skills and domain knowledge:

• Entrepreneurial skills
• Professional skills such as management and organizational skills
• Understanding of financial and risk management
• Marketing and promotions
• Human relations and interpersonal skills, including communication and negotiation skills, to manage internal and external stakeholders such as employees, vendors, taxation authorities, local police, and district level authorities
• Technical knowledge and specialized skills in specific areas of event management such as catering and décor
• Understanding of the media industry and subsequent networking with media and public relations (PR) agencies
• Understanding of laws and licenses

 

Opportunity Assessment Process

Once an individual has decided to pursue her / his career in event planning, it is essential to develop a strong business foundation- starting with identification of the right opportunity. This process includes identifying potential business services and the right portfolio for the company. Once the company is established, access to information and opportunities increases because of the business network. consequently, opening avenues for other business development opportunities.

This section attempts to simplify the process of opportunity assessment for starting an EMC. The first step in this process is shortlisting of essential services for the event company from the key categories of events – Intellectual Property, Managing Events (personal and social), Activations, Digital Events, and opportunities in rural, sports and government events. It is advisable that the entrepreneur should identify the specialization / niche area of the event company within these broad categories, preferably beginning with one or two services (or as many feasible). Corporate retreats, party planning, wedding planning, concerts, fashion shows, MICE (meetings, incentives, conferences and exhibitions) are some examples of specialized services in the event sector. The entrepreneur should attempt to identify and satisfy current or unmet customer needs, relevant to the local context. The key word at this stage is flexibility. Creativity, new technologies, and new marketing approach also help establish the company’s brand name and build customer loyalty.

Given below are some advantages of shortlisting essential services for the company:

1. It is easier for consumers to find your event company if it aligns with their requirements. For example: if your event company specializes in MICE for academic institutions, a client interested in organizing a seminar is more likely to contact your company instead of a general event planner.
2. The entrepreneur will spend less time, resources and effort to familiarize self with the elements of the selected services and create her / his business network.
3. To control the expenses in a start-up, only relevant resources and supplies should be purchased / arranged. For example, if you specialize in kitty parties or birthdays, you may not purchase technology or software that are used in large scale events.

Assessing the Business Potential of Shortlisted Services

Before pursuing the selected opportunity (service), entrepreneurs should ascertain the conditions that produced it. Will the conditions persist? Is there a market of sufficient size to make the opportunity attractive? And what resources are required to succeed in exploiting the opportunity? How will the location and timeline affect the event? Has there been sufficient market research to analyze the changing consumer and corporate demands?

To find answers to the above questions, assess the business potential of the shortlisted services on the following parameters:

• Required investment for capital purchases like technology, stage material, logistics, etc.
• Competitive threats and risks
• Life expectancy of events
• Pricing of events as compared to demand for statutes and suppliers in the market
• Profitability, and the willingness to initially compromise profits for growth
• Market growth (overall and within specific categories)
• Seasonality and cultural trends

One of the most reliable approaches to assess the business potential of the shortlisted service is thorough and extensive market research. It is the process of scanning the environment for business opportunity and the overall business landscape. Market research should be done before establishing the event company, and should include information on new events, industry trends, changes in business models, competitor initiatives and reactions, new entrants, customer tastes and changing customer requirements, changing trends in event formats and their customization, technological developments, etc.

While some may look at changes in the environment as a threat to their business, these changes are mostly opportunities for growth. Rita McGrath and Ian Mac Millan proposed an environment scanning procedure by preparing a register in which opportunities are classified.

1. Redesign of Products or Services: It entails creating new designs and elements of the service as per the client’s requirement. For example, if an e-commerce company wants to expand its business in remote locations, your company may design and organize events that are relevant to the cultural and local needs of the identified areas.
2. Redifferentiation of Services: Redifferentiation is the ability to consistently define new ‘unique propositions’ to clients. It is a critical factor in today’s fast changing environment. There is a constant need to revamp and improvise to provide a unique proposition/ solution to the client, distinguish your company from the competition.
3. Reconfiguration of the Market: The ever-changing market reconfigures itself in line with new technology, new entrants with new business models, and the need for event companies to reach out to its consumers in entirely new ways. It is therefore critical for the event company to align with these market reconfigurations.
4. Re-segmentation of the Market: Market segments also constantly keep changing and realigning in line with market dynamics. A smart EMC develops and changes its business model and process orientation with the evolving market segmentation.
5. Development of Breakthrough Competencies: With cutting edge technology, internet penetration and the growing influence of youth in India’s consumer markets, it is inevitable for the event company to develop new and cutting-edge competencies to keep pace with the environment. For example, an event company may consider identifying resources for reliable internet bandwidth to organize discussions between experts and farmers in remote locations, during an agricultural technology fair.

To explore these opportunities, the entrepreneur should research the market by carrying out a survey in the area (town/city/state/country) where s/he intends to establish the company. The primary information gathered from the survey may be supplemented by information / data from secondary sources such as the internet or existing surveys. Information collected through the survey will be useful in developing a viable business plan. For example, offering corporate event services in areas where there are no corporate organizations is not a commercially viable plan. Similarly, organizing an activation program to launch a new brand of computer, in areas where there is very less or no electricity supply or insufficient internet bandwidth, is irrational. These techniques can also be used for conducting market research for events.

Target Market

Target market or audience includes clients who are interested in hiring the services of an EMC. It is essential to initially identify the target audience, their location, requirements and expectations so that the entrepreneur can direct the marketing towards them; else there will not be enough clients to avail services offered by the company. For example, an event company offering mega events like concerts will not get enough customers in rural areas as compared to services for organizing fairs or weddings.

To examine the target market, the entrepreneur should consider the following factors:

• Changing socio-economic patterns
• Increasing disposable income, and the large youth population in India, who will be decision makers for spends in the coming decades
• Technology advancements such as internet penetration, internet usage on mobiles, increased awareness of global trends in fashion, science, lifestyle and other aspirational categories
• Motives of audiences to attend events – social, organizational, or personal

Competitor Analysis

Competitor analysis involves finding complete information about the competitors. This information should include.

• Basic information about other event companies and their owners
• Employee base – i.e. number of employees
• Client base – i.e. number of clients
• Market value – their reputation in the market
• Market share – business acquired by them in the market
• Annual Turnover
• Number of events organized by them in a year
• Why people attend their events? What is so unique about their events? What is their forte?
• How do they get clients and sponsors for their events?
• Their promotional strategy including media, public relation (PR) activities and corporate contacts

Collect maximum information about the events organized by the competitors. One of the means of obtaining this information is by attending the events hosted by the competitors and subsequently creating an event report. The event report usually captures the details of:

• Seating and light arrangements
• Promotional materials used
• Blueprint of the whole venue
• Program and food menu
• Contact details of sponsors, partners, clients
• Service providers like DJs, anchors, make-up artist, performers, photographers, videographers, decorator, florist, caterer, technicians, etc.

It is advisable to use this information to create the business plan of the proposed company.

Financial Assessment

Financial assessment seeks to ascertain whether the proposed event company is financially viable or not. The company should be able to make a profit while managing overhead expenses. Failure to appropriately assess the finances can lead to company’s failure. The aspects which have to be looked into while conducting a financial appraisal are as follows:

• Investment outlay and cost of project
• Means of financing
• Projected profits
• Overhead expenses: fixed and variable costs
• Break-even point
• Cash flows of the project
• Investment worthiness assessed on various criterion
• Projected financial position
• Level of risk associated with the business

Legal Assessment

Legal assessment is the analysis of the legal environment, both local and national. Society laws and regulations provide a framework within which its citizens can and cannot do certain things. The legal context both allows and prohibits certain entrepreneurial decisions and actions. The entrepreneur must be aware of the relevant laws and regulations affecting the proposed venture.

Legal issues faced by entrepreneurs while starting an EMC include to:

• Determine the legal ownership of the business
• Record keeping for tax purposes
• Conduct lease and financing negotiation
• Prepare legal contracts and agreements
• File for patents, trademarks, and copyright protection

However, the legal considerations continue while managing an established enterprise. Entrepreneurs must recognize that the state and local laws are likely to influence the entrepreneurial venture as much as the national laws. Multiple taxes like Service Tax, Excise Duty, Value Added Tax (VAT), state level entertainment tax etc. have been subsumed into the GST (Goods and Services Tax) Legislation since July 2017. However, Customs Duty collected by Central Government on import of goods into India and entertainment tax levied by local bodies (such as panchayats and municipalities) do not come under GST legislation and are applicable separately.

Ecological Assessment

In recent years, environment concerns have assumed importance. Ecology implies the relationship between living beings (i.e. human beings, flora, fauna, animals, insects, etc.) with elements that support these living beings (i.e. earth, water, air, etc.). Ecological analysis is particularly conducted for projects that have significant implications for the environment. The key questions raised in the ecological analysis are:

• What is the likely damage caused by the event project to the environment?
• What is the cost of the restoration measures required to ensure that the damage to the environment is within the acceptable limits?

 

Types / Structure of Business Organizations

Legal ownership of a venture is a critical decision taken at the time of registering the company. Many first-time entrepreneurs do not have a clear perspective of the issues, legal or otherwise, involved in choosing one or the other form of business. Lack of clarity results in avoidable mistakes which later cost time and money to rectify.

Various types / structures of a business organization are given below:

1. Sole Proprietorship – A single person is the owner of such a unit. The vast majority of new business setups every year in India are sole proprietorships. As a sole proprietor, there is no distinction between you and your business – it is one of the assets just like your house or car.
2. Partnership – A partnership firm is an association of minimum 2 and maximum of 20 persons.
3. Corporation / Limited company – can either be private limited or public limited. A private limited company can be formed in association with minimum 2 and maximum of 50 persons. A public limited company can be formed with a minimum of 7 persons and may extend up to unlimited persons.
4. Cooperative – is owned and controlled by people working in it.
5. Franchising – is between entrepreneurship and employment. It is a system of distribution that enables the supplier (the franchiser) to arrange for a dealer (the franchisee) to handle a particular service under certain mutually agreed conditions.

As per the usual procedure, determine the constitution of the company during the initial stages of a project. Then, before applying for Provisional Registration Certificate complete the remaining necessary formalities. The popular business structures in the Indian event industry are Sole Proprietorship and Partnership.

 

SWOT Analysis

SWOT analysis is a strategic tool used to evaluate strengths, weaknesses, opportunities and threats of an event company. In SWOT Analysis:

‘S’ stands for Strengths
‘W’ stands for Weaknesses
‘O’ stands for Opportunities
‘T’ stands for Threats

SWOT Analysis helps the organization achieve its goals effectively and efficiently. The company is also able to maintain edge over its contemporaries by improving its performance. SWOT analysis can also be used to evaluate the events organized for better performance in future.

Strengths

These are internal attributes of the company / project. They are helpful in achieving the objectives of the company. You may use the following questions to identify the strengths of the company:

• What are the key strengths of my organization?
• How is my organization better than others?
• What are others likely to view as strengths?

Weaknesses

Weaknesses are the shortcomings of the company which may negatively affect the performance. Weakness can also be identified by assessing the strengths of the competitor. You may use the following questions to identify weaknesses of your company:

• What aspects of my organization need improvement?
• What should I avoid?
• What are others likely to see as weaknesses?

Opportunity

Opportunities are defined as a set of favorable circumstances that makes it possible to do something. These factors are external to the organization. You may use the following questions to identify opportunities available to the company:

• What are the opportunities available to the company?
• What trends could be of advantage?
• How can strengths be converted into opportunities?

Threats

Changes in the external environment (like changes in economy or market trends) or any unfavorable situation can pose threat to a company. Determine all present and possible threats to the event company using the following questions:

• What threats could harm the company?
• What is the competitor doing?
• What threats is the company exposed to because of its weaknesses?

Conducting a SWOT Analysis

The template given below can be used to conduct SWOT analysis. There are four sections in the template to assess the Strength, Weakness, Opportunity and Threats. As an example, SWOT analysis of an EMC is given in the template.

SWOT Analysis – Example Table

1. Strength – Experienced event team. Specialized functional team members. Good market share and reputation. Geographic coverage. Good logistics capabilities. Price competitiveness. High motivation level. Excellent Market Research and Consumer. Research capabilities. Good PR contacts.
2. Weakness – Lack of corporate contacts. Poor financial and operational management. Bad positioning: trying to operate in multiple focus areas. Lack of experienced team, frequent attrition. Sourcing of funds is not strong.
3. Opportunities – Low Competition. Favorable economic conditions. Support from the local authorities. Existing client base. Customer demand for area in which you specialize.
4. Threats – Poor infrastructure. Irregular supply of raw material. Tax liability on entertainment. Legal environment not supporting. Better funded and stronger competition getting into your domain.

After conducting market, competitors, product / service research and SWOT analysis, document the research work. The analysis report will form the basis for the business plan of the company, and you can subsequently obtain financial support.

 

Zero Down Approach

SWOT Analysis is followed by the Zero Down Approach. As the name suggests, Zero Down approach is the process of identifying the most suitable alternative from the various analyzed alternatives.

Thus, in the context of business opportunity search, it is the process to ascertain the most suitable and viable business idea from the list of ideas identified initially for establishing an event company. This is primarily based on the assessment of strengths, weaknesses, opportunities and threats of each idea. The idea with the highest score in strengths and opportunities is selected. At the same time, one should also be able to deal with and overcome weaknesses and threats of the selected idea.