Inflation and labor shortages have affected all businesses, giving us yet another challenge to combat as the pandemic continues to compromise business operations. There have been disruptions in shipping and manufacturing supply that have caused increased supply prices, and in many industries, pricing insecurity is widespread.
The practice of event budgeting has been turned upside down. Many event pros feel like they’re flying blind as they craft proposals, project costs, and answer questions around inflation. It may be tempting to ask when it will all end, but the more pertinent question is, “How do I navigate these difficult conditions?”
LEO Events hosted our quarterly webinar, titled Recovery Budgeting: Rearchitecting Events in a Post-Lockdown Landscape, with Michael Dalton, SVP, Strategy, LEO Events; David Kenyon, SVP, Production, LEO Events; and David Waddell, CEO, Waddell & Associates to offer perspectives and solutions to help planners gain confidence in the new year.
Here is a synopsis of the discussion and Q&A:
The pandemic kicked us into economic exits that have had considerable impacts on how we do business. Much of the COVID-19 response was government-induced – shutdowns, social distancing, quarantines. The government essentially prescribed a recession to manage the pandemic, costing $2 trillion out of a $20 trillion economy – a significant 10% drawdown. Historically, it was the greatest decline we’ve seen since the Great Depression, but it was planned and scripted. In return for the drawdown, the government issued various economic stimulus policies.
Today, the US economy is 8% larger than it was pre-pandemic. Because of the stimulus, we’re now moving back toward potential GDP growth. Net worth and personal incomes have increased substantially, creating loads of demand for goods and services. Retail sales are 20% higher, and job openings are 50% higher than pre-pandemic, but the labor force is 2% lower than pre-pandemic – a phenomenon referred to as the Great Resignation.The post-COVID economy demand is greater than supply, creating shortages everywhere. This is the framework with which to operate your decision-making, whether you’re on the supplier side of the purchaser side.
- Pass along inflation to keep business moving forward. Consumers are willing to pay the prices for services and goods, which will allow companies to meet outstanding revenue and profit targets.
- Be wary of cheap services. Vendors that underprice their services will likely underdeliver because they will not afford the labor or materials.
- Be creative in how you hire and manage labor. Employment is no longer just about wages but about the entire experience. Invest in the employee experience to attract and retain talent to maintain your market share.
What automation are the event leaders seeing that might ameliorate the labor shortages? How close are we to solving some of these labor problems with technology?
Technology is allowing us to use less production. We see that through the popular XR stages, for instance, and we also see more technologically advanced infrastructure, requiring fewer technicians. That’s allowed us to reduce our on-site labor staff significantly, but as far as reducing the number of contractors needed, we’re a significant way away from that.
With our economic situation improving, is now a good time for courting corporate sponsors and individual donors?
We’re in a robust environment of income and wealth, so this is a welcoming time for sponsorships and philanthropic/in-kind donations. Non-profit professionals and sponsor-seeking events professionals should get comfortable asking for more to combat inflated costs.
Passing along cost increases makes sense, but it is more difficult in practice. How do I navigate my relationships to make sense of it all?
Break down budgets line item by line item. Executives know increased demand everywhere, but business continuity is mission-critical for most companies. In a shortage environment, we must take on the increased costs, pass along the inflation, and keep business moving.
If you are interested in viewing the full webinar on-demand, email us at firstname.lastname@example.org.
The Solutions People
Amid the upheaval unleashed by the COVID-19 pandemic, and the ongoing uncertainty as we emerge and recover, LEO Events remained focused, with our commitment to a solutions-first approach to every challenge. This summer, we repositioned the agency to reflect and amplify that mindset. Recent events have changed all events…