Andrew Shanks - Development Director, Reed Exhibitions
When we saw what was coming, we immediately started to try to save money in 2008, and were actually quite successful even in the later quarter.
So, what happened to the world?
Well, most of my world was afflicted by low exhibitor budgets, very low business confidence and even panic in some business sectors. It was very hard for our teams to sell. We saw visitor numbers drop rather promptly and had more cancellations, lower revenues in 2009 and lower profits. I don’t think that is an unusual story.
But this didn’t happen to us everywhere. Some countries did much better than others. We have 36 business sectors, but our business is concentrated in 12 or 13 major sectors. We managed in 2009 to hold our gross profit margin to the percentage it was in 2008.
So, what did we do? We had to save money, but we also decided to spend money and try to improve the way we did business, and improve value for the exhibitors. We attacked the supply chain and while we didn’t take an axe to costs, we did have a very careful look at them. We started working, and are still doing so, on improving our sales process. We have done our best to add value to service and flexibility to what we offer our customers.
Technology, especially knowledge management within the organisation, communication to the customer and data management, was one of our priorities for investment and still is.
In 2009 we didn’t actually lose very much because, as I said, we were being cautious financially. We cancelled a few weaker events that might have failed anyway, and made fewer acquisitions. We actually only made one, compared with what would normally be about a dozen or more in any given year.
We slightly reduced our workforce. As with our costs we didn’t take an axe to it, but we did lose maybe four or five per cent net year-on-year. Where we could we used natural wastage, but we did make a few cuts as well.
We invested much more in training, research and development, which we believe makes things better for us now. I think we would all agree that the exhibition model is strong, and that hasn’t changed.
We have worked hard to improve our own organisational competence, and started launching shows again. We are still working on trying to provide a more realistic pricing system that is value-driven for the exhibitor, and continue to develop the technology online, with social media for instance, to support our shows.
The recession has fortunately not weakened the power of our business model. Wherever you go, it is well documented that people realise the value of face-to-face meetings.
Finally, of course, we have benefitted from the fact that being a more broad-based company, we work in some countries where things are strong economically, and we work in some economic sectors where things are strong. We feel stronger today than we did 18 months ago.
‘We had to save money, but we also decided to spend money and try to improve the way we did business.’
Carsten Holm - Managing Director, Diversified Business Communications UK
From October 2008, it was a pretty horrible time, but up until then it had been great. Our year-on-year revenue growth was 27 per cent ahead of the same time the previous year, so it looked like we were going to break all our records. By April 2009, total year-on-year revenue was down by one per cent.
A larger organiser is like a supertanker.
It’s very hard to stop and change direction. Smaller companies are more nimble, and can change directions more easily. When you’re smaller you can actually take advantage of problems the larger players and you have.
We had a three-month period when we had very, very little activity. We got everyone together and said ‘look guys, this is serious, and that’s the bad news. The good news is that everyone is in the same boat and it’s easier for us to take advantage of the situation.’
We needed to cut costs where we could. No more sacred cows! The way it was looking, that would include either cutting staff or freezing wages.
‘The exhibitor and visitor experiences couldn’t be compromised but at the same time, we had to cut costs.’
We decided we wouldn’t compromise on launches and marketing. The exhibitor and visitor experiences couldn’t be compromised but at the same time we had to cut costs. We took a democratic decision not to cut staff, but instead to freeze wages. A smaller company can get away with making decisions like this, because the management and staff are on a closer level.
People in smaller companies trust management more when they have to make decisions like this instead of hearing the news come down from a much higher level where staff might question management’s motives.
By the end of the year, revenue was slightly down. We were looking at a year where at worst, we would be looking at a loss situation, which would be unacceptable.
Instead, because everybody focused on the business, the revenue was down slightly but the margin was up by some 30 per cent. It therefore turned into our best year ever.
As they say, there’s nought but a good recession. It really focuses minds and you completely review how you do business. That’s easier to do as a smaller company. The larger organisers were definitely doing less, and that creates more opportunities for smaller companies coming in and just doing it.
Larger corporations will want significant returns from a launch quite quickly. We take a different view. If it takes us three or four years to get revenue growth, we are happy with that.
