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How A lot Does It Value to Run an Occasion Planning Firm?


This article includes:

  • What is an event planning business?
  • What types of events do event planners manage?
  • How do event planners make money?
  • How much does it cost to start an event planning business?
  • How to start an event planning company

If you enjoy planning parties and organizing high-end functions, you may be able to turn your passion into income by starting an event planning business. What does it take to get started? On the one hand, not much! You can start by helping a friend plan a wedding and scale from there. On the other hand, you may want to jump right in and go big right from the start.

We’ve created this guide to help you learn more about event planning as a business so you can decide if it’s the right move for you. Let’s get started!

What is an event planning business?

Event planning businesses manage projects like meetings, shows, parties, and conventions.  Event planners are contracted to organize and facilitate some, or all, of the aspects of an event, including budgeting, timing, equipment, reservations, permits, decorating, transportation, entertainment, and more. Event planning companies also create detailed contingency plans for each event. Skills required to succeed in the event planning industry include communication, organization, strategic risk management, and attention to detail.

What types of events do event planners manage?

Individuals and organizations work with event management companies to coordinate events for several different reasons. Using a third-party company to facilitate an event can be the most cost-efficient and time-efficient way to throw a successful event. Event planners can be contracted for events of all different sizes and budgets.

Weddings

Wedding planners are among the most widely utilized event planners. Wedding planning with an event company can help streamline decision-making about things like venues, flowers, budgeting, food, and other details. Many individuals choose to hire an event planner to efficiently manage time while leveraging the planner’s expertise and networking ability within the industry.

Birthdays

Birthday event planners can cover anything from a low-budget kids’ party to an expensive extravaganza for an affluent celebrity or businessperson. Party planning for a birthday includes finding entertainment, planning a theme, creating a guest list, managing vendors, and more. Having an event planner organize and facilitate a birthday party allows friends, family, and other invitees to enjoy their event stress-free.

Graduations

Event planning businesses help facilitate college and high school graduations, professional program completions, and even elementary school milestones. Event planners in this space may get leads by working with schools and universities and networking throughout the year to prepare for graduation season in the spring.

Fundraising events

Nonprofit organizations generate revenue in several different ways, including through online donations, grants, and special events. When nonprofits host fundraising events, the objective is to generate as much revenue as possible. Using an event planning service helps maximize the earning potential of the event while making sure that all bases are covered. This is especially important for events targeting high net worth individuals

Product launches

Launching a new product, whether as an entrepreneur starting a company or as an established brand, often requires high-end events. Party planners can ensure a successful event that provides a high-quality experience that makes a global impression.

Other events

Ultimately, event planning companies can be hired to help with any type of special event, including corporate events, team-building activities, anniversaries, holiday parties, fashion shows, concerts, social events, political rallies, sporting events, and more.

How do event planners make money?

There are several ways event planners can make money, and before you open an event planning company, it’s best to explore your options in order to understand what profit margins you need to thrive. Typical payment models include:

  • Percentage-based – Some event planners charge clients based on the total event budget. For example, if the customer has a $10,000 party budget and the event planner charges 15%, the income for that party will be $1,500. The industry standard for percentage-based event planning is 15 -25%.
  • Hourly rate – Event planning companies may choose to price their services at an hourly rate. For this to be communicated fairly, hours are usually estimated upfront for each action item. The total cost should end up reasonably close to the estimated rate per hour, but this method ensures that the planner is compensated fairly for items that took longer than expected.  Hourly rates depend on experience and location but are frequently set anywhere between $25 and $125 and may include an additional planning fee.
  • Set service rates – Another option for event planners is to price by giving a flat fee for specific services. This allows the client to pick and choose which services they would like to pay for and is particularly valuable when they don’t require a full-service event. Set rates also make it easy for event planners to provide a price at consultations with new clients.

How much does it cost to start an event planning company?

As with any new business, the startup costs required to start an event planning company can vary. Factors that affect the range of initial investment include business goals, target market, and location. Business decisions that can affect startup costs may include whether you are working remotely or renting office space, operating independently, or hiring staff, and the amount of promotional material required.

Typically, however, starting your own event planning business should be achievable with an initial investment of less than $25,000, depending on the business decisions you make and the cost of permits and registrations. Startup costs should include:

  • Research and development
  • Marketing material and advertising
  • Licenses
  • Insurance
  • Office supplies and equipment  
  • Business cards or signature templates
  • Technology costs, like phones, computers, Wi-Fi
  • Rent
  • Legal Fees
  • Payroll
  • Permits

Each of these expense categories is flexible, so startup costs will depend on your business plan and the available budget. Checking with local authorities about the average costs of licenses, taxes, and permits can help estimate costs. It is also recommended that new business owners shop around for the best rates for advertising material, office supplies, and insurance.

How to start an event planning business?

The decision to open an event planning company is exciting but requires a lot of planning. Event planners have a lot of freedom because they can choose what types of clients they work with and the kinds of events they’ll be facilitating. However, like with any business, you should start with creating a business plan, legally forming the entity, and then promoting it to your target audience.

Business plan

After researching, brainstorming, creating a business name, and daydreaming, creating a strong business plan is the first step in developing a business idea. Business plans provide a documented outline of how to start and run a business. The business plan gives a detailed account of how you will run your event planning company, including the services offered and the customers you plan to work with. Your business plan sketches out how you will build and grow your business, market to your target customer, meet your forecasts, and compete in your industry.

You’ll need a business plan when starting an event planning organization for several reasons. According to research, young startup companies that have a solid business plan are 30% more likely to grow and succeed. Business plans are also required by many investors and lenders when discussing investment opportunities and financing. Many entrepreneurs write their own business plan using references like those provided by the Small Business Administration (SBA) or private companies and lenders that provide guidance on how to write a business plan.

Legal Requirements

You’ll need to form your business as a legal entity before getting clients. The following steps provide a guideline for startup businesses in the event planning industry.

  • Create a legal entity – Businesses are most commonly set up as sole proprietorships, partnerships, limited liability companies (LLC), and corporations. There are advantages to each of the business structures. Many entrepreneurs opening an event planning business chose to do so as an LLC because it is both simple and limits personal responsibility.
  • Register with taxing authorities – New event planning companies will need to register with both state and federal tax authorities. After inquiring with local and state authorities about necessary tax obligations, new businesses must register for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS).
  • Obtain permits and licenses – Most types of small businesses require certain permits and licenses to operate. To determine which types of licenses an event planning business is required to hold, it is best to check with the town, city, or county clerk’s office. The SBA also offers references to help small businesses get licensed.
  • Set up bank accounts and credit cards – Before working with clients or securing financing it is recommended that you open a bank account and get a business credit card. Entrepreneurs often begin business banking relationships at the same banks they use for personal finances.

Marketing

Marketing at its core is putting the right message in front of the right people at the right time. You’ll need good marketing strategies to attract clients and grow your business. Event planners new to the industry can use the following methods to market their business:

  • Build relationships with large event planning companies
  • Reach out to local nonprofit organizations
  • Distribute contact information to restaurants and sports clubs
  • Attend trade shows
  • Ask to be featured by a local media outlet
  • Start a website and update it frequently with SEO friendly content
  • Build a brand on social media like Facebook and Instagram

For service-oriented businesses, building a strong reputation and securing future business all begins with word-of-mouth referrals. Every event worked is an opportunity to gain brand ambassadors by performing well for your client. In other words, do an excellent job for every customer and ask satisfied clients to leave reviews on websites and local directories!

Financing

The startup costs of an event planning business can seem overwhelming, but you’re not alone. Every small business owner feels the same way. There are three common methods used to finance event planning companies.

  • Self-financed – Some entrepreneurs can get their event planning business started by investing personal savings. The advantages of using personal funds to start your business include not having to share decision-making power and not carrying any loan debt. There are major risks associated with using personal savings for a business, though. If the business takes longer than expected to turn a profit, the financial strain can affect you personally as well as professionally.
  • Small business loan – Many entrepreneurs decide to finance their companies through a small business loan. You might consider an SBA loan or a term loan. Finding the right business loan can be done quickly and often virtually.
  • Line of credit – Another type of financing that works well for event planning companies is a business line of credit. This type of revolving credit works well for new or established companies because it allows business owners to have access to credit as it is needed for cash flow fluctuations. Borrowers only pay interest on the amount that has been withdrawn.

Bottom Line

Starting an event planning company might seem complicated at first, but if you take the process step-by-step (just like you would any event), and you’re good at what you do, you’re likely to succeed. And if you have financing needs, Biz2Credit is a great place to get help. They’re an experienced lender that has helped numerous business owners in the industry, like Brian Lillie at The Party Staff.

How to get instant access to financing

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