10 Ways To Make Your Race Profitable
Making a race profitable seems like a simple question to answer; maximize your profit margins while keeping costs down. But scratch beneath the surface and there is a Pandora’s box to open!
You should embrace your inner Warren Buffet and ensure that your race works financially first and foremost, otherwise it has no future. So starting with a sound financial planning and budgeting is singularly the most important thing you can do to make your race more profitable. (Check here for a handy budget template for endurance races to help you out!)
Be careful about balancing the requirement to lower expenses and maximise revenue without sacrificing on the athlete experience or brand. Not so simple after all. Here are 10 ways to make your race more profitable.
1) Become a master of detail
A sound budget is the bedrock of any financially successful race. The budget should be granular in detail and takes in all expenses related to that event. In the planning stages getting accurate quotes is important. Race Director’s often don’t factor their own time into the budget, you should do this. Every single cost item should be put in your budget.
When inevitably things cost more than you expect, always include a buffer into your budget. A 10% buffer is around the right level, for example an event budget of £10,000 should have an additional £1000 built in as a buffer. If you are starting a race from scratch, read our handy guide on how much it costs to put on a race here.
2) Cut the fluff
Once your budget has been created, go through it with a fine-tooth comb and cut everything not essential to operations. It is very easy to spend money and justify it by saying ‘it will enhance the athlete experience’.
A simple and effective way to do this is to put ‘must have’ and ‘nice to have’ against each line item in your budget. Toilets are ‘must haves’, medals are ‘nice to haves’. The point of all this is to really think carefully about what you are spending money on.
Look where you can to change out costs and get something for cheaper. As an example, if your core event team needs to be onsite for a few days. Put them in a campsite rather than in a hotel. If medals are a ‘must have’, shop around and negotiate on price (more on that below). Being discerning on what you are spending stops costs from spiralling out of control.
3) Cash is king
The beauty of races is that they are great for cashflow, you collect ticket sales first and pay for event expenses later. This is very positive for your business in terms of when your cash comes in and when your cash goes out. Of course you can’t spend it until the race is delivered and it is wise to pay suppliers promptly after the race has happened. More on how to price your races here.
4) Negotiate like a market trader
Negotiation unless you are a candidate on The Apprentice fills most people with dread, but there are ways to do this which will significantly reduce some of your main expenses and impact the overall profitability of the event.
The host venue where your race is based is likely to incur the highest cost. Don’t take the price as quoted. If the venue has 4/5 events per year, you are likely to be able to negotiate on price and get up to 50% off depending on the venue. If however the venue is over-subscribed with many events throughout the year, it is likely that the figure the venue has quoted near will be nearer to what you have to pay.
Anchoring is an effective negotiation tactic. For example, a venue quotes £3000. You thank them for your quote and say you had a budget of £1000 and unfortunately this is out of your budget, you have thus anchored price expectations lower and are more likely to get a good deal. Venues also value positive PR, media attention and imagery which might be something you can offer to bring the price down.
5) Increase share of wallet
There are several effective tactics to increase your share of wallet. As the name suggests, share of wallet is incremental revenue and increases the amount of money customers are spending with you.
Charge for car parking, even a small cost for the car park (£2) can help offset that cost of the venue hire. Communicating that car parking goes straight to the landowner is the way to make this cost acceptable and cuts it from your expenses. In a similar vein, charge for photographs. People are generally prepared to pay for good quality photography, which should be made available as soon as you are able and removes the cost for you hiring a photographer.
6) Ditch the freebies
This is very tempting to offer up friends discounts or freebies for media or participants who have large social followings. After all, this will increase your brand awareness right? Free race entries don’t help your bottom line. Until your P&L is healthy enough, don’t do it.
7) Cash sponsorship
Perhaps the holy-grail of sponsorship deals is gaining hard cash for race sponsorship. Cash sponsorship is not easy and many overestimate their ability to bring in cash sponsors. The key is to find brand alignment and having an engaged sponsor. How to get a sponsor in a sentence….engage with the right person, who has the budget and the need to sponsor your race. A simple acronym to remember, are you dealing with the MAN (Money – Authority – Need)? To dive into this topic, you can read about how to get a sponsor for your race here.
8) Value-in-kind sponsorship
Often neglected, value-in-kind (V.I.K) sponsorships can be very useful in providing products like nutrition or equipment since you can eliminate this cost from your expenses. For example, an open water swimming event might require 1000 swim caps as part of your event plan – a V.I.K sponsor would provide free swim camps and thus eliminate £3000 out of your expenses.
9) A question on merchandising
Unless you have a well-established brand and good community engagement, don’t bother. Chances are you would need to make a fairly considerable up-front investment in clothing or equipment. There are additional costs to consider when merchandising, which includes point of sale, storing of merchandise and having a shop at the event or online. Well worth looking for established races but often a money pit for smaller races.
The point at which a participant is most engaged with your race is within the 24 hours after finishing it. Follow-ups emails normally contain a link to results and photos. Including a limited time incentive to book on another race with you such as a discount is a smart move to make the most out of your existing and hopefully happy customers.
Organise your race as a slick business venture
Regardless of size, profitable races are ones which are run as a good business venture. Attention to detail to produce an accurate budget, where all costs are scrutinized is singularly the most important action you can take. Always look at ways to bring down your overall expenses and be prepared to negotiate and drive down the larger costs such as venue rentals. Revenue opportunities go beyond simply selling a ticket, think about increasing your share of wallet, realizing sponsorship opportunities and making the most of an engaged customer.
Best of luck! Let us know if we can help – with the RaceID platform we offer you a multitude of opportunities to increase your revenue with the help of technology. Get in touch or get started.