If you’re thinking of doing a trade show for the first time and the price tag for the booth has you nervous, you’re not ready to do a trade show. Trade show costs are about more than just the exhibit space, in my experience that is usually only a small portion of the total investment. Here are some additional costs you must prepare for:
1. The Booth
While the fee to the show promoters might be a few thousand dollars, actually getting the booth ready can easily cost you as much or more. You’ll need to pay for booth decor, product samples (you typically show one of everything in your wholesale catalog at the trade show), marketing collateral and product catalogs. If you cheap out on these costs it’s a recipe for a bad trade show.
The main audience at a trade show is professional buyers for stores. The last thing a buyer wants to do is write an order and not get the merchandise. If you appear underfunded (meaning your booth and marketing materials look bargain basement) the buyer is going to suspect you don’t have the money to actually produce their order and that will send them in the opposite direction.
2. Travel Expenses
Unless the trade show is in your town you will need to budget for travel. This can include costs such as air fare, hotels, rental cars, fuel, and meals. If your trade show is in an expensive city like New York on San Francisco expect to shell out a pretty substantial amount of cash for these expenses, even if you plan to eat at cheap restaurants and stay in a no-frills motel.
3. Purchase Orders
The main objective of doing a trade show is to get purchase orders. You want stores to place wholesale orders because that’s how you are going to make your money back and earn a profit. So why would I consider this an expense?
Unless you are selling to small boutiques, your wholesale customers are going to want to buy in large quantities and pay you on net 30 terms (meaning you get paid 30 days after you ship). Are you prepared to produce an order for 10,000 units for Neiman Marcus or Macys and not get paid for that inventory until 30 days AFTER you ship it?
While you can get purchase order financing (a loan to cover production costs, based on having a purchase order), you’ll pay interest on that money so you have to be sure that you’ve either got the money to bank roll the production of inventory or margins that allow for you to finance those expenses.
To an entrepreneur time is money and to see any ROI from a trade show, you have to invest some time. The show itself can easily eat up a week. It’s also important to note that a lot of buyers do not place orders at the trade show, so if you want them to buy you’ll need to invest the time to follow up with people who expressed interest in your line. This process can take months.
I’ve personally seen buyers we met at trade shows take 6 months of follow up to write an order. If you can’t dedicate the time to routinely follow up with trade show contacts until they write orders, you will definitely miss out on some business.
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