I have always had a fascination with mathematics and was surprised to see a mathematical formula adorned on the cover of the March Wired Magazine. The formula, which looks like some form of Greek, attempts to explain the recent roiling of the stock markets:
Like I said, that’s an impressive formula to say the least.
As a young boy, I remember watching my father blitz through complex vector analysis equations, computing lift and drag coefficients as he worked on airplane designs and other structural projects. He always told me that math is the root to all knowledge. At a young age, who was I to argue?
My first business epiphany came years into my retail career and surprisingly it had to do with mathematics. Like many in the surf industry, I started my retail store out of a love of the sport. I didn’t even consider the merits of a business plan—much less a systematic approach to running a surf shop. My process consisted of the simple math of “cash flow.” The math of my early career went something like this:
“I have $100. I buy 20 items for $5. I mark them up to $10, sell them, and now I have $200!”
In other words:
Assume II/ic = nu then Nu(ic*mu) = ts then Ts- ii = p
Where II = Initial investment, ic = item cost, mu = mark-up, nu= number of units = total sales and p = profit.
Pretty basic. Luckily it worked for a while!
It was at a tradeshow seminar (yeah, I know, shameless plug) where I was introduced to Mort Hass who broke the entire retail process down into a mathematical process he referred to as Open to Buy. This was one of those light bulb moments, where I went from being surfer/skater with a store to a businessman who loved to surf and skate.
It was amazing! Through simple math Mort was able to calculate future order needs, make inventory adjustments, and consider markdown dollars, project sales, and profit margins.
Mort was a genius and—much like my father showed me that math can justify why a plane flies—showed me how to run a successful business from a financial standpoint and the importance of mathematics in a successful business.
Now I find myself in the tradeshow business, in the midst of a troubled economy and I wonder if math can help answer many questions that exhibitors are throwing at my staff and me. I think it can.
First, I’m surprised with the explanation I often hear of why an exhibitor increases or decreases the size of a booth at our show. If business is good, they buy a bigger booth. If business is bad, they buy a smaller booth or—worst case—they pull from a tradeshow entirely and place all their future in e-mails, cold calls, and traveling reps.
It’s amazing that this process sounds much like my “cash flow” method, and upon questioning exhibitors it was clear that many do not go into a tradeshow with specific goals and expectations. You probably can hang on for a while that way, but you’re either wasting money or leaving orders on the table by leaving so much to guesswork.
Sure enough, if you step back and approach the question of booth space scientifically and systematically, choosing the correct size can be done where it aligns precisely with your company’s goals and expectations for the selling season.
My father didn’t worry that a plane could fly; that was what he called a “given.” All he needed to know was how far you wanted to go and how much weight you wanted to carry. Let’s assume that the given of any manufacturer at a tradeshow is that they want to do business. Our questions might look something like this:
“What is your sales goal? What is your average order total? How many orders do you want to attain at a show? How many buyers do you need to see to get an order? How many buyers can you see in an hour? How many hours does the show last?
You need 50 square feet of space per employee (once again, a given) plus room to put your merchandise on display. So what are we left with? What size booth do you need? Let’s run the numbers:
Let’s assume the following for example’s sake:
■ $100,000 sales goal. (sg)
■ $1,000 average order. (ao)
■ 100 = the number of orders wanted to achieve sales goal. (ow)
■ 5 buyer appointments = 1 placed order. (ba)
■ 4 = number of accounts a rep can see in an hour. (ra)
■ x = Reps needed. (rn)
■ 24 = show hours (show is 3 day @ 8 hours per day). (sh)
■ 50 square feet of booth space per staffer (industry average), be sure to include management, greeters and models. Let’s assume for our example one sales manager, one model, and one greeter in addition to sales reps. (os)
■ Merchandise Display Space = For this example, let’s assume a single rolling rack per rep (2’x5’ or 10 square feet), and no other displays that would require floor space. (ds)
That leaves us with this equation:
sg/ao=ow*ba/ra/sh=rn*50+[(50*os)+ds] = square feet needed
or
$100,000/$1,000 = 100*5 = 500/4 = 122.5/24 = 5*50 + [(50*3) + 50] = 450 sq feet
Based on this a booth space of 10x50 or possibly 10x40 would suffice to meet projected sales goals.
From this we could continue the process based on your anticipated tradeshow ROI/ROO and look at how other tradeshow costs fit into your budget. Should you build your own booth? Utilize pipe and drape? Consider a rental booth? Utilize show marketing? Until you do that math, you’re just shooting blind.
Hey, it’s just numbers, right? I hope I got you thinking.