Diversification: Key To Profits by James Derosa

Taking your business to the next level means offereing more than just the basicsThis year I passed my 29th year as a DJ. I’ve worked as both a club and event DJ and have seen many changes and advancements in our profession. In the beginning it was a fringe business that few people acknowledged and understood. However, over the past decade it has grown into an established industry that has been attracting new business people each year.

Like other growing industries throughout history, it has begun to mature and change. Also, competition has increased dramatically and DJs all over the country have started feeling the crunch of a tougher market with shrinking margins.

This is very common; every up-and-coming sector of business has struggled with it. It’s happened in the automobile business, computers, telecommunications and many others. As a sector becomes better known and understood, many more entrepreneurs try their luck and the market becomes saturated. Increasing competition drives down prices and squeezes profits.

It’s a fact of business that cannot be avoided. The only way to handle it is to be able to change and grow with the industry as it changes and grows. Anyone who cannot adapt will not survive. Watching and reacting to the trends that drive an industry will show you how to adapt, and if you watch very closely you will see them before everyone else. The sooner you react and change, the more of the market you will capture and the more money you will make. It’s just that simple.

Simple, yes…but not easy. It requires a completely new way of looking at your business. For years I thought of myself first as a nightclub DJ, then as a wedding and event DJ. When I turned 40 I began to feel that, possibly, I was reaching the end of my days as a DJ and began to look at my business differently. I realized that I had learned a great deal about the event business over the previous two decades and that my knowledge was certainly worth quite a bit. Most of my performing had been at weddings and, as an MC and DJ, I had worked closely with hundreds of brides and grooms. I, also, realized that I had been working with many live music companies, photography studios, video production companies, florists and other event companies to help them increase their success. I had helped them grow their businesses; it was time to grow my own.

Are You Self-Employed or a Business Owner?

A few years ago I read a book called Cash Flow Quadrant by Robert Kiyosaki, the author of Rich Dad, Poor Dad. In this book he makes a great point that many “business owners” are really just self-employed people that are more interested in writing business to keep themselves working, than they are in building their companies. The truth is that a business should be created to give the creator a better life instead of keeping him or her working until they fall down. If your only concern is how you’re going to get your next booking, then you are self-employed. Unfortunately, with all the changes happening in our industry, that is a difficult place to be. With the competition increasing, eventually your profits will be affected.

So how do you make the move from self-employed to business owner?

Offer Increased Convenience

I must admit here that the bulk of my expertise is in the wedding field. Though I have done every possible type of party you can imagine, weddings have really been my bread and butter. I have noticed that brides and grooms have been getting older over the past 10 to 15 years. When I started in the late ‘70s, the average couple was in their early 20s. Now, my average couple is in their late 20s to early 30s. They are busier now. Both are working and, though planning their weddings is important, so are the other aspects of their lives. They are looking for convenience and “ease of use.”

I began offering other services and the response was almost immediate. As soon as I sold a client on my DJ services I could very easily move them into other services and increase my profits several fold with very little work. I created alliances with other vendors that sold different services. I experimented with several additional services. Some worked well, some were a disaster. I discovered three additional services that were perfect additions to a DJ company.

Live Music

Since the mobile DJ industry began to establish itself in the mid 1980s, live music agencies and party band companies have been hiring out DJs. They could read the writing on the wall and knew that DJs would become a prominent force in the event business. Smart managers figured if you couldn’t beat them, join them (or have them join you).

Well, why can’t DJs do the same thing?

Live music encompasses many different categories, and therefore many different ways to increase your profits. Though many customers like the energy and excitement that DJs bring to a party, they are still looking for the elegance and style that live music can provide. The latest trend is to have live music, such as a string trio or jazz quartet for the cocktail hour. It offers guests an added touch of panache initially, then once they have enjoyed the cocktail hour, they head into the reception for the party.

This is a great place to increase your bottom line. Most string trios cost from $400 to $500 for you to hire can be offered to the client for about $1,200. Prices differ in different parts of the country, but there are great profits to be made, and the best part is, a sale such as this is very simple. You suggest the entertainment to the client and, if they show interest, you need a video to demonstrate the service.

Finding talent like this is also fairly simple. While you’re working as a DJ at an event, simply look for musicians. Take cards and network. Everyone is looking for work. You can also build a collection of single musicians such as pianists, guitarists, violinists, harpists and more. As you build your file, you will be able offer more services and increase your profits on every sale.

Photography

This type of sale is a little more complicated. There are many layers to selling photography. Unlike DJ or live music, providing photo services requires more time and knowledge. Also, unlike DJ or live music, the provision of services doesn’t end when the event is over. As a matter of fact, when the event ends, the work is just beginning.

However, profits are also just beginning. There are several ways to make money with photography. Along with the initial sale, you can add on additional proofs, websites, prints and thank you photos and notes. Each additional product has its own profit margins and can keep adding to your cash flow for up to a year after the event took place.

Now, I don’t recommend you get into photography on your own. It is a completely different skill and you must know what you are talking about. The best way to move into photography is to partner with an outside provider. My company, Bella Photography, provides photo services for other companies in our area. We provide our client companies with demo albums, additions to their own websites, sales training, and customer service follow up. Of course we also do all the design and album construction and provide prints of every size. When you create a relationship with a studio local to you, make sure they have the staff to be able to handle their own work and still provide your customers with good products and services.

Digital imaging has made event photography much simpler and creative. You can also work with anyone you choose from anywhere in the world because the pictures can be transported over the Internet instantly. Your options are almost endless.

Videography

Video is also a wonderful addition to your product list. It is simple to sell and provide and can add a nice chunk of money to your bottom line.

Unlike photography, video is easier to manage. Though you are still dealing with the client after the event, you are not dealing with additional steps such as creation of enlargements, bridal or family albums and thank you photos. It is also simpler to provide the finished product. Simply partner with a videographer you trust and that creates a good finished product. Work out a wholesale price with them, then sell it at retail and keep the profit.

There are some steps you will have to take before you begin. First you will need demonstration videos. These videos are key. It is essential your video partners provide you will quality videos that are short (between 6-10 minutes), artistic and contemporary. When it comes to video, everyone is looking for the latest and greatest look. The editing must be tight and stylized.

You also need to decide how many different packages you want to sell. It’s been my experience that the great majority of our clients consider video important, but not vital. By the time they make these choices they are looking for simple, easy choices. We offer only three packages, but seem to only sell two of them. You have to decide what’s right for your clients and your part of the country.

Think Differently

Operating your business this way requires a different way of thinking. Instead of simply a DJ company, your business becomes an event services company. You are a consultant with years of expertise in a very influential and important industry. Most of your clients have little experience planning events and they are looking for help. By expanding your reach and depth of knowledge, you can be the help they are looking for. When you become more valuable to them, they become willing to pay you more. Also, your competition begins to diminish. There are simply fewer people providing this kind of multi-layered service.

There are many other services you can begin to add to your list of offerings. Some work better than others. Over time, as you begin to get more comfortable with this enhanced business, you can look into additional products. Floral and design services, limousines, and on-site event management are just a few. The list is long and grows longer every year.

Take a look at your business. Expanding your profits is simple but does take time and research. You have to understand your clients and the area of the country you live in. I live in the Northeast and some of the services we offer here, may not work for you. However, if you look around and study your market, you can diversify your business and move up to the next level quickly and profitably.

Jim De Rosa has been working as a DJ entertainer in the event industry for almost three decades. He has worked as a consultant for Marriott and Sheraton Hotels along with performing at almost 3,000 events. His company, Event Galleria, offers a variety of party services and he works with several other companies to help them diversify and grow. Check him out at www.jamesderosa.com.