In this article, Vincent Kofi who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses How to start an Event Management Business in India: Process, Compliance, Best Practices, and Relevant Laws.
- Currently, according to Getz and Page’s (2016) analysis, the size of the Indian event management industry is about USD 172 million. Broadly, the industry caters to personal, organizational, cultural, and leisure event categories, which can be further categorized into social and corporate events.
- The event management industry in India is at a budding stage and largely unorganized, and it mostly comprises self-employed entrepreneurs and house makers. Getz and Page (2016) further establish that the current growth of the industry is facilitated by the growing company and household incomes, as well as the increasing number and rate of TV and sports events, reality shows, corporate conferences and awards, etc. As people’s incomes grow, people increase their expenditure on parties, weddings, among other social and personal functions.
- There are only a few learning centers providing training related to events management, but from the market trend, the centers are likely to become many as people are becoming aware of the opportunities linked to the industry. This paper discusses how to start an event management business in India, particularly digging into the process, compliance, best practices, and relevant laws.
- However, first, it is important to understand the Indian event management market industry.
The Indian Event Management Market and Industry
- Event management is a very broad market. The market is customer driven since clients have more purchasing power coupled with low brand shifting cost. Although there are not many businesses offering events management services, there is so much competition in the market because of lack of entry barriers.
Accordingly, in Shekhar Singh’s (2014) view, whoever wants to start an event management business in India needs to create a niche for his or her business. For instance, one would choose to specialize in managing marriage or corporate events, or choose to market campaigns. Researching on the niche is very vital because it can reveal about the number of competitors in a specific area of interest, the competitor’s customer base, any unattended areas within the niche, and most significantly, how the competitors bill their clients.
- The corporate market category includes companies as well as charities and nonprofit firms. Based on observation, charities and nonprofit organizations are mostly involved in events meant to increase their public support base and raise money, such as hosting athletic competitions and gala fundraisers.
- There are thousands of this kind of events throughout the year across India (Pai, Sridhar, Badwaik, & Rajeevan, 2015). When they are very large, they need specialized event planning experience. However, it is helpful to start with smaller events as one learns and gains experience to manage larger ones. In addition to nonprofit organizations’ events, there are companies’ hosted events, which include conventions, trade shows, holiday parties, staff and investor meetings, and company picnics.
- Since there is a big market for these kinds of events, it would be wise considering them when one is deciding on the niche into which to venture. The other kinds to consider are social events, which include birthdays, weddings, sweet 16 parties, anniversary parties, reunions, etc. Depending on an entrepreneur’s goal and capability, he or she may choose to manage all types of events or create a niche in one or more of the types. With the proliferation of social media and its influence, the market for anniversaries, birthdays, and other social events is likely to continue growing. This market will mostly comprise the people getting married, parents lionizing golden anniversaries, and others commemorating their wedding anniversaries.
- Most of the event planners rarely work 9-to-5. Events are mostly organized in the evenings, holidays, weekends, and on specific seasons. It then follows that the amount of time an entrepreneur spends managing events depend on the specialization chosen. Almost half of the Indian event management industry is unorganized. However, due to the ubiquity of newspapers and TV channels, advertisers have resolved to using experiential marketing, where they connect with their consumers through events rather than merely on media.
- This way, Lee and Chhabra (2015) argue, the advertisers are getting better and faster results. This approach is intensely practiced by India’s largest event management at the present, Wizcraft. With the improving economy, the live entertainment arm of event management is equally growing and is likely to grow even faster as consumers are growingly becoming discerning. In fact, the discernment is growing from the TV channels increasing reality show content to about 40% (Malur & Lakshmikantha, 2014). These shows broadcast singing and dancing competitions, for instance, which need event management services.
- Because of the promising event management industry in India, there is a significant number of international brands setting camp in the country as investors. For instance, in the recent past, the international mega-brand WPP Digital entered the Indian market through Encompass Events, while Interpublic group entered through investing in Lintas India. There has been a recent joint venture amalgamating Viacom and Network 18 and Viacom—both formed Viacom 18, which is a well performing entertainment and event platform (Sulehria, 2017).
- With the increasing competition, even from the international brands, the local event management firms are becoming more professional and creative. Following the understanding of the current Indian events management market, it is necessary to understand the process, compliance, best practices, and applicable laws.
Process, Compliance, Best Practices, and Applicable Laws
First in the process of venturing into events management is acquiring relevant skills or knowing a way of getting someone with the experience and expertise to help the business grow faster. However, this may not be necessary if an entrepreneur has worked elsewhere and is prepared to apply the acquired planning experience in the new venture.
- Being able to do this, just like in any other business, a prospective entrepreneur must have some critical skills. For instance, to succeed in the market, an entrepreneur needs to be a good decision-maker to be able to evaluate options. The entrepreneur also needs to be able to come up with new and innovative solutions to problems, which also means he or she must have leadership qualities (Zakarevičius, & Župerkienė, 2015).
- To start off well, it is safer basing one’s specialization or choice of niche on personal experience. For instance, if one’s background is corporate, then it is safer specializing on corporate events at first, such as organizing corporate sporting events, and later diving into newer niches.
- An entrepreneur seeking to starting an events management business needs to have impregnable analytical aptitude and an eye for detail. The person needs to be able to market his or her services while selling his or her ideas. When money starts flowing in, the businessperson needs to know how to manage it as he or she tracks financial transactions.
- According to Zakarevičius and Župerkienė (2015), such a person should be a good time manager and able to prioritize work related tasks. The person must be able to motivate himself or herself, as well as others and know how to engage clients and close sales. In other words, the entrepreneur must be able to understand team formation and manage people successfully. Acquiring these skills faster needs one to train and get certified, which will demonstrate one’s competitive distinction in terms of professional experience, knowledge, skills, and capacity to plan and manage an event successfully.
The second in the process is knowing the right people.
- Besides having relevant skills and knowing exactly what to do in running an event management business, whom one knows is equally important, especially in a market that is becoming very competitive. Getz and Page(2016) claim that knowing the right people in the industry helps in equipping one with practical information in starting and running the event management business.
- Accordingly, the entrepreneur interested in the industry can use social media to find relevant people. For instance, LinkedIn would be important in finding and joining appropriate groups and participating in relevant discussions that would help in starting and running the business.
- In addition, the entrepreneur needs to be attending exhibitions, seminars, and trade shows to expand his or her contacts and network. It is also important to attend events managed by the people already in business to create more contacts, including of suppliers, and to create a list of potential sponsors.
After acquiring the necessary skills, knowledge, and contacts, the third step in the process is to plan.
- Locally, one can choose to incorporate as a sole proprietorship, partnership, or private (or public) company (Singh, 2016). When choosing a business structure for an event management business, one needs to consider the structure’s liability, funding, taxation, and ownership and control. Differently said, making the best choice demands balancing various factors, such as the business’s nature and objectives, degree of control the owner desires, amount of capital the business requires and the available and preferred sources of funding, tax implications, and liabilities the structure will bear.
- Creating a business plan will lead to the fourth stage in the process, which involves registering a business entity. Registration at this stage is important because an entrepreneur needs to secure a business name before using it in many other documents and in marketing. In India, one can choose to register a business entity through Ministry of Corporate Affairs (MCA) or Registrar of Firms, or on the Startup India portal or mobile application. There are many business structures from which to choose depending on one’s business needs and objectives.
- Mallen and Adams (2017) advise that the information will be important because knowing one’s audience and competition helps in finding one’s niche and deciding on how and where to promote his or her services.
- The templates provided by banks usually comprise all financial modeling templates that one would need to create year on year projections. The templates sourced from banks will also be very important in case one needs to raise business funds from a bank. The development of a business plan will need the inclusion of the market information obtained from the research in the previous steps.
- An events management firm or entrepreneur needs a good business plan. One of the areas to start searching is banks—banks would be having templates for a business plan of events management.
- Mallen and Adams (2017) advise that the information will be important because knowing one’s audience and competition helps in finding one’s niche and deciding on how and where to promote his or her services.
- The templates sourced from banks will also be very important in case one needs to raise business funds from a bank. The development of a business plan will need the inclusion of the market information obtained from the research in the previous steps.
- An events management firm or entrepreneur needs a good business plan. One of the areas to start searching is banks—banks would be having templates for a business plan of events management. The templates provided by banks usually comprise all financial modeling templates that one would need to create year on year projections.
- If one chooses to incorporate an events management business as a partnership, he or she shall need to be aware that the formation will be governed and regulated under the Indian Partnership Act, 1932. The Limited Liability Partnership Act, 2008 governs and regulates LLPs, while the Companies Act, 1956 governs and regulates companies (Singh, 2016). One is not compulsorily required to register an event management business if he or she chooses a partnership structure.
- However, without registering and being governed and regulated by the Indian Partnership Act, 1932, a partner cannot litigate the business or any other partner to the firm. In addition, neither the business nor its partners can sue a third party. Finally, the business cannot arrogate set off against a suit made by a third party. One cannot start and run a business as an LLP or a company without registering with Registrar of Companies. In addition, for companies, a Certificate of Incorporation is required as conclusive evidence for legal existence (Singh, 2016).
- If the entrepreneur chooses to register as a partnership firm, he or she needs to understand that the firm is not a separate entity from its partners and that it cannot be listed on the stock exchange. While an LLP is a distinct legal entity under the Limited Liability Partnership Act, 2008, it cannot as well be listed on the stock exchange. Partnership firms do not have perpetual succession since their perpetuity depend on the partner’s will.
- However, LLPs and companies have perpetual succession and partners or members may come and go. There are no legal capital requirements if the entrepreneur chooses to start the events management business as a partnership firm or LLP, but as a private company, the entrepreneur must have a minimum paid up capital of Rs.1 lakh, while a public company needs at least Rs.5 lakhs (Chakraborty, 2013).
- In terms of charter documentation, Perry-Kessaris (2016) records, a Partnership Deed is a charter of a partnership business structure that describes its scope of operation, and the partners’ rights and duties.
- An LLP’s charter is an LLP Agreement, which describes its scope of operation and the partners’ rights and duties vis-à-vis LLP’s. A company’s charter is its Memorandum and Article of Association, which also denotes its scope of operation.
- The entrepreneur also needs to understand that if he or she chooses to incorporate as a partnership firm, he or she must be in company of one (1) to nineteen (19) more partners.
- If he or she chooses an LLP structure, he or she needs at least one (1) more partner, but there is no limit on the highest number of members to involve.
- However, a private company legally requires between two (2) and fifty (50) members, while a public company needs at least seven (7) members.
After registering with relevant authorities and securing a name with which to do business, the fifth step in the process is to define exactly what one is going to offer in the events management industry.
- The exact service is dependent on, among other things, the findings of research on the target market and competitors. Based on the findings, for instance, registered events management firm would decide to offer all event planning services under one roof, including registration, hiring venues, promoting events, catering, etc. Otherwise, the firm would specialize in one or two niches. The final stage in preparing is to get relevant papers in order.
- Accordingly, one needs to understand the legal procedures involved in completing the required paperwork. A firm should check to ensure it has all the required licenses and certificates. If possible, the event management firm needs to have business insurance for its employees and the public, especially the people attending the events it organizes and hosts as Hopkin (2017) advises.
- Ahead of planning and hosting any event, an event management firm must seek a set of licenses for compliance and best practices. For the events hosted in hotels, most hotels give event organizers a list of licenses that they must have and hand over to the hotel at least a day before the event. Hypothetically, according to James (1982), every event needs a No Objection Certificate from the Additional Collectors office, a No Objection Certificate from the Fire Brigade, a No Objection Certificate from the Local Police Station, a No Objection Certificate from the Traffic Police Department, a Police Commissioners Note, and Rangbhoomi License.
- If an event has a DJ, then the event management firm needs to add a Phonographic Performance Ltd. License and a Novex License except when the music played is produced by Yashraj Films. Planning and hosting a Live Performance at an event requires an Indian Performing Rights Society Ltd. License.
- If alcoholic beverages are used in the event, then the management needs to have a Liquor License. If the management uses or plans to use a generator at a venue, then a Public Works Department License is required.
- If the event management firm plans to use performers from countries other than India, then a Foreign Artist Permission must be obtained. In addition, the firm needs to submit to authorities the documents required by the law, more especially the performer’(s) copies of passport and visa.
- To get the licenses just described, an event management firm needs to submit to authorities a No Objection Certificate from the venue, the venue’s floor plan, and a Letter of Application to the various identified licensing departments (James, 1982).
- The letter must have a business entity letterhead and be accompanied with an affidavit on a stamp paper. Regarding foreigner artists, in application, the event management business entity needs to submit to authorities the artist’s visa and copy of contract with the entity. It is advisable to get the foreign artistes on business visa rather than an employment visa. If an event involves paid attendants and/or sponsors, the management firm needs an Entertainment Tax directorate.
- In addition to the laws and regulations specific to the event management industry, the event management firm must ensure it does not do anything contrary to India’s supreme law, the Constitution. Closer home, the general business laws must be adhered to ensure compliance and best practices. For instance, the Indian Contract Act of 1872 is still applicable, and it includes such guidelines as those specific to contracts. Since the event management industry is largely about contractors, such as between artists and event planners or suppliers and hotels, the Indian Contract Act of 1872 and newer Acts must be followed closely. In case one chooses a partnership structure for running the business, the Partnership Act of 1932 would be very helpful. India experienced a high economic growth in the start of the 21st century, leading to the passing of the Competition Act of 2002 and the Limited Liability Act in 2008 by the Ministry of Corporate Affairs (Rankin, 2016). These laws serve to push for sustainable competition in markets, promote free trade, hence protect consumer interests, and forbid anti-competitive business activities.
- If the event management firm is a company, it will find the Companies Act of 2013 useful because the law gives guidelines on acquisitions and mergers, shareholding, boardroom decision-making, corporate social responsibility, etc. (Singh, 2016).
- The firm must also understand that the country’s law protects employees as well as employers and consumers. Employees are protected by the Payment of Wages Act of 1936, the 1972 Payment of Gratuity Act, the Payment of Bonus Act of 1965, the Industrial Disputes Act of 1947, and the Industrial Employment Act of 1946. On the other hand, the Indian business laws protecting consumers include the Consumer Protection Act, 1986 and the Consumer Dispute Redressal Forums at national and local levels (Saini & Budhwar, 2014).
India is an emerging market. It is among the biggest and fastest growing economies across the globe today. Accordingly, starting and running any business in India, let alone an events management business, would need investors who can understand some intricate and some simple realities unique to the country, including the government’s evolving policies, revisions to the existing statutes, and the laws enacted recently. While the process, compliance, best practices, and relevant laws discussed in this paper establish the general laws governing a business firm in India, it is important to adhere to local laws. In other words, a business entity must obey the laws of the state and city in which it is incorporated and operates.
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