Why we keep taking unprofitable risks : Lessons from local Exhibitions

 I often visit local exhibitions in my city during my free time. My mother and some of her friends and relatives have participated in these events by setting up stalls to sell artwork, food items, and other products. However, many of them struggled to make a profit. Often, they couldn’t even recover their basic cost

Curious about this pattern, I observed that several stall owners experience losses despite putting in considerable effort and investment. They spend on stall rent, materials, and other fixed costs, yet their returns are minimal.

In contrast, the organiser earns a steady income from stall rentals, regardless of how well the stalls perform.

So, why do people still continue to participate?

A few sellers—those offering unique products, having strong branding, or operating with lower costs—manage to earn profits. But many others don’t, and yet they keep coming back. Why?

Here are the possible reasons that I found after researching up on the internet :

1. Sunk Cost Fallacy – Having already invested, sellers hesitate to back out.

2. Marketing Opportunity – Exhibitions are seen as platforms for exposure. Like giving away samples of your newly opened business will help increase brand visibility.

3. Social Proof – Seeing others participate creates a bandwagon effect.

4. Product Testing – A chance to try out new products on a small scale and get feedbacks before launcing the product in the market.

Stakeholder	Revenue Source	Risk Level	Incentive
Organiser	Stall Rent (Fixed)	Low	Guaranteed income
Stall Owner	Product Sales	High	Profit, visibility, brand promotion
Customer	Leisure/Shopping	Very Low	Entertainment, novelty, food, deals

(The above table has been generated using ChatGPT. It helped me visualize better. Hope it helps you too!)

The organisers seem to have an unfair advantage, right? Not really.

Fairness Check:

• Organisers aren’t necessarily unfair—they provide space, electricity, security, and infrastructure and thus are entitled for the rent

• Stall owners enter willingly, based on mutual agreement.the stall owner does not force them to put up a stall in his exhibition.

How Can Stall Owners Improve Outcomes?

1. Control Costs – Be mindful of spending and avoid overstocking. Plan before and have a clear estimate of sales, the type of crowd that will be visiting the exhibition ,etc

2. Use Smart Marketing – Attract the right audience with engaging strategies. For example. Providing a sample tasting piece if you have a food stall, guiding the customers with some styling tips if you put up a jewelry stall, will help build a connection with the customers .

3. Build Customer Connections – Collect data during the exhibition for future follow-ups. This will help in finding potential customers.

To make exhibitions more beneficial for stall owners, the model could be rethought to reduce financial risks and improve outcomes. One suggestion is to implement a flexible rent structure, where organisers charge a base fee plus a small percentage of the profits. This would ease the burden on low-earning stalls while still compensating organisers fairly. Additionally, collecting pre-sale data—such as expected footfall, past performance of similar stalls, or visitor preferences—can help participants make more informed decisions about whether to invest. Stall owners should also focus on selling high-margin products, which offer better profit potential even with moderate sales. Most importantly, it’s crucial to define clear goals before participating—whether the aim is to make sales, gain visibility, or test new products—so that resources can be used wisely and expectations are realistic. (Note- The ideas are a combination of my thinking, articles available online, and ChatGPT -either way, we find a solution to the problem, and that's important!)

Exhibitions are more than just weekend events—they represent the hopes of small businesses and entrepreneurs. But for these dreams to thrive, we must rethink the current model. With better planning, data, and support, more stall owners can find success in these vibrant marketplaces.

Comment down below and let me know your thoughts on this idea !!