The budgeting process precedes the planning process. Event professionals live and die by their budgets. Putting together an event budget can be a daunting task for a newcomer and even the slightest hint of mismanagement can cost a company dearly. An immaculate budget provides a clear picture of the investments that need to be made and can help avoid spending on things that are not needed. More importantly, it helps in indicating what needs to be done to get the most out of resources.
With this in mind, let’s take a look at how to put together an immaculate event budget.
Setting goals is no-doubt the first step of planning the budget. By taking a closer look at the event goals, event planners can work their way around the type of investments they need to achieve them. Whether it is to create relationships or drive meetings, goals are important to understanding areas of focus and what needs to be done to get the most out of investments. Once these goals are established, event professionals can go about planning expenses.
Being realistic is vital to setting goals. Event marketers need to know their goals and set realistic targets accordingly. They need to keep three possible scenarios in mind. The ideal scenario, the realistic scenario, and the worst-case scenario. The ideal scenario lets them plan for higher than usual booth traffic, attendance, and meeting requests. The realistic scenario dictates the more likely circumstances and the worst case scenario works out what needs to be done in case of a dip. With these in mind, they can budget expenses accordingly.
Two part budget system
Corporate event planners often go by a two-part budget system. The first sheet details the projected income vs expenses and the second elaborates actual income vs actual expenditure. Breaking it down to the finest possible details highlights what costs need to be focused on and those aspects that need to be prioritized in the budget.
The budgeting process starts with evaluating where revenue comes in to pay for the costs of the event. Event planners need to analyze revenue channels from similar events in order to make realistic estimates.The first sheet, therefore, would need to contain a list of all the avenues through which revenue flows in. Everything from booth rental fees and ticket revenue to merchandise sales needs to be taken note of. It is important to be as detailed as possible.
After estimating event income, event planners will need to identify the expenditure required to get the event going. Again, there is a need to analyze the type of expenses incurred from past events of a similar nature. This helps identify types of expenses and probable costs. The expenses sheet, therefore, will need to detail every point of expense. This list should contain every expense ranging from invitations to food and beverage costs. Quotes from suitable vendors can also be updated on this sheet. The actual income vs expenditure sheet needs to be filled up as and when operations take place.
Break even point
The break-even point tells you everything you need to know about the sales volume required to cover the investment and the point at which the event starts drawing profit. Analyzing this number will tell event planners what sort of planning needs to be done to balance expenses and incomes.
Fixed and variable expenses also play a big role in determining break even. Fixed costs need to be covered regardless of the number of attendees. These costs are closely dependent on the type of event and do not depend on the volume of business generated. The cost for the venue is typically the largest part in this category and is typically paid in full. Variable expenses, on the other hand, are dependent on the number of attendees. It is crucial to gauge the attendance before compiling the event budget. It is impossible to be accurate about variable costs, and therefore there is a need to create working budgets that can be refined to project actual numbers as the planning process progresses. Variable costs need to be kept in check to keep the overall budget under control.
Irrespective of how good the planning is, it is always advisable to be prepared for unexpected expenses. Depending on the type of event being organized, it is paramount to keep aside as much as 10 to 15% of the event budget. The extra provision serves as a buffer and allows planners to effectively prepare for last minute miscellaneous costs that do not fit into a category of expenses on the budget. For example, broken equipment can seriously derail the projected expenses if not accounted for. This item also lets planners be proactive and fix issues as and when they turn up.
Planning the event budget is a tedious task and every ounce of detail plays a paramount role in ensuring that the event racks up as much profit as possible. And as stated earlier, the slightest slip can prove costly. If you liked this blog, we’re sure you’ll love our Comprehensive Guide to Creating Stellar Events. Download your free copy here.