How To Get Your Event Budget Planning Right
For the uninitiated, budgeting for an event can be a daunting task – there’s so much to think about. Just where do you start? More importantly, how do you avoid making costly mistakes?
We asked Michelle Fanus, Founder of Dynamyk Events and Lecturer in Events Management at University of West London to set out the basics of event budget planning…
Some warm-up principles:
- Be realistic – Are you really going to get those 20 sponsors and 500 delegates for that first event with no track record or branding in the market place? Create your ideal scenario (20 sponsors, 500 delegates). Your realistic scenario (where you are most likely to end up) and your worst-case scenario (your fall-back position when everything that you imagine can go wrong has gone wrong!)
- Be clear about what type of an event you are aiming to deliver – guest invitation, fee paying only, sponsorship driven, or a combination of all the above. Your budget will look very different for each event model type so ensure you are clear about which option you are working towards.
- Destination and venue – the quicker you can nail this, the more accurate your cost estimating will be. The entire event tends to hang on the venue or destination so if this is still up in the air then your numbers will not make any sense and moving forward with your planning will be difficult.
- Indication of revenues – for fee-paying events, what are the price points that you are aiming at charging? Check out the competitive events already being attended to see what the market is used to paying and benchmark your event against theirs to create your rationale for a higher, lower or similar price point.
- Fixed and variable costs – what costs are you liable for irrespective of the size of the audience? Which costs grow as your audience grows?
- Venue agreements – most venues want some kind of guarantee. A deposit for your room hire and catering. Know what that figure is and factor this into your budget
- Contingency – usually 5-10% for unforeseen costs (risks)
1. Work out your break-even point. What level of revenue (for fee-paying events) or funds do you need to cover all your costs to make the event viable?
2. Group your income/revenues and cost figures into categories. Revenues come in the form of Delegates Revenue, Sponsorship Revenue, Advertising Revenue and Exhibition Revenue. Costs generally come from: Research, Marketing/PR & Promotion, Delegates (goodie bags, badges, registration), Venue (room hire, catering, AV audio visual, décor, and furniture), Exhibition costs, Travel & Accommodation (staff), Speakers (expenses, fees) and Hospitality.
3. Create an Excel spreadsheet with a separate tab for your Revenue and Costs figures. Add in formulas where necessary.
4. Add a top sheet which pulls together all of your total costs and revenues for the above categories in a single figure for easy reference. This is your Summary sheet and will be your first tab in your Excel spreadsheet. It is this tab that you will use in your Budget meetings for accounting for each item. The other sheets provide the breakdown if more detail is required, especially where cost savings need to be made.
5. On separate 2nd and 3rd tabs allocate a few lines for each of the above categories, labelling each as you go along. Put in figures relevant to each item so that you can itemise each element that you are spending on. For instance, for the venue cost – break down the total cost into room hire, catering, and audiovisual etc. so that you can see how that total cost is made up. If later on you need to make savings it is clear what each item costs and where you are likely to be able to make any savings. If it is bundled into the one cost it will be harder to identify whether any savings can be made.
6. Run budget exercises for your events to review and analyse costs and revenue forecasts at timely intervals during the planning and co-ordination phases.
Overall budget management
My best clients create 12 week, 6 week, 1 week and Flash (on the day) forecasts. They are the best at managing costs and forecasting revenues. If you have the resources then I would recommend this approach. It flags up any dips in revenues, takes into account any unanticipated costs and highlights any unforeseen issues that were not apparent during the planning stages but have hit you like a rocket. This approach to budgeting is magical and does wonders for your planning abilities – not only for the current phase but really sets you up for those repeat events.
In the throes of planning for your event however, it may emerge that actual revenues were not as rosy as you first anticipated so cost savings or reductions are going to have to be made to prevent the event from making a loss. This is where the detailed budget really comes into its own. Those itemised lines for each cost really help you re-think each cost and revenue figure – is £2,000 really necessary for décor?! This is where you are able to remove those ‘nice-to-haves’ and cut back in areas without losing the event integrity and core essence.
Budget management is essential for successful event management. It helps you think and plan ahead, re-think and adjust your plans but also be prepared for any unforeseen mishaps and any changes in the landscape throughout the planning and execution of your event. It most importantly stops you haemorrhaging money where your event is concerned.
It is no different to making a budget for your grocery shop or monthly bills at home – be realistic, have a plan, nail the critical elements that will help your accurately forecast and regularly review.
Want an event budget template to get you started? Download yours now!