7 critical tips for managing an event budget
Whether your events are simple or complex, whatever kind of events you manage - from corporate events like meetings and conferences to social events like parties and weddings - you will probably be spending and/or taking in money to accomplish your event goals and create an amazing experience for your attendees.
In addition, you will probably have quite a few suppliers and vendors involved in helping you, most if not all of whom don’t work for free. And you may also have other stakeholders, team members and clients who are interested in how money is earmarked and spent as the event is being planned.
Hence the need for a comprehensive event budget that accurately lays out how much you have to spend, what you will spend it on and if you have income that will offset those expenses. In addition, creating an accurate event budget is critical in properly managing vendors, staff and other event personnel, so it's a step that should never be skipped.
Building an event budget need not be complicated, but there are a few key best practices to follow before you sit down with a spreadsheet or, better yet, an event budget planner tool to start putting numbers in columns. Here are some of the most important ones...
1. Establish event goals and spending priorities from the outset
It’s highly unlikely that you have a bottomless pit of funds to pull off your event, which means you need to make smart decisions about what to spend money on.
This starts first with looking at the overall goal of your event and determining what items are most important in achieving that goal and making the biggest impact on your audience. The items that can’t be cut without compromising the overall goals of the event are called signature expenses, and they could include food-and-beverage, entertainment, speaker and venue rental costs.
Once you have identified these key or signature expenses, you can then start to flesh out your other expenses and determine how much you can cut them, if necessary.
This planning work should give you your first thumbnail budget, which you can then use to establish the capital requirements for your event (which is the approximate amount of funds you will need to fully realize your vision). It’s at this time where you can brainstorm on where and how you will raise or acquire these funds, and this can lead to an exercise in how to manage your cash flow so you can stay current on all your bills and payments due.
2. Don’t start from scratch if you can help it
Often we are forced to build an event budget from a blank page, but this should be a last resort mainly because it’s very easy to forget an expense early on in the planning process and much harder to get sign-off on an overlooked expense down the road.
Using a budget from a previous event is a great starting point because it’s easy to modify and edit items based on a proven budget. If you don’t have an existing budget (or event budget template), the next best place to start is to collect quotes and input from suppliers, vendors and reliable industry peers who have in-depth knowledge of current event expenses.
HINT - Creating event budget templates is a great way to never start from scratch. Whether it’s a corporate event or conference budget template, a party or wedding budget template, you can use your previous work and research as a starting point for any new events you may plan. Simply put, creating event budget templates upfront can save you tons of time down the road.
3. Create a contingency fund for emergencies
If a career in event management prepares you for anything, it’s the unexpected. So you should be prepared for fluctuations in prices, order changes, cancellations from suppliers, budget cuts and hundreds of other possible scenarios that will affect your event budget and your ability to stay within it.
Because of these many uncertainties, it’s highly advisable to set aside a contingency fund (or rainy day fund) that can handle overages, incidentals and unforeseen emergencies. Rule of thumb says that this fund should be anywhere between 10% to 30% of your overall budget (with 20% being the average).
4. Build out forecasts and continually monitor items
This step is all about being forever diligent regarding your event budget because, if it starts to slide, both you and your event will suffer.
First, you should set a breakeven point, which is where costs and income perfectly offset each other. If your event is larger with many moving parts, you may want to create a few separate budgets with different scenarios of costs and revenues, some of which are more optimistic and others that are more conservative.
Next, you should look at when your payments are due to your suppliers and vendors and determine when you will need capital to make these payments. By putting these dates to a calendar, you can then plan your bill-paying and/or revenue-generating activities around these dates.
Many event budgeting software tools will provide access to comprehensive reporting (an advantage of such apps over event budget spreadsheets), including cash flow, income, and profit-and-loss reports. This will also allow you to pay close attention to your gross and net profit margins.
5. Simplify collaboration and sharing with your team
Most events have multiple individuals involved in planning the event and/or supplying services and goods for it, and many of these people will need access to the budget because they will either need to monitor it or make timely updates to it.
As such, it’s critical to be able to give these people the access they need, so either an online spreadsheet or Web-based event budget planner will give them the anytime, anywhere access they require.
HINT - One of the biggest stumbling blocks to staying on budget is not entering in updated information as things transpire. If a cost increases, if a payment is made, if a vendor is replaced, these need to be recorded immediately so your event budget is always up-to-date for your entire team.
6. Break down expenses and revenues into discrete line items
Sometimes event planners will divvy up an event budget into broad categories (say catering, venue, entertainment, etc.). Although this might be a good way to come up with an initial overall budget, it’s not a good way to manage an event budget moving forward for a few reasons:
- More than one vendor might be supplying services inside a particular category.
- Costs for items within a particular category may change or need to be adjusted/trimmed.
- If certain items inside a category increase in cost, you won’t be able to narrow down the culprit easily.
As such, it’s always best to break items down as precisely as possible so you know exactly what each item, service or good costs. Here’s an example of some budget categories and the separate line items within each:
Audio Visual Expenses
- Projector/Screen Rental
- Video Program/Production Fees
Decor and Signage Expenses
- Event Signage/Directionals
Food and Beverage Expenses
- Plated Dinner/Buffet
- Coffee/Tea Service
- Non-Alcoholic Beverages
- Service Fees
- Ticket Sales
- Direct Mail or Invitation Printing/Mailing
- Website Fees
- Program/Brochure Printing
- Live Band/DJ Fees
- Speaker Fees
- Lodging for Performers
- Travel for Performers
- On-Site Support Staff
- Security Staff
- Kitchen/Bar Staff
- Food Servers
Venue and Rental Expenses
- Venue Rental Fees
- Linen Rentals
- Table/Chair Rentals
- Tent Rental
- Parking Fees
- WiFi Access
7. Identify how you will cut costs or boost revenues in advance
With event budgets shrinking and costs fluctuating, you may have to do lots of shifting of your initial budget allocations. This is why it’s not only important to identify your key/signature expenses upfront (as discussed earlier) but also to identify early on how you will address untimely budget cuts or additional expenses. This way you are prepared to take action quickly when such things hit.
There are many strategies and approaches for addressing event budget shortages, which can include:
- Recruiting volunteers to replace paid staff.
- Renting the venue at a bulk rate for multiple events.
- Booking the venue on an off-peak season/day/time.
- Adding more sponsorship opportunities (like marketing-related sponsorships of the event website, swag bag, etc.).
- Trimming down on the catering order (like heavy apps instead of a plated dinner).
- Going paperless ... use event apps, event websites and social media instead.
- Finding a co-promoter with which you can cost-share.
- Boosting your merchandise offerings ... and sales.
- Switching from a free bar to a paid bar.
- Offering a VIP registration option (or upgraded tickets for special perks) at an increased rate.
- Always, always, always negotiate.
By following these best practices and using an event budget planner, you will have the tools and processes in place and be more prepared to address any scenario as you plan your events.