Planning your event or meeting requires you to create an event budget. This is the next step after defining your event goals. It’s essential to determine what financial success looks like for your event and how you plan to measure it.
You will need to identify all expenses and revenue that could occur at the event and track your cash flow. To ensure that your budget is within limits, it will be necessary to keep track of and revise it regularly. Before we get into cash flow, let’s first look at what financial success looks like for your event or meeting.
Find out what financial success means for your meeting or event.
Every event planner should start by creating a budget. This will allow them to predict if the event will be profitable, loss-making, or even break even. The type of event and its objectives will determine what financial success looks like for your event. Below is a table that explains each scenario in greater detail.
Before you begin planning your budget, it is essential to understand your organization’s needs for a break-even event, loss leader, or surplus event. The event budget is a projection or forecast of all costs and revenues you will incur for your event. It is only possible to predict some expenses and income from the start, and some might change over time. Planning your budget around the essential costs and revenue is important.
Make a budget for your meeting or event.
When planning your budget, it is essential to distinguish between expenses and revenue sources. It would help if you also distinguished between fixed and variable costs to forecast your next event’s budget accurately. Planners face a significant challenge: how to manage their expenses and revenues to reach their financial goals and measure the success of their event.
Expenses
In a survey by the Professional Convention Management Association (PCMA), 36% of all expenses were for food and beverage (F&B). Below is a list of the most recurring costs associated with meetings and events.
Meetings and events are about the attendee’s experience. As such, it is essential to determine where your money will go and what value you can add to your audience. While attendees don’t care whether you spend $140 on a gallon or $25 per head for a continental breakfast buffet, they care about the overall experience. F&B is an essential component of attendee satisfaction. PCMA suggests spending 55% of your budget on F&B, AV, and speaker/entertainment, as these items directly impact the overall attendee experience.
Fixed and variable costs
As discussed in our break-even calculation, you must also distinguish between fixed and variable costs or expenses.
Sources for Revenue
Different revenue streams can be used to pay expenses.
- Advertising revenues (event program, internet site)
- Concessions (food, beverage, and merchandise sales).
- Donations/Philanthropy
- Rental fees for exhibit or exposition booths
- Gifts in kind (actual market fair market value)
- Grants and contracts
- Management fees
- Merchandise sales
- Registration fees
- Sponsorship fees
- Technology income (from advertisements)
- Vendor commissions (hotels).
- Although many technology options are available, most event and meeting planners use Excel or Google Sheets to plan their budgets. You can assign specific titles or groups to make reporting and tracking easier. There will be two columns for actual and estimated numbers. Using past years as a guideline for forecasting revenues and expenses is best. It is essential that you fully understand your budget numbers and can explain their origins. To back up your budget, always keep all receipts and invoices.
- A contingency fund is another important line item to include in your budget. It’s better to be prepared for unforeseen costs so that you are ready for anything. Consider what might cause additional charges and create a plan for addressing them.
- With a budget and an idea of how the event will be funded, it is worthwhile to plan your event. After establishing a budget, you can start planning your venue, promotional activities, staffing, and other aspects of your event.
How to calculate cash flow for your meeting or event
- Cash flow and starting cash are essential when forecasting revenues and expenses for your event or meeting. Events are likely to have costs before revenues are generated. You will need to pay a deposit when booking venues. This expense is expected to occur before you sell your first tickets. It would help if you could pay your bills while you wait for payments.
- Add all your revenues to calculate your cash flow. Next, subtract the uncollected receivables. This is money owed to you for services/work done. This is your cash available before expenses. The cash you have on hand is calculated by subtracting all your accounts payable, the money you owe others for services/work performed. Positive numbers indicate a positive cash flow.
Track and Review Your Event Budget
- The first step in planning your event budget is to plan. It is only possible to forecast some expenses, and your budget may change as you plan the event. It is essential to keep track of your budget. It’s a good idea to meet with your company’s accountant or financial officer to discuss the budget. Depending on your company’s size, you might encounter the owner.
- You can then ensure you are in good health before you begin the event planning process. It’s a good idea because your event or meeting may have different requirements than you originally planned. This will allow you to determine who has the authority to spend more than the budget. The previously mentioned contingency fund can be used to cover unexpected expenses.
