For event budgeting, it’s always important to develop the budget at the start of the event planning process. If you simply let revenues and expenses “come in”, you won’t have a sense of whether the event is going to make money, break even, or lose money. Budgeting is a form of event risk management.

Simply put, an event budget identifies the event’s expenses and revenues (and sources of). It calculates the difference between the two to predict the financial outcome of the event.

Generally, the goal of most events is to make money or, at the very least, to break even. However, there are some events where losing some money is acceptable. This will be tied to the goal of the event and the resources available to cover the shortfall. For example, an event might be showcasing a new product or program to potential customers, where the organization is willing to lose money on the event with the goal of gaining revenue through the sale of the product/program.

Regardless, it is still important to create an event budget to ensure the financial outcome of the event falls within acceptable parameters.

Event Budgeting – where to begin

When creating an event budget, I start with expenses. What line items are required in order to implement the event? Think about venue, catering, audio-visual, speaker costs, event planner, advertising, printing… any area where you spend money to deliver the event. For the most part, these numbers will be estimates.

How do you know if your estimates will come close to your actual numbers? Some costs are fixed and will be outlined in your contracts, such as venue room rentals and speaker fees. However, sometimes room rentals are adjusted based on the amount you spend on catering and/or the number of guestrooms you book, so watch for those. Additionally, some venue contracts list a “catering minimum”. This is the minimum amount of money you are required to spend on catering (before gratuities, service fees, and taxes). If this is the case, you can use the catering minimum as a guide for your estimates.

Be as realistic (as opposed to optimistic) as possible when considering your attendance (which drives your catering estimates). It’s helpful to use past attendance history (even if you hope to increase your numbers for this year). However, your numbers may still be difficult to predict as attendance trends have varied widely coming out of the pandemic. In any event, considering all your costs as realistically as possible will help with your estimating.

Event Budgeting – estimating catering

When estimating for catering, think about the meals you will be ordering and what you’ll include with your coffee breaks (snacks/beverages or beverages only). If the venue or caterer has not provided you with their current menus, ask for those. If it’s not listed, ask for the venue’s gratuity or service fee rates and ask what line items they apply those charges to.

For example, some venues apply the service charge to everything (catering, room rentals, audio-visual) while other venues apply the gratuity to food and beverages only. Gratuities and service fees can vary widely across venues (ranging from 15-20%). This will significantly impact your estimates if not taken into account. Also, be aware that gratuities and service fees are themselves taxed. When you consider that gratuities/service charges and taxes can add an additional 25%-35% to your invoice, it’s vitally important to consider these when estimating expenses.

Event Budgeting – about revenue

Next, let’s consider revenue. Depending on the event, you might have a number of revenue sources or only a few. Here are some revenue examples: registrations, sponsorships, donations, exhibitor fees, merchandise (include your merchandise costs under your expenses), advertising (a source of revenue if groups are paying to advertise with your event).

In terms of registrations, be conservative in your estimates. It is better to base your budget on a lower number than to overestimate and fall short of covering your expenses. If you can, use past history as a guide when projecting your event revenues.

Balancing Your Budget

Once you’ve pulled together your expenses and revenues, make your comparison. Are you breaking even? Making money on the event? If your expenses are exceeding your projected revenues, it’s time to sharpen your pencil and look for where you can cut some costs and/or increase your revenues.

Here are some cost-cutting suggestions:

• Venues: if you haven’t signed the contract, consider other venues that might give you better rates on room rentals and catering
• Catering: opt out of All Day Meeting packages and order “a la carte” instead (you’ll be able to save money if you slim down the food and beverage offerings); additionally, consider cutting breakfasts and ordering snacks and beverages instead; something to note is that often, not everyone will show up for breakfast, so even if you keep your breakfasts, consider reducing the number of people you estimate for those
• Audio-visual: many venues have their own in-house AV company which can sometimes be more expensive than using an outside AV company; shop around and get a few quotes for comparison; even if the venue charges a fee for using an outside AV company, you might still be able to save money going this route

Finally…

Having developed your event budget, don’t let it sit on the shelf. Regularly review your budget, updating it with actual expense and revenue numbers as they come in. By keeping an eye on these, you’ll know whether you need to make any adjustments as the planning progresses. Sometimes unanticipated expenses pop up and/or expected revenues fall short, and you need to be able to adapt to those before the event happens. Budgeting is an excellent tool to mitigate your event risks and ensure your event’s financial goals are met.

If you’d like assistance with developing your event budget, contact me at carol@executivearrangements.ca.

– Carol Tebay, Executive Arrangements