Simple budgets

 

How many attenders?

Before you go any further, you need to estimate how many people will attend your event, because this will affect your costs and your prices. The main way to estimate the expected number of attenders is to look at past attendances at events of the same or similar nature. If it is an invited event (such as a wedding or private party), you should be able to count the number of invitees and then calculate the proportion that will actully attend.

 

Booking fees for a venue

Your role as the event manager will depend on your particular role:

1. You could work for the venue (e.g. a hotel or restaurant). In this case, the organization holding the conference is your client.
2. You could work for the organization holding the conference. In this case, the venue is your supplier.
3. You could work as an independent event manager. In this case, the organization holding the conference is your client and the venue is your supplier.

If you work for the venue, it would be ideal if you can show the prospective client the shedule of fees, confirm the booking and the terms of payment in writing, and get a holding deposit. Some venues have very clear conference packages and schedules of fees so that it is very easy to caluclate fees and make a decision.

If you don't work for the venue, you will either have to calculate a quote from the schedule of fees and make an offer, or wait for them to get back to you with a quote. If you can fill the whole venue or do a bulk booking, the chances are good that you will get a better rate. If you can trust the venue management, you can also avoid any price rises by making a confirmed booking with a deposit at current rates and paying the balance at the beginning of the conference.

 

Recurring or similar events

If the event is recurring, you can review the notes from the last time it ran, and use the previous budget as a template. You should, of course, considering any improvements suggested in the review and and any changes you propose in the event this time. The only trap is that, if the event runs for long enough, errors tend to creep into the budget if people blindly accept past systems and precedents. This will also give you an idea of the number of attenders.

In the same way, if you also have run very similar events and have review notes, you might also have a ready-made budget model to follow.

 

Researching a budget

Costing and pricing many events, however, is more complex when clients want services that need to be individually costed. Consequently, the shedule of fees doesn't necessarily give an accurate picture of costs, or at least accurate enough to decide whether or not to make a booking. The service provider will usually have to do a full costing and get back to the client with a quote. Besides, the organization holding the conference will want time to consider the quote before it makes a decision. The difficulty with this is that the service provider will spend time and effort doing an accurate costing with no client commitment to make a booking.

If you are running an event and you can't work on a simple schedule of fees, then you will need to write a full budget. In fact, you might even have to do all this work just to put together a proposal or tender document with a quote, and you mightn't be paid for doing it.

Work on your budget while you do your planning, by counting costs as you go. Many budget items will only become clearer as you work through the planning process.

New terms:
Costing: Find out what costs are involved in running the event
pricing : Detemining how much to charge.

These are separate processes. Pricing depends heavily on the market situation and competitor's prices, not just your costs.

 

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Costing

Identify clearly the parameters of your budget. This can be quite tricky if you are sharing personnel and resources with another event running at the same time.

Itemize costs in detail as accurately as possible, and identify fixed and sliding costs. You can ask your staff and colleagues who know most about each kind of expenditure, or check recent purchse records. Cover all the expenses you can be sure of, and express them as hard figures. Round figures upward and don’t forget to add any price rises for inflation.

New terms:
Fixed costs: Costs that will be the same no matter how many people attend.
Sliding (or variable) costs: Costs that will vary according to the number of people who attend.

A list of example of costs is below. They are already categorized (e.g. overheads), but you might have more helpful categories for your situation.

1. Overheads: Rent, electricity, gas, telephone, internet access, cleaning, taxes. Even if you own the building, you might just calculate a rental rate.
2. Labour
• Wages and salaries, counted on a per hour rate, or a per week rate, or a per team per month rate.
• On-costs: Workers' compensation insurance, holidays, Superannuation, professional development, benefits provided.
• Don't forget to count yourself.
3. Transport. One recommendation is to calculate it at current ATO allowance rates to make it tax neutral.
4. Separate public liability insurance for the event. This can be up to 10% of the total cost of the event, so it is not a small administrative matter.
5. Breakages (If you have a normal rate, otherwise put it in risks and contingencies.)
6. Profit: A profit margin of at least 10% is desirable, but it will tend to follow industry averages, the amount of risk you take, and the competition.
7. Risk/contingency: This will vary according to the kind of event and how you are funded. If it is a minimum risk event and you are doing a budget for government funding, then it might be the same as the profit section. But a high-risk event might have a high risk/contingency allowance.
8. Consumables
9. Office administration costs
10. Security
11. Tax
12. Advertising
13. Venue hire
14. Catering
15. Entertainment

Check that your data and calculations are accurate and fairly hard.

 

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Income

 

Pricing and income

You should plan your income streams for the event. What money will you get and when will you get it? There are several main kinds:

• Fees charged to hosts (e.g. hosts of corporate events, weddings, parties)
• Fees charged to attenders (e.g. tickets for admission)
• Fees charged to boothholders (e.g. exhibitors)
• Fees charged to sponsors for advertizing or other kinds of publicity
• Grants, if the event is charitable or for the public good
• Operating capital to cover preparation costs. This is usually provided by the event management company, but might be offset by a non-refundable deposit from the client.

Do your pricing on fees. The system is simple if the host is paying. Otherwise, you will need to set scales of fees for tickets, boothholders, sponsors, etc.and determine the conditions for each level on the scale. For example:

• VIP tickets at a sports event always get a better viewing position.
• VIP tickets at a music concert get a better viewing position and perhaps a backstage visit to the artists.
• In a trade fair, bigger, better-located booths attract higher fees.
• Major sponsors might get a display space and large prominant logos on everything. Minor sponsors might just get a wall display and smaller logos on key documents.

Grants

You will probably be able to find grant-giving bodies, but they all have condiditons. You will normally have to submit an event proposal that fits their purposes in the categories for which they give funding.

Start by researching funding bodies, then report your research results to your supervisor with a firm proposal. If you get a goahead, prepare funding submissions. (Link to finding funding) Make sure you have someone check it before you send it.

A word of caution: If you depend on the grant to be able to run the event, you cannot commit to the event until you have confirmation of the grant, and perferably the funds in the bank. It would be very risky to go ahead with the event with no assurance that you can pay for it.

 

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Cashflow

You need to know that you will have adequate cash on hand at each stage of the event. It is quite likely that the event will earn most income close to and during the event, but you will need fairly large cash injections at various stages of preparation. In other words, you will need to injections of funds during the preparation phase. Consequently, you will need to write a cash-flow plan showing when expenditures will be due and when you must recieve funds.

Sooner or later, you will also want to make a schedule of specific payments. It will help you to plan for higher expenditures, prevent cash-flow crises, and give you have a better idea of exactly where money is going.

At this stage, it would be advisable to ask whether you have cash reserves and who will underwrite the event in case of a loss.

 

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Risk

Does your hard total of income cover the minimum you know it will cost to run the event? If the expenditures are higher, the difference between the two totals is a risk. It may be a reasonable risk if there is a good probability of other income, but your supervisor needs to know that it is not yet covered.

If many aspects of the event are high-risk, experimental, or in start-up, you cannot accurately forecast either income or expenditures. Estimate income on the conservative side. Count all your expenditure, even things you things you can absorb. Otherwise you'll be counting on wish-list funds.

• How could you trim costs? (Usually fairly easy)
• How could you increase income? (Usually fairly difficult unless it's a simple price rise.)

 

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Prepare a draft budget

Write a draft budget using a clear, standardized format.

Identify and itemize the known minimum amounts that will come in. That figure needs to be fairly hard. Don't depend heavily on possible and probable income items; they aren’t hard. You budget will need to answer several questions:

1. What is the minimum number of participants needed to break even?
2. By what date do you need to reach this number for the event to go ahead?
3. What is the the maximum number of participants that can be comfortable at the venue?

You might find it helpful to put budget items into three categories:

• Basic necessities without which the event could not run. This is your fall-back position if funding is too tight.
• Good to have: What you want to be able to do a good job.
• Most desirable: What you want to be able to an create an impression of excellence.

It is not usually a good idea to go with the basic necessities approach unless you have no choice or are dealing with people whose standard of living best suits that level. The general trend is to offer something much better, charge a higher price, and create a much stronger impression. To some extent, the choice will be the client's, and that will depend on the class of their clientele. Are they looking for cheap, good value for money, or highly impressive?

It is highly recommended that you run your final draft past a qualified accountant, especially if there are risks, e.g:

• this is your first major budget, or
• you are not basing your budget on a previous experience that is fairly similar, or
• it involves large sums of money.

When you are convinced that the budget is sound, submit it for approval. When it is approved, inform your other staff so they can implement it. You may need to hold a briefing session and answer questions.

 

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Business model

A business model is an organization's pattern for moving goods and services so that they generate a profit. So far, we've presumed a very simple business model, that you will pay suppliers for goods and services, put them together as an event, set a competitive price, and get paid by the client at a suitable profit. This has a couple of variations:

• It still applies to fundraising events for non-profit organizations. The differences are, first, attenders come to contribute to the non-profit, second, much of the labor is voluntary, and third, some or all of the supplies are donated.
• Public relations events might generate little or no income; their purpose is to generate goodwill.

The question for you is "If a simple business model isn't working, could you change it somehow?" You might not want to cancel the event. If your expected total income doesn't cover the minimum costs, you should see if you could restructure your finances. For example, you could reduce some fixed costs by making them variable cost that can go up and down with variable income.

Here's how to separate fixed from variable income streams.

• In this context, fixed means that you know how much is coming in.
• Variable is income that can be paid for by commission. (It’s called variable in this context because it isn’t a fixed amountand could vary greatly.

Your costs are then tied to income streams, reducing or even eliminating risk.

 

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