The event budget is a projection (forecast) of the income and expenditure that the event will incur based on plans made and information gathered.
The preparation of a budget is an essential part of event management. It is fundamentally important that Event Directors are able to predict with reasonable accuracy whether the event will result in a profit, a loss or will break-even. This is achieved by identifying and costing all probable expenditures and by totaling all expected revenues (income). By comparing expenditures and revenues, it then becomes possible to forecast the financial outcome of the event.
The prediction of financial outcomes of the event need to take place very early in the planning stages. There is no use on setting dates, booking venues, preparing plans until there has been some attempt to determine whether the event is financially viable.
Once the Event Budget has been constructed, the Event Director has a means to exercise control of the event finances. Many organisations have run into severe financial difficulty and even bankruptcy as a result of staging events. The budget therefore enables the Event Director to make sound financial decisions about the choice of venue, and expenditure on a whole range of things including promotion, equipment and stafffing. The process of budgeting also enables the Event Director to calculate how much revenue is needed to stage the event in accordance with the planned level of expenditure.
The preparation of an event budget is one of the earliest tasks to be undertaken in the event management process. However, it should be expected that there will be numerous adjustments and refinements to the budget throughout the whole project life-cycle. It is not possible to know every cost from the start, nor is it possible to know whether efforts to secure sponsorship and government funding will be successful. Event budgets by the event management team as better information comes to hand.
Although the budget takes time to develop, there are some basic rules that should be followed from the outset:
If an event looks likely to make a loss, it calls into question whether the event should go ahead according to the existing plan. If it is not to late, plans should be changed so that the event will at least break-even.
Far too often, event plans are far too optimistic about the amount of sponsorship to ge gained, or the number of people who will attend as spectators or participants. Over optimistic predictions are often a cause for financial loss as a result of staging an event.
In thinking through what could possibly go wrong with an event, it is a good idea to determine what must be done if something does go wrong. For example, what happens if the sponsorship pull out, or there is very bad weather?
For information on typical forms of event income click here.
Events costs will depend on the scale and type of event. Not all the categories stated in the table below will apply to every event.
|Travel and Accommodation||Costs associated with officials needed to run the event may have to be borne by the event organisers. Event participants are generally responsible for their own travel and accommodation costs. In minor or local events travel and accommodation costs are unlikely.|
|Trophies, Awards||The cost of medals, trophies and other awards requires detailed knowledge about the number of competitors, the categories of divisions of the competition and the format of the competition.|
|Salaries||Applies only events are organised by professional staff.|
|Postage and telephone||Events usually require considerable communications with participants and the event management team.|
|Stationery and Photocopying||Special event stationery may be printed but otherwise there is always a lot of photocopying and usage of organisation letterheads to write correspondence.|
|Medical Fees||Events require persons with at least First Aid training to be in attendance. Larger events may also warrant the employment of a doctor and physiotherapists.|
|Venue Hire||A critically important aspect of the budget. Information about the probable cost of the venue needs to be obtained as early as possible. Beware that there some hidden costs such as security and supervision costs, and heating and lighting costs.|
|Insurance||Additional insurance can be taken out to cover risks of injury and/or financial losses associated with events.|
|Printing||Event programmes, posters, fliers and other promotional documents may need to be printed - especially where quality and colour is required.|
|Promotion||Expenditure on promotion may be considerable where a significant proportion of the event revenue is likely to be earned through spectators. Promotion covers items such as advertising, give-aways, costs associated with promotional events and sponsors' signage.|
|Equipment Hire||Includes equipment directly used by participants in the event and also any equipment used by the event management staff including sound systems, computers, mobile phones, two way radios, etc.|
|Transport||Includes costs of transporting equipment and hire of buses.|