You’ve been tasked with putting together a budget for an upcoming event, and don’t know where to start. Budgeting is more than tracking revenue and expenses — and just like with any business, cash flow is everything.
This step-by-step guide will help.
Start by determining the event’s objectives. Your objectives define the vision for your whole event, and this includes the budget. What are your top priorities, and what is the intended attendee experience? Is this expected to be a highly profitable event, or is breaking even acceptable? Asking questions like these will help get the budgeting process rolling.
Estimate the revenue from your different sources of income. These might include ticket sales, sponsorship revenue and exhibitor income, among others. Do not overestimate income. Consider any variables or scenarios that could impact revenue, such as unexpected bad weather.
Identify All Expenses. Create a checklist with every element of the event and the associated expenses, breaking them into fixed costs (those that do not change regardless of headcount) and variable costs (those that vary according to the number of attendees.)
Compile a master vendor list. This will make it easier to keep track of each vendor’s payment process and to manage your budget at the end of the event.
Track your expenses daily. Record what you’re spending from the start, and update your budget in real time.
Create a contingency plan. Even when there are unforeseen expenses (for example, needing to move an outdoor event inside at the last minute), you need to stay within your budget. If you overspend in one area, you need to find another area to trim.
For this reason, many planners create a small backup budget entry/line item to offset those unexpected costs. This could be a set amount or a percentage of the total event budget (usually no more than 25%), and it should only be used for emergencies.
Last but not least, focus on cash flow. Cash flow is dependent on both timing and terms. Timing is when payments are due to the venue and your suppliers, and when income is expected to be received. Terms are vendor-specific; for example, whether the registration provider pays out on a weekly or monthly basis.
Strategies to improve cash flow include setting a payment schedule with sponsors to get money coming in before the event; keeping the terms for incoming payments short and extending the terms for outgoing payments; and offering to do a credit check for your suppliers so that they will accept payment after the event.