Creating a budget is one of the most important parts of event and venue management. Without a well-thought-out, accurate, and realistic budget, you risk overextending your capital and running your event at a loss.
So, before you plan your event, it’s important to consider the event management budget.
Learn how to optimize the event budgeting and event planning process, to cover expenses and lower them where possible, and to push your event into a healthy profit margin.
What Is an Event Management Budget?
As the name suggests, the event management budget is the estimated budget to manage an event. The event budget considers all event finances, not just expenses. It also takes into account income from event sales, advertisements, etc.
Events tend to run at a loss or profit. Some event planners who are hosting to increase brand awareness break even intentionally and get a return in the form of brand exposure. Because of the dynamic goals behind events, the event management budget can be difficult to create and manage.
That being said, an event budget is critical.
Fortunately, there are steps you can take to make the process easier and to ensure a clear and comprehensive budget – steps we’ll cover in depth below.
Why Should You Plan Your Event Management Budget?
The goal for any event planner is event success, and one way to determine success is through numbers – specifically the event financials. No matter what your goals are, the event budget is a must for event planning.
Without an event budget, you risk overspending or underestimating your expenses. You might run at a loss or not have the money necessary to host your event.
By knowing what your expenses are going to look like, you can prepare the money ahead of the planning process and lower costs.
The event budget is also an essential document for event stakeholders. Stakeholders are going to want a budget to track where their money is going and to ensure it’s being put to good use. Hosting an event without a comprehensive budget can lower confidence in your capabilities and chances of future collaborations.
Lastly, event budgets are constantly being updated, even after the event. One of the reasons businesses do this is to track the ROI.
ROI (Return on investment) is used to determine whether an investment i.e. the event was profitable. Knowing the ROI rates of events will help you plan better events in the future and track financials for better business maintenance.
While setting up an event budget can be a time-consuming endeavor, it’s a necessary part of the planning process for anyone who hopes to host a successful event and have healthy financials.
How To Create an Effective Event Budget
To ensure a successful event, you first need to create an event budget. Fortunately, you don’t have to go into the process blind. This guide provides an outline that you can tailor to your unique event budgeting needs.
Without further ado, let’s get into how to plan an event budget for event success!
Estimate Event Budget Expenses
The first step to creating an event budget is collecting all the event expenses. Sit down with your team and consider the event expenses in all sectors.
Use an event budget template to track essential event budget expenses and miscellaneous expenses.
The essential event budget expenses are the things the event can’t go without. Common essential expenses include venue rental (unless you are hosting a virtual event), event marketing costs, event managers, catering costs, etc.
Miscellaneous costs can be the things you want but don’t need, like specific decorations.
Collect all the expenses on a spreadsheet and input estimated costs for all expenses. Get quotes and use local averages to create cost ranges. From there, round up the expenses to provide some financial cushioning.
Establish the Event Objectives
Next, establish the event objectives. Does the event need to make a profit? Are your goals to make money at the event or increase brand awareness, even if it means running at a loss?
Other objectives to consider:
- How many attendees do you want at the event?
- Are there sponsors you’d like to partner with?
- What is the message of the event?
Once you understand the event objectives, it clears up where to prioritize the budget and where to cut costs.
Determine the Event Design
Determine the event design to create an accurate event budget.
- Choose An Event Type: Will you be hosting an in-person event or virtual event, or combine them to host a hybrid event? In-person events are great for networking and interactive product testing or displays. Virtual events are cost-effective and increase the event reach. Hybrid events are great for both the above benefits.
- Determine The Event Theme: Will you host a formal corporate event or a strict dress code, or will it be a more relaxed vibe? What event decorations do you need? Consider all the event aesthetics and how that’ll affect the budget.
- Consider Event Entertainment: What type of entertainment will fit with your target audience, and how much will it cost? Could you afford a popular host that can increase buzz around the event? Ensure the event entertainment matches the event crowd and fits into the budget.
Continue narrowing down the event design and how it will affect the event budget. Once you have all the design expenses listed, cut costs with more affordable alternatives.
List All Sources Of Income
To create a comprehensive event budget and determine ROI, the event budget needs to also track all sources of income, including sponsorships, advertisements, merch, and other products sold on the event day.
Create a Contingency Fund
A contingency fund is a separate fund used to cover unexpected costs. The average contingency fund is between 15 to 25 percent of the total event budget.
Don’t skip the contingency fund when creating the event budget. Events and unexpected costs are like salt and pepper – they always go together. If you don’t take precautions with an emergency fund, you risk losing revenue or running at a loss.
Update the Event Expenses With Real Costs
The event budget spreadsheet is likely going to change throughout the event planning process, and it should be updated accordingly. Prepare for unexpected costs and ensure there is an accounting authority to approve additional event expenses.
As you get further along the planning process, add the real costs alongside the estimates. This will be great for financial tracking and provide real-time data on the budget’s performance.
Compare the Event Budgeting Performance
As the event comes to a close, it’s important to compare the event performance with the event goals you established in step two.
Here’s also where you should determine if the event ROI met business demands, and compare the ROI with previous events to see if your event management is improving.
Use event technology to your advantage. Event technology like event management software, restaurant analytics software, and POS management systems can help you accurately track the budget performance and the event’s overall performance.
These insights will help you improve the event budget management for the next event.
Event Budget Quick Tips
Now that we’re done with the event budget breakdown, consider these quick tips as you start creating your event budget.
- Improve Event Budget Planning Over Time: Past events are an opportunity to learn, even if they didn’t go well. Use the event management tools from step seven and previous budgets to pinpoint weaknesses in your budgeting approach.
- Start Early: Creating an event budget should be one of the first things you do when you start planning your event. Start creating your budget as early as possible, even if it is rudimentary. The more time you have to create the budget, the more time you have to collect funds and find cost-effective alternatives.
- Document the Entire Event Budgeting Process: Details and accuracy are key factors to successful budgeting. Document the entire process and keep track of event the smallest budget items. Many small expenses, which seem miscellaneous at the moment, can have a big effect on your budget when added up.
- Spend Smartly: Know when to splurge and when to save. While it’s recommended to find cost-effective alternatives to increase the event revenue, sometimes spending a little more can have a positive effect. Compare more expensive items’ costs with the event objectives to determine if spending or saving would lead you closer to your event goals.
Conclusion
An event management budget isn’t the type of document you can overlook during the event planning process. It’s essential in managing event expenses, measuring ROI, and tracking progress for stakeholders and future events.
Use this guide to create your event budget. Determine the event expenses and income, create a clear objective, prepare a contingency fund, and use event technology to compare and grow your budgeting strategy.
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