Module 5 - Events Budget and Timeliness PDF

Module 5 Events Budget and Timeliness Objectives At the end of this module, students are expected to: 1. Understand the event expenses; 2. Identify the sources of revenues; 3. Explain the event budget. Module 5 covers the following topics: 1. The eve...

Module 5 Events Budget and Timeliness Objectives At the end of this module, students are expected to: 1. Understand the event expenses; 2. Identify the sources of revenues; 3. Explain the event budget. Module 5 covers the following topics: 1. The event budget 2. Understanding event expenses 3. Sources of revenues 4. The revenue forecast 5. Drafting the event budget 6. The event timeline 53 | P a g e  EVENTS BUDGET AND TIMELINESS THE EVENT BUDGET What is budgeting? Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to spend in your event. What is the purpose of budgeting? The primary importance of budgeting an event is to provide the balance of quality in the exchange for goods or services. By staying within your budget you protect yourself from going into debt. Tips in Budgeting an Event The first step to creating your event budget is to figure out each part of your event that could potentially incur a cost. By including every part of the event, you’re able to get a more accurate budget versus one that simply includes the bigger pieces of an event. This is a preliminary step that you can continue to get a more accurate and balance budget. Look Into Past Events If you’ve hosted this event previously, you can look back at the amount that was spent on previous events. Look at the line items that were utilized, and the number of guests that attended. If you expect that the event will expand in the current year, it is important to keep everything proportional in your budget by using multipliers. Historical data will help put a benchmark budget in place. Track Your Expenses An easy way to track your expenses is to simply write down every penny that you spend and where you spend it. Build Your Budget and Expense Checklist Having a budget/expense checklist will keep you organized and help manage expenses. Here are some items that are necessary:   Venue   Advertising and Promotion  Speakers/Performers accommodation 54 | P a g e   Catering   Equipment   Team/Staff   Admin  On-site expenses Find Low-Cost Marketing Options Online Marketing is another expense that can grow exponentially if you don’t get results right away. The catch, of course, is that unless you market effectively there won’t be enough attendees to support the costs of the event. This is why it makes sense to utilize as many free or low-cost options to spread the initial word about an upcoming occasion. Leave an emergency fund You just never know what’s going to happen in the days leading up to an event. Working some leeway into your budget gives you enough breathing room to absorb unexpected costs. UNDERSTANDING EVENT EXPENSES Understanding Event Expenses It's hard to plan an event budget without a good idea of the expenses you will incur. That seems obvious, but the costs associated with event planning can come from a number of different places. Just when you think you have identified all of your expense categories, another one pops up to send you back to the drawing board. To prevent this from happening to you, use this outline of event planning expenses while creating your budget. On-Site Event Expenses These Include the costs and fees typically charged by the event venue. Often the most expensive category, it's also the easiest to predict since you will get a formal cost estimate to review in advance. Don’t forget to factor in variable costs that change based on your attendance numbers. Catering is an example of a variable expense because the amount of food you need— and subsequently the cost— increases with each addition to your party. Here is a punch list of on-site event expenses to put into your budget: Venue Costs These are the premises costs:  Room Rental 55 | P a g e   Security Deposit   Insurance Coverage  Parking Food and Catering Here's everything tied into eating and drinking:   Meals   Beverages   Bartender/Server Labor Fees  Tax and Service/Gratuity Fees Audio/Visual These are your presentation costs:   Microphones   Screens and Projectors   Internet Access  Other Specialized Equipment Third-Party Vendors This category represents all the items and services supplied by vendors outside of the host venue. Each one will bill you independently, so it is important to keep close tabs on every vendor. Using a spreadsheet will help organize your vendor contacts along with the costs associated with their services. Event Rentals These expense relate to anything you need to supply:   Linens, Table Skirting, and Chair Covers   Tents, Staging, and Amusement Attractions   Physical Items Not Provided by Venue  Labor and Delivery for Setup/Teardown Décor Vendors Making things look good will incur costs for:   Accent Lighting   Flowers and Centerpieces  Balloons 56 | P a g e Entertainment Don't forget the fees associated with:   Musicians or DJ   Speaker Fees  Contract Riders (food, lodging, transportation) Production Expenses Production includes all of the staff and resources required to plan and execute the event. These expenses begin the moment the event is dreamed up and continue through the post-event paperwork. In short, this category represents the cost of organizing the event, attracting attendees, and managing the administrative elements. Marketing and Registration This category can add up with costs for:   Print and Web Design Work   Advertisements   Invitations  Registration Management Planning and Organization Events require people and the expenses include: Event Planner Fees   Part-time and Temporary Employees   Office Supplies   Communication Costs  Travel Expenses Administrative Expenses Don't overlook the paperwork and costs for:   Salaried Employee Assignments   Accounting Costs   Legal Fees  Consultant Fees 57 | P a g e Cost Overages and Emergency Funds The purpose of this outline is to make you aware of the different types of event planning expenses that can occur. Every event is unique, so yours may include more or less of the items listed. The important thing is to know where your costs will be coming from. Overlooking expenses associated with a particular vendor or category can wreak havoc on your budget, but the worst case scenario is completely forgetting about an expense until the bill arrives. Fixed Costs A cost which remains unchanged regardless of a company's level of output or revenue. Variable Costs Cost that fluctuates directly with changes in output Security Deposit An amount of money that a renter pays when beginning to rent property (such as an apartment) and that can be used to pay for any damage that the renter causes to the property SOURCES OF REVENUES Revenues Represent money coming into the event or organization through an exchange of money for goods or services. Revenues are referred to as the top line because of their location on the income statement--typically on the statement’s first line. Samples Sources of Revenue 1. Tickets, Registrations, And Memberships Tickets, registrations, and memberships from attendance at or participation in an event generate revenues from spectators purchasing tickets to attend the event. This revenue category is an important revenue stream; therefore, event organizers should work to identify multiple ways to facilitate purchase of tickets, registrations, and related memberships fees. 2. Sponsorships Spectator and participatory of the events often generate revenues through sponsorship rights by partnering with corporations and other organizations. Event organizers may agree to create signage, booths, or other displays promoting the sponsorship. In exchange for a sponsorship fee, the sponsor has the opportunity to reach a desired target market attending or participating in the event. 58 | P a g e  3. Merchandising And Licensing Sport organizations view sales of merchandise and licensing rights as another revenue opportunity. These products satisfy fans looking for ways to commemorate their attendance at various sporting events and to show their affiliation with a specific athlete, team, league, or sport. Spectators and participants alike appreciate the opportunity to purchase related merchandise likes, clothes, shoes, mugs, tarpaulin and the likes. 4. Food And Beverage Sales Spectators may purchase concessions while attending an event, creating another revenue stream for sport organizations. Budgeting for food and beverage sales is very similar to budgeting for merchandise sales in that you have to consider per cap sales and the type of agreement you enter with your facility or concessionaire. 5. SOUVENIR PROGRAM SALES Many events will derive revenue from the sales of souvenir or commemorative programs. These programs provides customers with memorabilia that may appreciate in value over time. Keeping in mind that not everyone will be interested in purchasing a program, some events choose to give away programs in order to put the materials in the hands of more consumers and to provide more value for sponsors. THE REVENUE FORECAST THE REVENUE FORCAST Forecasting business revenue and expenses during the startup stage is really more art than science. Many entrepreneurs complain that building forecasts with any degree of accuracy takes a lot of time--time that could be spent selling rather than planning. But few investors will put money in your business if you're unable to provide a set of thoughtful forecasts. More important, proper financial forecasts will help you develop operational and staffing plans that will help make your business a success. Here's some detail on how to go about building financial forecasts when you're just getting your business off the ground and don't have the luxury of experience. 1. Start with expenses, not revenues. When you're in the startup stage, it's much easier to forecast expenses than revenues. So start with estimates for the most common categories of expenses as follows: Fixed Costs/Overhead   Rent   Utility bills   Phone bills/communication costs   Accounting/bookkeeping  Legal/insurance/licensing fees 59 | P a g e   Postage   Technology   Advertising & marketing  Salaries Variable Costs Cost of Goods Sold   Materials and supplies  Packaging Direct Labor Costs   Customer service   Direct sales  Direct marketing    2. Forecast revenues using both a conservative case and an aggressive case. If you're like most entrepreneurs, you'll constantly fluctuate between conservative reality and an aggressive dream state which keeps you motivated and helps you inspire others. I call this dream state "audacious optimism." Rather than ignoring the audacious optimism and creating forecasts based purely on conservative thinking, I recommend that you embrace your dreams and build at least one set of projections with aggressive assumptions. You won't become big unless you think big! By building two sets of revenue projections (one aggressive, one conservative), you'll force yourself to make conservative assumptions and then relax some of these assumptions for your aggressive case. 3. Check the key ratios to make sure your projections are sound. After making aggressive revenue forecasts, it's easy to forget about expenses. Many entrepreneurs will optimistically focus on reaching revenue goals and assume the expenses can be adjusted to accommodate reality if revenue doesn't materialize. The power of positive thinking might help you grow sales, but it's not enough to pay your bills! The best way to reconcile revenue and expense projections is by a series of reality checks for key ratios. Here are a few ratios that should help guide your thinking: Gross margin. What's the ratio of total direct costs to total revenue during a given quarter or given year? This is one of the areas in which aggressive assumptions typically become too unrealistic. Beware of assumptions that make your gross margin increase from 10 to 50 percent. If customer service and direct sales expenses are high now, they'll likely be high in the future. 60 | P a g e Operating profit margin. What's the ratio of total operating costs--direct costs and overheard, excluding financing costs--to total revenue during a given quarter or given year? You should expect positive movement with this ratio. As revenues grow, overhead costs should represent a small proportion of total costs and your operating profit margin should improve. The mistake that many entrepreneurs make is they forecast this break-even point too early and assume they won't need much financing to reach this point. Total headcount per client. If you're a one-man-army entrepreneur who plans to grow the business on your own, pay special attention to this ratio. Divide the number of employees at your company--just one if you're a jack-of-all-trades--by the total number of clients you have. Ask yourself if you'll want to be managing that many accounts in five years when the business has grown. If not, you'll need to revisit your assumptions about revenue or payroll expenses or both. DRAFTING THE EVENT BUDGET Drafting the Event’s Budget. So first let’s define the word drafting. When we say drafting, it is a preliminary version of a document. It is unpolished or not final. The next word is event. The word event is very broad, it can be an event for a cause, a business event or an event for a celebration. The last word is budget, it is the allotted money for a certain project. Let’s take deeper of it. I am going to tackle about the steps on how to draft an event’s budget. Step 1. Know Your Budget You should know your budget to know your limitations as well as to lessen your expectations. It is like buying in a grocery, if you don’t know your budget you tend to over-shop or lessen it that much. Step 2. List Down Everything You should list down everything that you think that is needed for your event. Let say for example, you need a venue, write it down. You need a photography, catering, jut all of it down. It will serve as a guide for you to follow or a simply checklist. Step 3. Canvass Canvassing is a combination of excitement and hardship, because it will take time for you to find the best that suits for your event and a little bit fun because you may find something different. Step 4. Budget Wisely Budget wisely specially if you want to gain money through your event. Remove the expenses that you think that is not necessarily needed. 61 | P a g e  THE EVENT TIMELINE What is an event planning timeline? The timeline of an event is a detailed structure of your event with careful calculations of time and resources, with the execution highlights and deadlines clearly marked. Why you need an event timeline? Having an event timeline is an integral part of the event planning process. The event timeline is your guiding light through the timeline for event planning process. Without a timeline in place, you may find yourself lacking focus and potentially missing important deadlines and risking complete event failure. How Far Out Should You Create Your Event Timeline? The amount of time in advance that you create your event timeline will be dependent on what type of event you are planning. If you are planning a major conference or festival this timeline may need to be created a year or more before your event date to book major venues and book event entertainment. However, if you are planning something smaller like a corporate meeting or gathering you may only need 6 months. Day of Event Timeline It is so important to have a schedule for your event. You put in a lot of hard work planning and it all comes down to the big show! You may feel stressed out and under a lot of pressure but there is no need to be, you have planned it all out! Having a solid schedule for your event day(s) will help everything run smoothly. Below are some items you will want to include in your “day of” schedule and tips to think of while creating it. Not sure what you need on your day of timeline? Here are some tips and must-haves for your day(s) of event timeline! Don’t Miss Any Details When creating your day of event timeline try to think of every detail. Plan the day the way you envision it to go. Always be realistic with times and expectations. Anyone in the event industry knows an event rarely goes exactly as planned. There are always unexpected situations that pop up, sometimes speakers go overtime, maybe your caterer decides to show up late, whatever it may be allowed time for the unexpected. Once you have your day of timeline completed share it with your team. They will be able to help make sure each part has realistic time estimates. Always be sure to include time for guests to get from one portion of your event to the next. If you have a keynote speaker followed by dinner in another location plan for the time it takes to get from one place to the next. 62 | P a g e Creating Your Day of Event Timeline While timelines leading up to events have similar markers, the day of event timeline is going to be very unique to your event. There are a few items likely to pop up on all agendas and events which I will address but be sure to create your own based on your own unique events elements. After the Event Hold event debrief meeting Meet with your staff after your event for feedback. Ask what they think went well and what needs to be improved upon for next time! It is best to do this meeting as close to the event as possible so it is fresh in everyone’s mind. Complete comparison of actual versus budgeted costs Now that the event is over you have all the information you need to compare the actual costs of your event vs. the budget. This is also a great time to be critical and see what can be improved upon in the future. Store all materials and Data to assist with planning of future event(s) After you have completed the above steps you are on the last step for completing your event timeline. Store away the feedback you have collected and data. At this time decide what worked and what needs changing for your next event. Finally, calculate your ROI.