Budgeting is one of the elements of event management that can cause angst and frustration – it doesn’t matter how big or small your budget is. It is all relative – even those events with seemingly massive budgets have to squeeze a lot into them and therefore those managing that budget face the same decisions as those working with smaller budgets.
I like to take the following approach with budgeting:
Work excluding GST – GST is often a false economy – for most businesses the GST that is paid out is also claimed and therefore it is a more accurate measure to exclude GST from your budgeting figures. Additionally, while most venues and catering quote inclusive, many production companies, entertainment and services quote excluding GST.
Start with the bottom line – It is very difficult to build a budget without having an end goal in mind. By knowing how much you can spend on your event holistically, you can start to work backwards and break it down. If you do it in the reverse order, it is very difficult to scale items back in order to save money.
Break down your hard costs first – things such as flights, accommodation and catering are hard costs which are virtually not negotiable – your event will fail if your guests can’t get there, have nowhere to sleep, and aren’t catered for adequately.
Everything else is scalable – once you have allocated allowances to your hard costs, fill in the gaps with items such as AV, entertainment, décor and theming. All of these items are scalable and it helps to manage expectations by putting allowances against these figures after you have taken out your non-negotiable hard costs.
Allowances – put an allowance against all line items even if you haven’t received a quote – in excel I like to highlight these cells a different colour as a quick visual reference that I have put an allowance against something that I may be able to cut later if funds run short.
Contingency – Contingencies are a great tool if you are working a long distance from your event or if you have to present a budget to an approval board and you don’t want to undersell the budget required. However – my golden rule with contingencies is to ensure that you formulate the cell so that the contingency is your overall budget figure less the total of all of your known expenses. Doing this will ensure that your contingency figure updates each time you update individual line items and you can keep a track of what funds you have spare. As you get closer to your event, your contingency should be reduced…if not removed all together.
Conditional formatting – At the bottom of my budgets, I like to have 3 x totals – the actual total of known costs; the total budget and the variance. Your variance line should have conditional formatting so that when you reach zero and start to go over your budget the cell turns red providing you an instant visual notice that you have gone over.
Prioritise your contracting – Once you have put an allowance against all the elements of your event, you need to start contracting your vendors. This is a key step – and one that needs a strategic approach and prioritising. No matter how accurate your forecasting is, things come up that throw your budget into disarray. The trick is to ensure that you give yourself the ability to remain agile to react to these. You can do this by contracting the essential items first – and then working your way down the list. This means that if you have an unexpected expense, you can still scale back some of your non-essential items that you have not yet contracted. The following will vary depending on the focus of your event, but in general; I like to prioritise in the following order:
- Event venues
- Professional services – event management, registration etc
- Infrastructure (eg expo builds, marquees)
- Keynote speakers/MC/Host
- Décor and theming
The biggest tip to remember when budgeting is to remain adaptable – things change with events all the time and many of these changes are out of our control. It is good practise to keep yourself a contingency for these unknown factors – and as you get close to the event, if you find you have not used up this contingency you can always throw on some cocktails on arrival or other enhancements to allocate these funds!