Budgeting is one of the most tedious tasks when planning an event. Interestingly, it is also the most critical aspect that sets the direction for the successful organisation of an event.
For this reason, event organisers need to pay special attention to the event planning budget to ensure the event is not only successful but also fulfils the attendees’ goals and values.
According to the report by Knowland State of the Meeting, increasing event expenses is one of the biggest concerns for event organisers.
In fact, almost half (46.3%) of event professionals admitted that rising costs are their most significant obstacle when planning events.
Taking this into account, we have created this comprehensive blog, where we have detailed the understanding of the event planning budget in a step-by-step manner, covering all critical facets related to successful event planning and organisation.
What is An Event Budget?
The first question that piques every student’s mind is what the event budget is. To understand it, let’s first split the phrase into two words: ‘Évent’ and ‘Budget.’
An event is anything that involves attendees and organisers together, such as brand promotion, corporate birthday parties, high-delegate summits, etc. On the other hand, the budget is the finance you allocate for the particular event.
By merging these words, we get the definition, which states that an event planning budget is any budget allocated to ensure a smooth and hassle-free commencement and completion of an event.
In an event management course, students often learn that, unlike the Union Budget, which focuses on national interest, the event budget is confined to a specific domain—in this case, an event.
Let’s take an example to understand it better. Suppose you are organising an event to celebrate ten years for your company. You have decided on the venue and the attendees who will be coming, but what about venue fees, food and catering charges, and DJ fees?
These all come under the event budget. Although event budget is a broader term, the overall definition reflects on these facets.
How To Create An Event Budget?
To create an event budget, you must be familiar with a few key terms: fixed costs, variable costs, revenue, and profit & loss.
- Fixed Cost: Fixed costs are expenses that remain fixed throughout the event management. You don’t need to dedicate excessive time to this, as these costs typically remain standard in stages of event organisation. The key examples of fixed costs include venue rent, registration charges, and entertainment fees.
- Variable Costs: Variable Costs vary significantly throughout the event. You cannot predict the exact variable costs, as they tend to fluctuate with the ongoing demand depending on the quantity of attendees coming, among other factors. Key examples of variable costs include event staff costs, food and beverage costs, etc.
- Revenue: Revenue is the income generated after delivering the event’s key purpose (in the above example, strengthening the brand’s loyalty and reputation). This typically includes sponsorships, ticket sales, and exhibitor booth fees.
- Profit & Loss: Profit & loss is calculated by calculating the total expenses, including variable and fixed costs spent on the event and the revenue generated through diverse sources. If the revenue generated exceeds the expenses for an event, you have attained the profit and fulfilled the event’s primary financial goal and vice-versa.
What Are the Initial Steps to Consider Before Creating an Event Budget?
Before implementing the pointers below on a large scale, you should know how to create an event planning budget.
1. Identify The Event’s Purpose And Goals
The event you’re planning should have a particular purpose and goals: Is it to improve your brand’s reputation, increase potential clients, deliver valuable knowledge, or launch a new product? If it’s to raise potential clients or launch a new product, you can afford to lose a bit of your pocket, as it will ultimately benefit you in the long run.
In contrast, if the goal is to deliver valuable knowledge, you may need to cut certain event expenditures, such as entertainment and food costs. However, you must create the right acoustic environment to ensure the speaker’s voice is heard in every auditorium corner.
2. Determine The Event’s Scale And Scope
You must make sure what will be the length of the event, the value it will bring to the attendees, and the number of attendees attending the event. Certain events that target delivering a useful knowledge session may have a time range between one and three hours. For corporate functions, it might go overnight, and for product launches, it could be around half to two hours. In addition, you can expect higher event scalability for large enterprises like Infosys or Apple.
3. Establish A Clear Budget Cap
You also need to determine how much of your budget you have. Is your budget capacity sufficient for organising a grand event, or might you need to cut fewer related costs? Generally, the budget for the company’s silver jubilee or anniversary would be higher due to the frequency of such events, while the budget could be smaller for informational sessions.
How Do You Break Down the Main Categories for the Event Budget?
Event budget is a broader monetary term that can be further classified into several main categories. Organisers should consider these categories to create a complete event management budget.
- Venue Cost: This includes all the event expenditures related to event hosting a specific event, such as hotel rent or parking to accommodate the attendees’ vehicles.
- Catering and Food Services: The catering and food services vary according to the attendees strength. The more attendees, the more food and accommodation are required, so the cost will be higher.
- Entertainment and Activities: These are primarily DJ-related costs, such as equipment rentals, music rights permits, and interactive game costs, including photo booths and workshops.
- Marketing and Promotional Expenses: This comprises the event expenditures related to promoting the event, such as social media marketing, event posters, online campaigns, and promotions through various media channels, such as TV shows or radio.
- Staffing and Labour Costs: These event costs are associated with hiring event coordinators, planners, and managers to supervise the event.
What are the Steps to Create the Final Budget?
To create the final budget, you need the right mix of analytical thinking and a certain amount of marketing skills to deal with sponsors. Here are the steps explained to create the event planning budget.
1. Frame a total Budget
The first step is to frame the total budget to organize that event. This includes all revenues earned through your business and the portion or percent of that revenue you can allocate for the event. This helps get a comprehensive picture of your event planning budget and sets the platform for further steps.
2. Research Past Events
Check the internet and office documents to see if there are any such events hosted in the event by your organization. If not, assess your competitor’s events and weigh them with the latest market trends to arrive at a more realistic budget than the previous step.
3. Prepare a Plan
Create a list of all the attributes where money will be spent, such as venue costs, catering and food services, marketing and promotional events, etc. Estimate the funds to be allocated to those attributes. It’s always a good practice to keep the highest priority attribute at the top, as it requires significant attention.
4. Determine a Timeframe
Setting a timeline for budget allocation helps you track your budget and ensures you know exactly how much time you’re dedicating to event planning.
5. Create a Backup Fund
You must be well prepared for accidents that may happen during events, such as earthquakes, mob quarrels, or someone falling ill. Likewise, it’s advisable to keep emergency funds for such issues.
6. Create A Proposal For Your Sponsors
Sponsors are your true financial backers. However, not all sponsors can sponsor your event. They require the value your event will provide to their brand. Hence, you must create a proposal highlighting a summary of yourself, what the event is all about, and how it can benefit the sponsors through their brand promotion.
7. Speak With Prospective Sponsors
Research thoroughly for the prospective sponsors. Select the top few candidates for this sponsorship role and give your prepared proposal.
8. Select Vendors
Contact multiple vendors, tell them your requirements, and ask them to provide detailed quotations. Compare all those quotes with the assistance of your account team. Accordingly, pick the best quote that suits all your requirements and goals and fits right into your event planning budget, which you set in the first step.
9. Calculate Marketing Costs
Marketing your event is as important as hosting it. However, social media platforms such as Instagram and FaceBook are free, but LinkedIn’s premium version can incur some fees. Generally, it’s best to promote through your LinkedIn premium version to help reach broader audiences through interactive and insightful features. In addition, you all have to run advertising campaigns, which require significant costs.
10. Double Checking Your Final Budget
To finalise your event budget, you must double-check all the expense estimates, adjust for any last-minute changes, and seek approval from stakeholders and sponsors. This will ensure that a more efficient and accurate form of budgeting is created. It also prevents you from overspending in a last-minute rush.
Conclusion
We hope you understand this topic of event planning budgets comprehensively. The event planning budget is the most critical phase for any event that sets its direction and success.
It’s important you have a basic knowledge of fixed and variable costs. Also, remember to create your budget structure and efficiently allocate expenses to different entities, such as marketing and catering.
Explore More Related Articles:
Top 8 Event Management Jobs to Kickstart Your Career
Exploring Event Management Courses: Fees & Duration
8 Essential Tips to Do Risk Management in Event Planning
Top 10 Event Management Skills to Excel in 2024
What Are The Basics Of Event Planning: Beginner’s Guide