Planning & Promotion

B2B Event Budgeting 101: A Comprehensive Guide for First-Time Event Planners

Eventually Learning Team

Introduction

Planning an event is a tough job. It has become even tougher today as most of the live events have pivoted to online or hybrid formats. One of the key challenges faced by first-time event planners is event budgeting. As the financial foundation of any event, be it live, online, or hybrid, is directly related to the success of the event, creating a realistic budget is a challenge that needs to be taken seriously.

If the event budgeting is not done in the right manner, it can lead to a blunder. If the planners create a too elaborative budget, managing it might be a tough nut to crack in the future. In contrast, if the planners create a smaller budget, they might have to cut costs, which often impacts the output quality.

Planning the budget for an event for the first time used to be complicated enough, but the ongoing pandemic and the new event formats have made things even more convoluted. To help deal with such an unprecedented situation, we have created this comprehensive guide to help first-time event planners create a realistic and effective budget. All you need to do is follow the steps, and you will have a thorough event budget that will allow you to finance your budget and ensure that it's result-oriented.

The budget we help you create will also allow you to prepare for any uncertainties brought on by the ongoing pandemic and have a contingency plan or backups ready if the situation changes. It will also enable you to be more confident in your finances and ensure that you never run out of money.
 

What is Event Budgeting

Yes, we are starting with the basics because it's the foundation of everything else. In simple words, event budgeting involves estimating costs that an event will incur based on research and plans made. One must ensure that their event (live, virtual or hybrid) never exceeds the budget or might lead to a financial loss.
 

Importance of an Event Budget

Many factors highlight the importance of an event budget. Some of them are:

  • It helps an event planner to keep an eye on the costs and know what can be afforded while planning an event and what's out of reach.
  • It assists in keeping spending decisions under control and allows better decision-making by helping you keep focused on the priorities.
  • A budget also allows you to know when and where you need to save money or cut costs to avoid unnecessary expenses.
  • It lets you know to what extent your event is feasible, how much risk is involved and how profitable an event can be.
  • It allows you to calculate the exact returns generated from the event after an event is completed successfully.
  • Event budgeting also ensures you have measurable, realistic, and achievable objects that help you stay on the right path and avoid veering away from it.
  • Event budgeting can let you know if you are overspending on anything or getting value for money deals.
  • Reporting to management becomes easier when you have a budget in place to explain where every dollar went.
  • You can also measure the returns generated from the event in terms of monetary value by comparing it with your budget.

What is the Starting Point of an Event Budget?

The starting point of an event budgeting process is determining the objectives of an event. When you set objectives about different aspects of an event, including a budget, you will know your priorities and the attendees' expectations. You will also know whether you are planning a not-for-profit event or a profitable one.
 

Essential Steps to Planning Event Budgeting

As event budgeting is a major task, it needs to be divided into several steps to make the process easier to read through and implement. Here are some of those steps.
 

Get an Estimate of Revenues

There are several estimated sources of revenue that are related to an event. They include but are not limited to, sale of merchandise, sale of event tickets, revenue from sponsorships, sale of food and drinks, exhibitor income, etc. Make sure you don't overestimate or underestimate the revenue.

Try to be as realistic as possible and realize that the estimation of sales can be affected by different internal and external factors. Examples of external factors include inflation and competitor moves. Think of all variables and different scenarios that might affect the revenues.
 

Make a List of Expenses

The next step is to make a list of expenses included in the event. The event budgeting process is incomplete without this step. Make sure that you include every expense you can think of, such as the venue contract, the fees of the speaker, the cost of food, the entertainment costs, the furniture costs, and even the giveaways you are offering. A smart way to go about it would be to make an expense checklist that you can modify as you come across more expenses.

It is a smart idea to divide the expenses into two sections fixed and variable costs. Fixed costs include costs that remain constant with time and need to be paid no matter what. Examples include the cost of marketing (speaking of marketing, check out this ultimate guide to Webinar Marketing), venue charges, fees of the speakers, salaries of the employees, etc. Variable costs are those which vary with time and can change even at the last minute. Examples include the catering costs, printing costs, registration fees (that change if there are more or fewer attendees.

Also, make a note of the contribution margin. What's that? It is the amount that you can contribute towards the fixed costs after you have paid up all the variable costs.
 

Set Measurable Goals and Keep an Eye on ROI

By now, you must have a clear idea of what event budgeting is, how your budget should be, and the main list of all the vendor contacts. So, now you need to start setting measurable goals and keep an eye on the ROI. For instance, if you plan to sell tickets for your event, you need to track how many people are signing up for it after registration begins so that you can track the incoming funds. Similarly, if you plan to have the event sponsored, you need to create detailed and creative packages for each sponsor. Some other tips can be used from this useful article.

If you are planning an event to make a profit, set measurable profit goals and make sure you know all the sources of income. Also, keep track of your spending by managing a budget sheet that is updated daily so that you avoid overspending. Finally, if you detect an unapproved expense, talk to your team about it and ensure that such instances don't happen often.
 

Be Ready for Any Contingency

When doing event budgeting, you need to ensure that you are ready for every situation by creating a rainy day fund. It should include all the unforeseen expenses like costs of moving an outdoor event indoors due to unforeseen weather changes or the cost of bringing in more food if the number of attendees rises sharply suddenly.

Name the funds set aside for such instances as a contingency budget and ensure that your team knows that they can only touch it after your approval or in certain situations. Usually, the figure of the contingency budget could be anywhere from just one percent to up to twenty-five percent of the total budget. Train your staff on event budgeting and contingency budget so that they can make a judgment call on purchasing something out of the budget with wisdom.
 

Consider the Price and Risk Sensitivity of the Attendees

While learning event budgeting, you need to remember that a lot depends on the attendees. If they change their mind, your event's success might be at risk. Therefore, a smart way to deal with such a situation is to consider the price and risk sensitivity of the attendees.

To do that, you should ask yourself some tough questions like the ones mentioned below:

  • Will your loyal attendees come to an event even if you increase the registration fee?
  • Will your target audience respond well if you spend more on marketing?
  • Should you invest more in social media ads to boost conversion rates?
  • Are "Limited Time Offers" worth the price?
  • Do special offers help in boosting the registrations?

Asking these questions and performing a sensitivity analysis will allow you to know where to spend money to get the best results and where you can cut back without impacting the event negatively.
 

Figure Out the Capital Requirement

A key element of event budgeting is to estimate the capital requirement for the budget. You need to answer the most crucial questions- How much money do you need and when you need it. Doing so will allow you to know whether the budget you have prepared is workable or you need to do any modifications.

It would be best to think about the capital only after budgeting the costs, sales, and investments. Then, as an event planner, you need to decide how much equity is required for investment into your event, how much capital you need from the lenders, and which financial milestones should be there. For those unaware, equity is the difference between the total value of assets and the total value of liabilities.
 

Focus on Cash Flow

Imagine a situation where you have to pay off a vendor, and you run out of cash. You wouldn't want that, would you? It is why event budgeting should include a focus on cash flow. It will help if you maximize the cash flow until all the necessary payments have been made. You also need to ensure that you have a simple cash flow statement that you can refer to know where your cash is coming from and where it is going. It is also smart to make a list of sources you can tap in case you run out of cash.
 

Be Smart and Track Your Event Budget

Tracking your budget, even in the planning stages, is a key element of event budgeting. You can make use of technology tools to know where your money is going. You can also use a technological tool that will help you to stay connected with your team and let them know sticking to budget is vital. Some of the most reliable technological tools you can use to streamline your event budgeting efforts are cloud-based solutions. They allow you to access your event budgeting data from anywhere on the planet. In addition, as this data is saved in real-time, you can make changes to it quickly, and your team will see it quickly.

When looking for a tool that can help you track your event budgeting data, do some research, and consider tools like Expensify, FreshBooks, Certify, CendynArcaneo, and Money Owl. Before buying a technological product or service, make sure it's worth the money, needs minimal training, and is user-friendly. It would also be a smart move to ask your key stakeholders as it's a vital investment that might bring in results in the long run.
 

Analyze the Performance of Your Event

After finalizing all the costs and making the necessary payments, the next step in event budgeting is to revisit the final numbers. Just follow these steps, and it would be done in a few minutes.

Identify the Total Money Spent

You should add every penny you have given to others, be it vendors or speakers. Then, if possible, share this number with the key stakeholders so that they feel they are kept in the loop.

Highlight the Savings

If you have managed to spend a little less amount for something than earlier planned, it will be your savings. So, whether you saved money by negotiating with a vendor or saved some money from the marketing budget by choosing social media ads, you need to add those here.

Underline Overages

When planning an event budget, you can't have an estimate for everything. It would help if you had the scope of overages. That's what contingency funds are for. So, if you have some areas where you went beyond your budget, you need to make a list of them as well. It will help you to do better event budgeting from then on. Also, share the data with the stakeholders as they can guide you on how to reduce overages in the future.

How to Enhance Capability for Event Budgeting

There are some tried and tested methods to enhance capability for event budgeting. Some of them are listed here.

Plan Every Detail

From the money that is supposed to be paid to the flower decorator to the cost of advertising on Facebook, you need to plan every detail. A smart way to go about it to imagine the event stages and visualize everything to ensure you don't miss out on anything.

Fix Overages

If you have more overages than you liked during the event budgeting, you need to fix that. One approach could be to include the costs you forgot to add in the planning stage. Another could be to beef up your contingency fund so that the overages don't surpass the contingency budget.

Do More Research

When hiring any service provider like a vendor, make sure you compare the prices offered by different vendors and test the quality. The cheapest deal isn't always the best. So, visit the vendor personally (if possible) and ask for samples or demos.

Look for Loyalty

After you have finalized a few vendors, ask them for a discount in exchange for your loyalty towards them. Ask them how much discount you will get if you use their products/ services for multiple events in a year. It is a feasible solution for those who want to plan several events in a year, and that too successfully.

Seek Feedback

One of the smartest ways to enhance the capability for event budgeting is to seek feedback. First, get the feedback from anywhere possible, be it from your vendors, audience, speakers, and other key stakeholders. Then, ensure that you take any criticism constructively and incorporate the changes the next time you plan an event. For instance, virtual events help your business survive digitally, so you should go for them if your stakeholders advise you to do so in the current climate.
 

Do You Need Event Planning Tools?

In addition to seeking technological tools mentioned earlier, you should also consider some event planning tools that will allow you to get an estimate of the number of people who will attend the event (either live or virtually), revenues and expenses, and even let you compare prices, vendors, and equipment rentals. There are a lot of tools and listing them all here isn't possible. So, we leave it to you to find some of the best event planning tools to help you stick to the budget and make your event a success.
 

Frequently Asked Questions

What is included in an event budget?

Every source of revenue and expenses is included during the event budgeting stage. In essence, every penny that will be generated or that needs to be spent will be counted.
 

What are the basics of building an event budget?

The basics of building an event budget include everything from counting the costs, comparing the costs, finalizing the income sources, and ensuring that you find the right sponsors to lend a hand.
 

Why is it important to budget for an event?

Event budgeting is vital as it allows you to track, monitor, and enhance revenue and expenses. It also helps avoid planning an event that brings in financial losses.
 

What are the reasons for budgeting?

Budgeting, be it event budgeting or otherwise, allows you to keep an eye on every dollar spent and earned from an event. It helps keep your finances healthy and prepares you for a better financial future.
 

Get Help from the Experts

If you need help with event budgeting or marketing, you can partner with Media 7 here. To help event organizer, we have also come up with a unique and interesting B2B event review platform, Eventually. It will allow industry professionals to know authentic and unbiased event reviews, take constructive criticism and make their events successful in the future.

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