Compiling an accurate budget can be a precarious endeavor – after all, the success and profitability of your event hinges on a precise calculation of costs. Unfortunately, budgeting for events continues to be an aspect that many event managers struggle with. Whether due to time-constraints or unreliable suppliers, budgets end up being based on ‘guestimates’ – and ultimately end up adversely affecting and event’s ROI. The next time you’re faced with creating an event budget, keep the following in mind:
Transparency is key
In our experience, creating a budget that is transparent goes a long way in building a client’s trust, and as a result, their willingness to do businesses with you. A transparent budget is one that shows actual costs from your various suppliers, with your management fees listed separately. While it may take some additional time and effort, the benefits of establishing accurate prices instead of merely guessing them are considerable.
Being greedy doesn’t pay
The largest portion of a budget generally goes toward the hiring of a venue and catering costs. Smart event budgeting relies on a mark-up that won’t put your clients off, but will also ensure your event is profitable. An unreasonably high mark-up doesn’t just look greedy, it’s unprofessional too. If you’re unsure as to whether your increases are reasonable or not, work out your cost per head. Do this by dividing the number of guests by the total cost of the job. If the cost per head is too high, you may be at risk of losing the job.
Use industry standards as a guideline
All event managers have differing ways of calculating their mark ups when budgeting for events, depending on the size and nature of the event in question. The general consensus is that a rate of between 15% and 25% is advised -depending on the value of the event. The more expensive an event, the lower the mark-up. Another method of conducting your event budgeting is to mark up each item (e.g.: catering, venue, entertainment, staff, gift bags, etc.) individually. Some items will carry a higher mark-up than others, depending on their value.
Don’t let hidden costs trip you up.
It’s an all too common occurrence – you’ve meticulously planned an event from start to finish, and done it within budget to boot – when you realise you haven’t accounted for the crew’s catering. Extras like daily stipends for staff, transport costs and event insurance can end up blowing your budget off course. Make sure to take pre-production time and its resulting costs into account too. When it comes to budgeting for events, there’s no such things as being too meticulous.
Be an expert record-keeper
There’s nothing more infuriating than having to pay for a last minute event purchase out of your own pocket, due to not having a receipt or record of the transaction. Avoid this by having an order book on site as a record of your client’s acknowledgement of additional budget requests. This will safe guard against losing money and also serve as a written record that can be included in your final budget recon. Make sure to collect and file all receipts for future reference so that you and your client have a complete record of every single cost involved.
Budgeting for events doesn’t have to be a dreaded exercise. An accurate budget benefits not only your clients, but your event management services too, so approach this endeavor with care in order to ensure all parties profit.
Image Credit: Times Live