Event Budgeting: A Guide to Creating and Managing Event Finances, Lecture notes of Social Sciences

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CHAPTER 6CHAPTER 6

THE BUDGET THE BUDGET

Instructor : Miss Nurfazlina binti Haris

CREATING A BUDGETCREATING A BUDGET

• (^) For commercial organizations: o (^) Senior mgt or head of dept prepare the budget
• (^) Volunteers, committees, individuals or families

(no experience)

o (^) Involved several people, or o (^) Volunteer with financial background

SOME COMMONSOME COMMON BUDGETING MISTAKES BUDGETING MISTAKES

 Ignore Objectives

› Ignoring the objectives of the event when setting the

budget

 Plucking a figure out of the air for ticket sales

› Plucking a figure out of the air for ticket sales before

finding out how much the event is going to cost (serious

mistake)

 Do not involve others

› Not involving everyone concerned in the budget

preparation and failing to identify the full range of costs

accurately.

 Over-optimistic over demand

› Being over-optimistic about demand for the event, or

failing to find a venue with enough capacity to do it

properly

 (^) Overlooking subsidiaries issues › (^) such as the costs of ensuring safety and security, or the effect of having to add tax  (^) Not enough capital or start-up funds › (^) to get the event off the ground, given the needs for deposits or advanced payments of various kinds  (^) No receipts or invoices › (^) So the money is unchecked and you have no control evidence that they actually spent it

BREAK EVENBREAK EVEN

• (^) Key issue
• (^) Not well understood
• (^) Example: o (^) Event cost RM o (^) Venue can accommodate 100 people - (^) At first glance you may say: Need to sell 100 tickets

at RM

• (^) Loss – even 99 out of 100 tickets sold
• (^) To make profit RM100 in this case – sell 100 tickets at

RM6 and not RM

TAXTAX

• (^) Has tax added to ticket price?
• (^) Small scale event or personal event – tax is

irrelevant

• (^) Big event – relevant o (^) Check with correct government department (e.g. Custom and Excise Department)

COMPARATIVECOMPARATIVE OUTLINE BUDGETS OUTLINE BUDGETS

• (^) To help decision-making process
• (^) For issues, like the venue
• (^) To compare between few possible venues.

THE DETAILEDTHE DETAILED BUDGET BUDGET

• (^) Common financial term “Budgetary Control”
• (^) In event management, “control” minds

costs/expenditure, revenue generation (the whole

picture) are equally important.

• (^) Advantages of budget:

o It is detailed forecast of what should be happening

financially, as such it helps planning

o Act as a measure of performance between forecast and

actual outcome

o Budgeting is also a method of controlling expenses and

costs

• (^) Figure 7.8 (page 109) – detailed income and costs
  • final outcome summary

OTHER SOURCES OFOTHER SOURCES OF INCOME INCOME

• (^) Programs/brochures/guidebooks
• (^) Catering/fast food/sales stalls
• (^) Retail/souvenir/clothing/merchandising
• (^) Corporate hospitality areas/lounges/chill-out areas/
• (^) Photography charges/photography sales/video
• (^) Car parking/transport services
• (^) Concessions/stalls/stands/pitches/franchises/rentals/

contracting

• (^) Lottery/games
• (^) Broadcast rights (usually major sporting events only?
• (^) The use of “membership” type subscriptions to encourage

repeat visits (where appropriate)

• (^) Types of event funding:

o Leisure event

• (^) E.g.: Government agencies such as sports council

o Cultural event

• (^) E.g.: Entrance ticket

o Organizational event

• (^) No direct income
• (^) Paid within a particular budget determined by organization

o Personal event

• (^) No direct income
• (^) Paid for by the people getting married, and/or their

families, with donations of presents and other useful things

“in kind”

• (^) Figure 7.12 (page113 for complete examples)

• (^) Several aspects to keep in mind what the event would do for potential sponsors. o (^) Event and potential sponsors would be looking at the same target market o (^) Issue of media exposure (publicity and PR plans for the event) o (^) Will sponsor get some direct benefit besides media coverage? (e.g. places at table in gala dinner?)

• (^) Sources of patronage, grant funding and

other income for events

o (^) “in-kind” arrangements, mutual benefit exchanges of goods or activities, volunteer work or donations o (^) Grants from local, regional or national governments o (^) Grant from charitable bodies; development agencies; arts, leisure or heritage bodies o (^) Lottery grants or subsidiary (matching) funding

Failure of BudgetFailure of Budget

• (^) Ignoring the objectives of the event when setting the budget
• (^) Plucking a figure out of the air for ticket sales before finding

out how much the event is going to cost (a serious and

regrettably frequent mistake)

• (^) Not involving everyone concerned in the budget preparation

and failing to identify the full range of costs accurately

• (^) Being over-optimistic about demand for the event, or failing

to find a venue with enough capacity to do it properly

• (^) Overlooking subsidiary issues such as the costs of ensuring

safety and security, or the effect of having to add tax

• (^) Not having enough capital or start-up funds to get the event

off the ground, given the need for deposits or advanced

payments of various kinds.

• (^) People spending money but not getting receipts or invoices,

so the money is unchecked and you have no control evidence

that they actually spent it.

Sources of BudgetSources of Budget

• (^) ‘In-kind’ arrangements, mutual benefit exchanges of goods

or activities, volunteer work or donations.

• (^) Grants from local, regional or national governments or the

European Union

• (^) Grant from charitable bodies; development agencies; arts,

leisure or heritage bodies

• (^) Lottery grants or subsidiary (matching) funding
• (^) Fund-raising activities related to the event
• (^) Commercial borrowing (from banks, etc. – this will have to

be repaid with interest)

• (^) Funding from trusts or other philanthropic bodies, often

listed in national directories of funding agencies and trusts

• (^) The provision of funds or donations from a patron,

commercial sponsorship