You are on page 1of 16

Sustainable Financial Leadership

Event Management
Chapter 5
The Event Budget

The budget represents an action plan or


roadmap for an event

Preliminary budgets should be created early in the


planning process
Event Management
Chapter 5
Categories of Event Budgets

Each event budget represents the financial


philosophy of the event:

 Profit Oriented
 Break-even Events
 Loss Leaders or Hosted Events
Event Management
Chapter 5
The Event Budget

Event budgets are a key component in determining


the feasibility of an event

Event budgets allow for periodic evaluation of the


event’s progress
Event Management
Chapter 5
Categories of Event Budgets

Profit Oriented Event

The revenues exceed the expenses.

Example: Events produced by corporations for the


purpose of generating new sales.
Event Management
Chapter 5
Categories of Event Budgets
Break-event Events

Revenues are equal to expenses

Admission fees should be calculated at the rate that


will cover all expenses and break even.

Example: A conference sponsored by a professional


association
Event Management
Chapter 5
Categories of Event Budgets
Loss Leader or Hosted Events

Events designed from the very beginning to lose


money.
These events are organized for a cause or purpose.

Example: University commencement ceremony or


governmental celebration
Event Management
Chapter 5
The Budgeting Process

Determine the financial philosophy of your event


before you begin the budgeting process.

An event budget represents the income and


expenses of an individual event.
Typical Income Categories
 Advertising Revenues
 Concession Sales
 Donations
 Exhibit or Booth Rental Fees
 Gifts in Kind (Not money; think services or use of
goods)
 Merchandise Sales
 Ticket Sales
 Sponsorship Fees
Expenses are much longer!
 Advertising
 AV Equipment Rental
 Awards
 Consultants
 Corporate Social Responsibility (CSR)
 Décor
 Insurance
 F&B ( a huge expense!)
 Licenses…etc. etc. etc.
Event Management
Chapter 5
Producing Profit

 The financial purpose of every for-profit business is


to produce a fair net profit

 The term profit means the earnings (net revenue)


after all expenses have been paid.

Profit = revenue - expenses


Event Management
Chapter 5
Producing Profit

All expenses can be divided into two major


categories:

1. Fixed overhead expenses


2. Variable expenses
Event Management
Chapter 5
Fixed Overhead Expenses

Predictable expense items that do not depend on


the number of attendees at an event.

Fixed Overhead Expenses:


 Site rental fee
 Insurance
 Entertainment
Event Management
Chapter 5
Variable Expenses
Variable expenses are those expense items that
fluctuate in cost based upon the number of event
attendees.
Variable Expenses:
 Catering
 Registration Materials
 Labor
Event Management
Chapter 5
Fixed and Variable Expenses
Number of Attendees 200 400

Catering @ $25/guest $5,000 $10,000


Beverages @ $15/guest 3,000 6,000
Site Rental Fee 2,000 2,000
Entertainment 1,000 1,000

TOTAL EXPENSES $11,000 $19,000