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WHY I OBSESS OVER EVENT BUDGETS

(and maybe you should too)

"I take solace in the fact that my budget wasn’t poorly done. It was the management of the budget that wreaked havoc with the plan."

budgeting

Ah budgets, budgets, budgets - an enemy for some and a lifeline for others. Does the idea of drafting a budget give you thrills? Or, do you dread the task? Either way, they are an inevitable part of life for every event planner and marketer.

 

I recently lived through an eye-opening (and painful) budgeting experience.

 

Here’s the story...

 

 

My son started living away from home on his own at university. Before he left, I carefully crafted a month-by-month household & school budget for him. I calculated every single expense, factoring in contingencies and cash flow. I spent hours on it because I was determined to set him up for budgeting success.

 

Or, so I thought.

 

Turns out he was completely inexperienced with tracking expenses, monitoring his spending, and keeping his budget on target. Within the first five weeks there was an SOS call home. Sigh ……

 

3 types of budgets: 

 

 

1) the break-even (when you make as much as you spend)

2) the positive bottom line (when you make money)

3) the negative bottom line (when you lose money)

 

In the case of my son, I set him up with a break-even budget that very quickly turned into a negative bottom line budget. Yes, there were a few unforeseen expenses (like a stolen laptop that had to be replaced) and a surprise expense related to curtains and blinds in his new digs. However, I was quite honestly shocked at how quickly his budget plan took a nosedive.

 

I take solace in the fact that my budget wasn’t poorly done. It was the management of the budget that wreaked havoc with the plan.

 

It really reinforced to me that budgeting is a skill and takes practice! And, it reminded me why I obsess about (and sometimes lose sleep over) each and every event budget that I help my clients prepare.

 

While you may think an event should always achieve the positive bottom line, this is not always the case.

 

Each type of budget has its place, depending on the goal of your event.

 

 

 

Maybe your event is designed to encourage new membership with your organization, so you offer the event for free. In this case, a negative bottom line might be totally okay.

 

Or, maybe your goal is to offer affordable education at your annual conference and keep registration costs low to allow more people to attend. In this case, a break-even budget would be the objective.

 

Some event hosts depend on their events to add to their revenue and so their goal is profit – pure and simple.

 

Whatever the objective, the first step is to determine the anticipated outcome before you start drafting the event budget.

 

And, as I tried to teach my son, some other intel you should have on-hand when you dive into budgeting are receipts for past expenditures (to use as a baseline for what’s a reasonable amount to spend on that item), or estimates on things you may need to purchase (which will provide rationale for each line item and how you came up with the number in the first place).

 

I recommend to always estimate event expenses conservatively, so that you are factoring in the worst case scenario. This will help to give you some breathing room when it comes time to pay up.

 

For more tips and tricks on event budgeting, check out my blog posts The Sinking Ship: What You Need to Know About Fixed Expenses and Event Budgeting: All About Variable Expenses