Planning an event can be thrilling, but managing the budget can quickly become complicated for any event professional.
What is an event budget?
An event budget is a detailed financial plan that outlines all the expected costs and revenue for organizing an event. It helps event planners and organizers track expenses, allocate funds, and keep the event within financial constraints.
Event budgeting is full of potential pitfalls, from underestimating costs to dealing with hidden fees and last-minute changes. It can easily throw your plans off track, leading to overspending and financial stress. It’s a real challenge to ensure that each dollar is well spent.
But don’t worry—successful event budgeting isn’t impossible! And with tools like event planning software, the task is pretty straightforward.
In this guide, we’ll explain what to include in the event budget and how to plan your event budget effectively, ensuring your event is memorable and financially sound. Let’s get started!
4 reasons an event budget is crucial
As creatives, event planners want to have enough money in the account to launch their magnificent ideas and make dreams come true for every attendee. But not every event has this kind of financial freedom. Without a consistent plan, finances can end up getting lost among so many accounts payable, unpredicted debts, and unnecessary expenses.
Here are four key reasons why effective budgeting is vital:
1. Organization
A well-structured budget lets you track cash flow and identify cost-saving opportunities throughout the event planning process.
For example, if you find a reliable audio-visual company, you can negotiate a long-term contract for a discounted rate. This level of organization helps you see where your money is going, making it easier to adjust strategies and address any financial bottlenecks.
2. Control
Maintaining financial control ensures a clear understanding of your event’s expenses, reducing the risk of overspending. Accurate budgeting also safeguards the reputation of your brand, sponsors, and stakeholders, as they rely on high-quality event planning.
Regularly monitoring your finances, possibly with help from accountants or legal advisors, allows you to make informed decisions and predict success more accurately.
3. Bargaining power
With a clear record of income and expenses, you can make more strategic decisions to reduce costs. For instance, if you’re launching a new product but have limited funds, you can choose to hire a well-known speaker for a virtual launch or host a smaller, in-person event with a less prominent presenter. Effective financial planning allows you to make these decisions with confidence, using past benchmarks to guide your choices.
4. Reporting
One of the challenges for event professionals is presenting financial results to clients and stakeholders. Properly organized financial reports make it easier to track expenses, manage accounts, handle tax declarations, and coordinate payments. If you find these tasks overwhelming, consider working with specialists who can simplify the process.
Centralizing financial data on a reliable platform ensures that all aspects of your event are connected, making it easier to generate accurate reports quickly. As an event professional, developing a business mindset and organizing finances from the start will save time and effort, eliminating the need to scramble for numbers at the last minute.
What does an event budget include?
Corporate events involve various costs that need to be considered by the organizers at the planning stage. Here’s what a comprehensive event budget typically includes:
- Venue rental costs for booking the event location, including any associated fees such as cleaning, security, or overtime charges.
- Catering and food expenses for meals, beverages, snacks, and catering staff. It should also cover service fees, taxes, and gratuities.
- Entertainment and speakers fees for booking keynote speakers, performers, DJs, or any other entertainment. Don’t forget additional costs like travel, and accommodations.
- Marketing and promotion budget for promoting the event, including digital ads, social media campaigns, print materials, and email marketing.
- Audio-visual equipment costs for renting AV equipment, such as microphones, projectors, screens, lighting, and sound systems, along with any required technical support.
- Logistics and transportation expenses related to the transportation of equipment, materials, or guests. This may include shipping, freight, or arranging shuttles for attendees.
- Staffing and security payments for event staff, such as coordinators, waitstaff, security personnel, and technical crew.
- Decor and setup budget for decorations, stage setup, seating arrangements, floral designs, signage, and any branding materials.
- Insurance and permits fees for event insurance, licenses, and permits required for the event to proceed legally and safely.
- Miscellaneous and contingency funds for unplanned expenses or emergencies. Setting aside a contingency fund (usually 5-10% of the total budget) can help cover unexpected costs without derailing the budget.
How to plan an event budget
Planning an effective event budget involves careful preparation, organization, and ongoing management. Here’s a step-by-step guide to help you plan a successful event budget.
1. Define event parameters
Before diving into budgeting, clearly define the essentials of your event. Factors such as scale, duration, format (virtual or in-person), and target audience will determine your cost structure. This foundational step will help you estimate and organize your budget effectively. Here are some things to consider before budgeting.
Event size
The main element to define the size of your event is the number of participants expected. Happy hours or board meetings, for example, tend to be small due to the small audience. Congresses and business fairs, on the other hand, demand wide public participation, which makes them large productions.
Event objective
What does your business intend to achieve through this event? To launch a product? To obtain awareness and increase the base of fans? Or to compensate and retain the most loyal customers?
Event structure
You must address these fundamental questions when planning your program. Ask yourself the 5 Ws and the 2 Hs related to the event:
- 5 Ws: What, Who, Why, Where, and When
- 2 Hs: How? How much?
Understand these essentials clearly, and then proceed to the next step.
2. Organization and methodology
Every event has unique expenses, and it’s crucial to structure your budget from scratch, starting with essential categories like venue, catering, and entertainment. Maintaining organization is key—keep track of supplier prices, rental fees, and other costs to avoid missing details.
Consider using online budgeting tools rather than relying on loose, disconnected spreadsheets. These tools can streamline the budgeting process, keep your finances organized, and allow you to replicate successful budget plans for future events.
3. Conduct vendor research
Once you understand your event’s requirements, contact multiple vendors for each service you need. If you don’t already have one, prepare a request for proposal (RFP) to streamline this process.
Collect quotes from at least three vendors for each category, comparing their prices, payment terms, and any discounts they offer. This research will give you leverage to negotiate better deals, especially when purchasing in bulk or booking services in advance.
4. Set priorities
Not all aspects of your event will carry the same weight. Focus your budget on elements essential to the event’s success and more likely to provide a return on investment. Additionally, some vendors offer discounts for early payments, so adjust your budget to take advantage of these savings where possible.
5. Monitor and adjust
Regularly update and monitor your budget as planning progresses. This ongoing control helps you identify and address any areas where spending may exceed estimates, allowing you to adjust before it’s too late.
Remember to include a buffer for unforeseen costs—these unexpected expenses can often make or break your budget.
6. Spreadsheet your event budget
You can start spreadsheeting your budget after or before request vendors’ quotations. You can even use an event planning or accounting tool for the same. As the planning progresses, regularly update your spreadsheet with actual costs.
This ongoing tracking ensures you have a clear overview of where your money is going and helps you identify areas where you might be overspending. Make adjustments as necessary to avoid budget overruns.
After the event, use your budget spreadsheet to analyze how your estimates compare to actual costs. Identify where you saved or overspent, and use these insights to improve budgeting for future events. This final review can also help with reporting and demonstrating the return on investment (ROI) to stakeholders.
Who’s responsible for event budget planning?
An event budget is not necessarily the responsibility of one person. Depending on the event’s size, it will rather be a group of people. Still, someone needs to be in charge of that group and the whole financial aspect of the event.
Event planners vs. event managers
To make a long story short, while a planner plans, the manager manages. It’s that simple. It’s not uncommon to see the same person occupying both roles, but it’s not exactly a best practice.
The event planner delves into the company’s purposes so that the event and organization are aligned on a common goal. It’s a more strategic role, as most of the planning process involves analysis, such as market analysis and consumer insights. They create strategies to achieve goals. In addition, they orchestrate all involved stakeholders to create a very strong voice for the organization’s branding.
They also pitch partnerships when they see strategic opportunities. It’s their responsibility to create ways to reach the final public, defining which form of communication is most efficient for each type of audience and channel involved.
The event manager figure comes in a second moment. Whether this event manager is the one creating a tactical plan or following one that the planners have previously established, this person is responsible for the execution of the event.
At this point, the event budget is already allocated, and this event manager will have the mission of keeping it under control.
Ideally, an event manager should participate in all stages of a given event from the very first brainstorm. However, it’s not uncommon to see event managers and producers only involved after the planning stage has been concluded.
In-house vs. third-party event planning: Which is better for your budget?
In-house or third-party planning is a very normal question in startups’ and corporations’ marketing teams.
In-house event planning means utilizing your existing team to handle all aspects of event preparation and execution. This approach requires allocating responsibilities to your team members, ensuring they have the necessary skills and bandwidth to manage tasks like venue selection, vendor coordination, and budget management.
On the other hand, third-party planning entails outsourcing event marketing to an agency that specializes in such services.
The decision between these two approaches hinges on factors like budget, team expertise, event complexity, and the level of control you wish to maintain. If your team has the necessary skills and you prefer to oversee the event’s execution closely, in-house planning might be the better option. Conversely, if you seek specialized expertise and want to minimize your workload, third-party planning could be more suitable.
Budget it out
Dealing with an event might not be as glamorous as planning or strategy. Still, it’s a key aspect of success. Without proper budget management, executing any plan or strategy can become quite difficult.
Now that you know how to set up a perfect event budget, focus on a real and executable strategy. Have a detailed event budget to control expenses and increase your return.
Dedicating time to budget planning will avoid problems in every stage of your project, positioning you as a complete event professional who is not only creative but also has a business vision.
Want positive ROI from event marketing? Learn essential event marketing strategies from an expert.
This was originally published in 2020 and has been updated with new information.
