How to Accurately Budget for Your Event

Being able to accurately budgeting for events is a well-known issue in the industry. With many event planners and project accountants relying on clunky spreadsheets to track sales and other expenses, making it nigh on impossible to reconcile how successful a festival or event has been until weeks after it’s finished.

Understandably, this causes huge frustration for event planners and accountants alike, especially during such a volatile time.

With the Ukrainian war and the cost of living crisis heaping even more pressure on an already strained industry, now more than ever, event teams are looking for solutions to help this side of the process run more smoothly.

We recently held a webinar with the Association of Independent Festivals (AIF) discussing best practice event budget management. Taking views through a series of steps to understand how to accurately budget for an upcoming event, including how to use previous event figures for future planning and event forecasting.

Here is a summary of the points we covered.

Problems with event budgeting

No matter if you organise one or 100 events per year, many of the issues are the same for everyone.

  1. Fragmented data management

With multiple spreadsheets being used across various departments, it makes it hard to consolidate crucial information. Compounding this issue is the lack of visibility for department heads, as they are unable to access the main spreadsheet due to confidential information. This complexity is further intensified by the difficulty in tracking and syncing data, resulting in potential errors and inefficiencies throughout the budgeting process. 

  1. Diverse software integration

Diverse software tools that incorporate accounting, approval, expense cards, bank feeds, and receipt capture, play a crucial role in data collection for event budgeting. However, the lack of seamless integration among these tools prevents a smooth synchronisation of data into one place. This integration shortfall often leads to reconciliation problems. 

  1. Complexity in budgeting 

Planning events and festivals involves dealing with complicated budgets and expenses that keep changing. It gets even trickier when external things, like the minimum wage going up, come into play. To handle this, it’s crucial to be proactive and make quick adjustments to the budget. This way, the event can stay financially sound despite unexpected changes. In simple terms, organising events requires flexibility and the ability to adjust plans based on what’s happening around you, known as event scenario planning..

  1. Operational overload

Keeping event spreadsheets up to date is a real challenge, demanding a lot of time and effort from both accountants and budget holders. Not only is it a mammoth task, but it also opens the door to mistakes and inefficiencies in the budgeting process. Simplifying and streamlining this process is crucial to ensure that managing event budgets doesn’t become an overwhelming and error-prone task for everyone involved.

  1. Lack of forecasting and scenario planning

In the event industry as a whole, there’s a widespread underuse of scenario planning for forecasting, a valuable tool that could provide better insights into future outcomes. Through no fault of their own, but largely due to the inability of spreadsheets to effectively do this task. This can leave events vulnerable to significant losses due to inadequate forecasting. The potential financial pitfalls underscore the importance of taking a proactive approach to budget management. 

  1. Multiple stakeholders to manage

Event budgeting involves a multitude of people, from event owners and company shareholders to budget managers, assistants, accountants, bookkeepers, freelancers, specialised outsourced budgets, and investors. The challenge lies in structuring budgets that meet the varied needs of these individuals. Each stakeholder has a unique perspective and role, making it essential to create a budget framework that accommodates their specific requirements and ensures effective collaboration. Striking a balance that caters to the interests and expectations of this broad spectrum of stakeholders is key to successful event budget management.

  1. Freelancer and outsourcing issues

Finally, getting timely and accurate data from freelancers and outsourced subcontractors also poses a significant challenge when it comes to budgeting. These individuals are often pulled in different directions, being involved in multiple events throughout the year. The high competition for their attention and data makes it challenging to secure the information needed for effective budgeting. Effectively managing communication and data collection with freelancers and subcontractors becomes vital to ensure the availability of the necessary information for informed decision-making in event budgeting.

How budgets were structured pre-COVID

Before the onset of COVID-19 and the creation of Eventwise, we had established a structured system within Google Sheets for event budgeting. This system consisted of a summary page and numerous tabs for different departments and revenue streams. Each department had a separate spreadsheet, offering detailed breakdowns with subcategories for better analysis. For example, the site production department includes subcategories like power, allowing for a nuanced understanding of cost fluctuations.

In these spreadsheets, subcategories are detailed, including roles, suppliers, and status indicators. Estimated and budgeted amounts are outlined, with a clear distinction between planning estimates and confirmed budgets. Actual expenses are recorded once confirmed and agreed upon. This meticulous recording ensures transparency and accountability.

The main P&L (Profit and Loss) sheet is interconnected with these departmental spreadsheets, enabling managers and event owners to make informed decisions based on real-time departmental budgets. Each department follows the same template, streamlining the process for everyone involved.

This was known to be a pretty complex and time-consuming system, which is why we created Eventwise.

Tracking budgets with Eventwise

Within Eventwise, the structure remains the same but is now consolidated into one platform. The P&L sheet displays different revenue streams, cost departments, and totals, with estimates at the planning stage and more accurate budgets once finalised. The cost departments follow the same template, with each item containing detailed information and areas for notes and comments to provide a narrative.

With the P&L being interconnected with departmental spreadsheets, this facilitates real-time decision-making for managers and event owners. This streamlined approach to budgeting enhances efficiency and accuracy during every step of the financial process, and can also use previous event figures to create more accurate budgets for future events.

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How to use previous event figures to make a more accurate budget

Building an accurate budget is a crucial aspect of successful event planning. One key strategy is to base your budget on previous actuals, incorporating the actual costs incurred in past events. For instance, if you had a creative expense of £1,000, you can decide whether to increase it by a certain percentage or remove it if it’s no longer relevant.

Bringing in all previous budget lines, even those with zero spending, helps provide a comprehensive view of your event’s financial history. A thorough budget review, especially with freelancers, is essential to understanding why funds were allocated or held back in various areas. This review, conducted shortly after the event ends, serves as the foundation for building the next budget.

Consider the structure of your budget and whether any changes, such as adding comments or different versions, are necessary. Ensuring clarity in the structure early on helps everyone understand the new format. The event P&L plays a pivotal role, with live feedback from different budgets feeding into it. This integration is crucial for making informed decisions, especially when determining ticket prices shortly after the event concludes.

What is contingency?

Contingency planning is another critical aspect. Rather than seeing it as a fixed percentage, some approaches involve tailoring contingency per department or even per subcategory. This nuanced approach refines the contingency amount based on the specific needs and uncertainties associated with each department or subcategory.

For festivals that have been running for multiple years, your contingency can be fairly minimal as you already know the pitfalls and challenges your event might face, in which case you can reduce your contingency plan or move it into small contingency subcategories. 

However, contingency is not just a number to be picked arbitrarily; it requires thoughtful consideration to ensure a more accurate and realistic budget. By incorporating these strategies, event planners can enhance the precision of their budgets, leading to more informed decision-making and successful event execution.

How to plan for different scenarios

The conventional approach to contingency involves setting a fixed percentage, but a more strategic perspective involves examining small percentages and creating diverse scenarios. This forward-thinking strategy reduces reliance on contingency funds and allows for more proactive decision-making.

Scenario planning, ideally initiated after confirming the initial budget, proves essential for several reasons. It fosters a proactive approach throughout the planning process, preventing last-minute, uncontrollable situations. This method provides a competitive edge, especially if ticket sales fall short or unexpected challenges arise. Additionally, it aligns with long-term goals, helping event planners envision their success over several years.

Effective scenario planning involves exploring various options, such as different ticket prices, capacities, discounts, multi-year goals, ticket targets, and responses to external factors like weather. By engaging the team in this process, the scenarios are efficiently created and linked to the main budget, ensuring accuracy and reliability.

The scenario planning process can be complex, often requiring detailed insights from different departments. While spreadsheets are commonly used, their limitations can make the process time-consuming and prone to errors. However, tools like Eventwise streamline the scenario planning process, allowing planners to visualise changes and their impact on the budget efficiently.

Effective scenario planning is a powerful tool for event planners, enabling them to navigate uncertainties, make informed decisions, and enhance the overall resilience of their events. By delving into detailed scenarios, event planners can confidently face challenges, optimise resources, and steer their events towards success.

Take back control of your event finances with Eventwise

Do you want to find out more about how Eventwise can transform the budgeting side of your festival planning?  Get in touch with our team today.

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