Planning is the key to avoiding mistakes that can blow your budget. But if you avoid these common errors, you will be able to produce an event you will love at a price you and your clients can afford.
Anyone who has ever managed an event where the financial objective is to break even at a minimum, understands that there are hundreds of critical decisions that are made along the way that will determine the financial outcomes and the potential ROI for those hosting the event.
Event managers working with corporate, government or association clients have common issues that can push budgets into the red and many of these issues come down to a culmination of decisions that add to their bottom-line price.
To prevent those in our industry from getting caught out along the event management process, we have enlisted the help of our award-winning team of event management experts to advise on the pitfalls to avoid. Together, we have collated the following list of eight budget blowers. Avoiding these challenges during the lifespan of the event will save you and your clientele money.
BUDGET BLOWERS
1. Not allowing for contingency funds.
Realistic budget planning is critical. Not factoring in a contingency amount into the event budget can drain funds if unexpected issues come up, which seasoned event planners will say – they commonly do! Typically an event budget may include: venue booking fees, payments to speakers, entertainment and other 3rd parties, printing costs for marketing collateral, running orders and other paper elements, additional equipment such as AV, projectors and staging sets, decorative and theming elements for example, table decorations, promotional and marketing costs, catering, event insurance and event technology.
Experienced event managers will determine the size and scale of the event and allow a contingency expense line item in the budget usually between 10-15% of the total event budget. Any number of things can go wrong such as medical bills, broken equipment, speaker cancellations and more, so a contingency is essential in covering any costs that may arise without warning.
2. Overzealous outsourcing.
Outsourcing too many elements of the event management process that could be completed in-house e.g. special events, satchel packing, design, registration, speaker management and other elements of the overall production adds cost and minimises your event profit margin. When your event is under development and the scope begins to shift and grow, there is the temptation to outsource key planning elements to a third party. Unless this is completely necessary due to time restraints, it may be necessary for the core team to coordinate these offsite or additional elements to maximise profit.
3. Not implementing a procurement policy when sourcing products and services for the first time.
Having preferred suppliers relationships in place that reward loyalty is important as the financial benefits that come from bringing your repeat custom are clear, but what if you are appointing a supplier for the first time? How will your tender process uncover the best supplier that will be able to deliver on your event objectives? Do they have sufficient experience to avoid costly errors that may be incurred if problems arise? An inexperienced supplier may offer a cheaper quote upfront but cause delays and issues down that track that cause budgetary blow outs.
A key strategy to avoid this is by undertaking due diligence on your client’s behalf and by setting up a procurement process that will help you determine the top 3 providers of event equipment or services and then narrowing the list down through face to face interviewing, reference checking and reviewing designs in response to your brief upfront. Remember decisions such as these should not always be made on price.
4. Failing to successfully secure the host organisation’s seed funding or some sponsorship money to fund the event prior to planning commencement.
In this chicken-egg scenario much of the planning cannot occur without sufficient funding which may arrive in various forms but usually via seed funding from the host organisation or sponsorship dollars secured prior to the event management planning stage. How do you know what elements of the event you can begin to plan? Even the basic event requirements such as the venue that can be booked and so on, without at least some seed funding to kick start the project will prove difficult.
Don’t risk too much of your cash flow carrying a fledgling event – at the very least get an indication of the event’s track record from previous years to help you determine the best course of action. Some funding to begin marketing the event to visitors, sponsors, exhibitors, strategic partners and the like will go a long way to potentially securing further funding that will float the event until the full impact of registrations is known.
5. Over catering
In the science and art form of event planning, there is an understanding from the statistics there will always be some margin of non-attendance. In fact some research has shown that planners can under order by up to 10% to accurately cater for events. No-shows and people who are simply not hungry are always a factor to consider here.
6. Beginning any of the design process before finalising your marketing objectives.
Consider your marketing objectives before your leap into the design process.
Tips to avoid wasting time and money on re-designing event materials may include:
– Providing incomplete, rough input to a design team usually results in multiple queries, delays and redesigns. Event planners need to understand that they can still edit along the way, but the fewer changes you have, the more money you can spend on other elements of the event rather than on the design costs.
– Another tip is before meeting with the designers, ensure you have given your internal stakeholders the opportunity to have their say. This will help you develop a clear and detailed brief that is less likely to change over the design process.
– Finally, continue your internal discussions until everyone signs off on the same brief and in turn the final design.
7. Forgetting to take out an event insurance policy can be costly.
Event insurance is a must for any professional event manager. There are simply too many things out of our control that could go wrong regardless of the best risk assessment conducted. Some insurers such as Aon, specifically offer event insurance so it is best to do your research and factor the cost of the policy into your event budget.
8. Not keeping track of the finances.
Even though you may be on the go, it’s important to estimate realistic average costs plus keep good records of your actual event finances and these days mobile apps can make this process easier. Here is one that you may like to consider and we recommend testing it out before you start:
– Account Tracker: This app has received 5 star reviews from a significant amount of customers in the Apple iTunes store to warrant your attention. The app features expense management, account tracking, multi-currency support, bill reminders plus your can export reports and budgets to CSV and PDF files.