Determining an Event Budget

Instructor: Elisha Madison

Elisha is a writer, editor, and aspiring novelist. She has a Master's degree in Ancient Celtic History & Mythology and another Masters in Museum Studies.

This lesson discusses the importance of determining an event budget and guides you through the process of creating, planning or implementing a budget.

Event Budget

Sarah is an event planner. She is planning a corporate event for a company that wants to have a picnic for their staff. As the event planner, it is Sarah's responsibility to manage the finances of the event and communicate with the company, the event vendors and her planning staff so that everyone understands what expenditures can and cannot be made. In other words, she needs to create, plan and implement an event budget.

Event budgets are important because they determine everything about an event - from the venue and the decorations to the food and the entertainment. Without a budget, Sarah won't know what the company can afford to spend on any of those things. In this lesson, we'll take a look at the steps involved in determining an event budget and discuss some of the key elements that need to be considered.

Creating a Budget

Before Sarah creates an event budget, she considers the type of event that she's planning. This step is important because it influences the amount she will spend. For example, an event that is designed to make news, market a business brand, or entertain guests is really only limited to what her client can afford. On the other hand, if Sarah needs to raise money for charity or recoup the event costs and turn a profit, she has to plan accordingly to make sure the costs of the event do not exceed or limit revenue.

Sarah is planning a company picnic for a corporate staff, so in this particular case, she only needs to worry about spending money, not making money. With that in mind, she creates a soft budget, which is the amount that she would like to spend on the event. She also establishes a hard budget, which is the maximum amount of money the company can spend on the event.

Sarah creates two budgets so that she has a contingency fund, which is money that can be used to pay for unforeseen or emergency expenses. Sarah typically allows an extra 10% to 15% of the hard budget for contingency funding. So, since her hard budget for the event is $10,000, her soft budget is $8,500. This gives Sarah an extra $1,500 that can be used to pay for items that exceed the estimated costs.

Planning a Budget

After creating an event budget, Sarah moves into the planning stage. She makes an important list that includes:

  • Event venue: The location or space where the event will be held
  • Event supplies: Items needed for the event, such as decorations, food and entertainment
  • Rented/purchased equipment: Supplies or technology needed to do the event, such as tables, chairs or video projectors
  • Advertising: Items that will be used to market the event, such as brochures
  • Paper-based items: paper items associated with the event, such as invitations, event itineraries, or menus
  • Travel: Travel for event guests, entertainers or event planning staff

Sarah uses this list to contact vendors, which are companies that will be supplying event items and equipment. She gets quotes from each vendor to get estimated costs for event items, supplies, advertising, etc. These estimated costs are known as projected expenses. Sarah usually contacts multiple vendors so that she can compare costs. For example, she contacts several catering companies so that she can compare food offerings and quotes to choose the best caterer for the event budget.

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