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Setting Financial Objectives
Setting Financial Objectives
The function of financial control takes place before, during and after the event. Beforehand, a budget will be needed so the organizers can judge whether the event is likely to be a success in financial terms, and afterwards as a guide to see whether the event could be judged successful against its financial objectives.
Source: Shone & Parry (2019) ch. 6
Breaking even
Breaking even
Objective: To cover all costs
If your event's financial objective is to break-even, you want to make sure that your expenditure does not exceed your estimated income. This would typically be an event where the main focus is on other values than money.
Making a profit
Making a profit
Objective: To earn money
If your event's financial objective is to earn money, you need to make sure that your income is greater than your expenditure. When aiming to make a profit, you need to be specific about how much profit you are aiming for, but also what the profit should be used for (e.g. personal gain, charity, organizational development, etc.)
Return on meeting investment
Return on meeting investment
Objective: To gain a contribution to the organization's bottom line
ROMI typically refers to corporate events such as meetings, seminars, incentives or promo events. The purpose of these types of events is not to make a profit from the event itself, but gain a contribution to the company's bottom line on the long run by e.g. educating personnel, promoting products to potential customers, etc.
Culture economics:
The multiplier effect
Culture economics:
The multiplier effect
Objective: Added revenue in the host area as an effect of the event
Culture events are typically focused on creating an added revenue, not to the organizer itself, but to the host area. The value created from the event would be measured through increased income from accommodation, retail and restaurants for example.
Sources of income
Sources of income
Most events make money on selling tickets for the event. There are many ways to determine the suitable ticket price for the event. When calculating the ticket price, an event organizer should always take all 4 variables into account:
Market research: what is the target group willing to pay? What have they been willing to pay at similar events?
Obtaining quotes from suppliers: What are the costs related to the entire production of the event, and how big a percentage of the costs should be covered by ticket sales?
Estimation of attendance: How many guests to expect will attend the event? (typically based on factors such as the capacity of the venue, size of the target group, and attendance at similar or previous events)
Opportunities for differential pricing: E.g. Early bird, family ticket, off-peak tickets, etc.
Other examples of typical sources of income for events are shortly described in the boxes below.
Stalls
Stalls
A very common way for events to earn money is through rental of stalls. Typically, local businesses, organizations or unions will rent the stalls in order market themselves or sell their products. In these cases the stalls are usually a large part of the event itself, and also very dependent - not only on the income from stalls - but also the experience they provide for the guests.
Funding & Sponsorship
Funding & Sponsorship
One of the common misconceptions in the design of events is the view that an event will easily attract sponsorships. This will only happen if there is a good fit between the event and potential sponsors. Therefore, it is important to keep in minds what the event would do in return for a potential sponsorship. Public funding is another option to raise money for an event. For example, if the event has the potential to attract a large number of tourists, or have an arts impact for which arts trusts and foundations might consider grants.
Sales
Sales
Many events supplement their earnings from tickets with other revenue generating activites. Revenue can be generated through fx sale of food and beverages, merchandise, competitions with sponsored prizes, access to VIP areas, etc. Revenue generating activities vary a great deal depending on the purpose of the event.
Source: Shone & Parry (2019) pp. 128-147
Budgeting
Budgeting
When creating your event budget, you need to estimate both your expenses and your sources of income. Your estimated budget tells you whether there is a chance of reaching your financial goals or not. Ultimately, whatever results you get from your estimated budget can make or break your entire event.
In order to give you a head start, we have created an Event Budget Template which includes all the relevant categories you need to get started on your detailed budget. The template includes three sheets:
Overview of expenses
Overview of income
Profit-loss summary
Start by estimating all your amounts, and when you actually start executing your strategy, you can activate the "Actual Costs" and "Actual Income" columns to get a full overview.
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