Financial

Management and
Budget for Event
 Learning Objectives

▪ To provide an introduction to some of the financial

planning, control and budgetary issues in running
events
▪ To consider the budgetary organization of events in
terms of break-even, monitoring and recording of
revenues and costs
▪ To discuss additional financial issues such as raising
income, public funding

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 Introduction to some of the
financial planning, control and
budgetary issues in running events

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 Introduction

Financial planning and good financial control are important aspects of the event
management process. Even if we are only organizing a small personal event,
we need to know how much can be spent. For the vast majority of events, there
will be both income and expenditure.
The careful monitoring, recording and control of these incomes and
expenditures is a significant concern of clients, organizers, coordinators and
finance officers of all kinds.

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 OBJECTIVES AND FINANCIAL
PLANNING
▪ The setting of objectives is important for the entire event
and is also the key to what has to be done financially. Event
organizers may be faced with a range of financial choices depending on
what has been decided about the objectives (figure 6.1)
▪ One key to the effective financial management of events is the
appointment of someone responsible for it, in the same way
that members of an organizing committee might be responsible for
bookings, organization, staff and publicity.
▪ Cash flow issues also tend to be serious, particularly for events that
involve pre-booking, such as a fundraising dinner. Some expenditure or
investment may well have to take place before any income is generated
or tickets sold, thus exposing the organizers to risk of financial failure.

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 Budgetary organization of events

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 ISSUES RELATED TO EVENT BUDGET
1. Related event objective with budget
2. Cash flow issues

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Differences
financial goals
personal events
vs
organizational
events
 Cash Flow Issues
• Cash flow issues also tend to be serious, particularly for events that
involve pre-booking, such as a fundraising dinner. Some
expenditure or investment may well have to take place before any
income is generated or tickets sold, thus exposing the organizers to
risk of financial failure.
• Venues for events often have long lead times for bookings and
require money up front to hold or confirm the booking. When this is
the case, the treasurer (or finance officer of the organizing
committee) will have to ensure sufficient money is available to pay
for the various costs before the deadlines, or risk losing the booking
and the event.
• This will mean careful attention to issues such as debt collection and
credit period. For example, if an agent has agreed to take a certain
number of advance tickets for an event, when do you, as finance
office of the event, get paid for them? If the period between booking
the tickets and payment is too long, your event might go bankrupt in
the meantime, because you have to pay money out but have not got
enough cash coming in (see Figure 6.2).

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 Preparing the Budget
1. Determine event objectives and collect information
about the event
It is no good setting a budget in which a large profit is forecast, if the event
is supposed to be for public entertainment and only intended to generate
a small surplus or to break-even, because making a large profit might
result in having to charge too high a ticket price.
So, what is the financial objective? Is the event intended to make money
or simply to cover its costs? If it is to cover costs, what is the total amount
that can be spent, specified either by the clients or by the organizing
committee?

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 Preparing the Budget
2. Check the latest prices of event component cost. Add prices
increases if the event held within month or years
3. Set the ticket prices after calculated all cost component and
expected profit
4. Considering number of visitors. What if number of visitors
under the target

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Expenses

Fixed Expenses
(unchangeable regardless of Variable Expenses
sales or profits. They can not be (fluctuate based on the number Additional Expenses
changed even when revenue of participants)
falls short of expectations)
• Audio visual equipment • Accomodation • Catering
• Entertainment • Additional site rental fees • Cancellation fees
• Insurance • Decorations • Power
• Marketing & Promotion • F&B • Staging equipment
• Meeting site/facility/venue • Gift • Tents
• Personnel salaries • Invitations/brochures • Themes and decoration
• Signs • Name tags • Traffic control
• Speakers • Promotional materials • Waste and trash removal
• Technology • Rehearsal cost • Hotel shuttle
• Transportation • Taxes • etc
• etc • Transportation
• Travel to site inspection
• etc
Contoh Format
Penyusunan
Anggaran
Anggaran
Biaya & Pemasukan Event
Anggaran DETIL
Pemasukan & Pengeluaran
 Budget Realization
▪ An important issue is who is allowed to spend money. If a department
has a budget, normally it will be the department head that has the
authority to spend it, and the key question is how much and who else can
authorize this.
▪ Events management depends on the ability of managers and events
organizers to solve problems, often very quickly. If they do not have the
funds to do this, or the ability to take decisions quickly, then the event
may fail.

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 Budget Realization – Petty Cash
▪ For small items, petty cash may be needed and a system will have to be
set up to issue it (petty cash is a small amount of money for items that
have to be paid for in cash, say at local shops, also minor items and those
that are too small to be bought in bulk).

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 Sources of Income

▪ So far we have assumed that income is derived from people buying

tickets. It is important to bear in mind that there might be other sources
of income or revenue besides ticket sales. These sources may be other
revenue-generating activities, or sponsorship-related activities.
▪ Sponsorship is not the only potential alternative income source for an
event (see Figure 6.13). The range of sources depends a great deal on the
type of event.

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 Ticket Pricing

HARGA TIKET = TOTAL BIAYA + KEUNTUNGAN YANG DIINGINKAN

JUMLAH PENGUNJUNG

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 Ticket Pricing

THINGS TO CONSIDER FOR TICKET PRICE:

• Does the number of visitors match the target set? If not, what kind of
anticipation will be made, will it reduce the amount of profits or
increase ticket prices?
• Lowering ticket prices is possible, but pay attention to FIXED COST
whether lowering ticket costs covers FIXED COST

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 Breaking Even

• If profit is your goal, you will need to know the break even point
• If your money is coming from registration, you need to know how many
participants it takes to break even.
• If you know the number of participants, you will need to know how
much to charge for registration or ticket sales

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 How many participants are
needed to break even
• Fixed cost (site rental, speaker fees, marketing cost): $75,000
• Variable cost (F & B; registration material): $200
• Ticket pricing or registration fee: $500

BEP (participants) = Fixed Cost / (ticket pricing – variable cost)

$75,000 / ($500 - $250) = 250 participants

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 How many tickets fees to break
even
• Fixed cost (site rental, speaker fees, marketing cost): $75,000
• Variable cost (F & B; registration material): $200
• Ticket pricing or registration fee: $500
• Participants: 250

BEP (ticket fees) = (Fixed cost + Variable cost) / 250

= ($75,000 + $50,000) / 250
= $500 ticket/registration fees

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 Group Task 3 – Week 4

1) Event financial goals or target

2) Cost of event (Fixed Cost and Variable Cost) & Total
cost of event
3) Price of ticket
4) Break even (participants & ticket/registration fees)
5) If the number do not work, discuss some alternatives that you
can do: increase attendees; increase registration fee;
sponsorship; reduce expenses à Giving your reason

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 References
• Anton Shone and Bryn Parry (2010). Succesful Event
Management. A Practical Handbook. Third edition. Cengage
Learning (SP) Ch. 6
• Shannon Kilkenny (2011). Successful Event Planning. Second
Edition. Atlantic Publishing Group

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Undergraduate
Program of
Management UMN
goes to AUN-QA
2021