Having a sound overview of an event’s finances is crucial for its success says Nick Eade, who also warns about cutting corners
At first glance event finance is a dreary topic for an article, but as one of the largest considerations you will have as an organiser, it is a very important one. Often event costs increase dramatically, especially in larger events, and cost overruns are going to be one of your biggest concerns.
The importance of budgeting is crucial at every stage an event’s life, from initial idea to implementation to finally establishing what profit (or not) has been made. Many of my industry friends have, with the best intentions, tried not to over spend resulting in their events being cancelled, which is ultimately the worst possible outcome. Managing expectations behind the scene can be complex. All organisations within the event industry, even charities, need to keep a close eye on what is going in and out of their balance sheets; financial decisions are almost always the reason for an event not making it to a second year.
Even at the concept stage, the numbers need to add up. Take a look at the flow diagram to see how financial management can be incorporated into your event and the areas to consider.
Given that some of the more complex festivals within the UK take around 10 months of continual planning, there should be continuous attempts to establish whether or not things simply add up. The smaller, more niche events, such as incentive days or food festivals, should focus harder on their finance simply because there is generally no back up. Huge companies such as Live Nation can move capital around whereas the smaller, more independent event does not have this option.
If your finances can stretch to employing someone to overview this, it should be given consideration. To find out earlier rather than later that there is simply no money left can at least bring an organiser back to reality so they can decide against delivering the event or, better still, allow themselves time to seek further revenue streams.
My advice is to review an event’s finances at least weekly. Identify where you can save money, check you are where your forecasts say you should be, and prepare the following week’s expectations. Interestingly, almost all ‘event theory’ neglects to examine the finances of event organisers. Some of the many items that should be taken into consideration around the budget include:
- Special programmes
- Ticket sales
- In-kind arrangements
- Venue hire
- Staff costs
- Entertainment hire
- Special equipment/facilities
- Broadcast rights
The best price
As for all things, you need to shop around. Get at least five quotes if possible from reputable companies for each element of your event that you have to buy in. Thankfully, those operating within the industry are aware, in the main, of others’ performances. Especially those companies that are of a poor quality or that have a reputation for delivering poor standards as word gets around very quickly.
Getting a recommendation is a beneficial way of finding a competitive quote. As with many areas in life, you will be surprised at the difference in the prices quoted between companies. The leg work will be worth it in the long run.
One consideration you may not have thought about is defining your event’s ‘boundary’ and where your responsibilities for it start and finish. These should be set, agreed and then stuck to right at the very start of your event planning. This is likely to be specific to the venue you are using and should be evidenced in writing. This photograph indicates where this may be problematic…
Knowing your boundary is essential knowledge as you may end up paying for more than you thought you would. This should be very detailed within the site plan. Staying on budget as briefly mentioned above, is crucial. You need to know what you have, what you are spending and anything that is expected to come from your budget. No surprises are an important way of performing business.
One of the most expensive areas, if not the most expensive, is staff. Volunteers can be a good cost saving idea, but are especially complex to work with, motivate and keep focussed. A considerable number of academics have attempted to write about this area with few results.
Many smaller events rely so heavily on volunteers that without them the event would not be possible. Village fêtes are an example of this. The communities make these events and they would not run without local help. However, it is worth bearing in mind the need for competent staff. The photo below demonstrates how the actions of inexperienced (or unthinking) staff can lead to deadly situations. This photograph was taken during an occurring event – you can draw your own conclusions! Competent staff must be utilised; lives may be lost if you do not invest here.
Contingencies are extremely important – unexpected occurrences take place. My advice is to always hold back 10 per cent of your final budget. This can then help you if the unexpected does take place. Events have an abundance of, mainly negative, surprises where finances are concerned. As the event management industry continues to professionalise more and more, written agreements are appearing; something that has not always been part of the industry. When dealing with financial management this is important as it gives a clear understanding of costs and minimises misunderstandings.
As we are all aware, incorrect budgeting can lead, for example, to the hiring of substandard workers. In extreme cases, this can result to all manner of problems including serious safety issues. A friend organising a large international festival just a couple of years ago hired a substandard number of staff and the result can be seen pictured.
This escape route consists of 75 steps going uphill. The barrier to the right of the stairs hindered the other escape route. Additionally, the signage at the top of the wall provides conflicting visual and written information – the arrows point in one direction, yet the image suggests that the crowd should go in the opposite direction! This was not thought out and could have cost lives. Over 200,000 guests were expected at this event. The signs were rectified prior to this event taking place.
ABOUT THE AUTHOR
Nick Eade MA, MSc, BA (Hons) (FHEA) has worked in the event management industry for over 20 years and has been involved in every aspect from early conversations of initial ideas to successful delivery. His experience covers festivals (music and other), the Olympics, corporate events, weddings and incentive days. In later years, he has delivered international consultancy to medium and large event owners.
Nick has been employed at Buckinghamshire New University for 13 years where he co-wrote the Event Management BA (Hons) course. He is the course leader for Event Management and a senior lecturer. Nick is well known within the industry both in educational and on-site at events, and continues to enjoy working in this fast paced industry. www.bucks.ac.uk / 01494 522141 ext. 3007 / linkedin.com/in/nick-eade-7b147629