The Three Things You Need to Know About Budgeting for Your Live Event
OHHHH the budget. THE BUDGET. It is usually THE LAST thing that people think about, particularly when they are wide-eyed and excited to host their first live event for their business.
When I talk to my clients and potential clients, as well as MOST students in Events That Convert, they always have a hard time understanding how much their event will cost at the outset. One of the biggest struggles for entrepreneurs is understanding pricing their tickets and 9 times out of 10, ticket prices have to start with your budget.
In this blog post, I’m going to walk you through how to get started creating a budget for your event, and after we get some basic principles down, I’m going to help clarify a few things around the budget (re: MONEY) that make it hard for entrepreneurs to stick to budgets (and therefore MAKE ANY DANG MONEY).
Why the Budget Matters
The budget matters because I want you to make money on your events. I’m SO tired of people NOT making money on their events, overestimating the amount of tickets that they can sell, spending too much on unnecessary things that look pretty but will not add to the ROI of your event.
The budget matters because it is literally the only thing that keeps you from losing money on an event and making money on an event.
I will also so that TONS of my clients “lose” money on events all the time (seriously, lots and lots and lots) because they understand that the event itself is a gateway into closing bigger business. Have you ever taken someone out for coffee? And you’ve talked to them for an hour and gotten to hear all about them and their business?
That’s EXACTLY what an event is.
It’s taking many, many people out for coffee all at the same time and learning all about them so that you can go forward and help them at a deeper level in the future.
Do you ever think of buying someone a $3 coffee as “losing money on an event”? No, because you know it’s an investment in a relationship.
So really, the trick here is to a) understand what you can afford to spend on each person EVEN if you don’t make a single dollar on the event itself and b) stick to that plan like your life depended on it.
How Most People Make Revenue from Events
The answer is often not on ticket sales, unless you’re already an established business owner and you’re selling high-dollar tickets to a retreat. Otherwise, most companies I work with (even the BIG ones) don’t make much money on their events. Maybe they make 20% if they’re lucky, but compare that to lots of other profit-generating activities and that’s barely exciting.
For me, I take home a very small profit of the events I host, which sometimes makes it almost not even worth it. EXCEPT…
The way that you consistently make revenue is after the event OR if you clearly value the event as a marketing opportunity and offer the ability for sponsors or partners to buy into that value (aka selling sponsorships).
So, when you’re setting up your budget, make sure that you understand that the significant revenue is often generated post-event or through cash sponsorships from partners.
PS In Events That Convert, I have a whole sample template that makes budgeting SO much easier and clearer, AND lets you figure out what you would need to sell in order break even on an event with just a few variables.
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So, without further ado, here are the THREE things that you need to know about event budgeting in order to start planning a successful event.
1. Budgeting is Not Complicated, But Your Money Blocks May Make it Feel Draining
You know this. I know this. Budgeting is literally getting a quote for something, putting it in a spreadsheet, totaling it all up, and dividing it by the number of people you want to host.
But what happens with most events is that we have all these wild ideas and then, when we start putting numbers to paper, we realize that there are WAY more things to consider than we thought. So when one quote comes back too expensive, we despair at trying to find a cheaper one.
But usually, when I start budgeting, I really like to list out my top 3 priorities and get really solid quotes for those three things (for me it’s food, location, and audio visual). Then for the other things, I fit them is as needed (printed workbooks? Let’s spend $5 per person OR make them digital if it doesn’t fit in budget), or cut them out completely.
The next time you’re budgeting for an event, try to get 1-2 quotes for each IMPORTANT vendor, then just Google Search for the rest of it. I would rather you ballparked things than got frustrated with all of the quotes and quit before you got to the end.
Money is hard, but budgeting is simply a process of finding out a piece of information, tracking it, and then comparing it all together so that you can go forward with your planning process.
2. Make Sure You Have Columns for Budget and Actual
I always create two columns for my budget, the Anticipated Budget and the Actual Budget. The first step in my budgeting process is that I get all my quotes and write them down in my Anticipated Budget column.
Then, as I’m signing contracts or paying invoices to vendors, I add those final numbers to my “Actual Budget” column (only when you sign or pay! Not before! Actual budget numbers are only recorded once the number is final final paid).
Here is an example of how I set up my columns for budgeting:
This is super important so that you can see how close your research was AND so you can also start seeing if you’re over budget on things. Usually, people won’t realize that they lost money until AFTER the event is over. When you start paying things and putting those “Actual” numbers into your budget, you’ll notice REALLY quick when you’re starting to overspend and in what categories you’re overspending.
Lastly, your budget needs to be updated weekly if not bi-weekly so that you can be sure you’re keeping up with event costs. If you don’t have the patience to do this, ask your admin or VA to do it for you.
3. Your Time Needs to Be a Line Item
This is the BIGGEST one that even large companies with big event budgets don’t often do.
The TIME you spend on an event needs to be accounted for in your budget. Because if YOU weren’t doing it, you’d be paying someone else to be doing it, and we can’t underestimate how valuable your time is. If you WEREN’T doing this event, you could be doing any number of other things, so we have to make sure that you are accurately making a fair wage for your event planning efforts.
I usually give myself an hourly rate of $50 and then assume 25 - 50 hours for smaller events and 100 - 300 hours for larger events. Your mileage may vary, but these are good places to start (and PLEASE track your time. Your time is a resource and just like money, it needs to be tracked to get a good, solid overall picture of what an event is actually costing you to host).