When budgeting an event, most of us think about revenues, expenses, and attendance. We take it to a another level when we consider fixed expenses versus variable expenses, and plan how we might control the latter if attendance falls short of what we expect. For the typical meeting planner, the financial planning process goes no deeper. As a result, anxiety can increase significantly in the weeks leading up to the event as expenses begin to hit before the actual event even takes place. If only such meeting planners would “go with the flow.”
What flow? Cash flow. In simple terms, planning cash flow is the “when” consideration in creating a budget. A planner should consider not only what expenses will hit, and what the anticipated revenues will be, she should also reflect on when the expenses will hit and when she’ll have the cash necessary to pay for them.
Expenses hitting prior to an event often include:
- Advertising and Marketing
- Deposits/Appearance Fees: For speakers, music groups, and other performers
- Deposits Owed to the Meeting Site/Facility: For meeting space, caterings, audiovisual rentals, and other items. (NOTE: Some facilities will offer direct billing subject to the payer passing a credit check. An event planner should discuss with potential host facilities early in the planning process.)
- Travel Arrangements: For you as well as those who are part of the platform/program (if required by your contract with them).
- Giveaway Items: Such as t-shirts, bags, binders, and flash drives. These items not only provide a keepsake for attendees, they can also provide advertising benefits for future events.
- Miscellaneous Expenses: Supplies, staging materials, decorations, programs, name tags, door signs for meeting rooms (What will the meeting facility provide, and what is your responsibility?).
How can an event planner have sufficient funds on hand to pay invoices as they arrive? Here are some possible solutions:
- Partner with an organization that agrees to provide the funds needed up front in exchange for a share of the revenues or profits when the event occurs.
- Recruit companies to serve as sponsors for the event, and collect the sponsor fees early enough to use the funds to pay for expenses that hit prior to the event. Many events offer various sponsorship levels to widen the circle of potential sponsors (and increase the amount of funds that can be raised). Focus on companies that will benefit from being visible to attendees at the event.
- Determine what deposit amount a registrant must pay when signing up for the event. Not only does requiring a deposit encourage fewer cancellations because a registrant has “some skin in the game”, it will also provide funds for you to use as needed prior to the event. In addition to deciding the amount of the deposit, you should also carefully think about your cancellation policy, including deadlines for cancelling and what portion of the deposit is refunded at those deadlines.
- Encourage early registrations. Offering a discount off the event fee might make financial sense if it incentivizes people to sign up and pay deposits earlier, thereby providing you with cash you can use as event expenses begin to occur.
Don’t get carried away by the current of expenses that can occur prior to an event…instead, think about cash flow during your planning process, and “go with the flow”!