Know your numbers

Events can be big business, or a big marketing expense. Every event owner needs to know and understand their numbers. Planners need to understand their costs per person, the event’s fixed and variable costs, year-over-year budget comparisons and profit margins. Understanding the overall value of your event is to your advantage in all vendor negotiations. Solid financial management is a key skill for every event professional. 

When negotiating with a venue you need to know the total revenue generated by your clients for the host property. Make sure to include revenue from outlets (some events drive bar revenues after the event ends, some contribute to golf course fees, some have attendee guests that drive revenues in the shopping outlets, etc.) Your strength in negotiating comes from really understanding the VALUE of your piece or business and using that to obtain the best rates and overall value for your event client.

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Always ask any event vendor for the ALL UP, total costs, including all taxes, fees, labor, gratuity, etc. Many vendors send a proposal over with the main costs on the button line of the proposal. If the planner forgets to confirm that this is the TOTAL spend with that vendor they can be hit with super high additional fees such as delivery, labor, taxes, etc.

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You should budget conservatively on income and overestimate your event expenses. Many clients are optimistic about the amount of registration revenue they can generate or the amount of sponsorship revenues they can secure. It is best to budget lower in these revenue line items rather than overestimate and be left short trying to cover event expenses. All event costs are climbing and budgeting for higher costs than expected will leave you with cost savings once you get the actual costs identified.

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When asked to reduce your event budget by 15%, one week out, you should have a solid grasp on fixed expenses and those that are variable…or not yet incurred. This  allows you to make cuts accordingly.

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Understanding the cost per person is critical to helping you set registration fees and to determining what a comp ticket actually costs you. One client offered ALL speakers a complimentary ticket. These were subject matter experts (not professional speakers) that were industry influencers and should have bought tickets to attend the event. Instead, the hard costs per person were over $600 across 85 speakers, over a $50,000 expense to the bottom line. Another had a $450 cost per person and set their ticket prices at $250…leaving it to sponsor funds to cover the cost per person.

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Translating budget variances is a key role for any planner. If your costs are higher or lower in any category you need to be able to tell the story of WHY the variance exists. Make sure to track in your budget the notes of why the variance exists. We have the entire print costs donated one year and that was not noted (to the tune of over $5k) so the following year the Board Members asked why that line item went from $0 to $5000. I train our events team to “Show Your Work” for each budget number so we understand how they got to that total line item number. (i.e. This registration revenue total is based on 500 ppl. @ $250 ticker, per person.)

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I was once told by a millionaire that he looks at everything on %, not the actual number or variance. When you attach a % to each number it puts that spend or revenue amount in perspective. We made $100k at that event, but what % of our total organizational revenue is $100k? We paid more for AV this year, but what % of an increase was this expense from last year's AV spend? What do we need to meet our goal, a 3% increase over our net revenue from last year. What should our profit margin be, 20%, how did we do against that goal? Percentages put numbers in context, use your %’s to tell your event financial story and outcomes.

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Every good event professional also needs to understand their numbers as it relates to attendance. You should track registration pace year-over-year to know if you are on target to meet your attendance goals. You should track all demographic numbers to be able to extract who is coming to your event. Events are a numbers game.

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In addition to understanding your event numbers, it's critical to be able to translate those numbers for key stakeholders and clients. Communicating financial trends, recognizing variances and the reasons behind each variance, identifying cost-savings ideas, making budget recommendations are all skills each planner needs to keep the event on budget and meeting revenue goals.

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You may not be an accountant but you sure need to understand the dollar and cents associated with your business….of events!

Lynn Edwards is a seasoned event professional with over 30 years of experience within the hospitality industry. Most recently Lynn’s event company Proper Planning was acquired by Evo3 Marketing and rebranded as Evo3 Events where brand evolution aligns with event execution.