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Knowing what falls into fixed and variable expenses will make it easier to note what falls into high priority.
MEETING PLANNERS ARE UNDER CONSTANT pressure to deliver the biggest bang for the buck. And despite millions of dollars being pumped into sales incentive meetings, training programs, product launches, and conferences every year, the days of lavish affairs and pharma galas are gone. Meeting professionals must be great event planners, but equally good at running their business as a business.
They are required to meet the corporate financial plan and produce valuable results—all while staying within a budget. The following seven tips will create a roadmap that guides the meeting professional through the budgeting and planning process with an eye on financial results.
1 Create better procedures Meeting planners who carry out a meeting plan without double-checking budget line items along the way are missing opportunities to add value without adding expenses or knowing when to reduce superfluous costs. Creating effective procedures for planning individual program budgets is the best way to ensure the meeting will stay within the parameters and schedule set forth in the initial phase.
Start by asking: Does the program have to make a profit, or can it just produce a goodwill return on investment? How can we service more employees with reduced funding? Did we motivate the staff? Did we save money on this event by bringing in sponsors? The answers to these questions help planners design and execute budgets that guarantee a successful outcome—one that meets the objective of the program both strategically and financially.
2 Know the objectives Knowing what the company and the attendees expect from a meeting will help determine the destination, the program, and above all, the cost. A successful budget process does not end with the creation of a budget, but rather the successful management of the budget. Budgets are simply tools; they are worthless except in the hands of someone who knows how to use them.
The right person will follow the rules and regulations set forth by the company, but know that budgets must be adjusted and monitored on a regular basis. They will recognize indications that a plan is off course. For instance, if revenue to date is less than what was predicted, the planner adjusts financially and logistically. Planners need to know if revenue is below expectation, since spending must be reduced to stay within ratios. More importantly, they need to be sure the available funds are being spent on items of high priority.
3 Identify all expenses A good place to start when identifying this year's expenses is to consult last year's budget. What needs to be adjusted in order to reflect changing costs and prices? Creating a budget spreadsheet to project expenditures and revenues will help identify a breakdown of costs associated with the event.
Budgets should contain a list of accounts for revenue or income from sponsors, and a list of accounts for expenses. Additionally, expenses should be broken into two categories: Fixed expenses remain the same regardless of how many people attend, such as the cost of renting a ballroom or contracting a speaker; variable expenses change based on attendance or quantities, such as the number of dinner guests, hotel rooms, or material packets produced. Knowing what falls into fixed and variable expenses will make it easier to determine what category is a genuine high priority. This brings us to the next point.
4 Identify high priority Let's say a budget's revenue is below expectation and a decision must be made about where to cut spending. It would make more sense to keep the fantastic speaker and cut back on food and beverage served if the program content supersedes the social networking part of the event. But if networking is more important to the company, meeting planners may opt for a less expensive speaker since the cocktail hour is the higher priority.
Keeping a close eye on budget revenue also helps planners recognize trends. If registration for a program is down from the previous year, is it due to a change in the industry, general economy, or because of the speaker or location chosen? This reduction in revenue must have a reason, and once planners can narrow it down, they can work on solutions such as additional marketing, broadening the invite list or finding a more engaging speaker. All of these steps will assist in enhancing revenue, and thus generate funding to produce the most successful program.
5 Establish a break-even point When creating the revenue side of any budget, the budget manager must determine where funding will come from. Revenue is often generated by ticket sales. More often than not, hearing a lecture on the next medical breakthrough or attending a gala event for a company foundation certainly could be worth the price of a ticket. The overall sales of tickets should cover the cost of the event and produce the desired financial benefit to the company. A break-even point must be established for this formula to be successful. So how does one determine the break-even point of an event?
First, an expense budget must be formulated by comparing the history of last year's event with the numbers associated with this year's program. A planner may decide that last year's numbers plus, say, three percent for the increase in the consumer price index will create this year's budget—so basically you would take last year's numbers and add three percent to them. Not flawless, but historically it would get you close to a usable number without having to calculate every item from scratch.
If companies are raising money for a foundation or cause, then meeting planners need to go one step further and multiply the amount they hope to raise by the projected break-even cost of one ticket.
6 Consider sponsorships It is always more fun to manage a budget with high income and low expenses, but we are not so fortunate most of the time. Creating enhancements to revenue is today's greatest challenge, and one method that works is sponsorship. Sponsorship and advertising is everywhere and it's a chance for both sides of the partnership to help each other. Meeting planners can benefit by seeing lower ticket prices. Sponsors see high exposure or just good community relations in return.
Companies can muster a sponsor for just about everything out there within the realm of the law. The simplest of items, such as a ruler or notepad printed with the sponsor's logo or message, can be handed to every attendee in a gift bag or materials packet. As long as companies are conscious of the regulations that govern many pharmaceutical and medical programs, the opportunities are endless.
7 Establish responsibility Let the budget manager manage the budget. All too often people in management positions do not share the department or program budget with subordinates, even though they hold them accountable for managing budgets. It is very difficult for someone who was not involved in the creation of a budget, or who does not manage a budget on a regular basis, to manage a budget with positive results.
A budget manager must know how the budget was created, what the company's strategic financial plan is, what the purpose of a meeting or event is, and what the financial goals of that meeting or event are. This knowledge helps the manager understand how to accomplish the goals that were set at the start of the planning process, how to produce better results and, not least, how to stay on budget.