CHAPTER 5

• Understand basic Event Leadership financial and accounting terminology.
• Forecast projected revenues and expenses for your event.
• Plan and allocate your event budget.
• Budget is an action plan that must be carefully developed based on limited information or assumptions.
• “Staying within the budget” in event management means revenue > expenses, profit-oriented events should have revenue = expenses, break-even events are designed to lose money, and loss leaders or hosted events are events where the event is designed to lose money but promoting a cause or agenda.
• Marketing projections and estimates are crucial in event management.
• The general history of previous identical or similar events, the general economy, your forecast for the future, the net profit or excess you reasonably believe you can expect with the resources available, and the type of financing that you choose to use to finance your event are factors in event budget development.
• Event budget is based on 5 factors: 3-year period, no history, high-low technique, general economic data, and sustainable funding.
• Income sources in event management include registration fees, interest income from investments, grants and gifts, exhibit fees, advertising fees, donations, and parking.
• Expenses in event management include advertising, accounting, décor, entertainment, permits/license, research, food and beverage, and videography.
• Profit in event management is calculated as revenue minus expenses.
• Retained earnings are not-for-profit organizations' way of showing profit.
• In event management, fixed expenses do not depend on the number of participants, while variable cost depend on attendance.
• Accounts payable in event management can be categorized into three types: pay deposit 50%, pay small deposit and invoice the balance due 10 or 30 days term, and vendor extend credit to organization.
• Negotiating accounts payable in event management involves collecting as much information about the vendor, providing documentation about your own business health, and some vendors might want a trial period.
• Controlling purchases in event management involves having a purchased order (PO), not allowing substitutions without permission, and using the PO is the most important tool.
• Financial challenges in event management include employee's salaries & benefits, commissions, and cash.