Reflect upon an event that you have recently conducted or attended. Has the event considered all possible revenue generation and cost reduction methods? What could they have done to improve their bottom line financial profit or reduce their loss?
This past year I was part of a team traveling to Haiti for a mission trip and we had various events to plan for fund-raising before we made the trip. One of the events we planned was a concert by a locally known Christian band. We provided snacks and a few beverages for the people who attended the concert. To raise revenue and reduce costs, the band generously played for free with no staging, lighting, or production costs. The only money they requested was that the team pay for their transportation costs to and from the event. Since we were able to use a room on Ball State’s property, we didn’t have to pay for use of the venue. We put numerous flyers up for the concert, made a Facebook event to invite people, and were able to get an article in the newspaper written about the event and our cause. While we were excited about the concert and expected a good turnout, not many people attended the event. We were expecting around 100-150 people, and roughly 30 people showed up. We did end up making a $15 profit though, so at least we didn’t end up in the negative!
Improvements we could have made to increase attendance and revenue: add a greater incentive to come such as a raffle, an auction, or a chance to win a prize with buying a ticket.
Develop a draft budget for a major event.
QUESTIONS FROM READING
1. What are the limitations of running an event by the budget? Do many events such as the arts festivals always come in under budget? What can lead to drastic changes in the budget?
Some limitations involved in budgeting: loss of flexibility of changes close to the event, a small change in event plan can cause huge changes in the budget, and possibilities of more money needing to be spent on fixed costs such as security, venue, staff salaries when you want more money put into the entertainment, atmosphere or decoration.
Arts festivals do not always come in under budget, but seeing as they rely heavily on unreliable variables such as attendance and value of art performances, art pieces, etc, they have a higher possibility of coming in under budget.
Unexpected problems close to event can lead to drastic and sometimes detrimental changes in the budget. An example of an unexpected problem could be the catering company you’re using suddenly gets shut down for being under health code restrictions. Because of this, you have to switch caterers and the only company that could adhere to your needs in time is the most expensive company in the city or state.
2. What are the financial benefits to the each of the event stakeholders?
participants-revenue for event itself including concessions and merchandise, surrounding businesses and hotels, revenue for sponsors of the event
administrators-income made from running the event
employees of the event-salary and hourly wage income, revenue from concession purchases and merchandise
witnesses of the event- revenue for sponsors of the event
3. Identify the cost centres and revenue sources for:
a) a celebrity poetry reading for a charity
cost centres include staging and possibly travel, revenue sources include tickets bought by fans and supporters of the charity, publicity and press coverage of the event
b) a rural car auction with antique cars
cost centres include catering and staging of the event, revenue sources include sponsors of the cars, publicity, concessions, car fans
c) a corporate Christmas party
cost centres include entertainment and catering, revenue sources include participation in the event(possibly an entrance or cover fee for everyone coming)
d) a hot-air balloon festival
cost centres include staging, travel expenses, and revenue sources include ticket sales, concessions, sponsors
4. Why is cash flow of such importance to event management? Can an event be run on credit?
Cash flow is important because from a management perspective, you need to know exactly where all of the money is going to, at what time and how much. An event can be run on credit when money is paid up front to run the event and then all the revenue from the event pays for what was paid before the event took place.