Generating ideas for an event can be a lot fun. Trying to decide how much money is going to be needed to finance the event can turn into a nightmare. Too often, the budget for an event becomes the amount of money readily available to spend.
The problem with this method is that it can easily create the need for dramatic cuts that will severely limit the event and curtail its potential. Taking the time to outline the event and determine the cost of each element is a far better way to arrive at the budget needed to make the event work.
Start by deciding the purpose of the event.
Some events have a simple purpose. A wedding reception or birthday party have a primary purpose that is fairly easy to understand. Fund raisers and charity events can be difficult to define the purpose in order to be able to raise the cash to fund it. With a clearly defined purpose, the amount of money to be spent can be easier to determine and to raise. A good cause will draw funds to it almost automatically.
Define the extent of the event.
Will this event be designed to reach family and friends or is a community wide happening. Knowing the scope of the event will help you to understand what can be included and what should be excluded from the event.
If it is a fair type of event, having a dunking booth might be a great idea. If it is a wedding reception, the dunking booth should probably be eliminated. At this stage, the length of time should be determined and number of anticipated guests or participants. The types of food and drinks should also be discussed. If there will be prizes or games, these need to be included in the planning.
Set a cost for each item of the event.
In arriving at the cost of each item, several factors need to be considered. Is there a rental or purchase that needs to be made for this item to happen? If there are prizes, decide how many prizes to get and how large they should be. Will the item be staffed by a volunteer or will it require a paid person. Photographers, disc jockeys, and performers may need to be hired rather than recruited if you are planning a quality event.
In the case of fundraisers, you will want to consider asking for donations to offset the initial costs.
Using donated funds to cover the cost of the event’s budget will let you cycle all of the money made at the event directly to the cause. Most of the time if your purpose is a good one and is well-defined, getting advance donations is not too difficult. If people cannot understand why you are having the event or believe that you may have personal gain involved, the donations will dry up.
Add in rental cost of the venue if any.
Often, it will cost you something to reserve or rent the location of the event. If the event is larger, obviously the cost will generally increase accordingly. Some locations rent by the hour, others by the event, and others break up the day into 1/2 or 1/4 day segments. Find this cost out as a part of the budget formulation process.
Tally all of the potential costs to arrive at a rough budget.
Once you have rental, purchase, and hiring costs recorded, add them up. Use as much detail as possible so that future budget revisions can be precise. For most events, it is a good idea to have a cost item that is simply undefined. Make the amount in this category about 25% of the cost of the entire event. Add this to your overall total.
Once you have arrived at this figure. Increase your numbers by 10%. With this extra added into your budget, you now have a number that will probably cover everything that you know about and most of what will come up that was not anticipated. If the event is more than six months away, make that undefined item about 40% instead of 25%. This will give you and inflation adjustment.