Creative Budgeting Amidst Rising Costs
By Jamie Kervin & Alissa Bush FROM Arrowhead Conferences and Events
When we think about "creative budgeting," it seems to be a contradiction of words. However, in the world of art, creativity can manifest itself in either the abstract or reality. In the world of conference planning, we need to kick abstract thinking to the curb, be realists, and focus on the facts. We can be creative in our budgets while planning in reality.
As planners, all of us bring different strengths to the table. While some of us thrive in spreadsheets and numbers, others who thrive in a more abstract way of thinking may procrastinate the task of budgeting or avoid it altogether. Successful budgeting, however, is necessary to maintain your organization's financial health, be good stewards, and care for your attendees, ultimately increasing the reach of your events. The process of creating a financially successful event begins before an RFP is ever distributed.
DETERMINE YOUR FINANCIAL GOALS
Financially, what is your event trying to accomplish? Does your conference generate operating funds for your ministry? For many organizations, this is the case, so your first objective is determining how much money you need to profit. Add this dollar amount to your final budget, and use the total to determine a per- person registration fee. If your goal is to break even and cover the event's costs, your per-person registration fee will simply be your total event budget divided by your expected attendance.
WRITING YOUR RFP
We would confidently argue that the most important aspect of budgeting is writing a thorough RFP and, through a competitive bid process, gathering as much information as possible on the costs associated with hosting your event in a particular location. For a city-wide RFP, it's not uncommon for us to ask 30+ questions about a potential venue to uncover every possible financial consideration. Don't wait until after a contract is signed to gather all this information. At that point, it's too late, and you could end up contracted with a venue that you can't afford.
Your RFP is also an excellent opportunity to ask about any incentives the hotel or city offers. We typically state our requested concessions and then ask what the cost would be if a venue cannot provide that concession. For example, if complimentary Wifi for general browsing isn't available in a meeting room for 100 people, what would be the total cost, including any service charges? These incentives and concessions with a dollar value need to be accounted for as a line item in your budget, ultimately reducing your overall costs. Consider other additional fees for bringing in an outside production company (including liaison fees or patch fees), resort fees, parking, and union fees. A well-written RFP gathering ALL the necessary information is key to achieving your financial goals!
SOURCING YOUR RFP
Knowing your attendees is an essential aspect of budgeting. Do your attendees pay their way to your conference, or does their organization pay? Although we want to be good stewards in either scenario, an individual's budget may be more restrictive than an organization’s or church’s.
Do your attendees bring their families? This dramatically increases their costs and, in some cases, even requires them to purchase two rooms, doubling their lodging costs.
Use knowledge of your attendees' financial thresholds to appropriately determine your ideal room rate and source cities and properties. Know that other vendor costs are generally more economical when room rates are more economical (F&B, A/V, etc.). Choose locations during their off- peak seasons or opt for tier two and three cities for more affordable options. Also, look for cities with incentives in the form of rebates or complimentary meeting spaces.
When determining where to source your RFP, there are generally three considerations - dates, rates, and location. Decide which of these is the most essential. In most scenarios, you can have two of the three. If your dates are not flexible and your location is not flexible, you will not have much negotiating room on the pricing. But if costs drive your decisions, then flexibility on your dates or site will get you the pricing you need.
WRITING YOUR BUDGET
Although budgets aren't abstract, in the early stages, they can be fluid. Before writing and sourcing an RFP, you should have a general idea of how much you want to spend or how much per person your attendees can pay in the form of registration fees. This information will dictate where to source your RFP, potential dates, and the level of production you want.
Budget items fall into one of two categories - fixed costs or variable costs. Fixed costs are the same, no matter how many attendees are present. Examples include meeting room rental, staging, production costs, and event insurance. If your financial goal is to profit from your event, this would also be considered a fixed cost. Assuming the setup remains the same, those costs will be consistent whether there are 200 people in attendance or 250.
Variable costs are dependent on the number of attendees present. Examples of variable costs include guest rooms (if they're going to your master account), meals, and Wifi (if there's a per- person cost in the meeting room).
The financial information you gather from your detailed RFP should fall into one of these two categories and be added to your budget as a
line item. At this stage, your budget moves from fluid to more concrete. As you evaluate potential locations and uncover costs, you can approximate how much it will cost to host your event in a particular location. Divide the estimated costs by the expected attendees, which will be your per- person registration fee.
UNEXPECTED EXPENSES
We want to avoid unexpected expenses. A great way to do this is to network with other planners, engage in planner forums, and tune in to webinars on current trends in the industry. Hotels and venues often add additional fees to increase revenue, and those pricing changes can catch us off guard. Be in contact with other planners so you won't be surprised by these new trends that result in higher costs.
No matter how hard you work to estimate every potential cost, unexpected expenses are inevitable. A speaker will request a hard Internet line in a breakout room the day of, or your board will request an unplanned afternoon break in their meeting room. The larger your event, the greater those unexpected expenses will be. Provide a buffer in your budget to cover any of these unforeseen expenses.
If this is a repeat event and you have budgeted well in the past, go back to your previous budget and compare what you estimated with what you actualized. If you went over budget in previous years, your buffer might be an average of those overages. Add this as a line item. If this is a brand- new event, your buffer may be a little bit of a shot in the dark, but at least you'll know it's there in case you need it.
CONTRACTING
A well-written contract is your insurance policy guarding your financial success. You may lose all your work in gathering pricing and creating a budget without a thorough contract that explicitly addresses your negotiated pricing. Be specific and detailed by adding any pricing discussed. Additionally, read, understand and address the implications of any amendments, hotel terms, and conditions, audio-visual information sheets, etc.
Be aware that these documents can be adjusted and negotiated, so make any changes to reflect pricing or concessions that differ. Include language that ensures you will not incur additional charges unless communicated explicitly in the contract and that the contract supersedes any other documents. This specificity can help mitigate or bring to light many budget-busting surprises.
CREATIVE WAYS TO SAVE
Costs are rising everywhere, and it can leave us feeling uneasy and unsure. Today's volatile environment might require us to think outside the box and perhaps even change our events to keep our budgets in line.
Consider alternate dates or guest room patterns. Ask hotels for needed dates. Look at other locations that might be more affordable. Trade shows like Emerge are great opportunities to learn about cities you may have never considered. Thoroughly review your RFP and see if you can reduce meeting space or the number of breakout rooms you're requesting to lower food and beverage minimums and audio-visual costs. Reduce setup time to save on rental and labor costs. Do you need to consider shortening your program a day? Bid out your vendor contracts to ensure you're getting the best pricing - production, decorators, security, etc.
Realistic yet creative budgeting is the remedy to that uneasy and unsure feeling you may have in today's market.
Jamie Kervin brings over 20 years of conference planning experience to her position of senior account manager at Arrowhead Conferences and Events. She serves a variety of denominations and ministries, partnering with them in their conference planning efforts-but donor events and city-wide conventions is where she really shines.
Alissa Bush boasts 15 years of hotel experience where she specialized in the faith and "SMERF" markets, where she grew a love the missions and goals of the organizations she worked with. In 2015, feeling the calling in her heart for more meaning in her career, Alissa joined the Arrowhead team, allowing her more time with her young children.