Three-step budgeting
For many planners, even seasoned ones, budgeting for a meeting can be an overwhelming, intimidating experience. There are so many variables and contingencies to contend with, not to mention a myriad of vendors. Understanding the fundamentals of budgeting is the best place to begin. There are three key steps.
1. Understand the business environment.
Staying abreast of changes in the state of the industry is one of the main goals of any professional. Keep tabs on the following key areas pertaining to meeting planning to bolster budgeting know-how:
- Trends in the economy
- Buyer versus seller market in the hospitality industry
- Travel taxes
- Gratuities
- Green meeting trends
There are several areas where costs can pop up out of the blue, based on the above variables. Good meeting planners anticipate costs and the plan for surprises. Be on the lookout for:
- Resort fees
- Unexpected hotel charges
- Internet charges
- Air lift, especially to second- and third-tier cities
- Cost for additional baggage on airplanes
- Postage increases
- Exchange rates (for international travel)
2. Assess your organizational needs.
The three most important factors to consider when preparing your budget are goals and objectives of the meeting, profile of attendees, and your group’s meeting history. Start by spending some time doing research and getting the necessary information on meeting objectives and preparing a list of questions in the following areas:
Meeting Goals and Objectives
- What should this meeting accomplish from a strategic point of view?
- What is the desired outcome of the meeting financially?
- What are the specifics of the program, schedule, andfacility, and who can you contact for the information?
Profile of Attendees
•What level are the attendees? Are they CEO’s, managers, entry-level?
- Who will develop the list of prospective participants?
- What is the percentage of female or males?
- Age range of attendees?
- Income level?
- Geographic location?
- What are their special physical or dietary needs?
Meeting History
- Analyze the difference between projected and actual figures from the previous year’s budget.
- Differentiate between fixed and variable costs.
- Understand the difference between number of meals guaranteed versus meals served in the previous year.
- In what areas can expenses be trimmed from the previous year’s budget?
3. Focus on critical calculations.
Your meeting budget is an estimate of anticipated income and expenses for your meeting and provides financial control and accountability. It’s important to document how and why you arrived at all figures. You can keep track of the calculations used to arrive at each budgeted item with Excel spreadsheets.
In general, the registration fee is determined by the total fixed costs divided by the number of attendees plus the variable costs. Fixed costs include items such as meeting room rental, audiovisual fees, marketing, signage, and insurance expenses. Variable costs can be food and beverage expenditures and materials and handouts.
For every meeting, there are critical financial statements to maintain. These include:
- A balance sheet—a statement of the financial condition of the meeting. It shows assets, liabilities, and equity.
- A profit and loss statement—a document that compares transactions accumulated over a period of time. The bottom line shows the meeting profit or loss.
- A cash flow forecast—a month-by-month projection of total income and expenses.
Starting with these three basic steps, you will be able to approach your next meeting budget with confidence.
This article was adapted from an educational session led by Bonnie Wallsh at the November 2008 Rejuvenate Marketplace in Virginia Beach, Virginia. Bonnie Wallsh is the chief strategist of Bonnie Wallsh Associates Ltd., in Charlotte, North Carolina, an independent meeting planning firm providing a variety of services. Wallsh is a 31-year veteran of the meetings industry.
This story was originally published in the April 2009 issue of Rejuvenate magazine.
