BUDGETING

1. Explain the importance of funding in MICE management;

2. Discuss the significance of budgeting and financial
control in MICE management;
3. Clarify the meaning and importance of sponsorship; and
4. Describe some tips on how to look for sponsorship and
how make sponsorship work.
 BUDGETING
Budgets and contracts are the backbone of any
event. Budget must be aligned with the
organization’s or client’s financial goals for the
event. The final budget must be mutually agreed upon
by the client and event organizer. The contract
seals and binds both parties with this agreement. An
event manager who effectively handles budgets and
contracts is a responsible manager.
 BUDGET
§ A budget is more than a pre-event balance sheet,
it is an action tool that guides the event
manager in decision-making regarding all the
expenses and revenues whether the event is managed
for a client or for the company itself.
§ The budget will help the event manager to assess
the viability of the event before it is even
presented to the management, clients, and
stakeholders.
 REVENUES OR INCOME
The three common financial goals or budget philosophies for
an event are:
1. Profit: revenue exceeds expenses
2. Break-even: revenue equals expenses
3. Loss-leader or hosted: expenses exceed revenue(the client
or event host provides fund to meet expenses
 REVENUES OR INCOME

REVENUE EXPENSES = NET INCOME

- (PROFIT/LOSS
Php 325,000. 00 Php 105,000.00 = Php 220,000.00
-
 In drafting the budget, the following concerns should be considered:

1. Is there a given budget? What are the client’s and/or

organizer’s financial goals? Where will the operating
expenses come from?
2. Is there an available bridge operating fund?
3. Will the client give the operating funds ahead of time so
that the deposits on the venue and other early bookings
can be secured?
4. If not, does the event company have the funds to pay these
in advance?
 In drafting the budget, the following concerns should be considered:

5. Given these conditions, what is the most suitable type of

the event? What are the venues suited for the event?
6. Who are the primary audience? What are the profile of the
target audience or visitors and their spending capacity?
7. Where will the revenue come from?
8. Why will people pay to attend the event?
 REVENUE GENERATING EXPENSES

§ A fee paid to register, enroll or sign up for

REGISTRATION FEE
(a course/event, etc.)
§ Entry fees means those amounts paid solely to
ENTRANCE FEES allow a person the privilege of entering an
activity, place, tournament or competition
§ A percentage of the sales is usually given to
ORGANIZING EXHIBIT the organizer of fairs and exhibitions. This
SALES becomes part of the revenue and may be used to
cover cost of the event.
 REVENUE GENERATING EXPENSES

IMPLEMENTING § Both rental of vendors is another source

VENDOR FEES of revenue for fairs and exhibitions.
§ This type of arrangement is usually paid
LOOKING FOR through a combination of cash and free
SPONSORSHIP products or services in exchange for a
visible presence during the event.
 REVENUE GENERATING EXPENSES

• These are solicited for the event's program or

ADVERTISING
newspaper supplement announcing the event.
• Sponsors or exhibitors are offered branding
corners in the events in exchange for a
certain amount of money. These corners have a
AREA BRANDING
high traffic density, charging stations,
wellness area, play area, food station and
lounges.
 REVENUE GENERATING EXPENSES

• For events with free admission, the

host/organizer can sell limited edition
SELLING souvenirs like t-shirt, face towels, calendars
MERCHANDISE and water bottles that have the event or
ITEMS organizer's logo. Food and beverages are sold
inside the premises. Outside food and
beverages are not allowed to assure profit.
• Some companies give their products or services
ENGAGING IN
in exchange for a booth or a segment during
EX-DEALS
the event.
 EXPENSES (FC + VC = TC )

The following categories of expenses that must be considered

in preparing the budget:
FIXED COST (FC)
§ This refer to the daily cost of doing business such as
salaries, insurance, rent, dues, among others.
§ These items remain the same despite the changes in factors
related to the event. For instance, regardless of the
number of attendees or number of booths sold, the cost will
be the same.
 EXPENSES (FC + VC = TC )

VARIABLE COST (VC)

§ These are costs that vary depending on criteria such as the
number of attendees, the type of food and beverages served,
the sort of accommodations provided, and the inclusion of
conference kits and other consumables.
TOTAL COST (TC)
§ It is the total expenses required to produce an event. It
is the sum of fixed cost and variable cost.
 Some of the important expense items in the budget are
as follows:

The expenses incurred at the site are covered here.

These include cost for the needed structures, function
VENUE
room rentals, and accommodations for the VIP guest,
speakers and staff.
Expenses for the delivery of the program are listed here,
including technical riders for sounds and lights, fees
PROGRAM
for performers and speakers, and designs and equipment
needed for staging.
 Some of the important expense items in the budget are
as follows:

Cost for marketing materials and activities are included

here such as registration materials and forms, IDs,
MARKETING
guest packs, staff uniforms and other operational
materials specifically produced for the event.
These are the expenses for the food and beverage served
MEALS
to the guests, organizers and delegates.
 Some of the important expense items in the budget are
as follows:

The salaries and fees of the organizing team and

other contractual workers designated for the set
STAFF
up, registration and ushering are all considered
here.
Manpower and equipment will be transported from
TRANSPORTATION
various locations to the venue.
 Some of the important expense items in the budget are
as follows:

Holding an event in public space entails getting

LICENSES AND licenses and permits from government units. The
PERMITS event manager must know all the licenses and
permits needed and how much each cost.
The event organizer usually provides accommodation
for guests/speakers/panelist and key event team if
ACCOMMODATIONS
the event is held in a different location. a
budget must be allocated for these expenses.
 Some of the important expense items in the budget are
as follows:

Lighting fixtures, sound systems, LED walls, camera set

PRODUCTION AND
ups and other technical requirements often consume a
STAGING FACILITIES
significant share of the total expense budget.
Aside from talent fees, some speakers and entertainers
PERFORMERS/ may request for transportation, special food and
ENTERTAINERS beverage, comfort items (like amenities) and a
comfortable holding area.
This group ensures the smooth and orderly flow of the
program. A successful event dependshighly on proper
PRODUCTION CREW
coordination and good flow of communication between the
event management team and its contractors/suppliers.
 Some of the important expense items in the budget are
as follows:

To mitigate risk during events, organizers need the

services of the police, security guards, and marshalls.
The number of needed personnel depends on the type of
SECURITY
event and number of guests, size of the crowd and the
venue. Other security requirements are mandated by the
local government
The success of an event is contingent on having all
potential risks points covered. Event organizers usually
CONTINGENCIES assign a percentage of the total cost as the budget for
contingency or risk management. This can be atleast 10-
20% of the total cost.
 DETAILED BREAKDOWN

§ A detailed breakdown of each budget item must be

prepared to ensure that the assigned teams are familiar
with the scope and limitations of their area of
responsibility.
§ For example, the menu, type of food services, and the
number of meals must be specified under food and
beverage items of the budget.