Chapter 7: Financial Management of MICE

Learning Outcomes:

 Explain the importance of funding MICE in Management

 Discuss the significance of budgeting and financial control in MICE Management
 Clarify the meaning and importance of sponsorship and
 Describe some tips on how to look for sponsorships and how sponsorship works

Funding
Adequate funding is essential for successful event. The biggest mistake of event
organizers is to host an event without adequate financial support. To do so will result in
the failure of the event.

Budgeting
Careful budgeting is vital for the success of an event. A budget is an estimate of
income and expenses. It is necessary to budget carefully to find out the funding needed
by the event and to provide monitoring system in the planning and implementation of
the event. Each activity should be analyzed as follows:

1. The specific activity to be undertaken.

2. The estimated cost of each activity.
3. The benefit of each activity.
4. The income from the activity.
5. The necessity of the activity.
6. The place of the activity in the budget priority.
7. How the expenditure of the activity can be monitored.
8. How the income will come in and how certain it is.

The cost and benefits of the whole project should he considered before deciding to
undertake it. The budget should be made as accurately as possible.
Financial Structure
After the organizers have agreed to push through with the event, the financial
structures need to be established immediately. Notwithstanding the level of the event,
financial structures may be simple with a treasurer controlling all finances or it may be
very complicated involving several committees and even paid staff to manage the
finances. When the structure involves committees, there are two options:

1. Finance as a free-standing committee; everyone requests money and awaits

their decision.
2. Each committee or subcommittee has a treasurer to look after it’s allocated
budget.

The method to be chosen will depend on the nature and level of the event, the
finances, and personalities involved. It is important to have a clear structure for financial
processing and control. Everyone must know who manages the money and who
authorizes and controls expenditures.

Control
The careful control of financial transactions is a vital aspect of MICE management.
Various control systems are necessary to keep spending within agreed limits. Failure to
implement proper control over budgets will lead to confusion. The following are
practical steps to follow for effective financial control:

1. Limit the number of people who can incur expenditure.

2. Keep accurate records of all income and expenditure.
 3. Use appropriate record-keeping methods to keep financial information correct,
current, and readily available.
4. Ensure that relevant structures channel financial commitment through
financial record keepers.
5. Ensure that financial information is widely circulated to all those who require
it.
6. Produce systems and information that are clear and understood by everyone
involved.

(A)

(B)
 Figure 7.1 Approaches to financial control
(a) Each committee or subcommittee has its own treasurer to look after its allocated budget.
(b) Finance is a free-standing committee.

Source of Funding
MICE organizers should identify possible sources of income and how to obtain funding for
them. There are several agencies that MICE organizers can approach for funding such as:
1. local authority leisure department;
2. education authority;
3. local or national sports council;
4. local or national arts council;
5. foundation for Sports and the Arts;
6. local or national tourist authorities;
7. sponsorship agencies;
 8. business agencies;
9. professional institutes;
10. hoteliers;
11. heritage agencies;
12. local or national charities;
13. voluntary agencies and;
14. the National Lottery.

In addition, MICE organizers can produce income from various activities such as:
1. franchising;
2. ticketing;
3. entry fees;
4. fundraising;
5. donations;
6. programs;
7. raffles;
8. souvenirs;
9. catering;
10. advertising;
11. licensing (logos, etc.);
12. trade exhibitions;
13. participant contributions;
14. sales stalls;
15. bar; and
16. corporate hospitality
Source of Funding

Fundraising
Several projects need some kind of fundraising. There are many forms of fundraising. If
carefully chosen, they can produce significant amounts. The following are some suggestions:
1. Sponsored runs, swims, and cycles
2. Dances and discos
3. Marathon swims and walkathons
4. Lotteries and raffles
5. Gambling evenings such as casino nights and race nights
Sponsorship
Sponsorship is a mutually beneficial business arrangement between the sponsor and
sponsored in order to achieve the agreed objectives. Commercial sponsorship is very difficult to
find and requires a lot of effort to service it. Finding sponsors is not easy. Information about
possible sponsors may be obtained from:
1. yellow pages and phone directories;
2. local and national news papers;
3. business organizations such as Chambers of Commerce;
4. professionals such as lawyers and architects;
5. participants and their personal contacts;
6. libraries – local, regional, and national;
7. market research through learned centers, consultancies;
8. partners that have supported previous events; and
9. existing sponsors

Some Tips on Looking for Sponsorship

1. Use imagination and innovation – a new idea might convince a person to be a
potential sponsor.
2. Put in the marketing effort – be sure that the product and price are correct, and the
quality of the event is widely known.
3. Clearly define the type of market – specify the type of market – if the participants are
rich, middle-aged, or young people.
4. Consider changing the nature of your activity, event, or promotion – adapt the event
to suit the sponsor’s idea, desires, and requirements.
5. Access your sponsors through the
Chamber of Commerce or the Rotary Club.
6. Assess respective images – sponsors must be compatible with the event and
participants.
7. Approach unlikely targets – approach somebody who has not sponsored an event
before.
 8. Do the necessary research – do detailed research using the media and the local
library.
9. Check existing sponsors – find out what active companies are already sponsoring.
10. Get media support – the support of media is needed to attract sponsors.

How to Make the Sponsorship Work

Sponsorship can be very worthwhile. Both parties must work to make it effective. The MICE
organizers must not promise what they cannot deliver. The technical skills and knowledge of the
organizers must be used in the planning and delivery in order to make the sponsor’s support
justified.

The Bidding Process

The bid is a proposal to host an event. It is the most critical marketing tool in obtaining
business. The bid should answer all the needs and requirements specified by an organization in
a clear and concise manner. This bid may be presented to an individual, a small committee, a
board of directors, or a general assembly of hundreds or even thousands of people. The
presentation may take place when decision makers visit the city, or it may take place in another
location. The presentation may be given to a client who is well-known by the bureau or to a
relatively new client. Each bid presentation will have it’s own unique character depending on
the potential client and character of the bureau. The following are important in the bid process.

Preparation
1. Ask for a copy of a “bid form” or information regarding the specific requirements of
the organization. The bid form is a document that gives a detailed explanation of the
requirements of the association in hosting a meeting. It could be short or long.
2. Research on the history of association for the past four years. Examine if there are
conflicts and clear them with the association planner.
3. Evaluate the strengths and weaknesses of your destination from the point of view of
the planner.
4. Find out how the bid will be made; whether the association will accept an oral
presentation, a written presentation, or both.
5. Research the details of bid presentation such as location, date and time.
 6. Meet the leader of the local district to discuss the strengths of the local organization.
Make clear the role of the local leaders in the bid presentation. Found out if the
neighboring areas will support the bid.
7. Categorize the organization according to kind – social, educational, political, scientific,
etc.
8. Examine your market position. Find out what makes your destination different from
other destinations. The positioning of a destination is essential to find out its importance
as a good location for a meeting, convention, or trade show due to its being unique and
unusual.
9. Communicate with previous host cities and request them to help you in dealing with
the organization’s planner.
10. Request local representatives to help you pre-sell your destination through letter-
writing, accompanied by several photographs or pictures.

Presentation
1. Make sure the presentation document is complete and easy to read without spelling
and grammar mistakes.
2. Make the bid document personalized by engraving the name of decision makers on
the cover of the bid document.
3. Send a letter of innovation following the protocol order to congressmen, senators,
governors, mayors, local members, and the bureau.
4. In case there is a “bid form” from the organization, make sure that it is completely
filled out and contains the necessary supplemental information. Include colored
photographs and brochures that will sell your destination.
5. In case an oral presentation is needed, prepare the scripts of every person who will
participate in the presentation. Have a local member of the group open the
presentation, followed by the mayor or another high-ranking local government official.
Next, the bureau’s sales executive should make a short but detailed presentation. The
local members will end the oral presentation.

After the Presentation

 Upon winning the bid, a memorandum of agreement will be signed between the bid
proponent, which is the local association, and the international organization. Upon losing the
bid, the proponent will revise the bid and bid again.

How to Bid for International Events

For the international events, it is the host federation or national governing body that formally
makes a bid to its international federation to secure an event. Once the event is secured, and
the contractual agreement with the international federation has been made, the host
federation will have to enter into a contract with its chosen host city. The host federation is the
one that selects the appropriate venue.

Financing of Bid and Events

The cost of biding and organizing international events can often be a financial burden to the
host city. Many governing bodies require the prospective host city to fund the bid process and
shoulder the total cost of the event.

Importance of Hosting International Events

The significance of hosting international events can be seen from the way events stimulate
the local economy through multiplier effects. These events can contribute significantly to a city’s
overall economic regeneration plan. The expenditures in the city by participants, spectators,
officials, and visitors will boost the local economy. Hotels, restaurants, clubs, shopping centers,
and local transportation, will all benefit from the event.