Financial planning and analysis

Once the event is deemed to be viable then, before proceeding further, a more detailed financial analysis should be conducted, this requires identification of event costs and revenue streams and careful consideration of cash flows throughout the planning cycle.

The stages are as follows:

Identify and quantify all anticipated revenues.
Identify and quantify all anticipated costs.
Budgeting and cash flow forecast.
Establish the financial outcome.
If viable – proceed with the detailed planning.
If not viable – then review the EVENT DEFINITION, make appropriate changes and re-calculate the revenues / costs / outcome.

Identification of event revenue streams

The revenue streams or sources of income available very much depend on the event nature and intended aims for its staging but, broadly speaking, event income can come from one or all of the following sources:

Reserves from previous events.
Tickets/entry fees / registration fees.
Grants and subsidies.
Loans.
Donations.
Sale of Advertising sites (e.g. venue, programme, menu, etc).
Merchandising sales.
Food and Beverage sales.
Sponsorship.
Retail pitches.
Raffles, auctions and other event fundraising.
Pre event fundraising activities.
Commercial rights (e.g. pouring rights).
Commissions (e.g. merchandise, venue bar, retailers).
Television fees.
Benefits in kind (e.g. donated product, prizes, free advertising, etc).

Predicting potential revenues

Whilst it is relatively easy to identify different sources of revenue, estimating the potential revenue generated by each source is more difficult. Whilst organisers may wish to present an optimistic picture to various stakeholders, you should be as realistic as possible with potential revenue predictions. Forecasting potential revenues should be based on solid research such as past event data (ticket sales and revenues from other areas), market research to determine likely demand and should also consider the notion of per-capita spends i.e. the average amount each individual will spend on things such as food and drink and other areas of expenditure.

In addition to the amount of money to be generated through each source, it is also essential to consider the timing of money coming through each source (see further details below on cash flow).

Ticketing and pricing

Central to the revenue of many events is the ticket income, which is determined by the number of tickets sold at set rates. In order to maximise uptake and achievement of event objectives, tickets must be priced sensitively taking into account levels of competition, customer characteristics and ability to pay, product quality and characteristics. Pricing event tickets is complex and decisions surrounding ticket pricing should be carefully considered and researched.
Another ticketing consideration is that of ticket structures i.e. the extent to which tickets are priced differently for different groups of people or elements of the event which they wish to engage in. Structures could include: Single admission price; different admission prices based on age, time, group composition/size; multi-visit tickets or season tickets; free admission with charges for specific attractions or extras (parking, reserved seats, programs, etc.); admission price plus charges for specific attractions.

Once you have established your prices and structure you then need to consider how tickets will be made available to the audience in terms of box office arrangements. Tickets for a local community event may be sold through local shops and leisure facilities however, if the audience is unable to get to these outlets then there are a range of online ticket sites which are increasingly popular with event organisers.

Event costs

As with revenue streams’ costs will vary from event to event. It is essential that you identify all areas of expenditure as early as possible in the planning process and then seek quotes from at least three different suppliers to quantify required levels of spending and also the timing of cash flow. Common areas of expenditure include:

Event marketing costs – designing, printing, advertising, etc.
Venue rental – check for extras.
Furniture rental.
Staff costs (and associated expenses e.g. insurance, uniforms, PPE, catering).
Security costs.
Licensing fees.
Insurance – seek advice from a specialist event insurer.
Infrastructure – stages, fencing, barriers, toilets, track way, etc.
Waste management and recycling.
Sound and lighting equipment.
Product costs (e.g. at a catering event).
Hotel and travel costs (planning period and event days).
Artist / participant costs.
Prizes / prize money.

Note that careful selection of the venue could mean that many of the above costs are covered by the venue rental fee however, if the event is outdoors, then most of the above will require consideration.

In terms of increasing the economic benefit to the local community, consider local suppliers where ever possible. This can also give your event a more distinctive, unique and authentic feel.

Sustainability is another key consideration when sourcing suppliers, for example when selecting venues and caterers you should ask about their ethical sourcing policies. In addition consider restrictions on the use of non-recyclable or non-compostable materials. This will not only improve your environmental credentials, it could also cut your waste bill!

Budgeting and cash flow

Once you have a clear idea of the money which needs to be paid out to different suppliers and the timing of payments, you will need to balance this against the revenue coming into the event through aspects such as sponsorship, grants, existing funds, loans, etc. A cash flow forecast is one means of clearly calculating on a month by month and week by week basis how much money will be coming in and out of your events account, leading to a clear picture of finances throughout the planning process.Note that timing of cash flow is essential to prevent issues of financial liquidity i.e. running out of funds during the planning process. For most events, there is a significant amount of expenditure required in advance of the event, whilst much of the revenue will come in much closer to the event itself.

Note that timing of cash flow is essential to prevent issues of financial liquidity i.e. running out of funds during the planning process. For most events, there is a significant amount of expenditure required in advance of the event, whilst much of the revenue will come in much closer to the event itself. Also note that ticket revenues should not be used to fund expenses prior to the event in order to allow for potential refunds in case the event is cancelled. Many online ticket agencies will also not allow you to have access to the ticket money until after the event has been staged.

Sources of grants and funding

Depending on the nature and potential impacts of the event being hosted, different sources of grants and funding may be available to you.

One source of potential funding for larger events is the Welsh Assembly Major Events Unit, to find out more information or to make an application to the Major Events Unit.
Other sites which can assist in the identification of available funding include the following:
www.grantnet.com, www.grantfinder.co.uk

Events Management Toolkit Contents

Organisational Structure