ESVET_Unit3_EVENT BUDGET ELABORATION_Presentation by AKETH

EVENT BUDGET ELABORATION Learning Unit 3

This project has been funded with support from the European Commission. This presentation reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

Overview

The ESVET Project Event Management is chosen the one of the most popular 50 careers on employment outlook in the world. Event Managers are both self employed small business operators, and employees of larger organisations such as: wedding venues, hotels, resorts, exhibition companies, concert promoters and conference organisers. 95% of the Event planners in Europe do not have a certicate from a training programme. Their skills come from their work experiences. Most European countries lack qualicational coherence, standards, and training/teaching paths. Within the EU, only the UK and Germany have some kind of national standards recognized both by industry and public authorities on event management. Answering the needs of European-wide Event Managers, this project will establish an ECVET platform in order to design a path towards European standard for Event Management enhancing the mobility of workers within the cultural sector. This project contribute the recognition of abilities of adult learners which were acquired outside the formal (national) vocational education and training system such as in other countries’ VET systems, on the job, during work or study periods abroad, within in-company training or learning taking place during leisure time becomes more and more important in the light of skill shortages and skill mismatches.

Who can use?  

Current workers in Event Management Sectors Teachers and Trainers

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ď&#x201A;§3 Unit Objectives Actions / Achievements Develop a budget for a specific event Knowledge

Skills

Comprehensive on event financial control Fundamental knowledge on basic budgeting rules Specialised knowledge on budget elaboration specific to different event types.

Distinguish different concepts to include in budget elaboration identifying their main characteristics (item, estimated cost, actual costâ&#x20AC;Ś) Define the right questions to be asked to figure out the requirements of an event in detail. Develop detailed/tailored event budget including each item regarding the specific requirements of an event.

Competences

Forecast the costs precisely resulting in quite close to real costs Manage others in a line compatible with the budget Autonomously adjusting the budget in accordance with the unpredictable situations/costs Realize improvements in their own work transferring previous experiences into the work in development

Summary of the Unit

4 In the third module 'budget' you will have the areas you need to pay special attention to in the organization of the budget, the financial literacy, the detailed analysis of the budget types and the areas you can act strategically

In the third module 'budget' you will have the areas you need to pay special attention to in the organization of the budget, the financial literacy, the detailed analysis of the budget types and the areas you can act strategically

Overview

ď&#x201A;§ In this module, before performing your budget work within event management ,you will encounter practical examples as well as a lot of information about the topic and skills you already have available, Before you know a topic, you need to know its history and learn with its story, so you will carry out a study of budget history, description, aim and type.

Overview

Topics include about the unit:

 Financial Literacy and Money Management  Budget History and Budget Definition  Budgeter’s Goal  Budget Types  How to Budget Budgeting Process  How to Budget Budget Preparation Techniques  How to Control Budgetary Features of a Good Budget  Conditions for Successful Budgeting  Budget Types  Financing Resources for event  Strategic Management, Strategic Planning and Budgeting Relation

Financial Literacy Where does money come from?  One things for sure, it doesn’t grow on trees!  Even though we wish it did.  How money is printed This project has been funded with support from the European Commission. This presentation reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

Financial  Do you currently  Do you currently have a savings have a savings Literacy  

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account? Do you currently  have a checking account? Do you plan on  owning or currently own a car?  What is a good interest rate for a car loan? Do you plan on  owning a house one day?

account? Do you currently have a checking account? Do you plan on owning or currently own a car? What is a good interest rate for a car loan? Do you plan on owning a house one day?

Financial Literacy  Revenue—what you earn  Expenses—what you spend  Net Profit—total revenues minus total expenses  Net Income—same as net profit  Depreciation—reduction in value over time  Appreciation—increase in value over time  Equity—ownership in a company

Financial Literacy

 Vesting—earning equity over time instead of all at once  Asset—something you own that has value  Liability—something you owe for  Balance—the difference between credits and debits in an account  Bond—debt instrument through which companies and governments can raise money

Why study financial literacy

 The state says we need to!  The number of foreclosures and bankruptcies are increasing.  Unemployment continues to be unstable.  Credit card use has gotten out of control.  You have the chance to be smart with your finances from the very beginning!

History of budget

• The budget is a financial plan for the future time • • •

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period. On the other hand, the Investment Budget includes long-term projects targeted by the organization. Both public and private sector organizations deal with budgeting. Governments start with the planning of revenue sources, the amount of tax revenues, the revenue from projects and legal sanctions, based on budgeted needs and community print. The public institutions prepare their budgets depending on what expenditures can be made according to their accounting records. This project has been funded with support from the European Commission. This presentation reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

What is budget?

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The budget is a quantitative plan of operations that ensures that the resources needed to achieve the organization's goals and objectives are identified. The budget includes both financial and non-financial aspects Budgeting is a kind of planning work called budgeting. . It consists of the main budget, the operational budget and the financial budget. Operational budgets ensure that the resources to be used for operational expenses are identified Operation budgets includes; production budget, procurement budget, human resources budget and sales budget

What is Budget?

 Personal budgets include an estimate of our incomes and expenses.  Business budgets are more complex.  They express the business objectives of the organisation.  Event budgets are event plans.  Financial considerations must be planned for in minute detail to ensure positive outcomes.

Purpose of the event budget

 The ability to predict and monitor event costs is a critical aspect of event management.  … Rapidly escalating costs can signal disaster for event finances and cash flows. … As well as reducing overall financial performance, cost blow outs can lead to significant cash flow problems.  Due to the uneven nature of cash inflows and outflows, the potential for cash flow problems is ever present

Purpose of the event budget

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The ability to event revenue is also critical … Sluggishness or poor performance in terms of ticket sales, sponsorship or other revenue raising activities can signal major financial and cash flow problems. The event budget is a simple and effective planning and control tool. When used effectively, it helps the event manager to predict event finances and cash flows, and then keep them on track. Event budgets are effective planning and control tool. The purpose of an event budget is to: predict and monitor event costs and revenues provide financial objectives for evaluating performance facilitate awareness of cost reduction opportunities create awareness of financial position for stakeholders create a control system facilitate planning for future events.

Types of Budgets

Zero-Based Budget: The Zero-Based Budget starts at zero point for each budget item and exposes and justifies the money used for the department expenses. This method was used in the United States and several countries in the 1970s, but this method has been abandoned because of the large number of bureaucracies that were created and unusable.

Kaizen Budgeting: This concept comes from Japan, open-to-transparent demanding is a budgeting technique that covers all expected investments based on a continuous improvement perspective.

Activity Based Budgeting: The activity-based budgeting system focuses on the costs of the activities undertaken and the cost of any action that is a financial value, either for production or sale. There is a point of view that facilitates continuous improvement

The Budgeting Process

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Environmental factors … Forecast of revenue sources such as ticket sales … Consider effects on revenue streams: …Economic climate …Trends for event type …Market research …Revenue from previous events …Change from previous events … Forecast of expenditure needs to undertake the same forecasting.

The Budgeting Process

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Levels of uncertainty … When developing a budget, considerations that relate to uncertainties about future revenue may at times, be disturbing … It may, for example, be necessary to broaden the revenue base in order to address current levels of uncertainty … A greater awareness of areas of uncertainty or vulnerability in terms of revenue generation is one of the key benefits of budgeting.

The Budgeting Process

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Levels of detail … The level of detail required and categorisation of various revenues and expenditures is an important concern in the construction of event budgets … The number of different revenue and expenditure categories should be determined primarily by the need to control or influence them … The needs of stakeholders must be taken into account when determining levels of detail.

The Budgeting Process

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Budget objectives … To change or not to change? … Budgets are mechanisms to ensure sound decision making … Stakeholders need to be considered before change is made. Ongoing communication with stakeholders … Continuous communication reduces the likelihood of major problems down the track … Awareness amongst stakeholders of key financial outcomes represents an important benefit or by-product of the budgeting process.

The Budgeting Process

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Budget review … Regular monitoring of the budget is recommended … If expenses are above expected levels, measures must be taken to control costs … The ability to recognise variances and take corrective action at the appropriate time represents one of the key benefits of budgeting.

The Budgeting Process

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Future budgets … Easier to develop realistic budgets with experience … Financial discipline with budgets increases over time … Event budgeting process is summarised here: …Analysis of environmental factors …Assessment of levels of uncertainty …Forecasts and categorisation of revenues and expenditures …Budget drafting and assessment against objectives …Distribution of budget to stakeholders …Negotiation and finalisation of budget …Regular review of budget …Collection of information for future budgets.

Breakeven analysis

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Budgets can be developed in terms of revenue or breakeven points. Breakeven point is where all costs are covered by revenue. Additional revenue = profit. Calculating breakeven points require knowledge of: … Fixed costs …Same cost no matter how many tickets are sold …Example: cost of a guest speaker or salaries for event staff … Variable costs …Costs that change dependant on how many tickets are sold …Example: food and beverage.

Breakeven analysis

Income strategy

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Income varies dependant on the income strategy. Sponsorship … Level of sponsorship reliant on stakeholder views … Very important to some event types. Grants … From local, state and federal government bodies. Licensing of product sales … Can generate extensive income … Events managers need to make agreements with manufacturers or distributors for a share of profits.

Cash flow consideratio ns

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Related to pattern of income and expenditure. To avoid cash flow problems: … develop a cash flow timing chart … delay expenditure as long as possible … gain information about supplier terms … maintain close control over expenditure … design income strategies to bring forward revenue streams.

Review of the budget

 Things do not always go to plan!  Unanticipated expenses, budget blowouts, etc. usually result in an unfavourable change.  Budgets are the ‘best attempt’ at anticipating financial movements for an event.  Constant reviews of the budget increase the likelihood of issues being detected.  Control measures and corrective actions can then be implemented to reduce loss.

About the future budgets

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Forecasts may be inaccurate due to lack of information. Past experience is useful, but new and unanticipated factors must be considered. Three approaches to anticipating costs: … Top-down … Bottom-up … Parametric.

Managing an event budget

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The effective management of an event budget involves: … Constantly monitoring the budget to identify variances in expenditure or revenue … If actual expenditure exceeds budget expenditure, corrective action is required to: …reduce costs, or …increase revenue to offset cost increases, or …A combination of both … Where expenditure problems have occurred, greater levels of detail may be required in the future to more closely monitor the situation and identify areas of concern.

Managing an event budget

… If actual revenue falls short of budget revenue, corrective action is required to: …Increase revenues …Reduce costs to offset revenue losses …A combination of both … Where revenue problems have occurred, alternative sources of revenue may need to be identified. … Based on past experience, event budgets must be constantly reviewed to ensure they are realistic.

Summary

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Budgets are one of the most fundamental planning and control tools for event managers. Effective budget management allows for planning of finances. Cash flow issues can be avoided. Allows for revenues and expenditures to be monitored and controlled. Budgeting relies upon examination of environmental factors, levels of uncertainty, forecasts and categorisation of revenue and expenditure. Managing a budget involves constantly monitoring expenditure and revenue, taking corrective action as required, and reviewing budgets to ensure that they remain realistic.

Thank you!