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Budgeting and Costing


Budgeting and costing involves estimating both income and expenditure and then setting a maximum for expenditure, having allowed a margin for error and perhaps also for profit.
This is a crucial part of putting on an event and, if ticket sales are involved, will inevitably mean making a leap of faith in estimating what your income will be. This is not a time for blind faith and believing it will all work out well, because you’re doing it for such a good cause. If you are to avoid ending up seriously in debt, your estimate will need to be based on a rational appraisal of the potential for ticket sales, given the venue and whether or not sales will be influenced by the weather, by competing events and by how much time, money and expertise you have available for investing in publicity and marketing.
We suggest you start by estimating your income.


INCOME can be from
1) Sponsors: Sponsorship can be in kind or in cash. If a sponsor agrees to, for example fund a stage or a tent, ensure that they know in writing, absolutely without doubt what it is they will be getting, how much it will cost them and - importantly - what they will get out of it in terms of advertising, free places, public visibility, and the intangible benefits of being associated with your project, Agree whether they will be paying direct, which can have VAT and tax advantages or whether they will be paying yourselves.
Ensure you know the actual value of in-kind. This will enable you to use it as match-funding against some kinds of grant. many companies may be happy to give you some use of their existing people, power, resources. They may even second someone to work with you.
Ensure that the sponsors will be kept informed at every stage without inundating them with minutiae.
While in-kind is good and can save you money, it is no substitute for some real cash...


2) Donors
Apparently Philanthropists in the Arts are the coming thing. let us know if you find any .(grin)


in the meantime, Arts and business are an organisation who are co-ordinating activity in this area. (maybe links could go into a left hand column alongside the appropriate section under a similar heading. This can help when it comes to finding them again at a later date)

3) Ticket Sales
These must be priced according to a complex discussion about the trade off between covering costs / making surpluses for your charity and the perceived value you are offering. Overpriced tickets can be counterproductive and lead to low sales.
It may be possible to arrange for an existing booking office, such as those at The Mercury and Headgate Theatres and The Arts Centre to handle advanced ticket sales for you. Aim to do this if possible, because you will inevitably sell less tickets if you rely on door sales only and it gives you chance to call the whole thing off if advance sales are very poor.


4) Bar, Stalls and Catering
This is a major but totally unreliable income source. Expect to do a deal with small caterers and stallholders which may take the form of either a fixed fee ranging from £10 a table for a family day to £35 per small stall or a percentage of their takings. Small caterers and traders do not baulk at 10-15% but are not always as straightforward in their dealings with you as you might like. If they need you to provide them with a stall, water or power, make a charge for this.
The bar is always a problem. On a good day, or on a rainy day if there is a big crowd they will do well, but for a small crowd on a rainy day they might even lose money. A percentage is the way to go, but insist on everything going through a recording till and check every now and again. The agreement should cover the percentage, their level of service and staffing, and specify that they must supply their own equipment, plastic glasses, and door staff with SIA certificates and communications.


Some suppliers will offer you their bar as a 'free service'. While tempting, always expect payment. Others might ask you to pay for stock in advance, especially if they are unsure of numbers, and want to share the risk. You must discuss this carefully with them and make a judgement.
See also the example permit to supply alcohol issued by Colchester Borough Council and the licencing information
5) Advertising sales in programmes. This is a good way of covering the printing costs. Divide the printing costs by the number of pages available for advertising, and then try to sell it by the page, half page, etc. However the outside back cover is worth twice as much as an inside left hand page. Draw up a rate card, but always discount it. Do any deal you like to get cash in, but its not a good idea ever tell anyone how much anyone else has paid. Clients should provide camera ready artwork in form of a .pdf or .jpg file. If it is in any other form, make a small charge for making their advert up for them.


6) Expertise, consultancy and goods and services given in kind


Arts Council England have a good example budget sheet downloadable fromhttp://www.artscouncil.org.uk/information-sheet/example-budgets-grants-for-the-arts/


Cash Flow.

When will you need the money? Do you need it all up front?

This cash flow forecast should be though about at the beginning of the process. Cash flow is one of the most important aspects of running any event - large or small. It is one of the single most important reasons why many events fai.l Managing cash flow therefore is vitally important in the smooth running, survival and success of any event


You need to work out when you will need your money, who wants paying in advance, and whether you can arrange to pay later. There is an excellent documentpublished with permission by Comdex, a commercial consultancy working in the field of conferences, here.


GRANTS

Sources of grants funding


Grant net Your local Council , library or Citizens Advice Bureau may be able to offer free access to this great website.
Arts Council workshops If you apply for an Arts Council Grant, you may be able to get a place on one of their regular funding workshops.
Local Borough advice : Your local Council will usually have an officer who will advise you on any grants available locally. In Colchester this is done through the Regeneration Office.
Essex Arts workshops

OUTGOINGS
Your budget


This will almost inevitably be a provisional one to start with until you know how much sponsorship and grant funding is going to come your way; so working out the basic costs of the event will give you an idea of how much this budget will need to be if it is to be financially viable. Estimates for income and expenditure will change as the event takes shape and hopefully will begin to firm up in the process. But the crucial thing here is to ensure that the estimated income always exceeds the planned expenditure.
As you begin to plan your event, laying out your proposed expenditure on a cost sheet will allow you to clearly see what items can be included and still keep you within your budget. Don’t wait to find out at the end of your event that you have greatly exceeded your budget projection.
Since each event will include different things there is no set formula or format for a cost sheet.
 However there are certain areas in which the headings fall.


1) Venue Costs, Hire of premises, electricity, staffing
2) Management costs, heat light telephone, office costs, consumables, photocopying
3) Infrastructure costs: Tents and marquees, fencing, tables, chairs, radios, Uniforms, hi-visibility shirts, printed tee shirts, clipboards, radios, rubbish removal and cleaning, radio hire, Stages, lights, PA systems (dont forget the VAT)
4 ) Legal and othe fees Insurances, Public Liability, Employee, Hired equipment, vehicle etc. Licensing fees, PRS, road closure fees, street cleaning fees imposed by Local Authority
5) Performers costs and expenses, including travel, parking costs, their VAT if appropriate
6) Monitoring, documentation and evaluation.
A good hint is to mentally walk through the entire project, looking at what you are planning, and imagining how everything you visualise got there and what is costs.


As far as possible ALWAYS GET WRITTEN ESTIMATES, spelling out what is included and what is not. Use an Excel file where possible and always save any changes as a separate document so that you can go back in time where circumstances change.
As final bills come in compare them with the budget. There may well be some hidden surprises such as VAT which is often overlooked by the unwary.