One important detail of event planning and, especially, general management is growth from year to year. In a business where you sell a product or service and have fixed costs it is considerably straightforward to view annual growth. Alternatively, in events where a majority of costs are variable it can be more difficult to see growth or an increase in profit on a particular project from year to year. In this article we will explore how to create and use an event forecast to aid budgeting, realizing profit from year to year or event to event. We will take a look into best practices when forecasting as well.

How to Create a Forecast

A budget forecast may be straight-forward but there are some things that any good forecast should include. As in your budget, the forecast should be thorough and include any possible revenue stream (tickets, sponsorships, etc.) as well as costs that may arise. This will give you the most well-rounded picture of the amount of costs the event or project will incur. By having such costs laid out well, you can more easily create a realistic range of revenue to create profit when your event concludes. 

To go a bit more in-depth about the revenue range, this step must be one of two things. First and foremost, it should be realistic yet ambitious. The lower part of the range should be a reasonable worst-case scenario. As such this should be projected as enough to cover costs, include some profit, and be as large or 2% to 3% larger than the year prior (where applicable). The middle point of the range should show more revenue, resulting with anywhere from a 5% to 7% increase in final profit from a prior year. This is going to be a comfortable goal for the sales team, something that should be attainable but with room to grow. The high end of the range will have the most amount of both revenue but also show the largest option of final profit. To make this end of the range reasonably attainable, you can expect to show 10% to 15% growth from years prior. The outlined forecasted growth rates may seem small but for a small event team, this can be a monumental goal. Finally, the second thing your range should be is all-encompassing. As such, you want to include costs alongside the potential revenue. At the end of the day many costs for events are variable and based upon how many people buy tickets and attend the event. To accurately forecast profit you simply cannot exclude forecasted costs.

Comparing Budgets and Forecasts

You may be wondering, “Why is comparing the budget to the forecast so important?” It is a great question, and completely understandable! In short, we want to make this comparison throughout our planning journey in order to remind ourselves and our team of the goals we set and the potential of the event. Event planning (and overall project management) is stressful, and as time progresses it can be easy to forget initial plans and ideas. Let this comparison act as a guide for the times when you feel a bit lost, need some reassurance, or want to clarify opportunities with your team.

The forecasted range of revenue and outlined costs can be compared to your budget as your planning progresses. Comparing your forecast to your budget can enable you, your team, and stakeholders to set goals for sales, planning deadlines, etc. Not only can you set expectations by comparing your forecast with your current budget, but you can also make difficult decisions when needed. For example, if your team is struggling to sell tickets to your event using the forecast versus the current budget can assist with making the difficult decision to downsize or cancel the event. 

How to Optimize your Forecast

Now that we have gone through best practices when creating a forecast and why it is important to use your forecast in comparison with your actual budget, let’s talk a bit about how to optimize your forecast. Part of optimizing your forecast will be to create it using the best practices outlined above and continuing to use it in comparison to your active budget it as you plan your event. The other part of optimizing your forecast is to use the document in the early planning stages of an event or project. Let’s explain: use your forecast to understand how many speakers you can invite/pay for, how many sponsor booths you can accommodate, or how many people you need to feed in order to get quotes from caterers. Needless to say as you are beginning your planning efforts and the numbers you originally forecasted do not seem realistic anymore, it is ok to tweak or change them a bit to get a realistic idea of what the event can become or what may be needed.

Conclusion

A budget forecast is an important tool, regardless of the type of event or project you are organizing. When you do not put enough time or energy into a forecast, you could be setting yourself up for failure. This is so because this is one of the first steps you take when planning an event, by skipping such an important outlining step you are putting yourself at risk for things such as miscommunicating with your team or not knowing how much you are able to spend on a piece of the event. Having this document allows you to compare your team’s actions and take action when and where needed.