Managing Budgets and Financial Plans - EVENTIS Company - Case Study Example

Managing Budgets and Financial Plans Organization The company, EVENTIS is an event creator, organizer and manager. It has organized various events in its short history of 8 months and has come to be known as a very competent company. The company’s portfolio includes organizing events such as weddings, concerts, gigs, conferences, seminars and the biggest event as yet, the Australian Cultural Festival. In this short span of time, EVENTIS has gathered a force of 400 young, talented and highly motivated employees through its friendly and goal oriented work environment. The satisfied customer base is increasing day by day and the future looks bright for EVENTIS at least for the near future. The Event EVENTIS is preparing a budget for an upcoming musical event. This event will be a rock music concert held in Sydney at “The Basement”. The client who has dealt with EVENTIS many a time before is offering a sponsorship and has handed the reins to the company to organize the event. Preparing the Budget – Data Collection The initial budget was prepared by EVENTIS by looking at past experiences and through gaining information about the source. The quotations about the venues, the price charged by performers, the costs incurred to hire additional staff etc was all done through interviews and meetings with the respective authorities. Incomes Income is to be generated through two basic sources. One is through the sale of tickets to the show. The price per ticket is kept at $20 judging from the demand and supply curves for the people coming to the concert. Other primary source is through the sponsorship provided by the client. This price was negotiated and then finally agreed at $9000. Other sources of income are the sale of programs, CDs and other merchandise which is expected to fetch around $2000 as a whole. Expenses The main cost of the event comes from the hiring of “The Basement” and the money paid to the performers to perform their gigs. The venue is expected to cost $5000 while the performers that will probably include INXS, Savage Garden and The Saints and a special performance by Kylie Minogue will take around $5000 as well. Other costs that have a high bearing is the insurance, hiring of an alternate venue as a preventive step, the hiring of personal assistants, setting up an emergency team and the stage and lighting affects creator will cost approximately $7000. These figures are based on estimations received through the meetings and quotations achieved from the performers and the vendors. Budget for the Rock Concert Income     Total Costs Total Profit/Loss Total 20,350.00 Total 20,115.00 $235.00 Quantity Price Venue Hire $5,000.00 Alternate Venue Hire $1,000.00 Ticket sales 425 $20.00 $8,500.00 PRS License $1,000.00 Programs 80 $5.00 $400.00 Insurance $1,500.00 CDs 100 $12.00 $1,200.00 Merchandise 250 $5.00 $1,250.00 PA Hire $2,000.00 Lighting $1,000.00 Sponsorship $9,000.00 Bands/Performers $5,000.00 Grant $0.00 Hosts $100.00 Door Staff $0.00 Security $500.00 Emergency Team $1,000.00 Print Tickets $250.00 Flyers $50.00 Posters $100.00 Artwork $0.00 Advertising $500.00 Miscellaneous Phone Calls $10.00 Postage $5.00 Petrol $0.00 Parking $100.00 Catering $500.00 Time $0.00 Other $500.00 (Kevin Harrington) [1] The profit is projected to be $235 for the project which will be one of the highest for a concert event on this scale. This figure is fairly conservative in nature since most if the possible emergencies have been taken into account and separate provisions have been kept for them. 1) Communicate the budget or the financial plan throughout the organization Experts Involved For the purpose of correctness in estimations, financial experts from accounting companies were consulted in proper measuring of monetary values. The auditing company responsible for the overview of financial issues remains with the company and guides in any legal and financial issues that may arise in the course of the event. Teams For the purpose of assigning responsibilities to the employees, the component parts of the budget were divided into several segments. The employees were then integrated in to teams who managed different aspects of the event. The different teams were marketing sales setup lighting event coordination safety band liaison Allocation of Budget to Team Members After the allocation of the budget, the event manager divided the budget and assigned the due finances to the respective teams. The break up of the budget was done as shown below. Teams Budget($) Marketing 650 Sales 265 Setup 8500 Lighting 1000 Event Coordination 2600 Safety 1000 Band Liaison 5000 The team members chosen for this task were specialized workers and were given the tasks that they were most competent in. These teams worked on the horizontal platform where these teams worked at most time as cross-functional teams. The level of communication was kept high at all times and this aspect of communication was deemed very important by the event manager. The employees were given this specific budget though ups and downs were expected to occur. Consultation from the employees was also sought at the time of making the budget as to get an accurate financial plan. The pre budget meeting was the ground where this planning was done. The employees were asked to clarify any queries that may arise. The employees who were new to the event management were given training as to clearly identify individual goals and how to go about achieving them. Feedback from the Employees As a final communication strategy, the employees were asked to submit a written report as to what they have understood from the budget meeting and about their responsibilities. Then the team leaders were asked to present to the event manager their solutions and way-to-go to achieve their teams task. This important step was taken to ensure that all the responsibilities of the employees were clearly understood and what their ideas were to achieve their targets. 2) Monitoring and controlling activities against the budget or the financial plan Distributing Funds After the budget allocation, the allocated money was distributed to the team leaders so that all cash transactions could be completed on time. As for the credit transactions, the employees would make them on the behalf of EVENT. The team leaders then assigned each member of the team with specific responsibilities and distributed the allocated budget for each of the employees. On the actual day of the event, the event coordinator verified whether all the employees who had been allocated the specific jobs were performing them and what problems were they facing. Management of Information As mentioned before, the companys accounting agency remained with the company staff at all times and especially looked into legal matters of the event. Cross checking of laws and financial regulations were given due importance and the event manager himself dealt with the accounting agency to clear out any legal requirements. Booking pf the venue and taking permission from the state authorities was one of their jobs. Risk Mitigation and Contingency Plans Since budgets are just estimations based on some accounting formulas, it can always deviate slightly from the predicted figure. Taking into account this very fact, EVENTIS prepared alternative plans as well if the primary plan could not be performed due to some problem. Hiring of an alternate venue, allotting $500 under the head of unforeseen event were some of the financial plans the company kept for provisions. Since EVENTIS is an experienced company, this allotment of money was based on their predictions for unforeseen circumstances. However during the course of the event no such incidents took place. However smaller problems and mistakes cannot be foreseen. For problems such as time delays, the hosts requested to inform the audience the exact situation. Other problems such as crowd control, the security additional security had to be brought in. Restructuring Budgets Due to the time lag between when the actual budget is made and the time when the actual work begins, several changes occur to the budget. These changes are usually in the prices of the items and the quotations gotten before as usually changed. Therefore a restructuring of the budget is often done to make one such budget where reality is not that far away from reality. In the scenario created, the one of the changes that occurred was in the cost of printing tickets, posters and other artworks. The cost for this expenditure rose from $400 to $750 making a difference of $350. This was basically caused by the sponsor’s requirements for more posters. On a positive side, discussions with the sponsor led to an increase in the sponsorship amount received before. This increase was made in order to provide for a better catering service since the other service wasn’t as good as expected. The restructuring of the budget is a regular and continuous change which comes and goes with each passing day. Just before the start of the project, the restructured budget stood like this. Identifying Variances in Budgets Due to some unforeseen events, the actual expenditure and income slightly differed from the budgeted expenditure. This is shown below Actual Incomes and Expenses Income     Total Costs Total Profit/loss Total 22,452.00 Total 22,274.00 $178.00 Quantity Price Venue Hire $5,000.00 Alternate Venue Hire $1,000.00 Ticket sales 394 $20.00 $7,880.00 PRS License $1,000.00 Programs 64 $5.00 $320.00 Insurance $1,500.00 CDs 86 $12.00 $1,032.00 Merchandise 244 $5.00 $1,220.00 PA Hire $2,000.00 Lighting $1,000.00 Sponsorship 12,000.00 Bands/Performers $6,000.00 Grant $0.00 Host $100.00 Door Staff $0.00 Security $1,500.00 Emergency Team $1,000.00 Print Tickets $350.00 Flyers $150.00 Posters $200.00 Artwork $50.00 Advertising $550.00 Miscellaneous Phone Calls $10.00 Postage $4.00 Petrol $10.00 Parking $100.00 Catering $500.00 Time $150.00 Other $100.00 (Kevin Harrington) [1] Other extra cost that had to be incurred in the course of the event included costs that had to be paid for the extra security called to control the crowd. Other than this the sales of tickets, merchandise, programs and CDs were over budgeted and their actual sales were way less than the predicted. The event manager contacted the sales team leader to find out the reasons for the low amount of sales. The team leader then made a thorough investigation to find out the personals responsible for the sales debacle. The result of the investigation was sent to the event manager and the reason found out was that there had been concerts of these artists just a week ago and the demand for these artists had been lowered due to that concert. Other variances in the budget were positive and they occurred since alternative plans were not required to be used. These included lower costs for alternate bands and miscellaneous items. The actual profit for the event was $178, $57 less than the original budgeted amount even though a conservative amount was kept. 3) Report outcomes of the budget or financial plans Analyzing the Budget A complete analysis of the budget and the actual figures was performed to find out the areas in the accounting side to find out which area needs to be monitored more closely and which area is not performing well. In the current scenario, it was found that the economic side of EVENTIS was at a fault. It could not anticipate the demand trends and gave a thumbs-up to the event. If the economic feasibility would have been done more thoroughly, then they could have postponed the event for some other time when the demand for a concert of these artists would have been higher. The director of EVENTIS was informed about the inefficiency of the economic department and conforming to the strict policy and commitment to the goal, the department responsible of was penalized for the over looking of the fact. Reporting to the Audience After the analysis of the budget and the actual plan, a complete report was submitted to the sponsor detailing all the aspects from the point of view of the sponsor. The benefits to the sponsor from the event were identified and a formal report presentation was given. Benefits such as more customer awareness and interest were highlighted. In the presentation, the sponsor was shown where their banners and posters were placed and how they were viewed by the audience. They merchandise sold all had the sponsors logo and name on them so that the customers would always remember the sponsor. By creating a event that connected the audience with the sponsor’s concept, the marketing goal of the sponsor was completed. Storing Records for Future Reference The complete reports prepared by the auditing agency were then kept in a repository for further processing and then finally stored in the database. This can be used for future references and can be compared with similar projects in the future. It can then be used to make trend forecasts and make more accurate predictions. Non-Financial Objectives With each passing of an event, it tries to build goodwill with the sponsors or the customers in order to gain more business from them in the future. Creating a good experience for the customers and fulfilling the needs of the sponsors is the basic aim of the company while making enough money to keep the company running alive and well. The benefit of satisfying the clients is that they keep coming back to the company for future orders and recommend EVENTIS to others as well. For this very reason, advertising expenditure is low and marketing through ‘word of mouth’ matters most. Learning from the Experience Each new event is an opportunity to gain further knowledge into the event creating world. Since creating events is a very creative thing, the experience of the employees counts very much. The more work the company does for its customers, it will get better at analyzing the situation before hand and predicting the budget and the problems associated with it. Therefore EVENTIS places high importance on its experienced staff members to act as mentors for the newly hired employees. And because of this nature and the keeping a friendly atmosphere at the work place, EVENTIS is growing company which is one stop solution for all kinds of event management. Work Cited 1) Kevin Harrington, “Blank Work Sheet”, Josaka, Available at , Accessed on June 7, 2007. Read More