As discussed in another post, an event’s financial outcome is only one factor to consider when assessing an event. Today’s post takes a closer look at how to use Profit and Loss (P & L) statements to measure an event’s financial health.
- Tie expenses to each specific occurrence of an event, even if the expenses occur in a different fiscal year than the event itself. This allows you to assess each event occurrence on its own financial merits.
- Code expenses to different categories to provide a better look at how you’re spending our money. Category examples should fit your event and organization, but could include:
- Office/Printing/Postage
- Advertising and Marketing
- Travel
- Honorarium
- Supplies
- Miscellaneous (a catch-all category…don’t use it for too many items, but it’s usually helpful to have it for one-off expenses, etc.)
- Separate program fee revenue from other revenue. This allows you to determine how the event would fare on program fee revenue alone as well as reflect on what other supplemental revenue streams (ex: merchandise sales) you might want to consider. When considering supplemental revenue streams, remember:
- Providing value for attendees is important.
- Fostering a perception among your attendees that you are providing value is vital. Beware of creating a “nickel-and-dime” culture.
- Merchandise with event information (ex: t-shirts, bags) can provide a financial benefit of advertising as well as strengthen a connection between the participant and the event. Perhaps these benefits even justify providing some items free of charge rather than selling them.
- Include attendance figures.
- P & Ls show each event’s margin (bottom line divided by revenue).
- Keep historical data so you can view an event’s financial outcome in the larger context of how it’s done in other years and explore reasons for significant differences.
Update the P & L monthly, to track an event’s financial health both before and after it occurs. Also take a more in-depth look in an annual “fully allocated” P & L in which you include the program revenues and expenses as well as estimates of labor costs within your office (based on how much time each individual spent on that event). This provides a more detailed analysis of an event’s financial impact to your company and your stewardship of the resources required to plan and hold it.
So, how do you measure an event’s financial health? What ideas can you share?
The post When The Bottom Line Is The Bottom Line appeared first on Ministry Serving Ministry.
