February 7, 2013

Convention Accounting 101 - Budgeting

When it comes to accounting, running a convention is pretty much like any other business.  Yes, there are some things that are unique to cons, but pretty much all business comes down to income vs. expenses.
Seems pretty straight forward, huh?  And, frankly, it really is.  The most important thing to remember is that your books (accounting, not your SF library) have to end up with more money coming in than going out... kind of like your check register.  For those of you who don’t know what a check register is, ask someone who is over 30 years of age.  Have them explain having to manually keep track of your income, and checks written, in a check register.
To help you manage your books, I suggest either getting a program like Quick Books, or utilizing a spreadsheet program like Excel.  If you go the route of spreadsheet, make sure to track your income and expenses separately, but also have a summation page that compares the two.
To begin your convention, you will need to start with a budget.  Simply put, you need to record everything you expect to spend money on, as well as everything you think will generate your con income. 
Expenses
For expenses, you literally to need to add in projections for everything from pens to airlines tickets.  If it costs money, you need to have a “line item” in your budget.  You may be able to circumvent certain expenses (I know people who used to make copies of fliers at work, for example), but until you are absolutely certain that something will not cost any money, it needs to be in your budget.  Some sample items might include: paper, pens, laminate for badges, hotel rooms, PO boxes, airline tickets, hotel convention space, consuite food, etc.  If you have never created a con budget, you might want to enlist some experienced help.  Barring that, you might try to see if a successful convention will let you have a peek at a previous year’s budget to get you started. 
No matter how you create your budget, my primary advice on expenses is that you need to be liberal in your projections.  Cons often fail because of unforeseen expenses.  If you have some “padding” in your expense budget, you might find that useful later on.
Income
Income is not nearly as complex as expenses, and thus many people consider it the easier part of the budget.  I don’t.  To me, the hardest thing to do is to try to come up with a solid projection of income.  Some areas to make sure you include are registrations, dealer tables, and sponsorships.
When it comes to budgeting your income, be very conservative. If you expect to have 500 people at your con, consider that you may well give away 200 memberships.  Sounds high, doesn’t it. You have to consider a number of factors in this.  Do dealers get any memberships included with their tables?  How many total volunteers do you realistically need to staff your con?  Are you considering GM’s as part of your staff?  How many guest and companion badges will you be giving away? 
It’s been my experience that “comps” can add up quickly.  Obviously, you need to try to keep the number to a minimum, but understand that the minimum might be higher than you expect.  Of the remaining 300 memberships, many of those will be at your lowest offered registration rate.  Certainly, you will have folks pay “at the door” rates, but I typically only budget that number to be a small percentage of my overall memberships.
The next major area of income is the dealer room, assuming you plan to sell dealer spaces.  Make sure your dealer room manager has a realistic idea of how many spaces will be available to be sold.  The best way to do this is to lay out the space early on and keep the layout moving forward.  Also, keep in mind you might have to give away up to 10% of your spaces to guests.  This will seriously cut into your income.
Now we come to sponsorships.  Sponsorships are easy to budget for. Until you get one, simply enter $0.00 into the budget.
Final Steps
Once everything is in your budget, check out your summary page.  Are the expenses higher than your income?  If so, you have some work to do, either by cutting expenses or finding more income (or, most likely, some of both). 
After “tweaking” your budget, if the expenses are still higher, my best advice is to stop there and review your business model.  Most likely you will need to cancel, or at least postpone your convention… because you are truly headed for financial disaster. 
Assuming you do finally get the income to come in higher than your expenses, there is still one step you need to take.  I strongly suggest that you let someone with some convention experience review your budget. Be patient with this part.  It is not uncommon for things to unravel at this point.  That’s okay, it just means you have more work to do.
Once the budget is finalized, you can move on to actually running your con.  Keep in mind, however, your budget is going to be somewhat fluid as you move forward towards your con.  Also, you will need to replace your projections with real numbers as you go along.  Be prepared to make adjustments to keep the income higher than our expenses.  If you do that, you will mostly likely be okay.

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