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Race Budgetting
Part 2: Be conservative when guesstimating
If you are a first-time event organiser, or if you are organising a new race, you will have to make three vital estimations about key aspects of your budget. According to Race Directors HQ, these "guesstimations" are likely to be crucial in determining a profit or loss from your event, so think carefully before making any assumptions about the following:
1. How many participants you expect to enter your event?
2. How much things are going to cost you?
3. How much income you will be able to get from sponsorships?
These three assumptions will largely determine your budget’s success or failure. Let’s look at them in more detail to help you get to the right outcome.
Participant numbers
This is the most difficult, but also the most crucial and it is vital to be realistic about your assumptions.
If this is not your race’s first year, you should be able to use data from previous years as a starting point, but there are some important factors that you still need to consider:
1. Is your race growing each year and by how much?
2. Are similar races in your area growing or are competitor numbers down?
3. Is your marketing spend going to increase this year, and if so, will this boost your race entries?
If this is your race’s first year, the best way to get an accurate idea of entry numbers is to find similar races in your area that you can use as a benchmark. If you are planning a half marathon, look at other half marathons in your region. If you are spoilt for choice, then find the one that looks and feels closest to yours and check out:
1. How long the race has been running and how well is the event marketed.
2. What their entry numbers are now and when they first started.
3. What type of merchandise do they give out.
4. If the race is growing and, if so, roughly by how much per year.
As a last step, when you have figured this all out, Race Directors HQ advises that you adjust your numbers down by a 20% safety margin, because it is always better to be conservative in your first year.
Expenses
It is much easier to get an accurate idea of your expenses than your race numbers. You can take away a lot of the guess work by phoning to get quotes, and by doing some online research, especially for things like shirts, medals, bibs and event insurance – but remember to adjust for price increases, especially if you are getting quotes before traditional end-of-year increases.
Where it becomes a little more challenging is when estimating costs for policing or permitting. Policing can be a significant cost if your race requires road closures, and particularly if it is a point-to-point course because there is more road to be policed than an out-and-back, or looped courses. Race permits can also be very expensive depending on the area in which the event is being held. Try and get in touch with the relevant authorities to at least get an idea of the costs so you don’t get an unwelcome surprise later.
If you are planning on using volunteers, a common misperception is that volunteers are free. Even free volunteers are rarely free. You have to transport, feed and look after them on race day, and if they are part of a charity, you will need to donate to their cause. So make sure you include that in your budget.
Of course there is nothing better than experience when it comes to budgetting, so if you can call on the services of a more seasoned event organiser, they will be able to provide you with invaluable advice.
Sponsorships
The final assumption you will need to make is how much money you think you will get from event sponsors. This is where a lot of people go wrong, especially those that are new to the events industry.
As far as you are concerned your race is going to be great, right? So why wouldn’t sponsors be clamouring to be involved in your event? The hard reality is that it is extremely difficult to get sponsors, even for well-established races, let alone new ones without a proven track record.
Broadly, there are two types of sponsorship – product sponsorship and cash sponsorship. Product sponsorship is a lot easier to get as companies are more willing to sponsor their products so they get sampled in the marketplace. There can be a cash value if sponsor’s products save you from having to buy products you need for your event. Race drinks and apparel fall into this category. Cash sponsorships, however, are hard to come by as most companies don’t like handing over hard cash until they are sure of a return on their investment.
So when it comes to your race budget, you need to be conservative, especially if it’s your first race. Only include in your budget product sponsorships that you are confident you are going to get and which will offset actual cost items on your budget. Leave out cash sponsorships until they are signed and sealed. If you are an established event and have existing relationships with sponsors, then you can be a bit more aggressive with your assumptions, but still need to be very, very careful.
Part 3, we will look at how to build your race budget.
What do you need help with as an event organiser? If there is an area of organising you would like to know more about, send a mail to tim@finishtime.co.za and we will see if we can find some info for you.
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