It's 2019 annual budgeting and forecasting season for many companies. While it's intuitive to build your annual operating budgets for all the known and historic expenditures and supplier agreements you manage and oversee, it's the unknown expenses and forgotten line items that could result in negative impacts to your Strategic Meetings Management Program and/or events.
So how does one budget for the unknown? As a former corporate category leader, I'll share with you what helped me during my corporate years in managing business travel categories and meetings/events.
1) Do a "horizon scan." Look at current economic indicators. Will they have a direct or indirect impact on your SMM program in terms of higher prices? Good indicators are the price of fuel, inflation, recession, increasing or decreasing venue inventory, overbuilding in a city or destination, consolidation of key suppliers, changes in commission levels, etc. Any key indicators that you see or hear about that could become reality in the next year should always be on your horizon and radar.
2) Remember to factor in any increases in salary, benefits and cost of living that are built into your current supplier agreements – a 5 percent to 10 percent increase could negatively impact your annual budget if unaccounted for.
3) Read and use data statistics from annual reports and global forecasts from suppliers and associations. MPI issues regular Meetings Outlook reports, and both CWT Meetings & Events and American Express Meetings & Events issue excellent annual state-of-the-industry data and forward‐looking forecasts. Usage of these important statistics elevates your dashboard credibility to senior leaders and demonstrates that you take notice of important data, statistics and industry trends; use them strategically in your reporting and in your annual planning.
4) Thinking of adding a supplier in the upcoming year? Find out an approximate cost for that supplier and build that into your budget.
5) Expanding your SMMP footprint? Going global? Any kind of program expansion will have to be factored into your budget. You can get an advance idea from your supplier partners. Ask them to develop a pricing index that you can use to approximate your budget. Make sure you inform your suppliers that you are not going to hold them to those guesstimate costs, you just want to ballpark budget for them next year.
6) Are there any potential changes in support resources, either internally or externally (outsourced)? Make sure you build those costs for additional head-count support into your budget.
7) When was the last time you did an audit of your suppliers or assessment of your program to gauge if it's still optimally working? Budgeting for a supplier, transaction and/or commission audit annually as well as a semi-regular assessment of your program policy, process, configuration, technology and support intermediaries is critical in maintaining the integrity of your SMMP and its cost effectiveness. Look for an independent consultancy to support these audits, as a self-audit by an existing supplier won't be as credible to your management and leaders. Like number 5 above, ask potential independent consultants what an approximate price would be for an audit or an assessment. Then build that into your budget and let the consultancy know you are just using that number for budgeting reasons only, and that any actual engagement will be priced with more specifics next year.
Thoughtful and strategically developed budgets can save you a lot of future trouble and unnecessary stress. Don't rush through the process; use the checklist above and anything else you normally use to develop a budget that will be approved by your management. Use available data when budget forecasting, and be prepared for the potential questions that may arise from management, the most obvious ones being, "Where did you get those numbers?" or "How did you do your cost estimates?" The more prepared, strategic and data-centric you are, the higher the likelihood of your budget getting approved. Good luck!