Expenses add up, sometimes unpredictably, sometimes outside of your control. But one way to guarantee they’ll be unpredictable and out of control is not setting a realistic, well-informed plan ahead of time.

And no matter what unforeseen events affect your bottom line, the one thing you have full control over is how good that plan is.

Setting a budget based on as much as information as possible, and one that eliminates unneeded expenses means you’ll have a much easier time keeping those expenses that are out of your control from adding up.

Event organisers often put on similar events each year, but under slightly different circumstances. One method of budgeting that might be particularly relevant to that work is zero-based budgeting. Here’s the low-down on how this budgeting technique might help you keep costs low and keep your event profitable:

What is zero-based budgeting?

In a more traditional approach to budgeting, a company will take last year’s budget as the starting point for this year’s.

Zero-based budgeting doesn’t do that. It starts at zero. It doesn’t matter what you spent last year. What matters is what you’ll need to spend this year, based on your goals. That means going through every expense, tallying them up, eliminating what you won’t need this year, adding in expenses that are new to this year.

Essentially, it’s working backwards. Traditional budgeting might say that since you spent £10,000 on marketing last year and you want to grow this year’s event by 30 percent, you should allocate £13,000 for marketing efforts this year.

With zero based marketing, you’d start with the strategic goal in mind — say, increasing ticket sales by 30 percent — and list out all the expenses required to make that happen, regardless of what you did or spent last year. Anything that doesn’t directly tie into that goal wouldn’t be included.

But it’s not a top-down approach. For it to work, every step of the process needs to be a collaboration between different teams.

It’s as much about a new mind-set as a new way of budgeting. Done right, it can change how your team thinks about costs. It can get them asking whether something is tied to the strategic goal and ensuring that spending is done efficiently.

What are the benefits?

Advocates for zero-based budgeting talk up this increased focus on objectives and efficiency, which force you to justify your expenses. That can help prevent the budget inflation that could occur if last year’s programs are blindly carried over to this year. That can mean higher profits.

And this more critical approach should lead to better strategy and planning since your team has to think through everything. This means rethinking your past efforts and current plans, which can’t hurt.

What are the downsides?

Actually seeing costs savings and higher profits are not guaranteed. A study by consulting firm CEB Global found that, of 18 companies that relied in zero-based budgeting, 47 percent saw a significant improvement of their profit margin from the previous year. Of 40 companies that used traditional budgeting, 45 percent saw improvements.

“That’s not much of a difference,” CEB reported.”… Results from zero-based budgeting are not guaranteed.”

It could also cause scheduling and team chemistry issues. Detractors say the process is overly bureaucratic and requires people to take time away from other projects. That could be worth it if it results in costs savings, but likely a waste if it doesn’t.

CEB’s finance research leader Tim Raiswell has said their research finds zero-based budgeting lengthens the budget cycle by about five days.

For creative teams like marketing, getting bogged down in tallying up expenses might hurt their creative projects. That might cause resentment of the process, causing them to not do it well and rendering it’s possible benefits moot.

Is it right for your event?

Zero-based budgeting requires broad buy-in from the team, and the time and effort to do it right in order for it to make a difference. If you can get everyone on board, have staff with the planning and budgeting skills needed, and can allow for a few extra days, it might be worth trying out. You can always move away from it the following year if you don’t see the benefits.

It’s particularly worth trying out if you haven’t reevaluated your budget in depth for several years or there has been a recent change in the management, direction, goals or scale of your event. Some companies alternate between zero-based and more traditional budgeting approaches depending on the challenges facing them in a given year.

And remember, while the end result may be cost savings, that isn’t the only result. The process of thinking deeply about your event’s cost structure should lead to more critical thinking and precise planning, which could result in a strong event and better strategic plan overall.

Considering new approaches like zero-based budgeting is only one part of thinking through your budget. For more ideas about how to manage your event budget, check out our free event budget template.