Capital Expenditure (CapEx) Management for Music Festivals.

Depending on the size of a music festival entity there will be a varying requirement to invest in infrastructure and other long-term assets. These assets can form part of the overall value of a festival organisation, so it is essential that organisers manage their asset portfolio for future financial planning and budgeting. 

A lack of understanding of how to manage capital expenditure (CapEx) in a festival entity can lead to poor financial management and budgeting issues. Managing the investment in stages and equipment like lighting and sound systems is essential for the larger festival organisation. What are the steps required for effective CapEx management? 

Planning. 
Investment in infrastructure and equipment may not be appropriate for every festival entity as some event organisers prefer to remain nimble and operate as organisers who rent everything they need for each event. More established festivals that use the same land and location every year are more likely to require capital expenditure plans. Planning and prioritising investments will depend on budgets and funds available, typically CapEx will include stages, sound and lighting equipment, fencing, power generation, sanitation facilities, and technology infrastructure for example. 

Funding and Cost Control. 
If a festival entity has continuing positive financial performance, they may have suitable reserves of cash. Investing this in CapEx projects is usually the easiest way to fund them and the asset value will appear on annual accounts and written off over time. External funding is an option but could burden an entity with ongoing repayments and the assets may be used as security against funding. A comprehensive assessment of the asset cost should be made evaluating the savings over time against renting equipment. 

Technology. 
CapEx evaluation will be required even for the smallest festival entity because it includes items like computers and mobile devices for example. Larger entities may also include on-site technology infrastructure investments like walkie talkies, Wi-Fi routers and scanners for example. Ownership may have significant implications on technology investment because of potential ongoing maintenance requirements and the need to regularly replace technology used as it becomes obsolete. 

Asset Management. 
Part of regular financial accounting processes will require the logging and assessment of all CapEx assets. This will include a comprehensive inventory along with current value and depreciation estimates. In addition, some assets require ongoing maintenance and this needs to be budgeted for every year. 

Sustainability. 
If CapEx projects can be aligned with sustainability objectives there may be external funding initiatives from government authorities who are encouraging investment in sustainable assets. Such eco-friendly investments can also form a key part of the sustainability credentials presented by the festival entity especially if they help to reduce energy consumption and waste. 

A comprehensive CapEx strategy may not be appropriate for every organisation and before committing to any investment an analysis of purchase against rental will need to be made. Every music festival entity operates in a different way and has varying objectives. 

For festival organisers planning their events using a software management platform like Festival Pro gives them all the functionality they need manage every aspect of their event logistics. The guys who are responsible for this software have been in the front line of event management for many years and the features are built from that experience and are performance artists themselves. The Festival Pro platform is easy to use and has comprehensive features with specific modules for managing artists, contractors, venues/stages, vendors, volunteers, sponsors, guestlists, ticketing, cashless payments and contactless ordering.

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