Tips for Improved Music Festival Financial Planning.

Music festivals have traditionally been viewed as high-risk investments, and many entities struggle to make a financial success of their events. Common obstacles include tight margins; unpredictable costs combined with high operational risks. What are the best tips for festival  organisers keen to improve their financial planning.

Many festival entities have been built on creative ideas with the intention of building a like-minded community, not for financial profit. As events gain popularity and become larger, it is a lack of robust financial planning that sees many go out of business. The key for long term financial success and stability is having a robust financial plan rather than a focus on profit. What are the simple financial planning tips organisers can use to help them survive in an increasingly competitive market.

Cash Flow Forecasting.
Accurate cash flow forecasting is the most essential tool for successful financial planning and is usually in a monthly or weekly format that shows revenue and costs indicating a final balance. A good cash flow model will cover an extended period which may include a year in advance of the live event date until several months after to ensure all relevant revenues and costs are included. Once initial numbers have been entered into a forecast, it is essential to identify any period where costs exceed revenue (negative cash flow) so that bridging finance can be arranged in advance. It makes sense to run different cash flow forecast scenarios that account for the best and worst cases where costs and revenues are altered. As actual numbers are achieved in each period, these can be fed into any cash flow forecast to indicate the impact over time allowing the creation of more accurate forecast scenarios.

Historical Data.
For festival entities lucky enough to have been operating for a number of years, they have the benefit of historical data which can help to make financial planning more accurate and realistic. Revenues from ticket sales, vendor pitches and sponsors can be mapped out over time with additional calculations allowing for price increases and improved attendance numbers. Equally many operating costs are known, and an analysis of these can help identify areas for potential savings, if suppliers increase prices, then new contractors can be sought. A key driver for ticket sales are pricing and timing linked to marketing activity. Most advertising campaigns now run on digital platforms where a plethora of data enables a deep dive into the numbers to reveal what drives sales. This historical marketing data can help with the planning of future campaigns that maximise ticket sales at the lowest cost, or best return on advertising investment.

Cost Control.
Spiraling costs can financially cripple a festival entity, so strict real-time control of these is essential to stay on track with planned expenditure. The fixed costs like venue fees, insurance, staff and IT infrastructure should be well known in advance, but it is the variable costs that can get out of control, including artists' fees and contractor charges, for example. Those responsible for artist curation will be allocated a budget, and it is essential that this is not exceeded. This may entail juggling a variety of headline artists and support acts to achieve an attractive line-up that stays within budget. Effective negotiation with artists can ensure that any booking is secured with a small deposit and a final payment on a later date. Equally organisers should try to get as much cash up front as possible from sponsors and vendors with scheduled completion of payments well before the event live dates. For supplier contractors providing services like power generators, security fencing, waste management, staging and backline equipment for example, organisers should negotiate the lowest prices possible without impacting quality. Where contractor prices are perceived as too high, it may worth putting that service out to tender to obtain better prices from alternative suppliers. Using the correct technology and specialist financial control software can make forecasting, planning, and cost control easier rather than relying on spreadsheets.

Revenue Streams.
A good understanding of the different revenue streams a festival entity has is essential for identifying new sales opportunities. Tiered ticketing with early bird pricing helps with cash flow but at a reduced overall ticket revenue. However, this can be offset by offering a variety of premium priced VIP packages. Explore potential revenue splits and sales commissions that may be possible with sponsors, vendors, and artists where endorsements can lead to incremental revenue for all parties. Expanding the festival’s merchandise range and adding new sales channels can create new revenue streams. Organisers should fully investigate partnership opportunities with multiple organisations where costs can be shared, or new revenue generating streams identified.

For festival organisers planning their next event 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, site planning, cashless payments and contactless ordering.

Image by Mariakray via Pixabay

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