Keeping the Independent Music Festival Financially Viable.

The entire music festival sector is currently struggling to stay financially viable, and without the backing of large corporate operators it is the small independent festival entities that are the most vulnerable. What steps can owners of these independent festival entities take to ensure that they stay financially viable now and in the future.

Like any festival entity currently, the smaller independent festivals are facing financial pressure from rising operational costs and increased festival-goer choice when buying tickets. Without the financial backing of a parent organisation the independent festival must find ways to increase long term financial stability. How can these independent festivals build a resilient business that can meet current challenges.

Challenges.
Almost every aspect of operating a music festival is facing an increase in costs, from artist fees, insurance premiums and fuel to production and staging. Other factors that are impacting festivals include increased regularity compliance complexity and unpredictable extreme weather that are causing disruptions. In some cases, organisers are struggling to recruit volunteers, which means they must bring in more paid contract staff to meet operational requirements. The festival-goer ticket buying behaviour is shifting with buying decisions being delayed until later in the ticketing cycle, which is putting pressure on the festival's cash flow.

Cash Flow and Financial Management.
Poor cash flow management is more likely to lead to a business failure than balance sheet profitability issues. Wise decisions about managing the financial operations can improve cash flow and include generating income earlier and spreading supplier payments over time. Payment plans for tickets with incentives for an early commitment can encourage more ticket sales earlier in the ticketing cycle. Where possible, organisers should explore ways to get better control over production costs to reduce or spread costs. Initiatives like multi-year deals with suppliers can bring costs down and moving to more efficient power and lighting systems can also reduce running costs. Greater collaboration with other independent festival entities can lead to shared infrastructure costs too.

Building Diverse Revenue Streams.
It is essential for organisers to fully understand the percentage or overall revenue earned by each revenue stream. If this is not balanced and diverse, it means that there could be an ongoing financial risk if one stream does not perform. A typical balanced diverse revenue stream could look like this: 

• Ticket Sales 55%
• Sponsorship 20%
• Vendors Pitches 10%
• Camping & Accommodation 5%
• VIP packages 5%
• Merchandise sales 2%
• Parking and Transport 2%
• Digital Streaming 1%

In this example, ticket sales and sponsorship make up the bulk of sales revenue which puts the festival at risk if tickets sell later in the cycle and sponsors refuse to make deposits or pay early. Increasing the diversity of income will make the festival entity more resilient to rising operational costs and variable ticket sales cycles. Increasing the proportion of revenue coming from sponsorship, especially if sizable deposits can be taken well in advance of cost commitments will improve cash flow. For any festival to secure sponsorship deals, they need to focus on how they can demonstrate a measurable return on investment for potential sponsors as this is now a key driver for sponsors when making decisions. Other key factors that organisers should focus on is the provision of more services for festival-goers which can increase the incremental revenue earned. This typically could include premium camping or glamping, VIP viewing platforms, priority parking, fast track entry, artist meet and greet schemes and wellness packages. Discounts for early purchase of premium services will bring improved overall cash flow and help diversify revenue streams too.

Alternative Funding.
For small independent festival operators who are struggling with cash flow but are resistant to being acquired by a corporate events organisation they can consider a number of alternative funding routes. Securing additional funding reduces financial risk and helps to improve long-term sustainability. A popular approach is to create schemes, or formal share offers to the festival-goer community which also helps build long term loyalty but does not always raise significant sums. Crowdfunding campaigns operate in a similar way, but the process is less formal, and contributors only receive rewards rather than equity or shares. There are a number of government arts and culture grants that may be available in certain circumstances, but the process of obtaining any funds can be time consuming and complex. Some financial organisations can offer revenue advance funding which is different from a formal loan and provides funds based on projected revenue with repayments linked to actual income, they may be attractive but can be expensive.

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 Mikhail Nilov via Pexels

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