Performance Planning 9

Performance Planning 9
The Budget

www.musicstudentinfo.com
Chris Baker

Formal education will make you a living,
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self education will make you a fortune.

Introduction

The Budget
• Apart from the performance this is the single most important
element leading to successful music shows!

Aims
• To understand the value of budget planning in successful live
music performance.

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Wonga!

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The Budget

• Definition - a quantified statement of plans, expressed in
numerical terms.
• The process includes, costing & estimating income and the
allocation of resources.
• It can be used to compare projected costs & revenues with
actual costs & revenues.
• It can be used to identify costs in each area of of an operation
• It can be divided into sub – budgets.

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Budget

• Especially important to shows/festivals because many
elements incur costs before requiring payment before
revenue is obtained (staging/merchandising/staffing)
• Cash flow needs specific attention.
• Most stakeholders or sponsors need to see budget before
committing resources.

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Budget

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Constructing the budget

• Budget creation forces management to establish a financial
plan & to allocate resources accordingly.
• It imposes financial discipline, regardless of the nature of the
show.

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Preparing the budget 1

Establish economic environment, the economics of the region
may significantly impact the event.

Ask the following

•What similar events can be used as a guide?
•Will changes in the local economy effect the budget?
•If hiring equipment, performers from abroad will the budget be
affected?

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• Obtain guidelines from the client, sponsors or committee.
• Follow the guidelines.

e.g. a sponsor may request only a certain percentage of monies
be used for entertainment and the rest for hospitality.

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Class Budget Activity 1

1. Take time to write down a list of all costs you can think of to
be incurred by organizers at a professional music show.
2. Now write a list of all sources of revenue available to
organizers at professional music shows.
3. Can you think of any ‘creative’ ways to generate additional
revenue at live music shows.
4. Feedback your answers to the group.

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• Identify categories & estimate the cost areas & revenue
sources.
• Cost areas (in general terms) may be; administration,
publicity, venue costs, equipment, salaries, insurance,
permits, security, accounting, cleaning, travel,
accommodation, documentation, hospitality, volunteers,
community groups & contingencies.

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• Estimate revenue areas.
• Revenue areas generally speaking may include; grants,
donations, sponsorship, ticket sales, fees, special programmes
& concessions.

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Cash flow

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Cash flow
Without payment event organizers face immediate challenges
payment terms & conditions need to be equitably negotiated.

To obtain the best ‘terms’ you need to

1.Learn as much about suppliers as possible.
2.Be flexible on what can be offered in exchange e.g. sponsorship
3.Negotiate contract with small deposit up front
4.Suggest a line of credit
5.Closely control purchasing

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Cash flow 2
• Ensure purchases are made via purchase order authorized by
event manager, ensures spending is confined to those who
are permitted by the budget.
• Obtain full description of product or service & quantities
required.
• Itemize price per unit.
• Calculate taxes or extras.
• Determine payment terms.
• Clarify delivery details.
• Consider imposing penalties for forfeiture.

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Cutting costs

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Tips on reducing costs

• Publicity - find innovative ways to generate publicity.
• Equipment & supplies - try to hire at non peak times, some
organizers have equipment in storage.
• In - kind gifts - ask sponsors or suppliers for gifts.
• Hire charges - can be reduced by offering further work.
• Volunteers - costs can be reduced by employing volunteers.

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Revenue / first level

• Ticket sales - sliding scale & offers
• Sponsorship - leverage to gain others
• Merchandising
• Advertising
• In-kind arrangements & bartering
• Broadcast rights
• Grants
• Fund raising
• The client
• Special features - raffles - guests & patrons bring prizes
(massage, slave for a day) auctions
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Conventional sources of revenue / second level

• Grants - local, national, international, arts, other (lottery)
• Donations - foundations, other.
• Sponsorship - in - kind, cash, individual contributions.
• Special programme - raffle, auction, games.
• Ticket sales - box office, retail outlets, admissions.
• Merchandise - t shirts, programme, posters, badges, DVD
• Fees - stalls, licenses, broadcast.
• Advert sales - programme, event site.
• Concessions

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Questions take 20 mins and answer the following - feedback your results

• What controls do you use to get from home to college?
• What ‘economies of scale’ can be expected from a multi-
stage festival?

Identify revenue sources for

1. 2012 Olympics?
2. A performance by a well-known local band?

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THE END

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Performance Planning 9

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Performance Planning 9