Small, tiny and in some cases non-existent budgets are all
too common working in the arts. Over the years I have worked on lots of
projects where there has been such a small budget that I have had to beg and
borrow as much as I can to actually get things off the ground. And, as any
artist knows, having constraints means you have to be creative, and that’s what
makes great art!
However, for the last five years I have been working in a
large performing arts centre, where the budgets are bigger, but so are the
costs and risks. In this kind of environment, begging and borrowing is much
harder, and sometimes impossible when you are bound by government policy and
procedure.
I have done a lot of arts project scoping work, and as part
of my research into potential projects, looking at the budget is one of the
most important aspects. The big question is always, how do you know if you
really have enough money to undertake the project?
When setting budgets, some of the considerations I make are:
·
Understand your total maximum revenue base, be
it tickets, grant funding, sponsorship etc.
·
Understand the fixed and variable costs and look
at what kind of scenarios could make the costs change
·
Don't forget ancillary costs (and revenue!) –
all the little things that can add up on a big project – staging consumables,
catering, complimentary tickets etc.
·
Assess what knowledge and experience you have in
house, do you need to recruit additional staff, and if so, what is the real
cost of that?
·
What was the financial cost of the project
previously, or, if it is a new project, then something similar that the
organisation has done before?
·
What has changed in the environment or in the
scale of the project that might have an impact on costs?
·
Work out the risk level of your project – what
happens if it only performs half as well as expected? Can you afford the financial
risk and who will cover the shortfall?
By going through this process you will begin to see whether
or not your project is viable. If a sell-out show won’t cover the costs, and
you don’t have grant subsidy to offset the difference, then you might have to
reconsider what you want to do. And if you can make the budget balance, go for
it!
You might be curious to know about a new festival called StripFest which has NO budget, or to be more precise, no expenses, which is in fact its intention. The festival is based on a model of relationship brokering. It merely connects venues with artists, artists with audiences, venues with customers and people with each other. It doesn't profess to be producing anything other than what the venues and artists want to do (at their own expense). Interesting model and well worth a look: www.stripfest.org
ReplyDeleteThanks for this Valentina - sound advice. One other thought I would add is "being realistic in revenue projections". I'm sure we've all seen revenue projections be made to fit the shortfall instead of the other way around. At times people are so keen and enthusiastic to get the project off the ground that they don't undertake the sensitivity analysis i.e. what if the Box Office is 20% less than projected? It is also important to look at what the effect is if Box Office is 20% higher (what costs will increase i.e.royalties etc) but the latter is the aim ! Cheers James
ReplyDeleteHi James - I totally agree, undertaking a detailed sensitivity analysis is really important for any project that has ticketing revenue. And yes, realistic revenue projections is tricky - selling tickets in the current climate can be difficult - if you don't do the market research then you add another layer of risk. Ideas for more blog posts - thanks! Valentina
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