After a summer of expert tips from some of our business advisors, we have come to the final week. With over 30 years of experience within the visual arts and music industries, our business advisor Andy Balman shares his tried and tested method to survival – the entrepreneurial way.
We are living through challenging times, where a continually changing financial landscape is exerting extreme pressures on businesses and organisations. As a result, businesses are having to re-evaluate their aims and business models. Many arts organisations that have previously relied on grants for the majority of their income now have to adapt to shorter term funding packages or even a loss or reduction of funding. There is no doubt that the immediate future will continue to put pressure on funders, as the money available continues to dwindle.
None of this is new, it’s been a tough 5 years and we are all fully aware of the effect austerity is having on arts and culture. “Earned Income” is now seen as an integral part of any arts organisation and their business plan. It is prudent that organisations have a clear and credible plan to build upon existing earned/contributed income or diversify their business models to generate new income streams.
Clearly, some organisations already have strong income generating strands of activity e.g. through the box office, shops, café/bar etc but how do free events such as the 3 day Freedom Festival in Hull diversify? I am a board member of this NPO and we earn income through bar and concession fees as well as creating events that are ticketed. We are also looking at using our organisational and event management skills to work with other organisations in developing their arts events.
I am also involved in Humber Street Sesh, a one-day festival in Hull that has to generate the majority of its income through its own resources. Initially a free event, it now charges an entrance fee that together with sponsorship; bar/concessions and grants allows it to continue to provide a great resource for the city. It is a step up that visitors are happy to accept – research shows that some users of arts events actively want to contribute financially.
Many arts organisations already act in an entrepreneurial way and in the case of Live Theatre in Newcastle, partnership working with the commercial sector has enabled them to develop an effective asset base and allow them to confidently plan for the future, developing new initiatives for their organisation. Working with the 21 Group, a highly successful local restaurant operator, they now have an award-winning restaurant and gastropub within their premises. Their latest initiative is to buy neighbouring properties generating commercial income whilst also allowing them to further their aims by building a children and young persons writing centre. In their own words:
“Once complete, Live Works will create new revenue streams for the core creative and educational work of Live Theatre, building resilience for the Theatre for the future, and transforming this part of the Quayside.”
They have successfully negotiated a £6 million loan from the local council to support their business plan and no doubt their history of successful commercial development was influential in this success.
So can any arts organisation embrace the commercial world? Let’s reverse that – Can any arts organisation afford not to embrace commercial opportunities?
How do we get there?
- Spend time assessing the possibilities of new income generation. E.g. Are you building based? Is there any spare capacity for generating letting income or development opportunities?
- Has your organisation developed particular skills that can be offered out for a fee?
- Are there any elements of what you currently provide that can be charged for?
- Does your current business offer opportunities for diversification?
- Identify a team from within your organisation that can take this forward. Are there any members of your Board that can add skills? If not ask for support from local individuals and companies – they are very often more than willing to help out.
- Keep an open mind and embrace all suggestions. Use the web to see how others have achieved success.
- Once ideas have been considered and prioritised start to develop the business plan and consider the best structure to move forward e.g. a separate limited company, social business etc.
- Consider partnership arrangements to achieve your aims – you may well be great at producing plays but running a restaurant requires new skills. Is it worth stretching your resources when there are people out there with a proven track record who may bring finance as well as skills to the table? Consider the risks; assess your strengths and weaknesses.
At this stage, it is probably time to apply to Creative Industry Finance to get free business advice on making this transition and the opportunity to apply for a business development loan.
Andy has over 30 years of working within the visual arts and music industries. He has experience of working within various business models from commercial to not-for-profit and has sat on various boards and committees. He splits his time between Northumberland, where he lives and runs a commercial art gallery and Hull where he runs a live music venue, a multi-disciplinary venue, pub and ticket agency.