Financial Decision Making for Creative Projects: Music Festival Report

This report provides a comprehensive financial analysis of a proposed music festival in London, organized by BeHappy events. It begins with an introduction to the event, venue, and facilities, followed by a discussion of market research findings. The report then delves into the funding sources, including crowdfunding, angel investors, bank loans, and sponsorships. It explores potential income streams, primarily ticket sales, and provides a detailed cost sheet, cash flow account, break-even point calculation, and return on capital employed (ROCE) analysis. Different pricing strategies are evaluated, including pricing at premium, market penetration, economy pricing, and others. The report concludes with a recommendation for the most appropriate source of finance and relevant income streams and pricing strategies for the event. This report serves as a case study in financial planning and decision-making for creative projects and events.

FINANCIAL DECISION
MAKING FOR CREATIVE
PROJECTS AND EVENTS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Introduction describing the event, venue and facilities offered..................................................1
Results of any market research ..................................................................................................1
The funding of the event.............................................................................................................2
Discussion on relevant income streams......................................................................................3
Discussing proposed event of cost, revenue, break-even and return on capital employed ........3
The pricing of event including description of different pricing strategies..................................5
Recommendation.........................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Financial decision is considered as crucial decision which needs to develop by financial
manager of company in order to conduct smooth business operations. Thus, this report will
articulate the event that is music festival which is conducting BeHappy organisers in London
city.
Introduction describing the event, venue and facilities offered
BeHappy occasions is a small business generally aimed at the big time. In order to reach
its goals, entity must focusing on its mission behind the vision (Lee and Staelin, 2019). The
business will offer two types of services, event planning for conducting corporate festivals and to
manage music festivals. The main objective of this company is to generate revenue for its
shareholders for organising event throughout the year.
Event:
A management company wants from BeHappy to conduct a music festival which is
commercially viable and technically feasible for the company. Thus, the purpose of this event is
to generate effective revenue for the business and to promote the brand BeHappy.
Venue:
This music festival will be conducted on London stadium which offers both world-class
events and concerts together. It is conducted here because it is considered as heart of London
through which people will get attracted to attend such music festival.
Facilities offered:
Audiences who will attend this music festival will offer with various facilities such as
catering services where they will get various snacks, proper hydration stations, proper safety will
be provided to them. Staff of BeHappy will provide their tremendous contribution where proper
allotment will get developed such as parking staff, food and beverages staff, cleaning staff,
general team who works in cases of emergency so that audiences feel safe and secure.
Results of any market research
In order to develop successful must festival event, proper market research has been done
by BeHappy events. This research will take place with analysing similar events services. Proper
analysis will be conducted through the music festival which was happened in Wembley stadium
where they have provided proper maps and scheduling in context with festival guard which will
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be available as handout where signs around the park is available through customers will easily
able to reach on event. Other than this, the information Booth and Lost & Found will also be
located at general store in main festival area if any person pick up lost item will deposit it in such
booth (Peter, Olson and Grunert, 2019). Medical tent will also be located in main festival area
who will address all medical related incidents. 24 hour security has been provided during the
festival with their contact number. Facility of restroom, showroom and parking will be provided
to customers.
Thus, in regards with this analysis it is concluded that for conducting effective music
festival proper arrangements of care will need to take place so that audiences will freely able to
enjoy such fun loving activity.
The funding of the event
In order to conduct successful event in London, the source of funding through which the
cost will get raised is as follows-
Crowdfunding:
This is the type of platform which has made easier for new organisers for trying the best
ideas before risking any kind of cash into the business. Through this, BeHappy event entity will
able to set a fundraising target and will also wannabe attendees to pledge to buy a ticket if such
event will take place (8 ways to finance your event idea, 2016). This is the platform through
which if entity will not able to meet its sufficient interest then the pledged money will get
released. Thus, it is considered as risk free investment through which event planner will able to
conduct successful event.
Angel Investor:
This is the type of wealthy individual group of people who will always look for effective
investment opportunities. Websites like this will help in connecting with relevant investors
through personal introduction.
Bank loan:
It is another source of funding but the banks will not easily provide loans against itself
because there are more chances of getting failed (Smith, 2018). However, if entity prove good
track of record then business loan will be considered as effective option for funding.
Sponsorship:
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This is one of the most effective way for funding key elements of any event which is also
utilised by vast majority of events (Krishnan, Bass and Jain, 2018). These are the people who
mainly wants to know about the people who are coming to event, when and where it will take
place and the type of agenda with marketing plan the entity hold.
Internal marketing budget:
This is the type of funding where event manager will invest their own capital or company
which can put into the budget. This level of risk encourage investors, sponsors and partners to
invest money for business capital.
Discussion on relevant income streams
The major source of income for this event would be ticket sales. Here, in order to
generate effective revenue BeHappy events will sale their tickets in advance of planned event
date. This is the process which enables entity to test the desirability of event idea and it will also
help in accessing on some working capital through which successful events will get developed
(Alexander, Jones and Nigro, 2018). For the present music festival, first of all promotion will be
conducted on social media because nowadays, people are generally active on such platform
where they will allow purchasing tickets in both online and offline mode (Rubinstein, 2017). The
amount which will be generate through their sales will further be used in developing resources
for conducting events which will always be remembered in the heart of people.
Other than this, source of income streams will be the sponsors of these events who will
invest their money on the basis of tickets which has been sold in advanced. Through such
information they will analyse targeted audiences which through which such event will be
successful or not.
Discussing proposed event of cost, revenue, break-even and return on capital employed
Cost sheet:
cost sheet
Particulars Amount (£)
Hire London stadium 40000
Set up of stage 5000
Musicians or DJ 2000
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Accent lighting 1000
Food and catering 4000
Screen projectors 1500
Microphones 1500
Advertisement 20000
payment to artists 25000
Total cost/capital 100000
Cash flow account:
Cash flow account
Particulars
Amount
(£)
number of average customers 1500
price per ticket 250
Net cash inflow 375000
Less: operating expenses cash outflow
Hire London stadium 40000
Set up of stage 5000
Musicians or DJ 2000
Accent lighting 1000
Food and catering 4000
Screen projectors 1500
Microphones 1500
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Advertisement 20000
payment to artists 25000
Net cash outflow 100000
Net cash flow (inflow -outflow) 275000
Break-even point:
calculation of break event point
Particulars Amount
Fixed costs
salary 25000
advertisement 20000
Venue hire 40000
total FC 85000
Variable cost
food and beverages 4000
total VC 4000
BEP
0.33333333
33
ROCE:
return of capital employed
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profit 275000
capital employed 100000
ROCE 2.75
The pricing of event including description of different pricing strategies
The different pricing strategies includes:
Pricing at premium: this is the strategy where business sets the cost higher than its
competitors (Broce, 2016). This is considered as effective and ideal for small businesses for
selling their unique products.
Pricing for market penetration: This is a type of strategies which aim is to attract
buyers by offering low prices of goods and services. This is the strategy through which effective
profit will get generated by the entity.
Economy pricing: this strategy mainly used by wide range of businesses because the aim
of this strategy is to attract the most price-conscious consumers (Eberlein and Madan, 2019). In
this, generally business maximise its cost which relates to marketing and production so that price
of products will remain down.
Price skimming: generally it involves designated in order to help businesses to maximise
sales on new products and services. This is the strategies through which high rate of price will
get set at introductory phase only further company lowers the prices.
Psychology pricing: this is the strategy which mainly adopted by entity for for
encouraging its customer to respond on emotional level rather than to logical ones.
Bundled pricing: Through this pricing businesses sell multiple products which is also in
lower rate than the consumers would face in market when they purchase individual item
(Holland, 2016). This is the effective way of selling goods and services.
In terms of BeHappy events, they will adopt the pricing at market penetration through
which they will attract customer to visit music festival which they are conducting will minimum
ticket price that is £250.
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Recommendation
Most appropriate source of finance:
Sponsorship will be the most appropriate source of finance through which entity will
generate the money through market investors so that successful event will get developed.
Relevant income streams:
For conducting successful music festival, relevant income stream would be selling of
tickets in advance through which customers will able to book their seats in advance and entity
will able to generate money back by selling certain amounts of ticket.
Pricing strategies:
The pricing strategy which will be adopted by event company is Pricing for market
penetration where entity mainly sells its ticket with lower range through which most customers
will get attracted to attend the event.
CONCLUSION
From the above report it can be concluded that before starting any event, event
management company must have to conduct proper market research through which proper
evaluation of market in terms of source of funding, pricing strategy situation will get analysed.
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