This summer over 3 million of us will go to a festival, and with over 500 to choose from in the UK alone, what started as flower power is now big business.

Promoters are looking for their slice of what’s estimated to be a billion pound industry but as John Giddings, organiser of the Isle of Wight Festival explains, it’s not easy.

“It’s the biggest gamble in the world. You gamble millions of pounds, hoping that people will buy tickets to see the bands you think they want to see.

“And if you’re lucky you can make money at the end, but it’s a very quick way of losing money if you don’t get it right.”

‘Eternal teenager’

It’s not just the young that promoters are hoping to attract. Many bigger festivals are designed to attract customers of all ages.

Melvin Benn, organiser of the Reading and Leeds festivals which attract 140,000 fans, says: “The idea of being an eternal teenager is very much on the agenda, and I’m rather pleased that it is actually, because that means that people still want to go to festivals when they’re 30, 40 and 50.”

Richard Cope, Senior Leisure Analyst at Mintel, agrees. “This is the first time we’ve had this generation who are traditionally time and cash rich, this is the first time we’ve had a generation in this segment who have grown up with rock and roll.”

Booking the right headliners to attract ticket sales is key, and it’s no coincidence that so-called heritage acts like The Sex Pistols and The Police who can attract older, wealthier fans have headlined festivals this summer.

Ticket sales are increasingly important to festival promoters as lucrative sponsorship deals become a less popular source of income.

This year Melvin Benn decided against renegotiating a long-standing sponsorship deal with Carling.

“Very simply I didn’t want it to be called the ‘something something’ Reading Festival or the ‘something something’ weekend.

“I wanted it to be called Reading Festival and Leeds Festival. That was a lucrative sponsorship and it will cost me a fair bit of money, but I think in the long run it was the right thing to do.”

‘Ethical standpoint’

And promoter Vince Power made his decision not to have branding and sponsorship a selling point of his Hop Farm festival in Kent.

He says: “Sponsorship is not going to stop, but it’s refreshing as you go around the site you’re not going to fall over a brewery sign.”

The Sunrise Celebration Festival in Somerset turned down sponsors for different reasons.

Sophie Docker, one of the organisers, explains: “We won’t make any kind of arrangements with any organisations that don’t have the same kind of ethical standpoint that we do.

“We’ve had some offers from people that we’ve turned down because it’s not green enough for us.”

It’s a principled stance, but does it make good business sense?

Peter Florence, founder and organiser of the Hay Literary Festival, says its sponsorship deals are crucial.

“We have 5% of our budget from the public purse, 70% of our budget from ticket sales, but without the money from Sky and Emirates and The Guardian then we’d be stuffed.”

But is the market getting too crowded? Sixteen summer festivals have already been cancelled, and even Glastonbury was reported to have had difficulty selling all its tickets.

Organisers say fans are just getting too picky and won’t shell out unless the biggest acts are lined up.

However, it wasn’t the sponsorship deal, or lack of it, that scuppered Sunrise, but the good old British weather.

With the worst flash floods for twenty years hitting Somerset the night before its opening, the event was cancelled: an indication that the festival business always carries unforeseen risks.

‘More small festivals’

And what of the future? Vince Power thinks the current number of festivals is unsustainable.

“We’re obviously going into a recession; at least that’s what everyone tells us,” he says.

“So I think there’ll be a lot of festivals that will go under because of lack of sales. I think the big names will survive. The little ones, they will find it hard to make ends meet. ”

Melvin Benn also believes there will be a shake-out in the industry.

“I think there’ll be a continued diversity of more small festivals, but I think the number of people running them will be less.

“I think the big promoters will eventually buy up a number of smaller ones, no different to normal high street businesses in that sense.”

News reported by BBC

Cash flow is the key to business success

The vast majority of business failures is down to bad cash flow, if not all failures for that matter!

If you want to run a good business and a successful one at that you must keep an eye on cash flow. Whilst profitability is important, profit is no good to any business unless the money you invoice to your customers is collected in full and in time!

Forget balance sheets and profit and loss accounts if you are not accounting minded, but get to grips with your business cash flow. If you lose control of your cash flow you will lose control of your business either to the bank and or the receiver/liquidator!

If anything, with most new ventures the cash flow is over optimised. It is always worth while being realistic when planning cash flow for your business.

These words are probably stating the obvious, but they are worth writng, as many a time the business owner (whether new or established) take their eye off the ball. So what was a promising venture becomes a statistic due to a lack of control over the life blood of the business – CONTROL CASH FLOW!

What can and does happen, and in particular with new businesses, is that the company over expands and the cash flow does not keep up with the businesses expansion. The new business is having to buy new stock to keep up with demand, but the customers are either not paying on time or the new business is not chasing it’s customers hard enough to pay! So although the business is showing a healthy growth and profit, there is not enough cash flow (or working capital) and the business faulters or fails!

Many a time when a business is in this situation, the business owners turn to factoring of the debt. However, be careful with this solution! Once you have factored your debtors you are into higher cash costs and it is almost like selling your sole to the devil! Don’t get me wrong factoring has it’s place and I have considered it’s use many a time, but be very careful with it and try where possible to look at how to get out of it as soon as possible.

In a start up situation the other factor that is almostly certainly under estimated is how much working capital a business needs. Working capital is the amount of cash needed to run the business and is the difference between the highest balance in your bank account and the lowest balance in your account (or if you have an overdraft facility, the highest point in your overdraft facility). To be sure your business is successful your working capital should also include a buffer over and above the above difference. The amount of this buffer is entirely up to you, but I would suggest at least 25-50% extra, if possible!

Don’t be an ostrich! Never bury your head in the sand when things are going wrong, always act right away. Make sure you have a good credit controller in your business or where possible don’t offer credit. There are many ways to get your customers to pay without letting them have credit, for example, I am a great believer in getting customers to set up a standing order or if your business is big enough a direct debit (banks will not normally allow you to set up a direct debit facility until your turnover exceeds somewhere between £2-5 million).

Some must do’s in business for good cash flow:

– Always make sure you meet your payroll, if you don’t pay your employees your business will faulter!
– Always keep your existing customers happy, don’t just focus on new business.
– Always collect your debts on time and consider reducing the credit period given to your customers to as low a period as possible or even to a zero period by introducing standing orders or direct debits.
– If your customers are not paying and bad debts are on the increase, review your customers services to see if all is well with the products or services you supply.
– Always pay your suppliers and tax bills on time- please note that the Government puts more businesses into liquidation than any other organisation! So always pay your tax on time!

Finally, make sure you plan your cash flow by producing a cash flow forecast yourself or by employing a good accountant to do it for you.

If you are a “Non-accountant” and want an easy way to produce a cash flow forecast then click this link: “Cash flow forecasts made easy”

Alistair Darling must do more to help the 1.1m low-income households still losing out as a result of the scrapping of the 10p tax rate, MPs have said.

A £2.7bn emergency package announced by the chancellor last month did not go far enough, the cross-party Commons Treasury committee said in a report.

The money had not been “well-targeted”, with £2bn going to middle-income workers who had not lost out, it added.

Mr Darling has said he wants to do more to help those not already compensated.

The committee’s report said the chancellor’s decision to raise the income tax threshold by £600 in May, at a cost of £2.7bn, was “probably the least bad option” to mitigate the impact of the abolition of the 10p rate.

“The government’s short-term priority must be to make every effort to compensate these people in full” John McFall Committee chairman

It found the 5.3m losers from the initial decision were people on low incomes for whom the loss of up to £232 a year had dealt a “significant” blow to their finances.

This, it noted, came at a time of sharply rising prices for essential goods and services.

Some people were still estimated to be up to £112 a year worse off, the report said.

Young workers

The committee found most of those affected were younger workers on low incomes with no children, but the worst-hit group were women between the ages of 60 and 64 with small work pensions.

Committee chairman John McFall said: “The government’s short-term priority must be to make every effort to compensate these people in full.

“The government must not let this issue slide into the background and will need to produce fresh proposals to fully compensate these 1.1m households by the time of the 2008 pre-Budget report.”

The MPs noted the government had yet to make clear whether the package of help given this year – funded by extra state borrowing – would be repeated in the future.

However, any new measures to help those losing out should be made through the tax system, the report suggested.

Child poverty

Frank Field, the Labour backbencher who led the rebellion against the scrapping of the 10p tax rate, said the government’s compensation package was not equal to one million people’s loss.

He said: “We will be looking, when we debate this in the Commons, and when the government promises it will come back in November, for a proper settlement for everyone who lost out on 10p.”

The committee called on Mr Darling to use his autumn pre-Budget report to launch consultations on future changes to income tax, rather than keeping them secret until Budget day.

“The government must now ensure that there is no backsliding and that future reforms to the tax and benefit system do not reverse this very positive development,” said Mr McFall.

The MPs also warned that the immediate need to compensate those who lost out after the scrapping of the 10p tax rate should not detract from the challenge of tackling child and pensioner poverty.

The report called for the creation of a Poverty Commission to look at the effect of public policy on the poorest families.

The decision to scrap the 10p tax rate, made by Gordon Brown in his last Budget as chancellor, came into force in April this year – alongside a reduction in the basic rate of tax from 22% to 20%.

It had threatened to provoke a backbench rebellion by Labour MPs

News reported by BBC