Financial Expert and teacher at the JMC Academy shares strategies for creating your first budget.
What do artists need to consider when it comes to production costs or touring budgets?
‘If an artist is venturing into a project for the first time, then the biggest issue is that they “don’t know what they don’t know”,’ said JMC Academy tutor Kim Thomas.
Luckily, budgeting is a skill Thomas regularly teaches students at JMC to prepare them for the financial responsibilities that come with project management. After all, Thomas told ArtsHub, the financially savvy artists are the ones that are able to make a living from the industry and have financial security afterwards.
Here are some successful strategies for those developing a budget for the first time or looking to finesse their skills.
The most common mistake when drawing up a budget is to underestimate costs. To offset the potential for miscalculation, Thomas suggests doubling expenses and halving the revenues of the original budget you came up with.
‘This might sound a bit extreme, but it’s much better to have more money than expected at the end of the project than vice versa, and you might be surprised by how often the adjusted budget is closer to the final result than the original,’ said Thomas.
Do three budgets
In addition to making the suggested adjustments to your original budget, it can be helpful to draw up the best and worst-case scenarios.
The three budget strategy is helpful for tours, production, and projects. ‘The first if your “best guess budget” which details everything you know. The second is a “worst-case scenario budget” which only includes revenue figures from venue guarantees or actual presales. This is updated as you sell more and more tickets. The third is a quick calculation of the revenue/profits expected if you completely sell out the tour. This is useful as it shows the profits possible and is helpful in considering extra paid promotion.’
Update as you go
It is a good habit to update budgets with the actual figures as the project develops and monitor the variances. ‘This gives you the opportunity to take corrective action if it starts to blow out,’ added Thomas.
Other actions you can take to stop your budget blow out include booking flights as early as possible, sticking to scheduled labour times by doing lots of preproduction beforehand, and arranging blanket deals with key personnel that are results driven and already account for time over runs.
The Essential Skills Series is brought to you in partnership with the JMC Academy.
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