Financial management is an important aspect of every type of business whether it is manufacturing, retailing, wholesaling or entertainment. It helps in managing the cash outflows and cash inflows of the business. It is all about making financial plans to achieve stability and growth. Business owners can never ignore the importance of financial management. It acts as the valuable tool which needed to move ahead with the expansion plans (Arnold, 2005). There are some important future decisions which are to be made for the future. Keeping records of monetary transactions and events is an aspect of financial management. These records are presented in the form of reports. No business company can utilize its full potential for growth and expansion without proper administration and effective utilization of finance (Baker and Baker 2009). Financial management is regarded as the key to the successful business operations. It includes decisions related to investment, finance and dividend. Among the three, financing decisions are concerned with estimation of funds which are needed to acquire the assets. The process is more related with financing mix or capital structure or leverage and the owner has to identify the proportion of debt and equity (Booker, 2006). It should be optimum finance mix which maximizes the investment of shareholders.
A proper balance is essential between risk and return. It can be said that financial management helps in promotion and smooth running of business. If any plan fails due to inadequate capital, it is very difficult to carry all business activities effectively and efficiently (Hawawini and Viallet 2010). Finance is needed at every level of company like research, development, promotion, expansion and in management of expenses. Financial administration becomes inevitable for smooth functioning of operations. It offers scientific analysis of all facts and figures through financial tools such as variance analysis, ratio analysis, budgets etc. Such techniques helps the management in evaluating profitability of the plan and also helps in taking appropriate decisions to minimize the associated risk (House of Commons., 2008).
Events like festivals also need proper financial sources for carrying out their business operations. The festivals can be related to anything such as music, arts, films, culture, education etc. Money is needed at all levels for doing sponsorship, marketing, and programming as well as event planning etc (Baker and Baker 2009). Though these festivals donates most of their profits to charities but still they need proper financing to do proper arrangements for visitors who are coming to the festivals. It makes planning perfect and effective. Mostly these kind of events runs for 2-3 days or even a week. Hence the organizers have to handle all the services that are related to retail, accommodation, food, catering, volunteers, logistics, transportation etc (Booker, 2006). Hence, financial management is important to handle all the day to day expenses and to manage all the cash flows. It helps in making the financial decisions very sound and secure. Under prevailing situation, with the availability of information and scarce resources, financial management makes the decision very effective. Under these kinds of festivals, it can be regarded as an intelligent quest for optimal use of financial and other economic resources at user's disposal (Howarth and Gruen 2005).
1.2 Source of finance
Without appropriate financing business is incomplete. These sources help in running the business continuously and smoothly. There has to be stability in all the sources which means income must arise from them regularly. Selection of the source depends on the size and scale of the business. All needs and requirements are taken into consideration and then feasibility analysis is performed regarding the assessment of that source (Winand and et. al. 2012). It is important that right mode of finance is selected. Another major aspect is to analyse the costs and implications for these sources. Company must have the potential to bear those costs that is associated with a source. Selection can be done keeping in mind the nature of the business also. Hence, it can be said that finance act as backbone for every kind of business (Howarth and Gruen 2005).
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1.3 Background of Glastonbury festival
Glastonbury is a small town which is situated in Somerset within England. The town lies in Mendip district having a population around 9000 people. It is a centre for religious tourism and pilgrimage. Glastonbury festival is a five day music festival which takes place at the above place only. The festival holds contemporary music, dance, comedy, circus, cabaret, theatre, arts etc. It is organized by the owner named Michael Eavis. The first Glastonbury Festival was held in 1970 and since then it has achieved growth and reputation in order to become the UK's largest and respected festival. It is regarded as the largest Greenfield festival in the world and is attended by millions of crowd every year. The event requires high infrastructure in terms of transport, water, electricity, accommodation, security etc. The staff members act as volunteers, providing support to the festival in raising money for good causes.
1.4 Research issue
Recent years have witnessed a high increase in the number of arts and cultural festivals in UK. These include established international festivals to small community events. Most of them also run in shoestring budgets and limited resources. These festivals have something different and they promote innovation and generation of new ideas and work with having high emphasis on quality work. The continuous expansion of this sector has lead in creating doubt about the sustainability of many festivals in UK. Sector is facing high competition for funding, sponsorship, resources and capacity in the context of profile, audiences and size. In order to be sustainable, these festivals now need to be very effective and efficient in their financial management. They have to think about achieving long term financial sustainability. Hence the purpose of this research study is to evaluate appropriate sources of finance for Glastonbury Festival. Further it will help to understand the importance of financial management and sustainability for these kinds of festivals.
1.5 Research aims & objectives
The major aim of the research study is to discover appropriate sources of finance for the Glastonbury Festival in UK. In order to achieve the above aim following objectives are to be achieved:
- To identify the short term and long term sources of finance for Glastonbury festival
- To understand the importance of financial management and sustainability for Glastonbury festival
- To suggest some innovative ways of funding for Glastonbury festival
1.6 Potential significance of the study
Every research carries significance behind it. Festivals like Glastonbury require high infrastructure and funds in terms of transport, water, electricity, accommodation, security etc. These expenditures are to be managed adequately by the organizer of these events. In order to fulfil this purpose, they need appropriate sources of funding and income. Hence, this study will help in discovering some appropriate sources of finance for Glastonbury festival. The major significance is that the owners and organizers of these kinds of events can learn about many financial sources through which they can do funding for their operations. They can also learn about effective financial management and optimum utilization of all financial resources.
1.7 Structure of dissertation
Chapter 1 Introduction
This chapter holds a major importance because it talks about the terms and concepts associated with the subject. It provides a brief outline about the research topic. It discusses the research issue, potential significance, research objectives of the study.
Chapter 2 Literature Review
This chapter performs thorough review of appropriate secondary sources. Here the relationship between the literature and project is explored that is justification is linked to the literature. This section will evaluate the sources of funds available for Glastonbury festival.
Chapter 3 Research Methodology
This chapter shows the application of research tools and techniques. All research tools that are applied during the study are discussed along with proper justification. Appropriate data collection technique is also discussed.
Chapter 4 Data Analysis
This chapter performs appropriate analysis of data in the light of the research objectives and questions. It will show clear and analytical presentation of findings by making use of a suitable data evaluation technique.
Chapter 5 Discussion
In this chapter results from the above chapter will be discussed effectively. It will also highlight significant findings and theory & practice will be compared wherever necessary. It will form the basis for solid outcomes and results
Chapter 6 Conclusion
This chapter will be based on a reasonable interpretation of research performed and the existing literature. It will make solid outcomes and results and the basis of those strong recommendations will be given.
CHAPTER 2 LITERATURE REVIEW
2.1 Types of sources of finance
There are mainly two types of sources of finance and these include internal and external sources. The two can be described as follows:
Internal sources are raised from within the organization or body or group. These are easy to adopt and implement. Arrangements can be made in easy manner. They also carry less of risk and burden. The user does not have to take complex decisions in availing these sources. The sources include owner's investment, retained profits, sale of stock, sale of fixed assets, debt collection etc (Atrill and McLaney, 2008). Under internal financing capital is available for use intermediately and there is no interest payments. It does not include any control; procedures that is related to credit worthiness. But it is healthier for short term business operations only and does not offer flexibility. It is also not tax deductible.
These sources are raised from outside the firm that is from other companies, group of investors, an individual etc. It is very difficult to raise money from external sources because it requires lot of examination and complex procedures. Further, they carry high level of risks and complexities. These include bank loan, share issue, leasing, mortgage, hire purchase, grants, trade credit, etc (Drake and Fabozzi 2012). External financing offers long term stability and flexibility. It is mainly useful for long size business operations. It also carries drawbacks such as loss of ownership, control etc and also includes interest payments.
2.2 Funding for festivals in UK
These festivals also carries a distinctive annual cycle as all people make efforts towards a time-limited event. The organizers prepare plans focussing on areas such as sponsorship, funding, marketing, programming, event planning etc. All areas are covered including logistics and event management (Howarth and Gruen 2005). The annual cycle also means that these festivals have to manage their finances and fund raising activities in careful manner. It is done to avoid issues that are related to cash flow and shortfalls. At present, many festivals had started disclosing their entrepreneurial nature as they are raising money through diversification. They are diversifying their income sources and they are not entirely dependent on public funding or ticket sales (Atrill and McLaney, 2008). According to BAFA, that is British Arts Festivals Associations 2002 study, ticket sales are the most significant source of finance, contributing around one third of the total income. BAFA is having a huge membership around UK. The research also showed that income from public funding such as Arts Council England and lottery grants are also practised widely but it contributes around 7% of the total income. Along with that, additional income sources include 14% from sponsorship, 12% from earned income and 13% from local authority funding. Other sources of funding include charitable trusts (9%), individual donations (3%) and European Union Funding (0.5%).
In the East Midlands region, different festivals rely on different sources of finance. They are dependent on public funding and get support from the local community in form of volunteers and use of venues. Most of the festivals generate funds entirely from ticket sales, sponsorships, donations, individual support etc. Many of them follow a policy of making payments to their staff not using them as volunteers (Droms and Wright 2010). Many festivals in UK seem to have discovered new and innovative techniques which are related to marketing, programming and crowd creation but yet it is difficult for them to get continuous funding. They find it complex to get continuous public funding support through regular communication. These festivals face problems related to sustained advocacy work and in highlighting the values of these festivals. In Easy Midlands, companies such as East Midlands Development Agency, Arts Council England, Culture East Midlands and Cultivate have been established to create link with festivals and to encourage collaborative working (Drake and Fabozzi 2012). Around 60% of BAFA festival members are small scale festivals having an annual turnover of less than £100,000 per year. It is difficult for the management of these festivals to find time for financial planning. This is because they operate within a very limited time, funds and human resources. Many organizers do not possess the adequate knowledge of financial management. Making of profit & loss sheets, monthly management accounts and end of tax year returns can prove to be difficult and time consuming. Strategic planning along with financial planning and budgeting must be the key aspects of any company's development (Howarth and Gruen 2005).
2.3 Sources of finance for Glastonbury festival
Glastonbury festival can raise money from different types of sources. These sources can be described as follows:
Grant - Grant is an amount of money that is given to an individual or group or entity for a specific project from the side of government. The users can apply for grant from the government, the European Union, local councils and charities (Atrill and McLaney 2008). These are regarded as the non-repayable funds which mean the borrower does not have to refund the amount of the money borrowed. For availing this kind of funding, the users are required to submit an application to the government. It requires some level of compliance and reporting. The application is written either on the applicant's own initiative or in response to a Request for Proposal from the funder (Leung, 2011). These are also given to the victims of any natural disasters or individuals who are looking to open a small business. Grants in UK are made available for fulfilling different types of business, charitable and research objectives including the happening of a festival also. Government departments and agencies are the biggest distributors of grants which offer money to third party organizations. The list of distributors also includes National Lottery, Charitable Trusts and Corporate foundations (Drake and Fabozzi, 2012). Grants are time limited and are provided to implement existing government policies, to encourage new ways of performing things, to secure agreed outcomes etc. It will usually be given for a particular project or use and will not usually be provided for projects that have been started already. It is not easy to raise funds through grants. The organizers of Glastonbury festival might have to fulfil all legal and ethical requirements stated by UK councils (Droms,and Wright 2010). If they are doing this for charity, they have to properly display the purpose and motive of their work.
Sponsorship – To sponsor something means to support an activity, event, entity, group etc in financial manner or through provision of goods and services. Sponsorship is done on the basis of expectation of a commercial return. These source of finance offer increased awareness, brand building and inclination to purchase (Keller, 2013). It is different from advertising and promotion. Now the question arises who are these sponsors. These can be social groups, companies, non-profit firms, NGOs etc. They provide sponsorship to festivals such as Glastonbury etc in the form of money and in return they demand promotion of their products and services at these events. Sponsors can associate with the festivals through offering support in any manner. In this manner mutual purpose of both parties are solved (South, 2006). The organizers of festivals get money and sponsors can create awareness about their services among people.
Banks – Banks are the most common option available for finance for these kinds of events. The organizers can take loan from various banks that are available in UK at considerable rate of interest. Different banks provide loans at different rates (Mills, 2009). The borrower can take the money after analysing all the interests’ rates offered by the banks and selecting the best one. These days loan are available at flexible formalities and favourable rate of interests. The amount can be repaid annually or monthly in the form of instalments. Interests charged on the loan act as the costs for borrower. Whether the condition of business is bad or good, the bank will always ask for instalments (Akrani, 2013). Hence, it is important that festival must succeed socially as well as financially.
Individual donations – Donation is an amount given by an individual, group or entity for a noble and social cause. These days’ people donate money or some other things to offer support for some events and festivals. It depends on the willingness of the person or groups whether to donate or not, they cannot be forced to donate (Baker and Baker 2009). The organizers of these events often contact companies and wealthy people to gain some funds. Donation is an activity that happens purely on the willingness of the party. Government can also provide support to these festivals in form of donations.
Charitable trusts – In UK, charitable trust are form of express that are entirely focused towards charitable goals. In order to be portrait as a valid charitable trust, the organization must display public benefit as well as charitable purpose (Booker, 2006). There is also a requirement that motivates the trust which must provide benefit to the public not any group of private individuals. These institutions are not allowed to be run for profit. These are managed by group of trustees but there are no relations between trustees and beneficiaries. Most of the festivals in UK are funded by these trusts. The trustees also feel happy to be associated with these kinds of events and festivals because these also promote noble causes and encourage many things that are related to specific culture (Hawawini and Viallet 2010).
Ticket sales – Generally when any kind of show, event or programme happens, tickets are placed for the audience and customers to see it. That means people have to pay the price in order to see the event. Ticket sales are major source of income for festivals as people come in huge numbers to attend the festivals (Droms,and Wright 2010). These tickets can be sold physically at some places, shops, and stores or online also. It means visitors can book their tickets sitting at their home also via internet. Online mode increases the sales of ticket because people find this type of buying easy and convenient.
Retained earnings – Retained earnings is the portion of net income of business which is retained by the company rather than distributing it to the shareholders as dividends. In case if the company suffers a loss then that loss reduces the company's retained earnings balance. If the balance of the retained earnings is negative, then it may be called retained losses, accumulated losses or accumulated deficit (Atrill and McLaney 2008). Retained earnings and losses are cumulative from year to year. These festivals can raise money from their retained profits and for that success of every of their event is must. Then only the amount of investment will rise for the future period.
Investors – It has been discussed earlier that gradually the nature of these kinds of events is becoming entrepreneurial. The organizers of these events are acting as entrepreneurs. Similarly in order to raise the funds, individual or group of investors can be called to invest some amount in these festivals and in return they can be offered certain portion of net income from festivals (Baker and Baker 2009). It is because organizing festivals demands high infrastructure, accommodation, electricity, water, security etc. For that purpose, organizers need a very heavy amount of investment so that they can grant every kind of services to the visitors. These investors can be in the form of firms, groups or individual etc. Investors also see their benefits and advantages in investing their money and get attracted towards these events (Leung, 2011).
Leasing – It is an agreement between the two parties that is lessor and the lessee. The asset belongs to lessor but he allows the lesses to use it (Hawawini and Viallet 2010). The payment is made by lessee according to the terms of the agreement for a specified period of time.
CHAPTER 3 RESEARCH METHODOLOGY
Research methodology section is related with application of research techniques and methods. The chapter leads towards achievement of research goals and objectives. It discusses design, philosophy, approach, data collection, sampling etc. It helps in generating the ways in which data is to be collected and analysed (Burns, 2007). It emphasize on potential benefits and challenges which are related with conducting of the research. This study is about investigating the appropriate sources of funding for Glastonbury festival in UK. It shows how the festival finances its business operations and attains financial stability.
3.2 Research Approach
Application of a research approach is important for adequate evaluation of research goals and objectives. With the help of approach, researcher can avail best and suitable information for the research. There are two types of approaches inductive and deductive. Inductive approach focuses on analysing pertaining facts, figures and information (Grbich, 2012). Here, the researcher through continuous observation develops different types of patterns and then establish a tentative hypothesis. Deductive approaches emphasis on evaluating theory that already exists by creating hypothesis testing. It is applied on the situation where the research work make efforts to apply generalized rule or principles that are developed to specific industry or company (Friese, 2012). For this study, inductive approach will be applied because the study demands generation of new theory from the data. It will look at the previously researched phenomenon from different perspective.
3.3 Research type
Research type determines the kind under which the research will be performed. There are mainly two types of research one is qualitative and quantitative. Qualitative type is applied when data is to be measured through theories and concepts. The data is evaluated through qualitative techniques only (Jackson, 2010). Quantitative data is more related with numeric and monetary terms. It requires evaluation through tools such as SPSS, surveys, questionnaire etc. This research type provides answers in more justified manner. For this study, both qualitative as well as quantitative type will be used. The evaluation will be supported with statistical graphs and figures. Qualitative type will help in focusing on theoretical aspects and quantitative type focus on providing accurate results (Kuada, 2012).
3.4 Data Collection
It is the most significant section of the research and helps in identifying relevant & valuable data for the research. It is essential that data is to be collected from valid and authentic sources. There are two types of data primary and secondary. Primary data is firsthand information available very fresh and is new in nature (Möllering, 2012). It is collected through sources such as surveys, questionnaire, direct observation, focus groups etc. While data, on getting used once becomes secondary for others. It is extracted through sources like books, journals, newspapers, internet etc. For this study primary data is collected from 20 management people of Glastonbury festival in UK through interview technique. It will show how the festival finances its business operations and attains financial stability (Panneerselvam, 2004). Secondary data is collected from sources such as books, journals, articles etc related to Glastonbury festival.
3.5 Research philosophy
It identifies the method that is employed for the collection of data. There are mainly two types of research philosophies positivism and Interpretivism. Interpretivism philosophy aids in analysing qualitative data in an appropriate manner and it is mainly concerned with small size samples. While on the other side, positivism philosophy emphasize on use of scientific and mathematical methods. It is applied under the study where huge sample sizes are taken (Sam, 2011). For this study, Interpretivism philosophy has been applied because the study carries small sample size. It is because this research focuses on constructed reality, subjectivity and relative truths.
3.6 Research design
It focuses on quality of the research. Different types of designs can be applied on the research and these includes descriptive, meta-analytic, explorative and semi-experimental. For this study, descriptive design is applied because the research is related with a particular body or association that is Glastonbury festival (Suri, 2011).
3.7 Data Analysis
Different types of methods and tools are used to analyse the research aims and objectives. It is essential that data is to be evaluated in a proper manner because it helps in producing valuable outcomes for the research (Jankowski, 2006). For this study, primary data collected has been analysed through thematic coding approach. The technique is used in the form of different type of themes by dividing the information on the basis of some categories. Thematic is best technique to scrutinize human behaviour, perception and feelings in effective manner. Themes will be generated on the basis of questionnaire (Guerin, 2006). However, all findings has been supported through graphs and figures.
3.8 Sampling and sample size
Sampling is related with selection of appropriate individuals for a set of population in order to fulfil a specific objective. Sampling is essential for filtration of the data. It makes the data collection work easier and simpler. In order to select an appropriate sample, an individual can use two types of methods probability or non-probability sampling (Humphrey, 2008). Probability sampling includes random and stratified form of sampling. Non-probability methods include quota, purposive, convenience and systematic form of sampling. For this report, purposive sampling has been used which is a part of non probabilistic sampling technique. This study requires data to be collected from people that are related to Glastonbury festival only and purposive approach offers that. It helps in selecting the sample on the basis of preference from the researcher. For this study, a sample size of 20 individuals has been kept (Burns, 2007). These individuals will deliver valuable data and information for the research.
3.9 Ethical consideration
It is essential that research must be carried out according to the ethical framework. There are some research guidelines and provision which are needed to be fulfilled in an appropriate manner. The researcher must have proper knowledge and understanding of the subject which is to be researched. It will help in producing adequate outcomes for the study (Panneerselvam, 2004). All data is to be collected from valid and authentic sources. There should not be any misuse of the data. It is essential that identity of the respondents must not be disclosed without their prior approval. Researcher must also avoid kind of biasness while the course of the research. While interview process, it must not harm the feelings and sentiments of the people (Möllering, 2012). Proper referencing and citation are to be done in case of every data. No information is to be taken directly from any source and proper referencing is to be done. Act of plagiarism and replication must be avoided and researcher must also avoid any kind of subjectivity throughout the work (Humphrey, 2008).
There can be certain limitations related with the study. Researcher can face constraints related with resources such a content, manpower, time, costs etc. Accessibility issues may arise in availing primary data from management people of Glastonbury festival. Lack of time and costs can disturb the scheduling of all research activities. Delay in one activity can cause delay in another activity also (Burns, 2007). Limitations may also arise in terms of selecting proper research tools and techniques, Selection of wrong tools and techniques can produce negative results.
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