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Published 20 March 2024
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5 minutes

Running a Music Venue? Stay Financially Sound with These 7 Steps

Grassroots music venues play a major part in the local economy and cultural scene, but a record number of these businesses went bust last year. We look at the financial challenges facing music venue owners and offer seven steps to help keep your business afloat.

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Record numbers of UK music venues shut their doors in 2023, having failed to make their businesses profitable. But industry experts say painfully tight operating margins has meant the long-term viability of many of these venues has been questionable for years.

Amid worryingly high numbers of small business insolvencies, the Music Venue Trust (MVT), a UK charity that aims to protect and improve grassroots music venues, dealt with 38% more grassroots music venues in crisis in 2023 compared with 2022.

The reduction of grassroots music venues in the UK is a concern not only for the development of new artists, but also for the economy. Around 125 music venues shut their doors for good in 2023, leading to the loss of 4,000 jobs and more than £9 million in lost income for musicians, according to MVT. 

The beat goes on… until it doesn’t

Music fans will know how local venues have helped set the stage for the development of British music. Local venues are often considered cultural assets, like Moles in Bath, which provided a platform for musicians, bands and DJs to build their performance skills and their careers, including Ed Sheeran and Radiohead. Sadly, in December 2023, Moles announced its closure after 45 years, after seeing costs spiral.

MVT’s 2023 report revealed the shocking statistic that, on average, UK venues operate at a 0.5% profit margin – that’s £2,977.25 a year. Pressure has come from rising rents, the cost of energy and staff wages, along with business rates, for which many music venues are unable to claim relief. While tickets to stadium tours fetch hundreds of pounds, entry to music venues has been “undervalued at grassroots, which then has a knock-on effect on what artists earn at that level and [the sector’s] sustainability,” according to Luke Hinton, a live music promoter and consultant for the MVT.

Don’t take grants for granted 

Recognising the high levels of need in the sector, the government stepped in with various initiatives, including the Cultural Recovery Fund (now closed) and Supporting Grassroots Music, a National Lottery funding project administered by Arts Council England. However, some venues were previously caught out by eligibility criteria, including a requirement to be a limited company.

To qualify, venues also had to demonstrate their debts were manageable and that their business had previously been profitable. Sarah Deen, a spokesperson at Arts Council England, confirmed by email that government funding “cannot support costs such as rent arrears, unpaid energy or suppliers’ bills or costs like insurance”. However, it can be used to invest in the business and its staff to increase future earning potential.

7 steps to financial stability 

  1. Look carefully at your business structure

Take time to consider whether to register your music venue business as a limited company, taking into account the VAT threshold, which will be £90,000 from April 2024, and any requirements for funding that you may want to apply for in the future. 

If you’re unsure of what becoming a limited company entails, look for online guides and don’t forget to check whether you’ll need to change your business bank account.

  1. Take a deep breath and apply 

If your business is based in England and you think you could be eligible for the Support Grassroots Music programme, a dedicated Arts Council relationship manager could help you apply. 

Funding for music venues in other parts of the UK varies. Visit Arts Council of Northern Ireland, Creative Wales or Creative Scotland to explore current funding, as well as helpful guides and resources for business owners.

  1. Keep on top of your bookkeeping

Many small businesses reach a point when they need an external cash injection. Whether it’s a private investor, a small business loan, or government funding, you’ll need to provide a record of your business finances.

Rather than waiting until your business is on the rocks, get in the habit of being diligent with your finances now. Accounting software could make this easier, which comes free with some business bank accounts.

  1. Sound out your suppliers for savings

For any business to be viable, revenues must exceed outgoings. Since the margin between the two is often incredibly tight for music venues, reducing your overheads, even by a small percentage, could help secure your venture for the future. Try negotiating your rent with your landlord; be honest with suppliers if you’re considering switching; and review how you split the proceeds of gigs with promoters. 

  1. Welcome daytime trade

Some venues have successfully added a second income stream to help balance the cost of rent. One option is providing rehearsal and recording space to artists during the day, or by serving food.

A report by Arts Council England evaluating the impact of the funding delivered to music venues found that 38% of successful applicants had developed new income streams, 41% had made changes to their business model and 45% felt more financially resilient.

  1. Get some perspective 

Getting independent advice can help you see the bigger picture and address financial challenges before they force you to pull the plug.

Even if things are going well, you may still wish to seek out a business coach or mentor. This could be someone who has decades of experience in the live music business, or someone younger with a fresh perspective.

“Receiving independent advice, I think, can be invaluable to any business because someone can point you in the right direction which can potentially make it more sustainable,” said Hinton.

  1. Upgrade your kit for sustainability

For venues successful in scoring a government grant, upgrading sound and lighting equipment can bring longer-term cost savings as well as improving the experience for punters. “The battered old PA covered in gaffa tape is becoming less and less [prevalent] as venues upgrade their equipment,” said Hinton. “Newer technology not only enhances live performances with crisper sound and better lighting, but switching to LED lighting could help bring down energy bills.” 

If you’ve realised you have a loss-making business on your hands, help is out there: MVT’s gurus provide an “emergency response” service for venues in peril, offering advice on planning, licensing, legal and financial issues. 

However, for venue operators whose music venue is a labour of love, taking steps to gain greater financial confidence and control could provide a stable bassline for a more sustainable business.

Image source: Getty Images

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