Fyre Festival was a failed music festival that occurred in 2017. Although it was a huge commercial success - as people were willing to shell out hundreds of thousands of dollars to participate in the most luxurious and expensive music festival ever mounted - it was a logistical and financial failure.
1. Plan Your Revenue Streams
Fyre Festival had already began selling their event before they even really had any feasibility of what they were selling to their customers. They began selling luxury villas and yacht parties before they had any real idea of how much these will cost them and the availability of such resources.
Start with an understanding of your top-line item, your revenues is a product of quantity and price. If your revenue stream has a scarcity of supply, then you will have to ensure that your max revenues cannot surpass the quantity available. You may have multiple revenue streams to ensure that you maximize your events capacity.
Think of the following revenue streams when launching an event.
Meet and Greet
2. Revenues Have a Cost
Everything that the Fyre promoters promised the customers have a cost. These costs are typically variable to the quantity of their revenue verticals. How much food, how much drinks, how many Villas, tents or other lodging should have been the second part of their planning. On top of that, who's performing for a certain number of hours.
For aspiring event planners, follow your revenue planning with the variable cost planning. Once the unit economics of your revenues have been determined, the total cost of sales will be the variable cost multiplied by the number of units to be sold.
3. Administrative Costs
Rent, Taxes, People and other administrative costs. Fyre promoters had to find an island on last minute, even though they had already sold their customers on the so called "Pablo Escobar's Island". They also ran into an import tax which kept their alcohol and water bottles from coming into the island. They needed people to work at an incredible pace because there wasn't enough people in the island to accommodate their labor needs.
When planning an event make sure you book a venue ahead of time, and have backups just in case you are unable to book your preferred venue. Ensure that you have enough time to run through the local government bureaucracy and that you have applied for all the proper permits and paid the taxes, licenses and fees. Ensure you have enough time to obtain labor.
No one can deny that Fyre festival and their marketers at Jerry Media did a great job. They used social media influencers effectively and sold everyone on a dream. But what they did wrong, was that they started Advertising before they had a plan of execution - before they had a product.
For event planners, determine how much you are willing to spend for Advertising, Public Relations and Marketing. A spending limit will force the event to choose the marketing campaigns that will create the buzz the event needs at the most efficient way. Keep a close eye on your customer acquisition cost, meaning how much it cost you to get an individual to pay for a ticket.
5. How Fyre Spent $26M
Fyre Festival spent money with little concern about their customers and investors. They did not control their spending, since it was "Other People's Money".
For event planners, manage the expectations of your customers and your investors/founders. Control your cost and treat their money, like your money.
For assistance with budgeting and financial planning, please feel free to contact us.