Fyre Festival and How to Budget for an Event
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The Fyre Festival was supposed to be a lavish event for the ultra-rich, but it quickly turned into a disaster. One of the main reasons for the festival's collapse was the mismanagement of finances. The organizers spent lavishly on promotion and celebrity appearances, but they failed to invest in basic infrastructure. As a result, they were unable to meet the needs of their guests when the event finally took place. This financial mismanagement is a cautionary tale for any organization planning a large-scale event. It's essential to create a realistic budget and to allocate funds wisely. Otherwise, you run the risk of ending up like the Fyre Festival organizers- bankrupt and disgraced.
1. Plan Your Revenue Streams
Fyre Festival had already begun 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 are 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 event's capacity.
Think of the following revenue streams when launching an event.
Lodging
Meet and Greet
Alcohol/Drinks
Food
Retail Merchandise
Package deals
2. Understand Your Expenses
Your event will have many different types of expenses, from the cost of the venue to the food and drink that you'll be serving. Plan ahead of time by creating a budget and understanding where your money will be going. For example, Fyre Festival overestimated the attendance of their event and did not account for the fact that they would need more tents, port-a-potties, and other infrastructure to accommodate the expected guests.
3. Don't Oversell Your Event
Fyre Festival sold tickets before they had a venue, a lineup, or anything else in place. This led to them over-promising and under-delivering on their event, which ultimately resulted in the festival's downfall. Fyre promoters had to find an island at the eleventh hour, 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 weren't enough people on the island to accommodate their labor needs. When selling tickets or packages, make sure that you can deliver on what you're promising.
4. Advertising
No one can deny that Fyre festival and its marketers at Jerry Media did a great job. They used social media influencers effectively and sold everyone on a dream. The Fyre team had sold a product before they had a plan of execution and ended up overspending. For event planners, determine how much you are willing to spend on 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 in 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 festival spent 26 Million dollars in 6 weeks?
Fyre festival was a music festival that was advertised as a luxurious and exclusive event. It was held on the Bahamas' Exuma island and marketed heavily through social media influencers. However, the event was marred by poor organization, oversold tickets, and a lack of resources. As a result, the event organizers had wildly overspent and it is considered by most to be a failure.
When you're planning an event, whether it's a music festival or anything else, make sure that you have a clear understanding of your revenue streams, expenses, and capacity. Don't oversell your event and have a contingency plan in place in case things go wrong. And finally, make sure to promote your event widely to ensure that you sell enough tickets. For assistance with budgeting and financial planning, GFT is here to help!