Financial Management For Event Company: Proposal For A Financially Viable Event

Introduction to the company, venue, and facilities offered

Ashfield Meetings & Events is a reputed international event management company, which is based in the United Kingdom. It is located in the city of Leicestershire (ashfieldhealthcare.com 2018). It is one of the most sought after event management companies in the world. They cater to the requirements of small to large companies ranging from pharmaceutical, medical devices, biotech and medical diagnostics companies, around the world. The company majorly provides a series of services including the production of various product launch events of various companies, tours and award ceremonies, both in a national as well as on international scale. Here the event of Apple’s new product launch, which is set to take place in Liverpool has been discussed about.

The major event venues of the company include Rome, Zurich, and Paris (Pharmafile.com. 2018). The company has won numerous prestigious awards and accolades in the form of “UK event 2013: Agency Of The Year”, “Conference & incentive Travel excellence Awards 2014: Pharma event Of The Year” and many others (Bloomberg.com. 2018). The company, which has the division named after it, the Ashfield Division, has a wide range of expertise in the form of various healthcare professional and other personalised services, for effortlessly providing services in the form of expertise in providing management of events, at both in a national as well as international scale.

Results of Market research about the commercial viability of similar events:

Ashfield Meetings & Events has been conducting events on a national as well as international scale since its inception. It has garnered adequate amount of profits along with an indelible reputation for conducting events with meticulous planning. Details of some of these events have been provided below:

• Drumming workshops to brewery tours in Japan: Ashfield was tasked with creation of an annual incentive program for a pharmaceutical company’s top working executives. After much research, Japan was chosen as the area of experience because of its rich culture and ethos. Tokyo and Kyoto were chosen as the favoured places. It was a five day event, consisting of luxury trips, rickshaw rides, and temple tours. A special Taiko drumming workshop was also arranged for the executives. Touring of brewery, traditional Japanese dinner of Sushi and Sashimi on a beautiful Yakatabune boat along with a huge dinner in a traditional; sprawling garden of Japan was also arranged (Citmagazine.com 2018). The client was impressed and had also requested Ashfield’s assistance in future for arranging similar events.
• The Bayer UK conference: Ashfield had arranged a conference meeting for Bayer UK, which is a pharmaceutical company. It was attended by a total of 450 attendees from different genres of the industry ranging from consumer, animal healthcare products, crop sciences, pharmaceutical divisions (Bayer.co.uk 2018). It was a highly engaging event, which had emphasised on the understanding of the life sciences business. It was even recognised and awarded by EVCOM Live awards, in the form of the ‘Life Sciences event award’, in the year 2017. It was noted that Ashfield had utilised its knowledge of their innovative and dynamic business, along with their technical know-how of the life sciences market, for arranging innovative and exciting concepts for the event. It was recognised as one of the most successful conferences in the United Kingdom.

Alternative sources of finance for funding of events:

Funding of events is one of the most important aspects of any successful event, be it any award ceremonies, meetings and conferences. It is also true for Ashfield too. Some of the sources of finance are as follows:

• UDG Healthcare PLC: UDG Healthcare is the parent company of Ashfield meetings and events. Being the parent company, it also looks after the financial well-being of Ashfield Meetings & Events. It is one of the most reputed and largest health care companies in the industry.  UDG’s sales, marketing and medical service offerings are well included into Ashfield Commercial & Medical Services, which caters to the financial requirements of the event management company.
• Angel investors:Ashfield also has a large network of angel investors, which also caters to the sourcing of funds for the company, which helps in their production and arrangements of the different events for the company. It is because of its strong network of investors, the company is able to gather funds from a large pool of investors, from the contacts generated by its existing network of investors and financers, including the angel investors.
• Loans provided by the banks:In the era of financial independence and digitalisation, banking has been the heart and soul of every growing and developed economy. The banks make huge profit in arranging such big events as conducted by Ashfield (Kavanagh, Rochford and Bussa 2015). Since, the company has earned international repute by serving its clients in the best possible way, receiving bank loans from companies is not at all a difficult affair.  
• Sponsorship and sale of tickets:Sponsorship has become an integral part of the financing any major event. In case of Ashfield, it is no exception. After gathering the information about the events, forecasted ticket sales and other information, it agrees to sponsor the event. Ashfield has been working in this field for quite some time now, which helps in receiving sponsorship in comparatively easier ways. Ticket selling websites like Eventzilla, Ticket Tailor, Etouches and EventMobi can play a major role in assisting the sale of advance tickets, which again form s a credible source of finance (com 2018).

Major purposes of financial management within the events industry:

The major purposes of the need for managing the finance for the event industry are as follows:

• Budget preparation: One of the most important tasks of financial management is the creation of the budget. The budget helps in forecasting the income and expenditure of organising any particular event of any other expense or income for the company(Sba.gov 2018). It helps the event directors for accurately knowing the financial map for the future events.
• Capital needs and requirements:Preparation of an effective financial plan and a proper strategy for its implementation is very necessary; otherwise the company might become bankrupt in the future (Bhatt, Manadhata and Zomlot 2014). Determining the required amount of capital and its sources helps in seamless execution of events and other plans.
• Investment issues:It is very important for the finance manager of the company, to determine the areas, where the funds could be invested for the betterment of the events business, how to use it, where to invest it for expansion and other important purposes. In this way the surplus could be disposed in an effective manner.
• Management of the financial resources: Management of the financial resources like cash in hand and other liquid funds, loans, borrowings, must be identified, failing to do so, might invite greater financial perils for the company(Entrepreneur.com 2018). Most importantly, if cash management is not performed properly, it could lead to disruption of the day to day activities of the company.

Pricing strategies:

For executing such kind of events, effective pricing strategies could be use by Ashfield:

• An hourly rate:Such rates are very useful, as most of the attendees favour to pay on an hourly basis. It helps the attendees in getting the vital information about the duration of the event, and it makes the payment a hassle-free affair. It would also help in receiving the money of the aggregate amount of hours of the event and it could start from £16.
• Venue rent: The cost of performing in the specific venue is required to be taken into consideration. The rent of the hall, the usage of the facilities and the cost of the other items being separately installed for the guests by Ashfield, needs to be taken care off.
• Percentage of profit:the profit percentage is another item which needs to be taken care of, it is probably the most important item, in organising such events.  Ashfield must ensure that the seats are full and the money is being received on time. Generally profits vary from 15 to 20 % o the total cost of conducting the event.
• Receiving commission:Commission is another important source of income for the event companies, which is derived from the various travel agents, food companies, hotels and venues. It’s a highly profitable strategy, which also helps in building strong professional networks for future events and activities (Atkins and Moyer 2013). This strategy will do wonders for Apple, and would be very effective for an event based company like Ashfield.

Critical evaluation of cost-volume-profit (CVP) analysis:

The cost volume profit analysis or the CVP is mainly used by companies for assessing the impact of changes in cost and volume on its operational expenses and income. It is also widely used in case of event management companies; its usage is all pervading (Ziakas and Boukas 2014). There are three pivotal elements of a CVP analysis, which are the profits, volume and the cost of the products. Here the contribution margin is calculated by deducting the variable cost from the total sales (Torriti and Ikpe 2014).  It is mostly used for decision making purposes for determining the level of sales, which is necessary for making a profit in the process of selling of goods by the company.

Results of market research

In the case of Ashfield, CVP would be very useful in the condition that the costs remain fixed till a particular level of output or production. Another condition which would help in CVP’s hassle free implementation is the assumption that the tickets would be sold and only variable cost and fixed cost remains. Some important points need to be kept in mind, for ensuring the success of the implementation of the CVP, such as the contribution margin must be greater than the total fixed costs (Noreen, Brewer and Garrison 2014). It could also be utilised for calculating the breakeven point, by dividing the aggregate fixed costs with the contribution margin.

Some of the hypothetical figures, which would help in using the CVP analysis, are mentioned below, in a tabular format:

Table 1: Basic hypothetical figures, to be used for Ashfield’s event.

(Source: Author’s creation)

In accordance with the table provided above, the average revenue from each consumer would be £45, the average variable cost for each of the consumers is fixed at £15, with the contribution margin being £ (45-15). Here the increasing fixed costs have been taken to be at £15,000 and the number of consumers expected to be 700. With the help of these hypothetical figures, the break even of the customer and sales amount can be calculated, as has been provided below:

Table 2: Break-even in terms of consumers and break-even sales for the event

(Source:Author’s creation)

If we decipher the table, it could be seen that the contribution margin for the event of Ashfield is at £21,000. Generally a healthy and positive amount of contribution margin is always favoured for retaining greater amount of profits for expanding purposes in future. It can also be derived from the table that after deduction of the fixed cost, the net profit would stand at £ 6,000. Thus, it can be said that Ashfield needs a total of at least 700 consumers to be on the no profit and no loss margin, which is the breakeven point.

In the table given below, various levels of revenue have been shows, which would eventually help in preparation of the traditional break even chart.

Table 3: Different revenue levels for breakeven point

(Source:  Author’s creation)

Figure 1:  Break-even chart for the planned event of Apple conducted by Ashfield meetings & events.

(Source: Author’s creation)

Based on the close evaluation of all the factors, strategies, pricing strategies, need for financial management and the cost benefit analysis, a series of recommendations have been provided for smooth growth of Ashfield in the successful completion of the event of Apple’s new product launch. For the income streams, banks are one of the most viable sources of easy finance. Since Ashfield has been operating under the flagship banner of UGDD, for many years, getting loans from the banks won’t be a very difficult issue. Similarly, sponsors would also be available, because of the joint brand name of one of the most reputed event management company of the UK and for associating with Apple, which is in itself, one of the pioneers of the Silicon Valley.  For the pricing strategies, the hourly rate and the commission mechanisms are very viable options, which must be utilised. Considering the brand name of Apple being involved, Ashfield must also increase its own profit percentage; keeping in mind the venue rent strategies.

Critical analysis of relevant income streams

Conclusion:

Thus it can be said and concluded that for the successful execution of the event of Apple’ s new product launch in Liverpool, UK, Ashfield must assess all the intricacies of the project in hand. Right from the costs, the pricing strategies, the cost benefit analysis of the relevant incomes, expenses, and the sales must be taken into careful consideration. For this, a thorough preparation of a proper capital structure is very important, where all these issues would be addressed. A final projection and forecast must be done for all the components of the event, before final execution. Along with all this, finally the sources of income in the form of bank loans and sponsorships from reputed sponsors must be used.

References:

Ashfield Healthcare. (2018). Ashfield Meetings & Events scoop life sciences event award | Ashfield Healthcare. [online] Available at: https://www.ashfieldhealthcare.com/gb/news/ashfield-meetings-events-scoop-life-sciences-event-award/ [Accessed 15 Aug. 2018].

Ashfieldhealthcare.com (2018). Ashfield Healthcare. Ashfield Meetings & Events named in CMI 25 list | Ashfield Healthcare. [online] Available at: https://www.ashfieldhealthcare.com/gb/news/ashfield-meetings-events-named-in-cmi-25-list/ [Accessed 15 Aug. 2018].

Atkins, M.G. and Moyer, D.S., International Business Machines Corp, 2013. Facilitating event management and analysis within a communications environment. U.S. Patent 8,347,143.

Bayer.co.uk (2018).  plc, B. UK – Bayer plc. [online] Bayer.co.uk. Available at: https://www.bayer.co.uk/ [Accessed 15 Aug. 2018].

Bhatt, S., Manadhata, P.K. and Zomlot, L., 2014. The operational role of security information and event management systems. IEEE security & Privacy, (5), pp.35-41.

Bloomberg.com. (2018). Terms of Service Violation. [online] Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=46300437 [Accessed 15 Aug. 2018].

Citmagazine.com. (2018). The Masterplan: Ashfield Meetings & Events. [online] Available at: https://www.citmagazine.com/article/1310193/masterplan-ashfield-meetings-events [Accessed 15 Aug. 2018].

Citmagazine.com. (2018). Universal World Events rebrands as Ashfield Meetings & Events. [online] Available at: https://www.citmagazine.com/article/1229573/universal-world-events-rebrands-ashfield-meetings—events [Accessed 15 Aug. 2018].

Entrepreneur. (2018). Financial Management. [online] Available at: https://www.entrepreneur.com/article/21926 [Accessed 15 Aug. 2018].

EventMobi. (2018). EventMobi. [online] Available at: https://www.eventmobi.com/ [Accessed 15 Aug. 2018].

Kavanagh, K.M., Rochford, O. and Bussa, T., 2015. Magic quadrant for security information and event management. Gartner Group Research Note.

Noreen, E.W., Brewer, P.C. and Garrison, R.H., 2014. Managerial accounting for managers. New York: McGraw-Hill/Irwin.

Pharmafile.com. (2018). Ashfield Meetings & Events | Pharmafile. [online] Available at: https://www.pharmafile.com/directory/ashfield-meetings-events [Accessed 15 Aug. 2018].

Sba.gov. (2018). The Importance of “Financial Management” | The U.S. Small Business Administration | SBA.gov. [online] Available at: https://www.sba.gov/offices/district/nd/fargo/resources/importance-financial-management [Accessed 15 Aug. 2018].

Torriti, J. and Ikpe, E., 2014. Cost–Benefit Analysis. In Encyclopedia of Law and Economics (pp. 1-8). Springer, New York, NY.

Ziakas, V. and Boukas, N., 2014. Contextualizing phenomenology in event management research: Deciphering the meaning of event experiences. International Journal of Event and Festival Management, 5(1), pp.56-73.

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order