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They’re the unsung heroes of the live music industry. And their financial knowhow will be essential if the business is to get back on track quickly in the post-Covid age
By IQ on 25 Aug 2020
Unless you’ve been living under a rock since early March – in which case, welcome back! You’ve got a lot to catch up on – you’ll no doubt be exhausted from reading about the financial carnage wreaked upon the live entertainment business by the ongoing Covid-19 pandemic.
So spare a thought for the accountants, financial advisers, investment experts, currency specialists and all those who have been on the front line since then, helping the live industry mitigate the impact of the crisis – and whose expertise will be key to getting live entertainment back on track when the time comes.
Many firms who work with music industry clients have been forced to reinvent their businesses, as well as help their clients boost non-touring-related revenues in the face of the near-total halt in live music globally.
“We’re taking a hit because a lot of our artists’ income is reliant on touring,” explains Mike Skeet, a partner at Skeet Kaye Hopkins (SKH), the London office of US accounting firm Gelfand, Rennert & Feldman. “Our bigger clients can afford to ride things out, but a lot of our smaller artists are concerned they won’t survive.”
After the rescheduling rush in the first few weeks of the crisis, Skeet says much of his Covid-era work has revolved around helping many of those smaller artists access sources of funding. “Previously, they would tour almost non-stop and be out every summer for festivals,” he continues. “So now we’ve been doing a lot of work with helping clients look at government schemes and trying, where we can, to get them help.”
“When you stop running round like a lunatic and stop to focus, you can achieve big things”
Serena Humphrey, a former accountant who runs the UK-based financial coaching company The F Word, tells IQ she is using lockdown to launch The F Word Academy, a ‘finance school for small businesses’ that has been five years in the making and builds on a popular coronavirus business support group she started on Facebook.
Whereas, “at the moment, my team and I can work with 15 to 20 people,” the launch of the online academy scales the F Word business to reach thousands of potential new clients, she explains.
Lloyd Major of Halo Solutions, an F Word client, has similarly realigned his business after agreements to sell the company’s Halo security system to multiple major international venue clients fell through as a result of coronavirus-era purse tightening.
Major, CEO of the company formerly known as Crest Planning, says UK-based Halo lost six-figures’ worth of business – or 50% of turnover – in four weeks in March/April. Now, though, “we’ve picked up open-air cinemas in the East and West Midlands, a contract for NHS [National Health Service] logistics in Hampshire, and we’re talking to well-known artists about behind-closed-doors shows,” he explains.
“While some people would say we might as well just delete the rest of this year, we’re using the opportunity to look inwards and build better internal processes and have a fresh look at our business plans.”
“We’re hurting just like everybody else is”
International payments and foreign-exchange specialist Centtrip has also been hit by the halt in live events, says Freddy Greenish, the company’s head of music, film and entertainment. “We represent the best part of 600 artists, and the summer touring and festival season is always a big part of our year, so we’re hurting just like everybody is,” he comments.
“On the flipside, we have clients that earn foreign income from various different streams – not necessarily just on the live side – and where there’s been quite a bit of market volatility, that presented great opportunities for clients to sell dollars and euros and buy pounds, for example. When it all started to collapse around lockdown, sterling to dollar went to 1.15 [£1/$1.15]…
“So we’ve seen quite a few artists take advantage of that, where the rates have been preferable.”
“In terms of innovation, I do think, strangely, that the challenges have played well to our skillset,” says Paul Bedford, partner at Edition Capital, an investment company specialising in the entertainment and leisure sectors.
“If you are always making capital of strong financial management in a business and something like this comes along, you benefit massively from the fact that most of those businesses already have good habits, such as regularly reviewing cash flow to ensure that they don’t have issues lurking in the future, or, if they do, corrective action is taken to remedy the situation.”
“The shutdown has forced forward and dynamic thinking … where the ‘normal day’ is not relevant”
As the scale of the crisis became apparent, Bedford continues, “each of the senior staff worked closely with around five or six investors to ensure that a robust survival plan was put in place immediately.”
Now, he says, Edition holds “regular update meetings” with those clients “to tweak the plan and to slowly begin post-Covid discussions as to how the business might bounce back.”
“The pandemic shutdown has forced forward and dynamic thinking as it relates to communication and process, where the ‘normal day’ is not relevant,” says Steven Wren, tax partner at SRLV Accountants. “As always, knowing a client’s business inside and out is pivotal in providing proactive advice, as well as ensuring that we communicate with clients on a regular basis.”
Greenish adds that Centtrip has also experienced increased demand for its prepaid, multicurrency MasterCard during the pandemic. “For us, a big one we’ve pushed right from the beginning is trying to take any production or tour cashless through the card,” he explains. “It’s hugely popular, and those artists who haven’t already taken their tour cashless are certainly looking towards it.”
The card even makes sense from a hygiene perspective, he adds: “Even in lockdown we’re all using less cash anyway, as no one wants to transmit the disease.”
“We’re using the opportunity to look inwards and build better internal processes”
Humphrey comments: “This [Covid-19] is going to be in our lives for years now; you’ve got to focus on where the opportunities are. It’s making us all realise we can do big things very fast. This is a lesson in how when you stop running round like a lunatic and stop to focus, you can achieve big things.”
Wren says he has seen many music businesses take advantage of the various government- backed loans available in many countries, as they are seen “as a great source of cheap finance, with some enterprises obtaining significant amounts.” This, he says, demonstrates the viability of the industry to support such debt.
While every business IQ spoke to for this feature is weathering the coronavirus storm, many companies – especially those just starting out, or yet to find their feet – are not so lucky. “There are going to be so many business failures over the next six months,” observes Humphrey. “So many companies just didn’t have a viable business and never worked out how to make money.”
Continue reading this feature in the digital edition of IQ 91, or subscribe to the magazine here.
This article forms part of IQ’s Covid-19 resource centre – a knowledge hub of essential guidance and updating resources for uncertain times.
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