The Colorado Shakespeare Festival at the University of Colorado in Boulder Colorado is an example of a long time organization meeting the needs of a niche market in both customers and people resources. It ran into problems when it forgot it's mission.
Brittany Anas, Staff Writer at the Boulder Daily Camera, on June 20, 2011 did a concise summary of what had happened. In the three year period from 2007 to 2009 expenses exceeded revenue by $950,000. The Festival broke even in 2010. According to Festival officials it is on track to break even in 2011 and to pay back $50,000 of the amount that has been covered by emergency funds.
This is a most important case for anyone in a niche business. Since everyone today should be in a niche business this case applies to almost everyone in business.
Many Shakespeare festivals are diversifying to other types of productions. Why are they doing this? According to the news story, the Colorado Shakespeare Festival did this to boost sales, help attract youth, and build revenue. The claim was that this did not happen because of the economy. Why did it take three years to determine that? A private business could well have gone under by then. The revenue of the Shakespeare Festival is about $1.4 million. A loss of $950,000 could well consume all of the profit and cash flow and make a business unable to borrow money.
According to Todd Gleeson, the dean of the College of Arts and Sciences, expenses met the target but revenues did not. The solution has included cutting expenses and a new executive board has been formed to give more oversight. No longer will shows run concurrently. Season length last year was shortened though this year the season has been lengthened. "A couple weeks longer than last year." This year there are only about 130 summer employees instead of the usual 170. Apparently revenue increases are not expected.
In examining this case there are other questions.
1. The Colorado Shakespeare Festival has been running for 50 years and "grew out of the desire of students and faculty in the English department who wanted to experience Shakespeare not only as literature to be read, but as a performing art." Before making a fundamental change to its mission with new products was there much soul-searching? Is it possible that the failure to meet revenue expectations was because the loyal customer base wanted Shakespeare and not Christmas Carol? Did it want summer theatre outdoors or a holiday production indoors?
2. Does the Colorado Shakespeare Festival have some special expertise that would qualify it to move into other types of productions?
3. Is there a business need to add non-Shakespeare productions? There are plenty of other theatres in the area.
4. The Colorado Shakespeare Festival has a number of full time year round staff. That means a high fixed cost. A business today needs to lower or eliminate fixed costs. Does the Colorado Shakespeare Festival need to consider why it needs year round staff and other Shakespeare Festivals and other seasonal theatre companies do not?
5. Did no one at the Colorado Shakespeare Festival or the University of Colorado know about the recession for three full years? Early in 2007 it was well known. It is vital that a business understand its environment. Even if we do not understand why the plight of Greece is so important world-wide we do need to know that there is universal agreement that a Greek debt default can have worldwide impact. What about here at home? The U.S. Government is borrowing 42 cents out of every dollar it spends. The deficit is expected to be at lest $1.4 trillion per year for years to come. We should all learn what we must do to sustain our businesses.
6. The Colorado Shakespeare Festival has been bringing in expensive directors from out of state and out of the country. This year one is coming from Russia. That increases variable costs. Many if not most college based Shakespeare Festivals have students and local people as actors and directors.
7. Is the recession to blame? During the same time period that the Colorado Shakespeare Festival had a revenue shortfall of $950,000 a dinner theatre in the same market area started, built a multi-million dollar building and is doing well. It keeps adding show dates because it has sell out crowds.
This case is most important as we consider our missions, our fixed costs, our variable costs and our economic environment. We need to make sure we know if the economic environment has an effect or if that is an excuse. Since economic environment has so many uncertainties a sustainable business should always have a plan for the worst.
What are some recommendations?
1. Examine the Shakespeare market. It has been around for 400 years. It is done everywhere even by non Shakespeare Festival theatre companies. Have a creative team that can look at new ways of presenting Shakespeare. Theatre for a New Audience in New York has been doing some great things and at lower costs for stage design with minimalism. Maybe concentrate on summer theatre.
2. Develop a better way of tracking knowing financial projections.
3. Develop a way of knowing the effect of the economy on revenues.
4. Use more students and local talent rather than out of state and out of country. Implement new techniques of co-employment as private business is doing.
5. Cut back on year round employees.
6. Last but not least get out of the insanity mode of believing that doing things the same way as in the past will give different results.
David Sneed
