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How accountants can drive the creative sector recovery

Author: ICAEW Insights

Published: 27 Sep 2021

Accountants have a critical role to play in charting a path to sustainable recovery, as the cultural and creative sectors seek to maximise benefits from 18 months of pent-up demand.

With arts and live venues forced to close during lockdowns and with recovery proving a slow and challenging process against a backdrop of ongoing uncertainty, all eyes on the next few months as an indication of a change in fortunes. 

In a July 2020 report, the Digital, Culture, Media and Sport Committee warned that the pandemic presented “the biggest threat to the UK’s cultural infrastructure, institutions and workforce in a generation”. According to official figures, arts and culture contributed £10.4bn to the UK economy in 2019, the equivalent of 0.5% of total UK economic output. In the fourth quarter of 2020, arts and culture economic output was 46% below the same period in the previous year having seen limited recovery since the onset of the pandemic in March 2020.

Tim Wilson is Managing Director of One Night Records, a live venue start-up based in Southwark offering a live music experience described by Wilson as a “secret cinema for music” that is "part gig, part festival, part immersive adventure. Wilson says footfall in Southwark is currently at about 60% of what it was two years ago, although 20% up on last year.

Having come up with the business idea and secured funding in early 2020, the pandemic then hit forcing Wilson to put his plans on hold. “Not knowing how long the pandemic was going to last, we put a line in the sand to open in October.” When the show – Snake Oil – did finally open, it received the accolade of Best COVID Safe Live Music Event 2020. However, the relief was short lived, as the show hit the skids and another lockdown kicked in on 14 December. 

The absence of revenue forced Wilson to go out for another round of fundraising over the summer. “It was touch and go whether we’d make it or not,” he admits. He turned to ACA-qualified Romesh Jeyaseelanayagam, a virtual FD, whose advice and support proved instrumental in weathering the storm. 

“When your P&L is so unpredictable, credibility is everything and we wouldn’t have been able to raise this round of money without having a serious, competent and prudent FD such as Romesh, both as part of the team but also building the forecasts, budgets and failsafes and reviewing all of the revenue forecasting not only in the immediate months but over a five year period to reach some realistic valuations in order to attract new investment,” Wilson says. 

Jeyaseelanayagam says many businesses in the creative and cultural sectors have survived thanks to government support and other grants and the easing of restrictions presented both an opportunity and a risk. "As we pivot back to a sense of normalcy, customers are coming back, but not yet in the numbers we have seen previously. Despite the vaccines, Covid is still around and many people remain hesitant to fully embrace normal life.” 

“As such, businesses need to strike a balance between ramping up activity and spend to generate income and carefully controlling cashflows to navigate a still uncertain period. I am working with clients to closely forecast activity and manage cashflows and risk. This needs to be revisited often as the wider situation develops. Such forecasts need to include various scenarios and contingency plans,” Jeyaseelanayagam adds.

Andrew Subramaniam is a partner at accountancy firm HW Fisher, whose clients include

musicians and concert organisers. With the furlough scheme – a godsend to many in the sector – coming to an end at the end of this month, and with many of the reliefs that have been on offer likely withdrawn over the next three to six months, he agrees that advisors have a critical role to play in helping their clients chart a path to sustainable recovery: 

It’s up to business owners to make themselves viable so the business can continue in some form. “So making sure you project forward and have accurate cashflows,” Subramaniam says. “And making sure the numbers are as up to date as possible so if you need to have conversations with your bank or lenders you have accurate information because at the end of the day, cash is king.”

Looking back, Wilson is remarkably positive about the experience of the past two years. “The pandemic was both an awful speedbump to hit but it might also have been the best thing to ever happen to us because it forced us to really focus our ideas on what sort of a show we wanted to deliver,” he says. 

And he’s equally optimistic about the sector’s prospects for recovery. “We come back into the market with a really good product; Snakeoil is a refinement of everything that’s good about lockdown fun. It’s a hell of a night out – six worlds of live music from one little door in London Bridge.”

More broadly across the sector, positive signs are further buoying Wilson’s optimism. “Shows are filling - Woman in Black in the West End is full most nights, and great shows and big names are selling.” 

An outlook for the creative economy published by Deloitte in June suggests live events will benefit from pent up demand although Wilson says it’s too early to say whether that will come to fruition. “It will be related to Covid cases and deaths but I have a strong suspicion that people feel an individual yearning to get back out there, especially young people. You also feel a collective responsibility to carry on and get back in the saddle because this is not going away.”


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