How can access to capital help

organisations develop their assets and

evolve their business models?
A review on behalf of Business Link & Arts Council England
Margaret Bolton for Mission Models Money
http://www.missionmodelsmoney.org.uk

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Introduction
This report reviews an action research project developed collaboratively by Arts Council
England, North East (the Arts Council) and Business Enterprise North East (Business
Link) and designed to examine how arts organisations might better exploit their assets to
develop income generating products and services.

The organisations receiving support through this initiative are:

• Generator
• Live Theatre (through a subsidiary LT Online)
• Northern Stage
• Seven Stories

Each of these organisations is regularly funded by the Arts Council. In each case
investment, advice and support is helping these organisations develop or better exploit
digital technology and to develop and market new income generating products or
services. The idea for this approach was conceived and developed because the
organisations concerned lacked capital to invest. Neither could they access the
development grants available to businesses in the region without having their own funds
to contribute towards project costs.

One of the recipients describes the investment provided as “like research and
development money”. She comments that funding of this sort is often hard to attract.
However, it is really important “enabling the organisation to pilot things, to invest to save,
to take risks”. A recent report by MM Not Rocket Science1 argues that arts organisations
should have access to funding for research and development activities, “the knowledge
generated will enable them to stay ahead of the technological curve, to lead artistic and
even social change”.

Each of the four organisations receiving investment is seeking to implement a new

strategy based on diversifying their income through sales of new products and services
which align with their mission. The initiative is a recognition that organisations need both
investment and advice and support to enable them to make this transition. It coincided
with a reduction in the availability of private and public funding because of the recession.
An environmental change which, while it made it more difficult to secure investment for
work of the kind supported through this initiative, made it all the more necessary.

The Arts Council and Business Link contributed in total £145.3k towards the costs of the
projects supported. They characterise the initiative as action research examining what
arts organisations, poised for enterprise development, might be able to achieve if
provided with some capital and business advice and support. It is difficult at this stage to

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Hasan Bakhshi, Radhika Desai and Alan Freeman.

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gauge the success or otherwise of the initiative in meeting its overall objectives. It is as
yet at an interim stage. It was planned as an eighteen month initiative lasting until
August 2010. So far only one of the projects has been fully implemented. This report
therefore reviews progress to date and offers a commentary on some of the issues
emerging.

The report is based on:

i) a survey of the original written material prepared by the four funded

organisations about their projects;
ii) interviews with the Arts Council and Business Link and the four organisations;
iii) observation of quarterly update meetings.

It has been produced by Mission Models Money (MMM). MMM was asked to undertake
this work by the Arts Council because of its programme examining financial
sustainability or resilience in the arts and cultural sector.

The action research and what it was designed to achieve

The initiative was designed to test whether a one off investment of capital provided
alongside on-going business support could enable arts organisations, at an appropriate
stage of development, to exploit new business opportunities thereby generating more of
their own income, thus enabling them to become more financially resilient. The
investment was to be in infrastructure namely the development of digital products and
services.

The need for the project emerged from on-going business development work with a
small number of organisations regularly funded by the Arts Council. It was considered
that these organisations, if they could access additional capital investment, could
progress planned projects which would make them more financially resilient in the
medium to longer term. The amounts of capital required were not large (relative to the
organisationsʼ overall budgets) but the Arts Council considered that they “could make all
the difference” to the individual organisations concerned.

The Arts Council decided to invest £80k in the initiative on the understanding that its
investment would act as leverage, providing organisations with the contribution towards
project costs needed to enable them to access investment for business development
from the North East of England Investment Centre (NEEIC). NEEIC is a brand under the
Business Link umbrella but separate from the Business Link advisor function.

The Arts Councilʼs objectives for the initiative, were to:

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 • test the potential for regularly funded organisations to increase income from
commercial sources;
• enhance the sustainability work being delivered by MMM;
• gain valuable research evidence as to the need for one off infrastructure
investment into the creative sector;
• support the partnership between the Arts Council and Business Link.

For the Arts Council the initiative was regarded as developmental, with the potential to
inform models of investment and support both regionally and locally. It represents a new
approach to supporting the development of arts organisations and therefore entails
“risk”. However, it is a new approach that appears to have significant potential because
“it joins funding up with the Business Link diagnostic undertaken by an appropriate
person and identifies opportunities for organisations to become more sustainable”.
NEEIC investment would be provided to projects at levels proportionate to its
assessment of the extent to which the project would produce a return on investment
represented by jobs created or safeguarded and increased turnover and profit.

The Business Link advisor who helped initiate and deliver the project describes it as
modelling a new approach to asset development for arts organisations:

“The objective was to open minds to for example, digital opportunities. The
approach was one based on asset development…..Regularly funded
organisations spend their money on running costs. One idea behind this funding
was to give money for projects which generated a return not funding which would
pay utility bills and go into the huge black hole of running costs...I would hope that
this funding will enable these projects to get a return on the investment, to
increase participation in their work with target audiences and to test ways they
can digitalise.”

The organisations supported through this initiative are regarded by both the Arts Council
and Business Link as being at the leading edge of developing new business activity and
new business models in the subsidised arts sector. They are entrepreneurial
organisations who have “loads of ideas about new income generating initiatives but
donʼt have the resources to follow them through”. The projects supported are described
by the Business Link adviser as:

…Examples of fastest possible impact with the least amount of resources and
budget invested.

Although relatively quick wins, it was considered that the projects supported would “help
these businesses think about what theyʼre doing well and the demand for their services”
ie that they would make a major contribution to the future strategies of the organisations
developing them.

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The genesis of the initiative

This initiative is the product of a long standing relationship between the Arts Council and
Business Link, which dates back at least nine or ten years (see the box overleaf). This
work has resulted in a significant and sustained partnership between the two
organisations. A Memorandum of Understanding (MoU) and Statement of Intent (SoI)
define the relationship between them. A Business Link advisor specialising in
commercial creative industries uses the Arts Council as an office base one day a week.
The advisor provides business development advice on issues such as marketing and
staff training and development or signposts to other relevant specialist agencies. He or
she also helps organisations access NEEIC investment. However, the Arts Council does
not focus on Business Linkʼs investment role, “it is only a very small proportion of what it
does”. The primary value of Business Linkʼs relationship with the arts sector is, in its
view, the access that it provides to valuable and much needed business support and
advice.

Supporting business development in the arts

2001: The Cultural Business Venture Grant Scheme bringing together Arts Council
managed funds and single programme One North East is launched. It offers access to
finance (capital for example, for new equipment and work space refurbishment or
marketing and also elements of consultancy). It was available to start ups and existing
businesses in the creative industries. It offered funding of between £1k and £10k. 25 per
cent match funding was required; this had to be in place at the time of application.
Applicants filled in a form, submitted a business plan and a 3 year cash flow forecast.
Business support was provided through the Business Link support function in the region,
regional enterprise and development agencies (some applicants chose not to access
external support). The scheme worked in partnership with the Princeʼs Trust. An
allocation of the fund was passed on to the Princeʼs Trust who awarded it as a small
grant alongside their loan scheme.

2006: The One North East funding stream changes. The maximum grant from the
Cultural Business Venture Grant Scheme was reduced to £6k and only start up
businesses were eligible (new ventures developed by existing organisations fell into this
category). The scheme valued £50k a year. To be eligible organisations had to access
the business support network.

2003 - 2008: Arts Council England, North East co-ordinate an Objective 2 ERDF and
ESF bid – Cultural Sector Development Initiative (CSDI). Arts Council England, North
East led the development of the Cultural Sector Development Initiative (CSDI) in
partnership with key regional agencies and sub regional representatives. It helped the
creative and cultural sector to engage with this strand of European funding. CSDI was
an umbrella initiative comprising a number of projects that delivered tailored business

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support and skills development opportunities to cultural and creative practitioners in the
North East. Total project funding over three phases was in the region of £32m.

[2004]: As a result of the relationships developed through work on the Cultural Business
Venture Grant Scheme and the need for the arts sector to engage with mainsteam
business support, Business Link and the Arts Council agreed that a Business Link Tyne
& Wear advisor should be based part time in the Arts Council. The post holder was
based in the offices of the Arts Council and Northern Film and Media.

[2007] There are four independent Business Link offices in the region. A merger of the
Business Links is proposed. The new merged body decides that it will work with a
smaller number of key partners and Arts Council is one of these. The relationship with
the Business Link advisor is therefore maintained.

As a result of the MoU and SoI, Business Link and the Arts Council have regular
quarterly meetings. These meetings discuss themes emerging from the work undertaken
with Arts Council clients and the feedback received by the Arts Council on the service.
(NB work with specific organisations is not discussed as this would breach client
confidentiality and data protection). At one of these meetings the issue of access to
capital was discussed.

The Business Link advisor had been working on business/product development with the
organisations supported through this initiative over a couple of years. Generally helping
organisations develop and test new business ideas (or ʻpre-service designʼ). Her view is
that while the business models pursued vary, as does organisational capacity to deliver
them, these organisations have important things in common, for example, “they are all
open minded about income generation and the opportunities offered by digital”.

A major barrier to such organisations developing their business ideas is a lack of capital.
All four organisations were unable to make the financial outlay for their projects in
advance of payment, while NEEIC pays on completion of the project. Neither did they
have funds to make the partial contribution required for eligibility for NEEIC investment.
These two factors were key to motivating the Arts Council to dedicate funds to the
initiative.

Selection process and conditions of participation

As already mentioned the intention was that this initiative would build on business
development work already underway in organisations and focus on those organisations
ready for investment to enable them to take particular income generating projects
forward.

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When it was clear that some Arts Council investment might be available to support
projects around business development, the Arts Council and Business Links met to
discuss what work they might do collaboratively and agreed to take an action research
approach. On a confidential basis the Business Link adviser approached four Arts
Council clients with whom she was working, who were at an appropriate stage in their
business development work and asked if they would be interested in participating,
explaining the Arts Councilʼs aims and objectives for the initiative. She applied the
Business Link diagnostic (a series of meetings to discuss all areas of the business) to
those interested in participating and examined whether the projects proposed would
produce the return on investment required to unlock NEEIC money.

The four organisations considered to be appropriate to participate were required to

agree certain conditions, namely to:

- attend quarterly meetings;

- share information about learning and progress;
- communicate with each other and the Arts Council and Business Link;
- contribute to evaluation and review.

After the four organisations had agreed to these conditions, The Arts Council made a
formal investment offer and they submitted project outlines, a narrative of benefits and
budget forecasts.

The projects supported

The four projects that form this initiative have a number of commonalities. They are all
based on online solutions, they all underwent the Business Link diagnostic to identify the
need for the project and the opportunities it presented, all received support from the
Business Link adviser and all accessed NEEIC investment. However, they are all at
different stages of development. Generatorʼs project is the most advanced and is largely
complete. The other three are still underway. Live Theatre and Northern Stage are, at
the time of writing, close to completion. Seven Stories, having undertaken significant
preparatory work, made their application for NEEIC funding at the end of 2009. One key
piece of learning from these projects so far is that they take significant development time
and that the capacity to deliver them needs to be carefully planned into organisational
work programmes.

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Generator
The organisation
Generator is a development agency for music. It works in the areas of music business
development, musician support (including the commercial viability of artists) and live
music, most significantly in supporting promoters and representing the music
development sector in the UK. Based in Newcastle, it was established to serve the
needs of the North East and Cumbria. However, it was asked by the Arts Council to take
on a national role assisting other fledgling agencies and representing the music
development sector to government.

The organisation has been in operation since 1991. It had a major restructuring in 2008
and has a new board and a new organisational structure. The restructuring was
designed to enable the organisation to operate more effectively including by pursuing a
more entrepreneurial approach to income generation.

Over the last four or five years Generator has received 3 investments from NEEIC for
discrete projects. These have enabled it to put in place new organisational systems and
examine product development and markets. Generator describes itself as having “a very
productive relationship” with Business Link. They have just signed an MOU to work
together – Business Link makes referrals to Generator because of its music industry
expertise.

Generator has recently heard that an ERDF bid has been successful. It will provide a
significant injection of funds, £822k over three years, to develop their music business
support work.

The organisationʼs turnover in 2008/2009 was £400k. In the current year it is £660k.
Projected turnover for 2010/2011 is £760k The organisation now has 9 full time and 2
part time staff.

Project overview
The project has three main elements:

- a new Business Management System (website) to enable Generator to more

effectively market and sell its services to both organisations and individuals;
- development of a new training course for fledgling music businesses (for example
people setting up record labels and live music promoters covering finance,
planning, digital marketing etc) for which accreditation is being sought;
- the music business network ʻPlugged Inʼ.

Generator has for a number of years run a number of unaccredited training and
education packages for those wanting to increase their understanding of the music
industry. Discussions with individuals and organisations in the music industry indicated

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that there was a market for formal, structured training provided by a specialist
organisation that focuses on running small music businesses. A survey of music
development agencies (part paid for by NEEIC) indicated that they were interested in
providing such training and that, rather than reinventing the wheel, they would buy it
from Generator.

Generator had witnessed increased demand for its training over the previous two years.
For example for one course typically there were three applicants for every place
available. Working with other music industry bodies as training delivery partners,
supported by an appropriate website, would enable Generator to train many more
people. Offering a bespoke level 3 course that was accredited would produce
guaranteed income on a fee per head basis for its music industry partners thus enabling
them to buy into Generatorʼs courses.

Generator was fortunate to employ a part time information manager who had the
relevant experience to develop the ʻLearning Zoneʼ that not only supplies information
and course notes to beneficiaries but also has a series of pass word protected levels
that can be accessed by assessors, verifiers and examiners as necessary. Generator
has now been able to employ this member of staff on a fulltime basis. This key
development has gone some way to reassuring NCFE (the national accreditation body
that Generator is forging its education partnership with) that they can stand alone and
deliver all aspects of accredited training.

A new website meanwhile is seen as a means for Generator to more effectively market
and sell to both individuals and organisations. For example, the new website will enable
Generator to market training packages to other organisations with an interest including
further education institutions and local authorities. It will also enable its training partners
to download course materials from the web and to register course participants and
access information about their previous use of Generator services. While a client
relationship management function will enable it to track individualʼs contact with the
organisation and the support provided and suggest which of its services might be most
appropriate for them (for example one to one advice on business or legal issues through
ʻclinicsʼ, information or guidance packs or training).

One element of the project is the ʻPlugged Inʼ network. ʻPlugged Inʼ is a memberʼs
network which publicises opportunities for the music business, offers a members forum
for the discussion of issues, and the sharing of opinions, problems and solutions with
other network members. It also offers a streamed feed of information affecting music
businesses in the region and nationally.

The organisation reports a number of benefits related to increasing confidence in the

team. It has also helped build strong relationships with other key music industry bodies
and “cemented Generatorʼs reputation as the leading music development agency in the
country”. Even at this early stage the project also appears to have had some tangible

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benefits. It has already helped Generator to attract other funding notably the large ERDF
grant mentioned above. On the basis of this project and the potential strength of the new
website they have also won a tender to establish a music network for Yorkshire.
Generator regards this project as:

“Central to taking the agency forward. Itʼs been key to the organisation to learn
how to develop a product and market it”.

The next stage of project development, following Generatorʼs employment of a

marketing and communications officer, will be to engage a consultant to advise on an
appropriate marketing strategy to ensure optimum uptake of the full range of support
services the agency can now offer across the UK. A timeline outlining key project
milestones for this and the other projects is provided in an annex to the report.

Aspirations
This project is central to the future development of Generator. The aspiration is that the
project will increase awareness of the need for the sort of training provided by Generator
and help develop a national appetite for relevant research and other developmental
work.

Generator projects that over a period lasting 12 months after project completion it will
create 1 extra job and safeguard 5. The turnover generated as a result is projected at
£60k over the same period.

The selection of and relationship with suppliers

The Business Link office extracted from its supplier register the names of five possible
suppliers with the relevant skills and experience to undertake work on the project.
(Organisations can use a supplier not on the register and still be eligible for NEEIC
investment if it is the first time they have contracted with them). The organisations on
this list were invited to tender. The supplier recruited is regarded by Generator as strong,
“showing a clear understanding of the organisationʼs business”.

It proved impossible to find a consultant with appropriate expertise to map the course
onto the appropriate occupational standards and Generator therefore undertook this
highly specialist task itself.

Investment
The Arts Council contributed £20k toward the project. NEEIC contributed 16k. This
investment will pay for:

• content development in the form of training materials;

• Business Management System (website) development;
• marketing and PR consultancy.

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Generator itself contributed approximately £8k in management time to the project.

Advice and support

Business Link advice and support has been very important to the development of the
project. The Business Link advisor helped with the writing of the brief. She also
suggested the development of the client management system. This is a really important
element of the project. It will provide the business management information for
monitoring and evaluation that potential funders expect. Generator consider that this
element of the project contributed to their success with the ERDF bid. Indeed, the ERDF
team at One North East were extremely impressed with this system that even goes so
far as to measure changes in an individual businesses turnover.

Issues and challenges

Negotiating the accreditation process has been time consuming and difficult, while
accreditation is key to the success of this particular business model. However, one of
Generatorʼs board members has expertise in this field and provided the organisation
with a key piece of advice at an important stage that enabled progress (board members
have been recruited because they have expertise in areas necessary to the
development of the agency which is complementary to that of the staff team). One piece
of learning they have taken away from the project is that it would have been helpful to do
more homework on the accreditation process and what it involved at the beginning of the
project.

Setting prices has proved difficult. Expert views about what prices the market can bear
have varied greatly. This is mainly due to there being no precedent for the offer.

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LT Online (Live Theatre)
The organisation
Live Theatre is a theatre which produces new writing and supports new writers. For the
last two years the organisation has been exploring new ways to generate income to help
sustain the companyʼs work into the future and enable it to become less reliant on
current revenue streams. It has worked with a specialist consultant to develop a two
pronged approach:

− raising investment to put together a portfolio of property around the theatre

(based on experience gained in their recent capital development);

− developing a range of businesses which exploit the intellectual property, skills and
experience of staff working within the organisation.

Live has established a separate but linked company to develop and manage these
businesses, including the property portfolio in order to “ensure it can involve the right
sort of business brains”. This company received support through this initiative to develop
the first of these businesses – an on-line playwriting course.

Live Theatre heard in the Autumn of 2009 that it had been awarded £1m through the
Arts Councilʼs Sustain programme. With this funding it will be able to pursue its business
development strategy. This funding, which Live hopes to match through prudential
borrowing from Newcastle city council, will enable it to deliver five planned projects,
each of which are potentially large scale:

- the on-line playwriting course;

- a new restaurant - a joint business venture;
- an SME incubator in the old school house (part of the complex of historic
buildings in which Live Theatre is based);
- commercial property investments with partners;
- a city park.

Live has previously received funding from NEEIC, investment for the early development
stages of the on-line play writing project. This was for pre-service design. It enabled the
organisation to develop the project from a one page proposal to the appointment of a
web development agency with a brief to design the course website.

Liveʼs turnover in 2008/2009 was £1.8m. In the current year it is projected at £1.7m.
Projected turnover for 2010/2011 is £1.6m. The organisation currently employs 14 full
time and 10 part time staff.

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Project overview
The project was to develop an on line version of Live Theatreʼs existing popular off-line
Introduction to Playwriting course, which had been devised and delivered by Gez Casey
and Jeremy Herrin. Desk research suggested that there was a gap in the market for a
playwriting course which was attached to a theatre with a reputation and proven record
in supporting successful writers. No other playwriting courses offered on the web are
delivered by people with an established reputation in professional theatre.

The idea of providing the scriptwriting course on line came from within the organisation.
It was in part motivated by staff interest in digitalisation given that digital will be such an
important channel for distribution of arts content in the future. Already, staff at Live are
envisaging the development of a range of educational resources provided on line. The
scriptwriting course is the first to be pursued.

The off line course is massively oversubscribed and many of its graduates have gone on
to have work professionally produced. Live are aware that linked to the on-line course
they can develop a range of connected products which might include a writers forum, a
digital work book, a hard copy book etc.

The course has been designed and developed and was ʻsoft launchedʼ during the recent
new writing festival held at the theatre in March. The 5 modules are now being tested by
6 aspirating playwrights. Feedback will be gathered and the course amended before it is
launched to market in September 2010.

Of the £1m investment Live Theatre have received from the Arts Councilʼs Sustain
programme, £100k will be used for the development of the on-line play writing course in
the future.

Live regards this project as:

“…potentially commercial, 100 writers a year might go through the course. It

might generate £100k profit as against £200k costs. However, really itʼs a cultural
project, itʼs about spreading our brand. The secondary thing is its commercial
nature. However, if we could develop 6 or 7 social enterprises like this one it
would be very helpful to Live”.

Aspirations
To develop a series of business ventures that generate revenue for Live Theatre. This
project is helping to provide the knowledge and develop the skills to enable Live to
achieve this.

Live considers that the project will create 1.5 full time jobs and safeguard 25 . The
increase in turnover is projected at £300k. It is considered that the project will safeguard
£1.4 m in turnover.

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The selection of and relationship with suppliers
Once the design brief was drawn up it was sent to a number of agencies. These were
selected by prior knowledge and by looking at examples of previous work. 3 agencies
sent in responses and all were invited into Live Theatre to pitch for the contract. An
excellent relationship has developed between project staff at the supplier and Live
Theatre. The supplier has been very flexible in adapting to the stop start nature of the
project and the consequent changes in deadlines.

Investment
The Arts Council contributed £20k towards the development of this project. NEEIC
contributed £15.3k. Live Theatre contributed £3k in kind funding from its own resources.

This investment will pay for:

- the development and building of the different course modules;

- more detailed testing and market research;
- further work on strategic planning.

Advice and support

The Business Links adviser was very supportive and successfully helped Live Theatre
staff through the uncharted waters of NEEIC investment.

The design process consultant who helped the organisation undertake the pre-service
design is described by Live as very important to the project. He helped Live think
through what they needed to do in order to set up the new venture. A piece of work
described as potentially “very valuable in their future planning”. This consultant was
recommended by an agency specialising in digital, broadcasting and IP.

Issues and challenges

The two course tutors, Jeremy and Gez, have found it very difficult to find the necessary
time to dedicate to the project. Half way through the project Jeremy took a job at the
Royal Court and Gez took over the position of full time Literary Manager at Live Theatre.
Both had huge demands on their time, but following some delays did successfully
complete the scripts and interviews. They are busy producers, in demand and therefore
over committed.

Live considers that the biggest challenges are yet to come, in marketing, costing and
launching the course: “At the moment we are concentrating on making it. The post
making process is going to be equally tough and itʼs difficult at the moment for us to
quantify the work involved”. Notably, Live knows that it needs to build capacity and
skillsets within the organisation but suggests predicting what is required in advance is
difficult.

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Live says that a danger might be that:

“…..the project gets treated as another production. It gets made and itʼs
successful and then we move on to something else whereas it should be seen as
a long term project, the start of something big. We need to see it as such and be
in it for the long term”.

The organisation is seeking to avoid this by including in its business plan the recruitment
of a course moderator and a digital producer.

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Northern Stage
The organisation
Northern Stage is a producing theatre company which also presents notable local,
national and international theatre. For the last couple of years it has been considering
how it might better exploit its assets. These assets include its new building, its reputation
and its people.

One issue it has been considering is how it might use its website to generate additional
revenue by increasing on-line ticket sales, corporate hires, merchandise sales and
demand for its training. A major barrier however, has been its outdated website. The site
dates from 2003/2004 and it very limited compared to some of the more sophisticated
sites that now exist which for example, incorporate Amazon type selling.

Northern Stageʼs turnover in 2008/2009 was £2m. In the current year it is projected at
£2.4m. Projected turnover for 2010/2011 is £2.7m. The organisation currently employs
39.5 full time equivalent staff.

Project overview
The project is the development of a website that emulates some of the sales functions of
sites like Amazon. The site will enable customer accounts to be attached to a profile
and customers will be able to comment on the products they buy on-line. It is considered
that over time the functionality for peer review and comment could develop into an
important sales tool (since peer reviews tend to have more credence than professional
ones). The intention is to build stronger relationships with audiences through the
website, increase engagement and build a sense of community.

The website will allow for:

- an improved, more sophisticated contact management system;

- increased opportunities to up-sell and cross-sell including user recommendations,
purchase ʻremindersʼ and suggestions of ancillaries including an ability to
purchase programmes and interval refreshments when booking tickets;
- a customer log that allows tracking of site-navigation and purchases enabling
recommendations to be made to customers;
- multi-media postings, which would enable staff or users of the site to upload more
information around the show for example, author histories or rehearsal diaries;
- an on-line facility to add a donation to the ticket price and to register donations for
gift aid;
- short clips from the communications skills course and video testimonials;
- building the profile of the building as a bookable venue to encourage facilities hire
including by on line booking.

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The development of the new website has involved the senior management team and a
representative from every team in the company. A strategic planning workshop was held
with the senior team and a planning day for all staff.

This project has already had a number of distinct benefits. It has helped Northern Stage
to think in a more sophisticated way about its digital priorities and put in place plans to
develop this work over time. It has also helped the organisation to develop its branding
and communications and to consider how these can support its strategic development. It
is now looking to develop strong sub brandings for a) the audience; b) the theatre
industry; c) people interested in participation. For example, as regards the theatre
industry Northern Stage will seek to understand what information producers want/need
and to present this to them in an attractive way on the website (a service that they donʼt
perhaps get elsewhere) so they will want to bring their productions to the theatre.

According to Northern Stage, the project has:

“…encouraged a lot of cross departmental working and helped demystify

marketing – people across the organisation now better understand the marketing
messages and why theyʼre important. Itʼs increased understanding of
organisational roles and whatʼs important to the individuals in these roles. The
internal learning and the cohesion generated have been unexpected”.

Aspirations
Northern Stageʼs aspiration for the project is that it will increase both sales and revenue
and make the organisation more financially resilient. Currently the split of public
funding/revenue generation is 60 per cent/40 per cent. The organisation would like to
reverse this over ten years. This project is an important step towards this.

Northern Stage estimates that the project will generate an extra £5k in turnover and
safeguard £30k in turnover over a period lasting 12 months after project completion

The selection of and relationship with suppliers

The project allowed Northern Stage to complete a large public tendering process, the
first it has been able to execute in four years. Previously, the scale of projects and
associated costs had prohibited this.

According to Northern Stage:

“the tendering process was a valuable opportunity to build Northern Stageʼs

reputation as a forward thinking organisation to suppliers and helped it be seen
as a client to be pursued. The tendering process made the company really focus
on the project; made it attach targets and goals to something which had
previously been aspirational and visionary. The process of selection and
subsequent interviews helped to further cement the organisations plans. Overall,

17
 the opportunity to tender impacted positively on the companyʼs profile and the
planning process.”

Funding
The Arts Council contributed £20k towards the development of this project and NEEIC
£9k. Northern Stage contributed £2k from its own resources. This investment will pay
for:

- web development and technical upgrades;

- marketing and promotion of the new website, including the opportunity to try
previously untested methods, such as SMS marketing and online advertising.

Advice and support

Business Link advice and support has been very important to the development of the
project. Northern Stage said that they had been encouraged by Business Link to look at
upselling and cross selling. Business Link:

“….are very interested in innovation. An aspect of the bid that they were
particularly keen on was an SMS marketing campaign linked to the website. They
appear to like the idea of models developed in the commercial sector being
applied in arts organisations.”

Northern Stage received help from a consultant in scoping their portal. They have also
had discussions with the Culture Lab about what their broader digital strategy might be.

Issues and challenges

A major challenge with the project has been the tight timetable for development of the
new website. This timetable was dictated by Northern Stageʼs desire to launch in
January 2010 to coincide with the 40th birthday celebrations for the theatre. In the event
this deadline was missed because of difficulties reconciling the existing on line ticketing
system with the new website and its functionality. This has been a major headache likely
to afflict other arts organisations undertaking similar web development projects.

18
Seven Stories
The organisation
Seven Stories is a centre for childrenʼs books, it is an accredited museum with an
important and growing collection of original manuscripts and illustrations. It has a
strategy which is aimed at achieving national status and impact (it is working towards
becoming the national childrenʼs literature gallery and archive) and includes developing
a business model enabling it to generate more of its own income and thereby achieving
greater financial stability and resilience. It has undertaken significant work developing a
range of products and services which, whilst contributing to mission, will also enable it to
generate more of its own income. These products and services include book packages
for schools ʻHooks Into Booksʼ, continuing professional development for education
practitioners and special projects for schools.

Seven Storiesʼ turnover in 2008/2009 was £1.3m. In the current year it is forecast to be
£1.1m Projected turnover for 2010/2011 is £1.2m. The organisation currently employs
39 staff.

Project overview
The current web site was launched when Seven Stories opened its visitor centre in the
summer of 2005. Its main purpose was to promote activities at the new centre and the
organisation now considers that it limits its ability to promote its new agenda which is
much broader. The intention is that the new website will act as a hub for childrenʼs
literature and help to optimise income generation and fundraising opportunities.

Seven Stories has developed a plan for the project as a whole which comprises 4
phases over eighteen months. They have planned the first two phases and funding from
this initiative is contributing towards these; the development of the site map and initial
content, work on functionality and the content management system, and the adding of
products and e selling. Phases three and four will comprise ongoing development.
Although the project has a long way to go before completion, a lot of detailed and
thorough work has already been done.

During the first half of 2009 staff members attended various courses and seminars about
digitalisation in preparation for the project. These encouraged staff to think about how
they might use digital in their work. As a result Seven Stories has begun using Flip
cameras.

In April, Seven Stories heard that an application to the ONE Northeast Collaborative
Innovation Partnership (CIP) developed with the University of Newcastle had been
successful. This provided Seven Stories with a part time postgraduate student for nine
months to help the organisation develop its use of gallery-based digital interactive
content and more specifically to develop digital content to showcase the collection. The
opportunity during this period to develop an understanding of the potential of social

19
media and to test the use of Twitter and Facebook made a valuable contribution to
project design and to wider organisational strategy.

The second six months of the year were taken up with preparatory work: pulling the brief
together and recruiting consultants to undertake it and scoping the organisationʼs
contact management system requirements. NEEIC support for the project was
confirmed at the end of December 2009.

Part of Seven Storiesʼ strategy for the future is to promote its charitable aims and to
develop its donor base. In order to fundraise effectively it needed to sort out its
databases and management systems. This project gave the organisation the opportunity
to undertake this work. Work on the contact management system was initially regarded
as a tedious chore but the organisation reports that:

“in the event, itʼs been quite exciting. It has enabled staff to join up their thinking
and provided them with an appreciation of what theyʼll be able to do with well
organised richer data to cultivate relationships with their audiences. Itʼs created a
huge buzz in the organisation”.

This buzz has been an unforeseen benefit of the project. As Seven Stories commented:
“one thing thatʼs worked really well is getting staff really involved in thinking about the
impact of the project on their area of work.” Another unforeseen benefit has been the
way in which the project has enabled the organisation to better utilise the skills of its
young staff team. It was discovered that the part time receptionist was a budding film
maker and she now works one day a week recording and editing digital content for the
website. Another member of staff is a skilled photographer, who now takes photographs
for the website.

A notable feature of the project is that Seven Stories has twinned the senior member of
staff with responsibility for the project who, because she is over 30 is a digital migrant (ie
she didnʼt grow up with the web), with a younger member of staff, a digital native, to
whom web applications come much more naturally.

Seven Stories describes the project as having a profound impact on the organisation
both in terms of how content is generated and how itʼs managed.

The selection of and relationship with suppliers

Eight companies were invited to apply for the contract, four were short listed. Informal
meetings were held with these four companies. These were described by Seven Stories
as very informative, providing them with a much richer understanding of the
opportunities and challenges of the project and an insight into the strengths and
characters of the different companies. More specifically these conversations helped the
organisation see the potential of the project:

20
 “Discussing some of the issues and recognising their complexity meant that
Seven Stories started to see the possibilities that the project could offer.”

On the basis of these conversations the brief was tightened and refined before the
formal interviews. A joint bid for the work from a digital media company and a marketing
agency was accepted.

Aspirations
One of the aspirations of the new website is that it will achieve national reach,
developing the audience for Seven Storiesʼ work. As Seven Stories describes the
project:

“We already had an award winning website but the objective of this new project
was to think about audiences, to put user groups at the centre. The new website
is also an opportunity to capture and communicate the multiplicity of our work”.

Seven Stories wants to use the new website to: generate more sales; to broaden and
diversify audiences and to cultivate more sustained and deeper relationships.

Seven Stories believes that the project will safeguard 2 full time jobs. The turnover
generated as a result of the project is projected at £81.5k over a period lasting 12
months after project completion. It is projected it will safeguard £131k in turnover over
the same period.

Investment
The Arts Councilʼs initial investment of £20k enabled Seven Stories to raise a
considerable amount of other funding. NEEIC provided £25k and an anonymous donor
£20k. Seven Stories also contributed £9k from its own funds.

Advice and support

Business Link has provided a significant amount of advice and support to Seven Stories.
It has helped the organisation think through how it might use the website and the
internet to generate more trade and improve is financial viability. Generally, “it has
helped the organisation to focus on its business development needs.”

Business Link support was regarded as particularly beneficial in the early stages of this
work:

“In the early days we received a lot of support. [Business Link] helped by asking
useful questions. The advisor has a lot of skills and knowledge and knew what
the organisation needed. Iterative conversations really helped.”

Events and training run in the region by Tyneside Cinema and MMM have helped Seven
Stories with its thinking, by providing inspiration and concrete examples of practice.

21
Issues and challenges
The project has been challenging in a number of respects for Seven Stories:

The process of scoping the project and defining the brief has been a challenge. Seven
Stories described the process as one of “getting their heads around all the possibilities”.

Seven Stories also regards itself as “on the cusp of a challenge around sound and tight
project management.” Staff are incredibly busy and there might be a tendency to let the
consultants get on with it. Seven Stories is aware that it needs to steer and drive the
project, getting the best out of the consultants to meet the needs of the organisation. It
recognises that this is a one-off opportunity that must be implemented effectively.

Another challenge identified by Seven Stories is to keep a tight grasp on the costs of the
project and also to ensure that the system created is manageable within the
organisationʼs resources. Seven Stories has already recognised that working patterns
will have to alter; data management will now be central to everyoneʼs job. This is a big
change. While in the medium to long term the new system will make everyoneʼs life
easier, it predicts that the next 6 to 9 months are likely to be tough: “even basics like
data input are likely to be difficult given the numerous demands on the staff team”.

22
A commentary on the initiative
This action research initiative was designed to test whether an injection of capital could
help the organisationʼs supported to generate more of their own revenue enabling them
to become more financially sustainable. All of the projects involved the development of
new websites to enable the organisations to better market a range of products and
services, while two involved putting an off line product on line to increase reach and
sales. It is too early to comment on whether the initiative has been a success in helping
the organisations concerned generate income – it is not yet concluded, it is scheduled to
last until August and it will take time for the projects supported to show an impact on
organisational revenues.

While it is not possible to comment yet on the extent to which this initiative has achieved
its overall objectives, it is possible to draw out some learning points from the work so far
undertaken, to inform future funding and provide arts organisations engaged in similar
enterprise development projects with an indication of what may be in store.

A long development period

These projects demonstrate that it takes significant time and capacity for organisations
to develop and implement new approaches to raising revenue. All four organisations
started the process of thinking about how they might diversify their income sources a
number of years ago.

The first stage was identifying potential products or services through the strategic
planning process. Later stages involve developing and testing particular product ideas.
Also, specific organisational development activity has underpinned the projects
developed for example, work on systems and processes. A specific example is Seven
Stories work on its contacts management systems.

There are a number of specific development and testing stages that projects need to
progress through. It takes time to navigate the process particularly when external
expertise may need to be sourced at different stages. A mainstream business might
spend two or three years on product development from initial idea to launch but for these
organisations the process….”has taken longer than conventional business development
because the organisations are trying to balance social as well as economic outcomes.
The overall objective of the work is of course to better help them achieve their mission”
(Business Link).

The strategic nature of web development projects

Each of these projects will potentially make a major contribution to helping these
organisations effectively pursue their future strategies, in the case of:

23
 - Live Theatre, the project is the first in a series of enterprises that it plans to
develop and therefore could be seen as a pilot or testing initiative, helping the
organisation to understand whatʼs involved in developing new enterprises;
- Seven Stories and Northern Stage, the website development project has enabled
these organisations to take an in-depth look at different audiences for their work
and how it communicates with them;
- Seven Stories and Generator, the project is a key means of marketing and selling
products that both organisations are currently developing and testing.

For Northern Stage it has helped the organisation as a whole become much clearer
about the importance of marketing and marketing messages. It has also prompted more
sophisticated thinking about branding and communications and how it can serve the
organisationʼs strategic development.

Seven Stories has been struck by the potential of the new web site to help it achieve its
future aspirations for example, in the area of fundraising, where it offers the opportunity
to develop the organisationʼs donor base and to communicate with donors much more
professionally. As Business Link commented in relation to these projects:

“All the projects have said that this work has helped them to look at all the areas
of their business in a different way – not just those areas that we are specifically
working on.”

The importance of the right advice and support

All four projects have gone relatively smoothly. In some measure this appears to be
because they have been able to access the right advice and support at key stages. Two
of the projects spoke very highly of the consultancy support they had received enabling
them to develop their project (in one instance this was funded through this initiative, in
another not, it was part of the preparatory work feeding into it and was regarded as an
essential building block). One organisation referred to how the advice and support of a
trustee with the right skills and experience had also made a significant contribution.

All the projects found the advice and support from Business Link extremely helpful.
However, responses varied depending on the stage of enterprise readiness of the
organisation. A couple had received more support and more intensive support and
acknowledged this and how helpful it had been. All regarded the connection with
Business Link as very valuable in helping to access investment for business
development and innovation. Northern Stage emphasised particularly how Business Link
was interested in and able to support the application of models developed in the
commercial sector in the subsidised arts sector. Seven Stories said how helpful the
iterative conversations with Business Link about business development had been.

The capacity challenge

24
A common challenge all four organisations have experienced has been around
managing the volume of work generated by these projects on top of already full
programmes. The website development projects particularly have required these
organisations to undertake a heavy burden of strategic and systems work. Organisations
have sought to negotiate the burden by effective project planning, appropriate use of
external consultants to steer and advise, and by sharing responsibility for content
generation and contact management systems across the organisation.

Conversations with the projects revealed a couple of relevant issues that perhaps
require more consideration:

- Live referred to the difficulty of planning capacity to undertake enterprise development

when youʼre not yet sufficiently experienced to know what capacity is needed and in
what specific areas.

- Live and Generator indicated that one specific issue on which more general guidance
and support would be very welcome is that of pricing new products or services.

Funding difficulties and project pitfalls

Although as mentioned above, all the projects have gone relatively smoothly, there have
been a few difficulties related both to the investments and the web developments
themselves.

One organisation referred to the NEEIC investment process as being extremely opaque
but complimented the advisor on the help and support she had provided in both
signalling opportunities and supporting organisations through the process. Also, the
work funded by NEEIC needed to be complete and invoiced for within a 6 month period.
Two of the organisations commented that this had caused some difficulties.

One organisation emphasised that ideally they would have liked longer to prepare for
their project, they had planned to develop a new website a little down the track.
However, they had taken advantage of investment being available. While the support
was very welcome, coming at the time it did, it had intensified the capacity problems
discussed above.

Organisations have also experienced some technical difficulties with their projects. For
example, a major difficulty for Northern Stage has been the difficulty of integrating its
existing ticketing system fully into the new website and its functionality. Attempting to
make the join look as seamless as possible has created significant extra work. This may
be a problem for other arts organisations seeking to maintain an existing ticketing
system but introduce a new website with Amazon selling features.

25
The benefits of the early work on these projects
Although it is still early days, the projects receiving investment through the initiative have
already generated a number of benefits:

- Generator describes it as having helped to leverage some contract income, it also

helped the organisation attract a large ERDF grant because the new web site had
the capacity to collect the sort of monitoring and evaluation data that the funder
expected. It also seems likely that the project work considered here, or at least
the thinking that generated it, made some contribution to Seven Stories receiving
support from CIP and to Live and Northern Stage receiving significant Sustain
funding.
- Generator also describes the project as helping to build its reputation and enable
it to develop valuable connections and networks in its industry.
- Seven Stories and Northern Stage say that unexpectedly the project has
contributed significantly to cross team working and organisational cohesion.
- Seven Stories also describe how the project has enabled them to better deploy
the specific skills and experience of its staff team for example, using its
receptionistʼs film making skills to produce content for the new website.

The Arts Council and Business Link perceive the projects as having had a number of
soft benefits related to collaborative work and relationship building. There has been
regular attendance at update meetings and communication between organisations
between meetings and the general tenor has been positive and enthusiastic.
Organisations have been able to discuss issues and solutions and share learning and
good practice. They also describe the project as having benefits as regards
development of the working relationship between Business Link and the Arts Council.

Conclusion
While it is too early to tell whether this initiative has achieved its overall objective of
enabling the organisationʼs supported to generate more of their own income, only time
will tell, it appears that it has helped them on the journey to achieving this end. Their
success will be contingent on a number of factors, for example, whether:

- the websites and products when launched have the functionality intended for
them;
- they are backed by appropriate marketing efforts (two of the investments include
provision for work on marketing);
- whether the products they are seeking to promote are attractive at a price which
generates additional net revenue.

Nonetheless these projects are providing some of the necessary infrastructure and
developing the knowledge and experience that should help these four organisations

26
achieve their future plans for income generation and greater financial resilience. They
will enable them to reach a broader audience for their products and services at relatively
little cost and exploit new proven marketing and selling techniques used to great effect in
the private sector.

The action research is in some ways weighted in favour of success. The four
organisations participating in this initative are regarded by Business Link as having
significant enterprise development skills and/or potential. They also have significant
tangible and intangible assets which they can exploit in order to generate income. These
assets include: buildings; a collection; the good will of artist collaborators; significant art
form knowledge and expertise. Before they were awarded this funding each had spent a
significant amount of time considering product and service development or how better to
exploit existing product. As Business Link puts it “thereʼs potentially a lot to be learned
from these organisations”.

However, a notable factor is that even though these organisations are leading the field in
the arts in terms of mission related enterprise development, their financial position
during this transitional period is uncertain. Also, their development and growth plans,
given the funding situation, are slightly ahead of their organisational capacity to deliver.
This is a stressful situation which, while perhaps inevitable, needs to be managed
carefully by organisations and funders alike.

Despite the difficulties of making the transition but perhaps because they are making the
transition - additional funding has been raised by these organisations since investment
through this initiative was agreed. This will enable them to consolidate and develop their
approach to business development. For example, Liveʼs funding through the Sustain
programme will enable it to pursue its wider strategy for enterprise development. While,
Generatorʼs ERDF funding will enable it to further develop the range and quality of the
services it offers to the music industry. The projects receiving investment have had a
number of other benefits for all the organisations involved, the development process
has:

- created staff buy in and support for new communications, marketing and product
development initiatives;
- increased confidence in the development of commercial products and services;
- increased staff and board skills.
- enabled the development of strong supplier relationships.

This is an interim report considering these projects and their progress. The initiative is
due for completion in August 2010. In the Autumn of 2010 MMM will revisit the projects
and consider the extent to which the original objectives for the initiative have been
achieved.

27
Annex - Project timelines (capturing major milestones)
Generator
March 09 May 09 June 09 Sept 09 Dec 09 Feb 10
Brief A supplier Business Inventory Business Site
developed. selected case and the Management launched
Tender sent (from 3 developed for content for System
out. shortlisted) accreditation the learning finished.
Consideration zone and Content of
of national and course
hard and regional written and
software membership with partners
infrastructure zones for review.
needs. developed.
Examination Plugged In
of LSC Music
accreditation. Network
planned.

Live
March 09 May 09 June 09 Sept 09 Dec 09 Feb 10
Selected web Writers Subsidiary Market Module 1 3 modules
developer. filmed for company set tested first on line written.
Developing course up and board seminar Full launch
first module. content. members with with ʻfriends planned for
appropriate and familyʼ. September
skills and
experience
recruited.

Northern Stage
March 09 May 09 June 09 Sept 09 Dec 09 Feb 10
Issued an Appointed Wire frame Official launch
open tender – consultants stage planned for
10 interested, April with
4 shortlisted. some
additional off
line
marketing.

28
Seven Stories

March May 09 July Sept 09 Sept to Dec 09 Feb 10

09 and
August
09
Scoping a Brief Technical Team Scoping
design put out and discussions re process and
brief and to design/mark website and site map
meeting tender. eting functionality developed.
with consultants requirements.
designers appointed.
to inform
the brief

29