Revenue Streams and Cost Structure
As you begin to think about your audiences and operations in this way, you will generate a range of scenarios in terms of costs and income. These scenarios can be used it arrive at a cost/revenue structure which will allow you to deliver within your means and model future scenarios.
Good financial management means looking at every cost that will continue to be part of your structure, considering whether you need to bear it, or if it can be shifted to a partner. If you do have to bear it, what negotiations or exchanges can take place to reduce it? If you are carrying costs (i.e. subsidising other organisations through free services or resources) you will need to consider if that is still affordable and desirable.
Price-cutting is not usually the answer; maintaining price and reducing the cost will serve you better. For charged sites, time-limited offers and incentives which initiate additional sales could be attractive, particularly at lower traffic times or for particular target groups.
Spending reserves on cost-of-living increases is not recommended: reserves are needed to reduce risk in fundraising and for unforeseen emergencies. Reducing operational and energy costs should therefore be a major focus. Making this part of everyone’s role and turning it into a challenge can make the necessary reductions less onerous, more motivating and even a cause for celebration. It will also reduce your environmental impact.
Partial or seasonal closure may be an option for some, but this needs to be carefully considered in light of all the knock-on impacts.