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Living Arts Center: Financial Plan Report

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Updated: Sep 19th, 2022

LAC is a charitable organization in Canada providing clients with an opportunity to take part in different art classes and, therefore, contributing to the popularization of modern art in Mississauga (Living Arts Center 5). Living Arts Center has managed to gather the support of governmental institutions, universities, and famous representatives of the creative community in the region which makes it successful and increases its popularity among Canadians. In reference to its services, LAC provides space to organize numerous events such as concerts, open classes, business conferences, and exhibitions.

Income Statement

2015 % 2016 %
1. Sales $7,334,016 100% $7,309,914 100%
2. Gross Profit $2,301,707 31,3% $2,474,581 33,8%
3. Expenses
Arts Programs
Catering and Restaurant
Customer Services
Program Initiatives
TOTAL EXPENSES
$3,454,870
$1,577,439
$831,147
$82,006
$5,945,462
47%
21%
11%
1%
81%
$3,115,357
$1,719,976
$830,192
$61,977
$5,727,442
42%
23,5%
11,3%
0,85%
78,3%
4. EBIT $1,338,374 18% $1,582,472 21,6%
5. Balance in the end of the year $3,967,556 $2,754,620

Recommendations

The preliminary statement and the entire report show that the organization still has certain difficulties related to sales. A range of practices related to marketing needs to be changed. The special focus is to be put on Internet marketing that is expected to widen the range of customers working with LAC and make it able to provide keen and tough competition to other organizations such as National Arts Center (“About the National Arts Centre” par 1.).

In general, as it can be seen from the comparison of financial results in 2016 and 2015, Living Arts Centre has managed to reduce its total expenses by more than $200,000 which acts as a positive factor for its further growth. At the same time, the sales of services have also decreased. The most significant service that Living Arts Center provides is the organization of arts programs (including concerts, exhibitions, and so on), and the money earned through this activity constitutes more than half of total profits. Nevertheless, according to the annual report provided by LAC the revenues from sales related to the organization of arts programs have decreased by more than $100,000. The given tendency indicates that the target audience pays less attention to visiting events related to art. Another thing that needs to be noted is that the income from customer and facility services has decreased as well. Therefore, the primary challenge that the management of Living Arts Centre needs to analyze and address is the decreasing interest of the target audience in art events and facility services which may continue to grow. At the same time, the income of the organization is still rather substantial due to services related to catering and restaurants that LAC provides. Despite that, one of the primary goals of the organization which is supposed to make it different from other centers in Mississauga and Canada in general is promoting cultural diversity by means of popularizing modern and classical art of various nations (“History and Mission” par. 5).

Due to the necessity to spark the interest of the audience to arts events in order to prevent the organization from losing its positions in the field, it may be necessary to improve marketing practices and put more focus on the use of modern (and relatively inexpensive) means of advertising such as social media. More than that, another possible reason why the revenues from arts programs and the interest to them have decreased is the unwillingness of people to spend money on tickets considering that the entertainment content is available to every user of the Internet. Therefore, the organization needs not only to spend more money on marketing but also introduce new opportunities for those who want to visit arts events. It can be supposed that one of the appropriate decisions would be the introduction of prize drawing for visitors. Apart from that, the improvements made to the discount schedule may also help to keep the target audience interested in buying tickets.

The industry partners are expected to understand the rationale as they know that demand for art exhibitions and concerts with paid admission tends to decrease due to availability of media content.

As for the lack of resources which may prevent Living Arts Center from ensuring its success, it needs to be said that time presents a crucial resource when it comes to marketing as upcoming events need to be advertised in a timely manner. Also, there is a need for Living Arts Center to attract more online marketing specialists to develop an effective social media advertising strategy. Another important thing related to online advertising is that prospective customers must be provided with information materials such as blog posts in which information on upcoming events organized by LAC and knowledge that possesses practical significance would be combined. Therefore, the help of experienced copywriters is also necessary to increase sales.

Works Cited

NAC, n.d., Web.

LAC, n.d., Web.

Living Arts Center. Annual Report. 2016, Web.

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