8 Mistakes Theatres Make (and How to Prevent Them)

This post is all about mistakes theatre companies make, and how to prevent them

An article about what mistakes theatres make might appear negative, but don’t worry: it’s written with all my best vibes. I have worked 15 years in theatre, and devote my work to improving theatre companies’ financial and administrative infrastructures: the first step to improving something is understanding what can be done better. Over the course of my career as a senior staff member and collaborator of small and medium-sized theatres and charities, I have built a pretty good understanding of what the most common mistakes are that can snowball into small crises that suck all the capacity out of the team.

Leading a theatre company can be very exciting and rewarding: you have a vision to inspire you and a plan to get there. You can carve the path of your company’s future, and you want to do it in the best possible way. While you may have a limited budget and resources, it’s crucial to identify and avoid common mistakes theatres make that can hinder growth and success.

In this blog post, I’ll explore some frequent pitfalls and provide practical solutions to prevent them effectively, even with limited financial means.

1) Lack of Budget Control

One common mistake theatre companies make is failing to maintain tight control over their budgets. If there aren’t internal controls that can allow budget holders to monitor their department’s actual spend and remaining budgets, teams will inevitably to go over budget and there will be a lot of confusion around how money is spent. Without careful monitoring, expenses can quickly spiral out of control, leading to financial instability. 

Here’s how you can prevent this:

• Set up monthly budget meetings with producers and budget holders: you will need to prepare reports of how much their budget is, and how much has been actually spent. Budget holders will be responsible for accounting for any overspend or fallback of sales targets, and they will need to reforecast projected income and expenditure as appropriate.
• Track Expenses: it is absolutely pivotal that you track your spend regularly. This can be done through an accounting software such as Xero, Sage, or Quickbooks. Alternatively, if your company is small enough, you can track your income and expenses with an Excel template by categorising every transaction by category and department. This needs to be a regular task, rather than something you only do at year-end, or ad hoc.
• Set Up Spending Controls: if you work with a team, you need to make sure that there are enough checks in place to prevent overspends. For example: the purchase of any assets needs written sign-off by the Executive Director; or Budget holders need to seek explicit permission before spending more than their budgeted amount.

2) Responsive Rather than Preventive HR and Staff Wellbeing

Small theatre companies often overlook the importance of proactive HR practices and staff wellbeing until issues arise. 

As the company expands its work grows, it is tempting to throw all of your time and resources into offering new work and programming, and the more tangible aspects of running the show (pun intended). This means that your team will grow without the proper infrastructures that can protect the company as well as its workers and employees.

HR is something to invest in so that hopefully you’ll never use it. It creates clear frameworks that allow employees and employers to work happily together, and resolve any issues through a system of healthy feedback and conversations, de-escalating crises and issues.

Neglecting employee welfare until it’s too late can result in decreased productivity, high turnover rates, and an unhealthy work environment. Here’s how to address this:

• Work on a Feedback Culture: regular meetings and check-ins with your collaborators will help you understand where the company’s pressure points are, and where the team might need some extra support. Invite everyone, regardless of seniority, to give feedback about the company’s way of working, and ensure you are equipped to listen and respond appropriately. Here are some feedback models you can be inspired by to ensure you and your staff feel enabled to deliver feedback, may that be positive or constructive.
• Employee Development: invest in training and development programs to enhance employee skills and engagement. Although training can be expensive, consider cost-effective options like online courses, webinars, or mentorship programs with experienced professionals in your industry.
• Invest in HR Support: if you see the company growing exponentially, make sure you budget for a professional HR review of working contracts, policies, and infrastructures. When this step is overlooked, companies find themselves playing catch-up and putting band-aids on issues that could have been resolved with a little care before things start getting out of hand.

3) Lack of Financial Knowledge Among Staff

When employees lack financial literacy, it can lead to errors in financial management and decision-making. For example, they might not know how to set and manage a budget, or they might not know how to properly read management accounts.

Theatre companies can mitigate this by:

• Financial Training: organise workshops or online training sessions to educate staff about basic financial concepts, budgeting, and cash flow management. Encourage employees to actively participate and apply their newfound knowledge in their day-to-day roles.
• Regular Updates: keep employees informed about the company’s financial performance and objectives. Share financial reports, such as profit and loss statements, to help them understand the bigger picture and align their efforts accordingly.

4) Finance Books and Accounts Are Left to the Last Moment

Waiting until the end of the fiscal year to handle accounting tasks can lead to rushed and inaccurate financial reporting. Here’s how to avoid this: 

• Consistent Record-Keeping: maintain accurate and up-to-date financial records throughout the year. Utilise affordable accounting software or cloud-based platforms to simplify bookkeeping tasks and ensure compliance. 
• Regular Reviews: conduct periodic financial reviews to identify any discrepancies or potential issues early on. Regular reviews allow you to analyse your financial data, track your progress, and make informed decisions. Allocate dedicated time each month or quarter to review your financial statements, balance sheets, and cash flow statements.
• Seek Expert Assistance: while small companies may not have the resources to hire a full-time finance team, it’s still beneficial to seek professional assistance when needed. Financial reporting doesn’t quite allow for the “trial and error” learning method, as filing the wrong accounts or presenting incorrect management accounts can lead to a lot of confusion and extra work. Consider outsourcing the bookkeeping, or engaging an accountant who can provide guidance, review your financial reports, and offer insights on optimising your financial processes.

I recommend using Unbiased to look for an accountant that can match your needs: Unbiased is essentially a search engine that can help you connect with financial advisors and accountants that can tend to your business’ needs.

5) Lack of Mentorship

Small companies often overlook the value of mentorship in their journey. Having a mentor with industry experience can provide valuable insights and guidance. Here’s how to find mentorship without a large budget:

• Join Networking Groups: engage with local business organisations, industry associations, or online communities where you can connect with experienced professionals willing to mentor small business owners. Attend networking events, seminars, or workshops to build relationships.
• Contact Your Ideal Mentor (and encourage all staff to do the same): a mentor is someone that you aspire to be in a few year’s time. If you are aware of someone in your industry who you look up to and would like to learn from, it doesn’t hurt to just reach out and ask them to grab a coffee. Many experienced people are more than happy to help out those who are a few steps behind, as it is an extremely rewarding and gratifying thing to be able to support a peer. There is nothing to lose from just asking: here is a great resource about how to find a mentor.

6) Lack of Formalised Processes

It’s very easy for a small theatre company to run on informal processes: staff get into working habits that are never reviewed or formalised. This means that there aren’t clear and documented processes that clarify the right and compliant way do to things, and where accountability lies if things go wrong. This can lead to inefficiencies, errors, and inconsistent quality. Establishing processes can improve productivity and ensure consistent quality of work. Here’s how to implement processes effectively:

• Identify Critical Processes: determine the core processes that are crucial to your business operations. For example: staff and freelancer recruitment, front of house procedures, and the production and delivery of a show. Focus on these areas to establish clear procedures.
• Document Procedures: create step-by-step guides or manuals outlining each process. This documentation will serve as a reference for employees and enable them to perform their tasks consistently and efficiently. This might be a staff handbook, or training materials that are shared during the induction process.
• Continuous Improvement: regularly review and refine your processes based on feedback from employees and customers. Look for opportunities to streamline operations, eliminate unnecessary steps, or leverage technology to automate repetitive tasks.

7) Poor Internal Communication

This often happens during extremely busy times and when the organisation is understaffed. When you’re fighting fires it’s hard to have the headspace to think about how to prioritise your communications and things move too quickly for the less urgent yet important communications to take place. 

Inadequate internal communication can lead to misunderstandings, delays, and decreased productivity and morale. Effective communication is crucial for small companies to function smoothly, especially now that remote work is more and more common. Here are some low-cost communication strategies:

• Utilise Communication Tools: implement cost-effective communication tools like instant messaging apps, project management software, or shared cloud-based documents. These tools facilitate quick and efficient information sharing among team members. A great example is Slack or Microsoft Teams.
• Regular Team Meetings: schedule regular team meetings, either in person or virtually, to discuss ongoing projects, address concerns, and foster collaboration. Every meeting should have an agenda, and clear purpose and outcomes to avoid the ‘could have been an email’ eyeroll.
• Feedback and Suggestions: create a culture of open feedback and encourage employees to share their thoughts and suggestions. This promotes transparency, engagement, and a sense of ownership among the team.

8) Lack of Line Management Training/Knowledge

Often times staff who are good at their jobs are promoted into roles where they will be responsible for other members of staff, however, this doesn’t mean that they are appropriately equipped to lead their team. Setting up a line management framework for managers to rely on and learn from is a fantastic way to support them and their themes to thrive.

Here’s how to address this issue:

• Identify Training Needs: assess the knowledge and skills gaps among your line managers. Determine the key areas where they require training, such as communication, conflict resolution, performance management, or team building.
• Use Free or Low-Cost Resources: if you don’t have the budget to book bespoke HR training, look for free or affordable resources that provide training materials, online courses, or webinars on leadership and management skills. Online platforms, such as MOOCs (Massive Open Online Courses) and Free Courses in England, often offer a wide range of relevant courses that can be accessed at a minimal cost.
• Internal Training and Knowledge Sharing: encourage knowledge sharing among line managers within your organisation. Facilitate peer-to-peer learning sessions or create mentorship programs where experienced managers can mentor and guide newer managers.

Conclusion

By being aware of these common mistakes theatre make and implementing preventive measures, small businesses can overcome challenges and improve their chances of long-term success. Remember, you don’t need a large budget to avoid these pitfalls. Mostly, it’s about making space and time in your diary and own head to apply these suggestions a little bit every day. With careful planning, utilising available resources, and seeking opportunities for cost-effective solutions, small businesses can proactively address issues such as budget control, HR practices, financial knowledge, mentorship, process establishment, internal communication, and line management training. 

By avoiding these mistakes, small businesses can lay a solid foundation for growth, sustainability, and resilience in a competitive business landscape.

Related articles:

• How to Read Management Accounts: a Guide for New Managers
• Charity Balance Sheet Funds Explained: Guidance and Example
• 8 Common Misconceptions About Being a Charity Trustee
• Creating a Theatre Production Budget: the Full Roadmap

This post was all about mistakes theatres make and how to avoid them