Accounting in a Business Context

Deluge Arts is a successful, growing local centre for the arts. We’ve been fortunate to receive funding from the Arts council, local authorities and lottery grants over the past five years enabling us to provide a variety of entertainment facilities. However with the growth of the organisation it would appear to be developing toward a more commercial outlook, with this we need to investigate into our current organisational structure.

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Structural organisation is a formal way of sub-dividing the different stations of work into specialisation. This is often quite vital in an organisation. Line or direct, line and staff, matrix, committee are all the different structural possibilities. Looking at Line organisation first; this is when all posts are concerned with the achievements of the objectives set all of the authority is direct from the main supervisor to the subordinates.

The main advantages of this is clear and consisted knowledge of the responsibility and the allocation of the authority another advantage of this is that the decision making process is much more efficient, simple to organise, maintain and more importantly understand. Other organisations that have used this have helped them lead to becoming very stable. Although being stable and well established may seem appealing its main disadvantage is just that, it will stop the organisation expanding and growing further. A different structure is line and staff which is apparently the most wide based approach. When using the Matrix structure method in an organisation it tends to encourage bringing together a team of company specialists to work on a particular project. A committee organisation is assisted by advisory committees to help work process quickly.

This type of structure is often seen in hospitals, so may not be the best type of structure for this organisation. This organisation is a non-profit organisation which is what Deluge arts is as the moment, as its always breaking even and wasn’t doing it for the money basically we are an organizations that isn’t influenced by the surrounding market, but keep doing what they do for the fun of it.

What are Non profit organisation like Deluge Arts, well under this definition are various types of organizations such as charitable or public, social welfare, private school, religious, medical (committee), special public, charitable trusts, cooperatives, specified nonprofits cooperatives and unincorporated organizations. Unincorporated organizations (which Deluge arts is considered to be) and non profit corporations are two types of organizations that are run by individuals (sole traders), these are not influenced by the public and the private businesses in the market. Our organisation helps to supply individuals with opportunities for enthusiastically participating in a social life. This is one of the main reasons these types of organisations have received much more attention than any other type of organisation.

The current accounting system is dealing directly with cash by checking the balances with the receipts this enabling them to see what money is going in and out. However with the organisation expanding into a commercial market it would be wrong not to look into a new accounting system, as with it becoming commercial we would be having a larger incoming of money if all goes to plan. So it may become very complex for someone to deal with, we may need employ a specialist in this area of work to deal with our accounts to ensure that we aren’t having shrinkage in the organisation. From this we can ensure that the books are up to date and accurate, and see where we are getting the most incoming money from.

The internal reports will we be for the current acts telling them of the new plans that Deluge arts has for them things such as their itinerary and various meetings and so forth. The internal report will also be sent to the current members of staff the organisation have working, it will tell them the new plans the board of directors have to see if they agree as for a organisation to change its goal and achievement goals the staff need to agree with the new direction plans of the organisation. As without telling the staff it’s not seen as good management. Management is all about team work.

Looking into the external reports, there are a variety of hosts these reports could be sent to. Quite obviously if the organisations goes commercial the ones which will bring in the money will be the key ones to aim at. Considering we do go commercial there are two main groups we will want to focus on to bring in the money these are share holders and obviously sponsors. Looking at sponsorship first as this is where I consider the main bulk of an income to come from, there are indeed a lot of companies out there that would want to be bigger so will donate to smaller organisations to help get their company advertised at a low cost.

This often concludes in the big company gaining a bigger slice in the market and also advertisement about Deluge arts too so the word is spread. We’d need to send a report containing information on how the centre was a few years back, how we’ve progressed, where the organisation is now and our plans for the future. Since the company is doing very well it will be more than likely that a big company would pick up in this and see that we are a good investment.

The report doesn’t necessarily need to contain much financial information but how much the company is growing and the rate it’s growing. We’ll need to explore with how we’ll gain the money to expand, a sort of rough indication of how we’ll get the money and where it will be used. Now to most sponsors they will see you as some form of free advertising and this will be their reward, however a lot of companies will probably want some kind of financial return.

For example if the company was a music organisation they may want to be allowed to sign the next big artist, or let the next big play or movie. Another group that the organisation may want to produce a report if they went commercial would be possible share holders and if there are any current share holders. This report will be similar to the sponsorship report; the difference is that this one will contain much more financial information, as share holders buy into organisations for the purpose of making money.

This report should contain what happens to the money so all of the money coming in and going out, although Deluge arts is breaking even at the moment it may attract people as they will see that in the last five years the organisation has never finished a years loss, but in the same time they haven’t completed a year with a profit either. So to someone who didn’t know too much about your plans for the organisation complete with step by step guide of process on how we intend to achieve to make them a profit they wouldn’t think twice about walking away. So we need to come up with some ideas on how we can appeal to people that will make them money.

If the organisation intends to expand into a more commercial market then this will be good for them but in effect that can’t expect the organisation to make it on there own, to get to their goals they will need full corporation of the acts. To do this their report will need to stand out and really grab the attention of the reader so the act will have to have the “wow” factor to achieve this, without this the company is not going to make money and without the money they can’t help to fund the acts.

This results in the organisation to loose money and causing it to shrink loosing those potential shareholders and sponsors. However at the same time though whilst the organisation wants to take on these new acts it’ll need to have certain limitations upon how many acts they are willing and able to take on. There is no use in taking on thirty new acts when five are going to beneficial to produce revenue. In effect of becoming more commercial the acts are most important to the organisation as without them nothing really functions.

In conclusion to whether an organisation such as Deluge arts should go commercial, is to me quite obvious. To benefit the company it would be the best option if we did, as with the more income coming in we can expand into different fields of the arts helping to fund various projects and helping the unsigned arts creators to have a chance in making a go of what they love. This is really what Deluge arts are about.

With the more money coming in we can employ new staff to work on specialist departments (in the same way the line and staff structure works). The only downfall to this is they become a commercial organisation and they have a lot more work to do as they will have competitors and as it stands at the moment the organizations is a ‘charity’ so a lot of the other agencies wouldn’t even bother with trying to crush them. As soon as they become commercial it opens up a whole new ball park. However if all the organisation wants to do is help people and aren’t bothered about money, then why risk everything by going commercial.