Festrack:
Business
the details of the financial and technical aspects of our business. Use the shortcuts below to quickly scroll to a topic, or browse yourself
COntent
Business
Description of the value of the PSS, the revenue strategy and the daily activities
Market
Report about the market Festrack enters and competition that Festrack faces
Strategy
Description of how the PSS should be introduced to the market
Logistics
Description of the main processes and activities of the venture
Financials
Overview of profit maximization strategy, cash flow projection and break-even analysis
Future steps
Discussion about future steps, the desired investment and possible risks of the venture
Business Description
Festrack is a tracking service system that aims to improve the experience of festival visitors by simplifying their payments, shortening their ques and offering an option to find their friends. Festrack is also interesting for festival organisations and festival facilitators, as Festrack’s digital payment method increases spending behaviour of visitors and its tracking system offers analytical data on visitor behaviour...
Business Description
Festrack is a tracking service system that aims to improve the experience of festival visitors by simplifying their payments, shortening their ques and offering an option to find their friends. Festrack is also interesting for festival organisations and festival facilitators, as Festrack’s digital payment method increases spending behaviour of visitors and its tracking system offers analytical data on visitor behaviour...
Increased consumption
Companies that already started using wristbands for paying with non-physical money mention that they make more profit. Because it is so much easier to pay, visitors of the festivals spend up to 25% more when they are at the festival (Event Genius). There are less queues because the staff works more efficiently. Also, less post administration is needed and the numbers give insight into the spending behaviours of the visitors.
Location data analysis
The tracking function of the wristband gives insight into the movements of each visitor around the terrain. This data can be used by heat mapping the festival to find out which locations were visited most and which were visited least. This helps the festival to adjust their long term strategy for an increasing popularity. The security is also enhanced, since this data can help to manage crowd control.
Fraud-prevention
By digitising the payment methods, there is less risk of coin theft or use of counterfeit money occurring during the festival. This saves time, labor and thus money for the organisation.
Revenue strategy
Festrack aims for festivals with large amounts of visitors, which will often be music festivals. These festivals are organized by specific festival organisations or more overall festival facilitators, which will be our targets. To make money with this PSS, the entire system will be rented out to these organisations and facilitators. The organisation or facilitator pays a specific amount of money to Festrack for being a part of the festival, depending on how many visitors the festival will receive. This way the product will be adopted by every visitor, spreading out the cost per user. This sole expense for the festival has to be calculated exactly right, since this is the only source of revenue for Festrack. This price shall be determined on the added value the PSS provides for the festival. The festival can in turn decide whether they add their cost per visitor partly or completely to the ticket price. If the organisations and facilitators find out that the PSS proves to be a success, there will be options for investments or long term contracts.
Daily activities
The daily business activities of the venture will be the following:
- Developing the PSS and its components.
- Acquiring cooperation contracts with organisations and facilitators.
- Preparing for upcoming festivals.
- Installing and operating the PSS at the festivals.
- Providing customer service to past and future users and clients.
These processes are more extensively discussed in the part about logistics. To make these operations run smoothly, they must be supported by a strategy. First, the venture has to be up and running. Then, every mentioned activity must be managed. Two team members will be in charge of developing the product and its components. One of them will focus on the physical product and the other on the PCs, scanners and their software. The other activities will all be managed by one of the remaining four team members. One person should be democratically appointed as the captain of the team.
For every activity, there must be a structured way of keeping track of the process. This means that the answers to the following 4 questions must be clear at all times for every activity:
- What tasks must be achieved?
- Who and what do I need to perform each task?
- When must each task be completed?
- How much does it cost to complete each task?
Meetings should be held to present the news and progress in all of these matters for each activity. This will help the venture to get its priorities straight and make decisions.
Event Genius (2020). 10 reasons why your festival should go cashless. Retrieved from:
https://www.eventgenius.co.uk/blog/10-reasons-why-your-festival-should-go-cashless-in-2019/
Market
A context analysis has been done regarding the market and competition. This gave us good insight into the future environment of Festrack. The financials and events were analysed before the Festracker was compared to the existing competitors. It could be concluded that the event market is increasing and that there is no product on the market that has the exact same functions as the Festracker. Some products are similar, but the Festracker stands out because of the tracking function.
Market
A context analysis has been done regarding the market and competition. This gave us good insight into the future environment of Festrack. The financials and events were analysed before the Festracker was compared to the existing competitors. It could be concluded that the event market is increasing and that there is no product on the market that has the exact same functions as the Festracker. Some products are similar, but the Festracker stands out because of the tracking function.
Financial analysis
“The global events industry size was valued at $1.100 billion in 2018, and is expected to grow at a CAGR of 10,3% to reach $2.330 billion by 2026.” – (AMR, 2019)
“Revenue in the Music Events segment is expected to show an annual growth rate (CAGR 2020-2024) of 41,3%, resulting in a market volume of $30.129 by 2024.” – (Statista, 2019)
The global events industry has an increasing market. The concert and music festivals by corporate organisations have great potential for the launch of our product. The concert and music festivals are expected to have an increase in revenue (tickets, sponsorships, etc.) as well as the number and size of the events.
According to research presented by Statistica, the revenue and users of music events in the Netherlands will keep increasing.
- The impact of the current corona crisis is expected to be recovered from in only a few years.
- The user rate is expected to steadily grow to 3,5 million users.
- The overall revenue is expected to increase with an annual growth rate of 39,9%.
- The average revenue per user, $162,68 in 2020, is expected to grow to $195,36 in 2024.


Event analysis
According to a study by marketing agency EM-cultuur, a total of 1.115 festivals were being organised in the Netherlands in 2019. These festivals have been approximated to attract a total of 19,5 million visitors (NLTimes, 2019).
The type of music events that are relevant for our product are outdoors, corporate organised festivals that cover a relative big terrain. An example is Lowlands, which is an annual 3-day festival in the Netherlands.
- The yearly attendance is approximately 55.000 visitors (Statistica, 2019).
- The location of the festival is Biddinghuizen on the festival terrain of Walibi Holland. The terrain covers an area of 0,8 km2. (Wikipedia, 2020).
A ticket costs €200,- and each festival token is sold for €2,90.
- The festival rents out lockers and a special wristband is needed for access to the site.

Competitive analysis
A wristband with useful functions that can be used at festivals is not a completely new concept of course. Our concept is a wristband with three main functions; find friends, contactless payment and the ability to open a locker. There will be competitive products that are already available. Wristbands that can be used as a payment method is an already existing concept. An example of this is the NFC wristband that is available for large events. Reasons that NFC wristbands are being used at an event are increased security of expenses, speed up lines and faster and easier payment.
Furthermore, there are waterproof NFC wristbands that are being used in swimming pools that can be used as keys for lockers. The production price of NFC wristbands is very low. These wristbands can be ordered for a price ranging from €0,03 - €0,50.

There are more advanced versions of the NFC wristband, such as the Sendrato wristbands. These wristbands also use NFC technology which can be used as a payment method, however the company Sendrato offers wristbands with more functionality focussed on event management ranging from music festivals, sports events or conferences. These wristbands have multiple functions that can be used for ticketing, access control, cashless payments, security and crowd control.

There are different versions of the Sendrato wristbands. The Smart Wristband edition is quite similar to our product, however it is mostly used to gather information from crowds of the event and use this data to create heat maps of the area for example. The advanced wristband of the Sendrato company is very similar to our product when looking at the functions. In the advanced wristband, which is used by staff members of events, there is technology integrated that can be used to track other staff members' wristbands. The Sendrato smart wristband edition does not only offer the same functions, it offers more. The wristband has a microphone, bluetooth, music recognition, and very accurate sensors. Because this product is more advanced, it is also more expensive. This is not fit for use at festivals, since this would become way too expensive.

Another product that offers similar functionality is the Lynq device. Lynq offers a product that is targeted at a different target group, but it has similar functions when it comes to finding friends. The product is aimed at travellers, snow sporters or hikers, but it can also be used at music festivals.

The product has a similar interface as our product. It is however designed as an advanced people compass, there is no NFC payment technology included. It is designed as a durable device and this results in a higher cost price. A pack of two costs around $249,-. The big advantage of this product is the reliable technology that is used to find other devices, because it does not need phones, networks, wifi or apps in order to work. It works from groups ranging from 2 to 12 people and has a range of 3 miles.
There are also existing apps that can be used to find friends using the GPS function on a smartphone. Apps like Glympse or Find My Friends offer the find your friends function for free. However, they are often not accurate enough to determine the actual location of friends on the size of a festival terrain. These apps are mostly focussed on finding people on a map.
An app to find your friends is easily downloadable on your smartphone. However, for festival visitors this can bring inconveniences. Firstly, all the members of the group need to download the app and have a charged phone with a GPS signal. Festivals often have a duration of an entire day or sometimes even multiple days. There is a high chance that the smartphone of at least one of the members of the group has an empty battery or other problems before the festival is over. Using the Festracker would eliminate that risk.
The Festracker
It is clear now that there is already an existing market with comparable products. It is important that the Festracker stands out in order to make the PSS profitable. As discussed, there are a couple of existing products that can be used as alternatives. However, when we look at the market that we are trying to conquer, not many of these products are real dangerous competitors. The Lynq devices are for a different target group, and therefore too expensive. Smartphone applications are less reliable and can only cover some of the functions that we offer. The NFC wristbands, and especially the Sendrato wristbands, are the products that are the greatest competitors. They focus on the same target group and are already being used at festivals. However, the combination of all these functions into one multifunctional wristband distinguishes the Festracker from all these other products.
AMR (2019). Statistics on global events industry. Retrieved from:
https://www.alliedmarketresearch.com/events-industry-market
NLTimes (2019). Over 1,000 festivals in Netherlands this year. Retrieved from:
https://nltimes.nl/2019/04/29/1000-festivals-netherlands-year
Sendrato (2020). Retrieved from:
https://www.sendrato.com
Statistica (2019). Number of visitors Lowlands. Retrieved from:
https://www.statista.com/statistics/1065391/number-of-visitors-to-lowlands-festival-in-the-netherlands/
Statistica (2019). Statistics on music festival industry in the Netherlands. Retrieved from:
https://www.statista.com/outlook/273/144/music-events/netherlands#market-users
Wikipedia (2020). Area of festival terrain Walibi Holland. Retrieved from:
https://nl.wikipedia.org/wiki/Walibi_Holland

Market introduction
The PSS is targeted at organisations and facilitators of festivals. The goal is to get them to invest in the PSS and implement it at their festivals. It is not likely that large festivals are willing to use the PSS only based on theoretical research. Then the festival will not have enough confirmation that the PSS is profitable for the festival organisation. That is why the first step in convincing the organisations and facilitators to use the PSS is done by testing it at a small free festival, think about a maximum of 5000 people...
Market introduction
The PSS is targeted at organisations and facilitators of festivals. The goal is to get them to invest in the PSS and implement it at their festivals. It is not likely that large festivals are willing to use the PSS only based on theoretical research. Then the festival will not have enough confirmation that the PSS is profitable for the festival organisation. That is why the first step in convincing the organisations and facilitators to use the PSS is done by testing it at a small free festival, think about a maximum of 5000 people. We will offer the PSS for free to a small festival to analyse how well it works practically. Examples of this are the Bevrijdingsfestival in Enschede or some events during the Kick-In week on the UT campus.
Because the PSS will be offered for free to a festival, there will not be any reason for a festival like this to disagree with it, because they are dependent on consumptions only. Our product makes payments more frequent, easier and faster, so there is not much to lose for the festival there.
The advantages of this test are that we will have better experience with the working of the product. If there are flaws, they will be found and they can be fixed. Furthermore, it is possible to provide more detailed information about the efficiency and usability of the product if it has been tested in the right setting. Moreover, when the PSS is being used at a festival, we will make sure there is a camera crew present to capture amazing footage in which the Festrackers are being used.

After the testrun there will be confirmation concerning the effectiveness of the PSS. Since the goal is to convince larger festival organisations and facilitators, it is important to have a clear analysis of the important selling points:
- Attractiveness of the tracking function.
- Less waiting times in lines.
- Increased amount of consumptions bought per visitor.
- Usefulness of crowd control.
The combination of these selling points make Festrack very interesting for organisations and facilitators.
Logistics
Logistics can be defined as the detailed organisation and implementation of a complex operation or process. This should be thought out to make sure that nothing is overlooked. All of the main processes of the venture are discussed, from developing and operating the PSS to providing customer service.
Development
The development of the PSS can be split up into two parts. First, the development of the product. Much thought was given to the functions of the product and how they can add value for the visitors, but also for the organisations. Then, the service was developed to complement the product. The service had to make sure that the product would reach its full potential.
The UI of the product was developed after the form factor of the product was clear. Designing for maintenance and end-of-life then became a priority, because it increases the value of a future investment drastically. The business details and the technical details were thought out, making everything about the PSS very clear within the team. Visualizing in 3D and making good infographics then became very important to make everything clear to people outside the team. As of now, the development of the PSS is at the prototype phase. To perfect the PSS, adjustments were constantly made to its design and its requirements. Going on with the prototype development, the design is still up for change. While the first part of the development process was done solely by the team, the complexity of the prototype might push us to start a collaboration.
Storage
A small warehouse needs to be rented. The largest festival in the Netherlands has about 220.000 visitors. However we will start with 50.000 wristbands, because otherwise it would get too expensive. Also, most of the festivals have less than 50.000 visitors. The rest of the inventory can then be used as spares. The wristbands need to be assembled and stored. The LED screens and the wristbands are going to be assembled beforehand and then the festrackers are going to be stored and transported in boxes with an estimation of 500 products per box with the dimensions 60 (l) x 40 (w) x 31 (h) centimeters. The storage room therefore only needs to be about 7 square meters in case 4 boxes are stacked on top of eachother. But the components of the service also have to be stored here. This includes the station, special exit gates, server infrastructure, PCs, scanners and maybe some means of transport. So in total, a storage room of an estimated 50 square meters is necessary.
Sales
An important part for generating revenue is to acquire cooperation contracts with organisations and facilitators. The PSS has to be sold to them before it can be implemented on the festivals they organize. Since Festrack is not a well known brand, these companies should be approached by Festrack. We should phone and mail all the organisations and facilitators that can potentially become clients of Festrack. The sales pitch of the PSS should be clear and convincing.
If the client is interested, a contract can be signed. The cooperation contract can be made according to the wishes of the client. If Festrack proves to be a success, the client can opt for an extension of the contract. A lawyer might be needed to draw up a standard contract. This contract can then be modified according to the wishes of the client. The most important collaboration for this process is the one with the client. Festrack will use collaborative selling, which recognizes the clients’ active and decisive role in the sales process. This role should be nurtured and the clients should be made aware of this. The clients will then realize that Festrack will try to find the right solution for them.
Any past and future clients should be kept up-to-date regarding any big developments within Festrack. This can be done by sending out a newsletter. Festivals often have yearly editions and missing out on one edition does not mean that Festrack should also miss out on the next edition. Festrack should be known by every organisation or facilitator and they must all be aware of the added value of the PSS. Relations with clients should be maintained. The customer service can play a part in this. An eye should be kept on competitors, since they might be able to replace us by approaching our clients. Offering promotions might help us to become more attractive to companies that are in doubt.
Preparation
Just like the client, Festrack prepares for an upcoming festival. It is very important that there are enough products in stock to serve all of the visitors of the festival. Other maintenance than a simple battery exchange can be done in between festivals. Dirty bands can be cleaned and broken parts can be replaced so that the products can be reused again. Collaborations are needed to recycle broken parts that cannot be repaired.
The components of the service should be ready to perform. Preventive maintenance should be done to increase the reliability of the hardware. This will most likely be done by specialized companies. All of the physical components of the service must be mobile and ready to be installed at the festival.
Operation
When the client requests it, the station, special exit gates and server infrastructure need to be installed at the terrain. This will probably be one or two days before the festival starts. A check has to be done to make sure that the installed equipment works properly. At the day of the festival, the PCs and scanners will be installed at the appropriate locations. Besides the station, the bars and the top-up points also get PCs and scanners. This is needed to check and increase the amount of tokens on the wristbands. The station will be placed right next to the entrance and next to a top-up point. The visitor can then get the wristband directly after entering the festival and buy tokens at the top-up point. As always, the top-up points are taken care of by the client. The lockers will be provided by a specialized company, which Festrack will introduce to the client. As it is normal, the client pays for the installation of the lockers.
A day before the festival starts, the amount of wristbands required for the festival need to be determined and this amount needs to be transported to the festival terrain in vans. When the wristbands are delivered to the festival site, they go to the station, where festival visitors can pick them up. At the station, the wristbands are registered on the name and email address of the user. The station also has spare wristbands in case users need replacements. The station will always be manned to ensure that service can always be given. When the employees are not busy, they can replace batteries of empty wristbands. The users use and return the wristbands as mentioned before. Right after the festival, the entire PSS will be removed from the terrain. It can then be prepared and stored so that it will be ready for the next event.
Customer service
The PSS will be used by all of the festival visitors. They can all have questions about the use of the product. It is important that people that have questions have a place to ask them. The location where the visitors of the festival pick up their wristband is also available for questions when people have questions during the festival. If users have questions before or after the festival they can get in touch with the festival management or with us via our website. This same means of contact can also be used by clients with questions.
IDEFØ
IDEFØ was used to produce a model that represents the activities and processes that are necessary to make the venture viable. This model can be used to analyse the system and improve it. It can also be seen as a summary of the described logistics.
Solent Plastics (2020). Retrieved from:
https://www.solentplastics.co.uk/53-litre-heavy-duty-black-attached-lid-container-lidded-plastic-storage-box/

Financials
To make sure that the venture is viable, an elaborate financial projection is made. Many variables are complicated and therefore a lot of estimates are used. The estimations are made by doing research on what specific parts and services approximately cost nowadays. These numbers are subject to change. To make this projection more reliable, most variables are overvalued.
Financials
To make sure that the venture is viable, an elaborate financial projection is made. Many variables are complicated and therefore a lot of estimates are used. The estimations are made by doing research on what specific parts and services approximately cost nowadays. These numbers are subject to change. To make this projection more reliable, most variables are overvalued.
Strategy to maximize profit
The price for the client will be based on the value that the PSS adds. The average entrance fee for a festival in the Netherlands costs about €24,- (Festival-Insight). An average visitor spends about €37,- for a festival, and therefore spends about €13,- on the terrain. These numbers also include free festivals and we are therefore forced to believe that these expenditures are way higher on commercial events. The visitor should spend up to 25% more with the wristband. Let us assume that the average visitor spends about 10% more. On average, an extra revenue of €1,30 per visitor is made. Because of this, Festrack wants €1,- per visitor for a 1-day festival. The festival will probably make much more, since both the expenditure and the added percentage will be higher. To heatmap the festival with the GPS functionality, Festrack wants €1,50 per visitor for a 1-day festival. This makes the total cost price for the client €2,50 per visitor for a 1-day festival.

The profitability of the PSS lies in the fact that the products are reusable. Using the products multiple times increases the profit margin per product. But for a product to be reused, it has to be returned. After entering the festival, the users pick up the wristband and fill in their email addresses, linking the products to their addresses. When leaving the festival, the users can throw the products in a special bin that is connected to the exit gate. The user can only leave the festival if the product is dropped in the container. Also, the user must be made aware that the only way to get the remaining tokens back is to return the product. If a specific product is returned, the linked user receives an email with a link. Via this link the user can reclaim his or her remaining credits. A worst case scenario would occur if due to an emergency situation the entire festival has to be evacuated. Making sure that the wristbands are returned will be very difficult in such a situation. Therefore, the inventory must be insured at an insurance company.
A penalty that covers the product costs will be paid by the users that are reckless and break their wristbands. If the wristband is broken because of a reckless user, an extra profit can be made if it is repaired. Maintenance is simple and can be done by the team member that is responsible for the preparation (see logistics), who is already being paid. Therefore, maintenance does not cost more than the parts that are needed, while the reckless user paid a penalty for a complete replacement. This extra profit is not even in the upcoming cash flow projection. If the product still needs maintenance while the user was not reckless, Festrack is responsible and therefore accountable for the maintenance.
Cash flow projection
The cash flow projection maps all of the expected income and expenses of Festrack’s first year. To start, the incoming cash should be estimated. Festrack will try to serve 1-day, 2-days and 3-days festivals. The first year, it is expected that a total of 10 festivals will be served. The table below shows an expected distribution of the served festivals, which will determine our projected revenue.

The estimated product costs and the operating costs are presented in the tables below. Every value is determined after doing detailed research. The components of the product are estimated wholesale prices. The team earnings are determined by having full-time contracts for all of the team members earning a gross €12,- per hour. One of the team members takes care of the customer service and one of the maintenance. No extra personnel has to be hired for this. The customer service is done by someone with a full-time contract earning a gross €10,- per hour. The PCs and scanners cost respectively about €250,- and €20,- a piece. The station has 8 sets. Having 6 bars with 8 sets makes another 48 sets. The software can be developed for around €5.000,-. The station is always manned by 4 persons for the entire duration of the festival. Taking the expected number of festivals, their duration and a gross €10,- per hour for each employee results in the number below. In one year, every product user might need a maximum of 2 battery replacements per use. An expected 5% of the used products must be replaced because of the users who do not have any credits left and still take the product. The maintenance of the used products needs extra parts, which are also valued as 5% of the used products. The team’s wages are paid out of the potential profit of the first year.


The total product costs are determined by having a stock of 50.000 products and the mentioned total costs per product. Now that the projected income and expenses are known, they can be subtracted to calculate the cash flow.

The expected cash flow is positive for the first year. This means that after interest, taxes, depreciation and amortisation, there will be a profit statement. The products are already bought, which results in much lower product costs for the next year. With the same amount and distribution of festivals, this will in turn result in an even higher profit for the next year. But because of increasing popularity, Festrack expects to serve even more festivals in the next year. To increase the amount of festivals that can be served at the same time, more products might have to be purchased.
Break-even analysis
The average revenue per festival can be calculated by dividing the total revenue by the total number of served festivals. This average gives us a linear relation between the revenue and the amount of festivals that are served. As mentioned, since it is a renting business, an inventory has to be acquired, which results in higher fixed costs. The average revenue per festival and the total fixed costs can be combined to do a break-even analysis, which is shown in the graph below. It shows that the costs should be overcome after serving about 8 festivals. Of course, this all is subject to a lot of estimations.

Festival-Insight (2020). Bezoekers en bestedingen. Retrieved from:
https://festivalinsight.wordpress.com/over/
Future steps
The next step should be to develop the PSS even further by making a working prototype. This will lead to more knowledge about the possibilities of the PSS. A working prototype can also help to persuade any investors. Without an investment, Festrack will not have enough money to start generating revenue. It is important to know how much money is needed and what the possible risks are.
Future steps
Future steps
The next step should be to develop the PSS even further by making a working prototype. This will lead to more knowledge about the possibilities of the PSS. A working prototype can also help to persuade any investors. Without an investment, Festrack will not have enough money to start generating revenue. It is important to know how much money is needed and what the possible risks are.
Desired investment
With the savings of all team members together, the venture would still need about €780.000,- to succeed the first year. Costs can be limited by becoming inventive in finding cheaper solutions for the variables that make up the operating costs. Also, all of the variables in product costs and operating costs are high estimates. Both the product costs and the operating costs are very likely to be lower in reality. Despite the high needed investment, the venture could already make a profit in its first year. Possible investors should be made aware of this fact.
Possible risks
Since the wristbands are expensive to make, Festrack has to keep ownership over them. Losing to many wristbands directly results in a lower profit. It will therefore be important to find out how many wristbands will eventually get lost. It is also important to change the product when the business model demands this.
Making the venture as circular as possible is one of the goals. How this will eventually turn out is still a question. It will be difficult to only use environmentally friendly materials. To account for this, the materials should be used in a responsible way. This means they should be strong, reusable and recyclable. It will be a challenge to make the product circular in the way as described in the part about maintenance and end-of-life. The exact way of how the components of the PSS will be repaired, reused, refurbished, remanufactured and recycled still has to be determined. To get the cycles complete, Festrack will require partnerships. The wristband should also be assessed regarding its life cycle. This is important when validating how to improve it. Any improvements in quality will reduce the need for maintenance. The design of the PSS should make it easier to perform maintenance, since this will reduce the handling time. The design should make it easier to recover the value of the PSS and its components, since this will reduce the production costs. The risks regarding circularity are therefore in line with the risks of the venture.
Entering this market is risky, since the product is complex and a large number of users will be addressed from the start. A lot of wristbands are needed for a festival with 15.000 visitors and these wristbands should all function properly. This means that a substantial investment is needed, which is also a big risk. The venture is only at the beginning, but with a strong team of industrial designers, we believe that this can become a profitable business.