The Oxford Literary Festival was launched around a kitchen table during a conversation over a glass of wine, but in the ten years since then, its founders have learned to be hard-nosed and highly focused.

Angela Prysor Jones and Sally Dunsmore were both keen arts festival-goers, and had been discussing how Ms Prysor Jones' life would change now that she had a new baby.

She said: "We knew each other quite well because Sally used to work with my husband at art publisher Phaidon Press. I was on maternity leave and thinking about going back to work at another publisher, Thames & Hudson in London.

"My husband said: We won't be able to go to festivals with a baby, why don't you organise one here?"

Ms Dunsmore was keen to keep up her links with the arts, having just left a job at the Museum of Modern Art in Oxford to become a marketing executive at Conference Oxford, which markets the Oxford colleges as conference venues - a job she has continued to keep, as well as helping to run the annual literary festival.

She said: "I had brought a theatre company to Oxford from Athens to perform Antigone the week before and it was terrifying because we hadn't sold a ticket. I felt sick with fear.

"So I rang everyone in my address book and told them to bring ten people. It was a word-of-mouth thing. By the end of the week I had people arguing with me to get in."

Ms Prysor Jones said: "The festival relied on that kind of thing to start with. We had friends willing to help write the programme and be at the door.

"We did everything ourselves - I found one of our leaflets which said: Sally and Angela will be standing at the pagoda handing out tickets'. We still rely on volunteer stewards, which makes for a very nice atmosphere."

That first year, in 1997, they held ten events over two days, attracting 1,000 people. Ms Prysor Jones remembers that they emerged £38 poorer, but Ms Dunsmore insists that they broke even.

She said: "When you try something new, there's always an element of risk. There is so much to do in Oxford every night of the week.

"One of the things that so cheered us is that people came, because there is so much competition for audiences. It was really inspiring."

This year's festival, from March 20-25, will have 160 events and is expected to reach an audience of more than 30,000 adults, and several thousand children.

They still do not make a profit - something they are aiming to change, since they would like to have a balance to plough into the following year's festival.

Surprisingly, they do not usually pay the writers who take part, even famous ones - this year's stars include Joanne Harris, Rageh Omaar, Sandi Toksvig and Alexander McCall Smith.

The only exception is people who don't have a book out this year - others will be paid by their publisher, or may appear without payment to promote their new book.

Most of the festival's £250,000 annual turnover is ticket sales, and the major expense is hiring venues, which took a quantum leap last year when they moved to Christ Church - a development which they believe will allow the festival to expand to a much bigger international audience.

This year the Arts Council is giving £30,000. Another £5,000 comes from Oxfordshire County Council, plus £4,100 for schools events and outreach work, such as a poetry slam, an Asylum Welcome event and work with the homeless.

Much of the other sponsorship is in kind' or through organisations and companies giving low quotes for work, such as printing programmes or hiring halls. Winning sponsorship from The Sunday Times four years ago after competition from two or three other cities' was a major coup and allowed significant expansion.

The founders are not disclosing the sum involved, but the deal also gave the festival national coverage, enabling the pair to expand their weekend break' packages, attracting visitors to Oxford before the main tourist season.

The Easter date was originally chosen to avoid clashes with other festivals, and to avoid university term-time, when most venues would be unavailable.

Other sponsors include travel company Cox & Kings, City Audio Visual and Blackwell bookshop.

There's also The Oxford Times, which each year produces a wrap-around supplement about the festival, including the full programme.

As In Business went to press, they were still looking for sponsors for the festival dinner, a sell-out event which includes the chance to bring 20-30 guests to a glittering event with crime writer PD James and TV history don David Starkey in Christ Church's magnificent Great Hall, famous from the Harry Potter films.

Ms Dunsmore said: "We have learnt a lot over the years about how to find out what sponsors want and to make it a real partnership, so that they can join us in the green room' and mix with the writers."

As for the future, they are aiming to increase their audience to 50,000 within three years - a feasible target considering that numbers rose 5,000 last year to 27,000.

"We also want to develop the children's programme into a major part of the festival in its own right," added Ms Dunsmore.

"Right from the beginning, everyone thought the Oxford Literary Festival had been going for years. It is the right place - well known internationally and it has lots of thinking' people.

"We like to feature the topics that are in people's minds - civil rights and climate change - as well as the current literary trends."

n Contacts: Box office 0870 343 1001, www.sundaytimes-oxfordliteraryfestival.co.uk