Start-up Funding | |
Start-up Expenses to Fund | $6,650 |
Start-up Assets to Fund | $21,350 |
Total Funding Required | $28,000 |
Assets | |
Non-cash Assets from Start-up | $2,000 |
Cash Requirements from Start-up | $19,350 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $19,350 |
Total Assets | $21,350 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $0 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $0 |
Capital | |
Planned Investment | |
Hillary MacQuilliams | $10,000 |
Family and Friends | $18,000 |
Other | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $28,000 |
Loss at Start-up (Start-up Expenses) | ($6,650) |
Total Capital | $21,350 |
Total Capital and Liabilities | $21,350 |
Total Funding | $28,000 |
Mt. Hood Records is a new, Portland, Oregon based record label. Mt. Hood Records is taking a new, unusual approach to band promotion and CD sales. Instead of competing with the large, ultra competitive national record labels, as well with the larger Indie labels, Mt. Hood Records will adopt a regional, intimate approach where they concentrate on several local bands. By working with only a few bands at once, Mt. Hood Records is able to offer a much more specialized and attentive level of service for their bands. This will be their competitive edge, something no other record label can offer.
At the same time that the CDs provide visibility for the respective bands, it provides visibility for Mt. Hood Records. This is key for Mt. Hood Records’ business model. They need to be known as a hard working/promoting record label. This is important because the stronger the label appears, the more attractive the label becomes in terms of being an exclusive promoter for a band.
While the compilations CDs are released, Mt. Hood Records will be working with a variety of parties for networking purposes. The first is local radio stations. Being able to get air play for the CD depends on relationships with the key decision makers at the various stations. Mt. Hood Records will also be working with various record stores, developing relationships with them so that as some of the bands on the CDs become known and there is consumer interest, Mt. Hood Records can begin to sell the CDs. Lastly, Mt. Hood Records will be working with the different clubs to get the bands live gigs. Playing live to local crowds will be one of the most productive activities in terms of developing fanfare.
As the label becomes well known locally, it will become attractive for local acts looking to sign up with a record label. Mt. Hood Records will be looking to sign up a total of no more than five bands at any one time. This will allow Mt. Hood Records to offer specialized and intimate promotional assistance.
As the bands begin to sign on, the next tasks are to assist in the production of a studio CD for the band. Once the CD is cut key activities will be aimed at record sales and live show production. These are key activities as these are the sources of revenue for Mt. Hood Records, CD sales which occur at record stores as well as at the live shows.
Mt. Hood Records business model recognizes that there will be little to no revenue within the first year. First year revenue is being sacrificed for the building of a viable record label in future years.
Mt. Hood Records will not focus on a specific genre of music; that is difficult to do on a regional basis. It also creates competition at the local level between the bands within the same genre. Instead, Mt. Hood Records will focus on the element of improvisation which can be found in a wide range of genres. Improvisation can be described as adding free flow change or spontaneity to a performance. This occurs when a band is playing a pre-defined song, but certain or each member of the band deviates from the song, playing their own solo or rendition of the material. This occurs in the moment, in a spontaneous experimentation. This lends it elf to viewing a band’s performance multiple times, as no performance is the same. Improvisation also lets the musicians “shine,” it allows them to try new things, play around, have fun, and entertain the audience.
Mt. Hood Records will target two primary market segments, record stores and consumers at live shows. These will be the sources of income so they will be the main targets. Initially, Mt. Hood Records focus will be to develop visibility within the community, enough to be able to sign up bands which are the key to revenue generation. The need to sign up bands will drive the marketing activities that Mt. Hood Records will undertake in order to generate revenue in the future.
Mt. Hood Records has identified two target market segments which will be the main targeted customers.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Record stores | 5% | 23 | 24 | 25 | 26 | 27 | 4.09% |
Consumers at live performances | 7% | 18,776 | 20,090 | 21,496 | 23,001 | 24,611 | 7.00% |
Total | 7.00% | 18,799 | 20,114 | 21,521 | 23,027 | 24,638 | 7.00% |
Mt. Hood Records has chosen these two distinct market segments because they are the main source of revenue. Mt. Hood Records will remain focused on their important marketing activities aimed at developing visibility for the record label, however, ultimately it comes down to CD sales for business viability and the record stores and consumers at live performances being the source of this revenue. This is a fairly intimate industry, most of the industry participants within a region know each other. Keeping this in mind, networking will be the most efficient and effective activity. The only way to get into record stores is by showing potential record sales. The way you begin to do this is to have good contacts within the stores to get the right people to listen to you.
Another source of revenue will be the buy out of a band from their Mt. Hood contract in favor of a larger, national label. These events will not be marketed for, they will tend to occur on their own. This source of revenue is, however, tracked in the sales forecasts.
In general, the record industry, at least when based on overall sales, is a highly concentrated national industry. There are several huge international corporations that control the bulk of record sales. For bands looking to break through into national stardom and significant record sales, this is the distribution/promotion channel that they must concentrate on.
There are also the “Indie” labels which are broader than regional companies, but do not have the same breadth as a national player. The Indie labels can be quite large, they just tend to do business in less commercial ways. Many Indie labels can support national acts who are professional musicians.
Mt. Hood Records will leverage their competitive edge of low overhead and low band count ensuring intimate specialized care and promotion for the lucky few bands that it represents. Mt. Hood Records will employ a marketing strategy that concentrates on developing a large web of networks to assist the visibility of their label as well as developing visibility for the bands it represents. Mt. Hood Records will be extremely active in the local music scene as an effective way of plugging their bands. Lastly, Mt. Hood Records will have an aggressive sales strategy with the goal of getting as many record stores as possible to assist with sales of the various CDs as well as having a heavy live gig schedule as another outlet for CD sales.
Mt. Hood Records will employ a two pronged competitive edge. The first edge prong is having low overhead. Mt. Hood Records’ office will be in Hillary’s home. There is not an immediate need for offices, as all work can be transacted from her home office. Additionally, unlike many record labels, there will not be a recording studio to support. Significant costs are saved by renting studio time as needed. There appears to be no time in the foreseeable future that would dictate the need for a dedicated studio.
Mt. Hood Records will also use their other competitive edge prong by retaining a low band count. Mt. Hood Records will have five or less bands under contract at once. While this will reduce the chance of large records sales associated with having many different bands under their label, it does allow Mt. Hood Records to offer the bands it represents very specialized and intimate care. This is quite unusual in the industry. Most record labels have many different bands under contract; that is the nature of the industry. It is very difficult for a band to pick up a contract that differs from this arrangement.
Mt. Hood Records recognizes the opportunity to get away from the status quo and operate under the business philosophy that specialized customer care and attention is the best way to make money in the long term. Unless you have tons of marketing money volume is not the way to make sustainable profits. Each of Mt. Hood Records’ bands therefore receive far better plugging and placement. Anytime Mt. Hood Records is in a networking activity, they can plug all of their bands at once due to the small number.
This approach to specialized care can be seen in the athlete representation field. Two current great cyclists have adopted the approach, bucking the same trend within the athlete representation industry. Both Lance Armstrong and Kevin Livingston have both chosen contract representatives that only represent a couple of athletes instead of the norm by choosing a large company that has many different athletes in many sports represented at once. They have chosen this arrangement recognizing the more intimate care that they receive.
Mt. Hood Records’ marketing strategy recognizes the fact that the value in the label is intrinsically based on their reputation within the music community. Mt Hood Records needs to be known as a premier label, creating a compelling reason for bands to sign up with them.
Mt. Hood Records will develop their industry visibility through the release of the various compilation CDs. The goal of these CDs is to get the word out about Mt. Hood Records. This will assist in securing their initial bands. This will be done through aggressive networking. Mt. Hood Records will be in close contact to who’s who in the Portland music scene, for both retail recordings as well as within the live music scene.
Once a few bands have been secured, it then becomes Mt. Hood Records’ marketing strategy to plug the bands as much as possible. This again will be done by leveraging all of their networking contacts. One effective way that Mt. Hood Records will be marketing their bands is to line up as many live shows as possible. For a local scene, it is very important for the bands to be performing quite often, this is the fastest way that demand is generated within a specific community regarding a band. Once the shows have been lined up, Mt. Hood Records will almost always man a booth where the concert goers can buy CDs, learn more about the performing band, as well as providing more information about the other bands that they represent. While this takes time and effort, it is this passionate effort that will assist Mt. Hood Records in becoming a viable label, not immediately, but over time and hard work.
Other activities, as intuitive as they may seem are (not an exhaustive list):
Mt. Hood Records will also address the need to sell CDs at live performances. As mentioned earlier, CDs purchased at shows are, more often than not, impulse purchases. The viewer is impressed by the live performance of the band and in a show of support or a desire to have more material from the band they buy a CD. It is likely that other bands’ CDs will be sold by leveraging the goodwill of Mt. Hood Records. Studies indicate that consumers are more likely to experiment with new bands if the bands are found on a record label that the consumer is already familiar with and has confidence in. In essence it is using the positive halo effect of the label to sell other bands the label represents. This is further reinforced by the common element of improvisation that Mt. Hood Records represents. If the customer appreciates the element of improvisation then they are much more likely to try another improvisational band, especially when it comes with a “seal of approval” from the record label.
Sales will be slow initially. It is forecasted that the first two compilation CDs will be handed out for free. Sales revenue is not anticipated yet. By the third compilation Mt. Hood Records will have signed two bands and this will be the beginning of revenue generating CD sales. Once bands are signed, Mt. Hood Records’ legitimacy will be developed and they will be able to begin to generate revenue both on band CDs as well as the compilations.
Sales will also be generated through online website CD sales. Margins for the online sales are quite good because it eliminates the retail layer of the distribution channel. This will be Mt. Hood Records attempt to capture revenue from the powerful Internet sales channel.
An additional source of revenue is contract buyout. At some point there is the possibility that one or two of the bands will receive an offer from a larger record label for national distribution. In all of the band’s contracts there will be a buy out clause that will allow a larger label to buy out the contract. This is in recognition that Mt. Hood Records has limited distribution and if a band does indeed “make it” they will need to move onto a new label that has an established distribution system. Having this clause and the phenomenon of a band or two moving on is of value to Mt. Hood Records because it allows them in turn to sign on another new band. This is not expected or desired to be a huge revenue contributor initially. While Mt. Hood Records has no desire to completely cash in on a band moving to a national audience they will certainly make some money when a contract is bought out. However, it is not their goal that all bands will move on to larger labels.
Direct cost of goods includes:
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Record retailer sales | $0 | $28,090 | $39,076 |
Live concert record sales | $0 | $19,000 | $24,090 |
CD sales from website | $0 | $15,070 | $25,600 |
Contract buy-outs | $0 | $20,000 | $55,000 |
Total Sales | $0 | $82,160 | $143,766 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Record retailer sales | $0 | $11,236 | $15,630 |
Live concert record sales | $0 | $6,650 | $8,432 |
CD sales from website | $0 | $5,275 | $8,960 |
Contract buy-outs | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $0 | $23,161 | $33,022 |
Several milestones have been established and will act as a set of goals and a tracking mechanism for achieving the goals. While the milestones are initially static, they can be dynamic if needed. Please see the following table for detail regarding the milestones.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Business plan completion | 1/1/2003 | 2/15/2003 | $0 | Hillary | Business Development |
First compilation released | 2/15/2003 | 5/1/2003 | $0 | Hillary | Marketing |
Second compilation released | 5/1/2003 | 9/15/2003 | $0 | Hillary | Marketing |
First band signed | 2/15/2003 | 10/30/2003 | $0 | Hillary | Sales |
First revenue stream | 10/30/2003 | 2/28/2004 | $0 | Hillary | Sales |
Band representation currently full | 10/30/2003 | 6/30/2004 | $0 | Hillary | Sales |
Totals | $0 |
Mt. Hood Records’ website will be an excellent source of information dissemination and CD sales.
The site will be linked to the various Portland entertainment guides such as Willamette Weekly. Mt. Hood Records will also submit the site to several different search engines. Lastly, the URL address will be prominent on all printed material and correspondence.
The site will be developed by a computer science student.
Hillary MacQuilliams first got her feet wet in music after college. After graduating with a Bachelor of Arts degree, Hillary and bandmates of 180 South decided to start their own record label to support a regional tour. The goal of the record label was primarily self-promotion and personal satisfaction. By creating their own label, they could release their one studio CD. They did not expect to generate profits from this, they saw it as an opportunity to support their tour with a CD. They toured for a month straight, throughout NY, PA, and NJ, playing almost every night, driving to the new venue during the day. The tour was quite an accomplishment, but it really did not make any money, just covered expenses.
Hillary then earned a J.D. degree from Lewis & Clark Law School in Portland, Oregon. During the summer of her first and second year she interned at the Department of Justice (DOJ), but was unable to find a job after graduation.
At this point she decuded that she could leverage per passion for music into a job, and once again start a record label. This time around she would be able to rely on her husband’s income for the household for the first year or two of her new business. Hillary recognized that in order to build a sustainable label she would have to forgo revenue and keep overhead low for the first year. If she could weather this financial burden she could make the business model work.
Hillary will be the primary employee. She will be working long hours, often with her husband’s help, but after some sweat equity, the business model will begin producing revenue. Hillary will not take a salary for the first two years in order to build the business. For year three she will draw a salary. Hillary will hire two other employees to assist her.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Hillary | $0 | $0 | $30,000 |
Sales | $0 | $12,000 | $13,000 |
Distribution | $1,600 | $12,000 | $13,000 |
Total People | 1 | 3 | 3 |
Total Payroll | $1,600 | $24,000 | $56,000 |
The following sections presents important financial information.
The following table lists important financial assumptions.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 10.00% | 10.00% | 10.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
Tax Rate | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 |
The Break-even Analysis indicates what is needed in monthly revenue to break even.
Break-even Analysis | |
Monthly Revenue Break-even | $1,502 |
Assumptions: | |
Average Percent Variable Cost | 0% |
Estimated Monthly Fixed Cost | $1,502 |
The following table and charts illustrated projected profit and loss.
Explanations for some line items:
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $0 | $82,160 | $143,766 |
Direct Cost of Sales | $0 | $23,161 | $33,022 |
Other Costs of Goods | $0 | $0 | $0 |
Total Cost of Sales | $0 | $23,161 | $33,022 |
Gross Margin | $0 | $59,000 | $110,744 |
Gross Margin % | 0.00% | 71.81% | 77.03% |
Expenses | |||
Payroll | $1,600 | $24,000 | $56,000 |
Sales and Marketing and Other Expenses | $13,500 | $14,500 | $15,500 |
Depreciation | $400 | $400 | $400 |
Rent | $0 | $4,000 | $4,000 |
Website expenses | $1,560 | $1,800 | $2,000 |
Utilities | $360 | $800 | $1,000 |
Insurance | $360 | $600 | $800 |
Payroll Taxes | $240 | $3,600 | $8,400 |
Returned CDs | $0 | $1,200 | $1,200 |
Total Operating Expenses | $18,020 | $50,900 | $89,300 |
Profit Before Interest and Taxes | ($18,020) | $8,100 | $21,444 |
EBITDA | ($17,620) | $8,500 | $21,844 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $0 | $2,430 | $6,433 |
Net Profit | ($18,020) | $5,670 | $15,011 |
Net Profit/Sales | 0.00% | 6.90% | 10.44% |
The following chart and table show the projected cash flow.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $20,540 | $35,942 |
Cash from Receivables | $0 | $61,620 | $107,825 |
Subtotal Cash from Operations | $0 | $82,160 | $143,766 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $0 | $82,160 | $143,766 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $1,600 | $24,000 | $56,000 |
Bill Payments | $15,595 | $48,234 | $70,690 |
Subtotal Spent on Operations | $17,195 | $72,234 | $126,690 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $17,195 | $72,234 | $126,690 |
Net Cash Flow | ($17,195) | $9,926 | $17,076 |
Cash Balance | $2,155 | $12,081 | $29,158 |
The following table presents the projected balance sheet.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $2,155 | $12,081 | $29,158 |
Accounts Receivable | $0 | $0 | $0 |
Inventory | $0 | $0 | $0 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $2,155 | $12,081 | $29,158 |
Long-term Assets | |||
Long-term Assets | $2,000 | $2,000 | $2,000 |
Accumulated Depreciation | $400 | $800 | $1,200 |
Total Long-term Assets | $1,600 | $1,200 | $800 |
Total Assets | $3,756 | $13,281 | $29,958 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $425 | $4,281 | $5,947 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $425 | $4,281 | $5,947 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $425 | $4,281 | $5,947 |
Paid-in Capital | $28,000 | $28,000 | $28,000 |
Retained Earnings | ($6,650) | ($24,670) | ($19,000) |
Earnings | ($18,020) | $5,670 | $15,011 |
Total Capital | $3,330 | $9,000 | $24,011 |
Total Liabilities and Capital | $3,756 | $13,281 | $29,958 |
Net Worth | $3,330 | $9,000 | $24,011 |
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Music recording and distribuiting industry NAICS code 512220, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 0.00% | 74.98% | -22.55% |
Percent of Total Assets | ||||
Accounts Receivable | 0.00% | 0.00% | 0.00% | 16.48% |
Inventory | 0.00% | 0.00% | 0.00% | 21.02% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 31.62% |
Total Current Assets | 57.39% | 90.96% | 97.33% | 69.12% |
Long-term Assets | 42.61% | 9.04% | 2.67% | 30.88% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 11.32% | 32.24% | 19.85% | 25.08% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 16.76% |
Total Liabilities | 11.32% | 32.24% | 19.85% | 41.84% |
Net Worth | 88.68% | 67.76% | 80.15% | 58.16% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 0.00% | 71.81% | 77.03% | 29.18% |
Selling, General & Administrative Expenses | 0.00% | 64.91% | 66.59% | 10.66% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.44% |
Profit Before Interest and Taxes | 0.00% | 9.86% | 14.92% | 5.25% |
Main Ratios | ||||
Current | 5.07 | 2.82 | 4.90 | 2.54 |
Quick | 5.07 | 2.82 | 4.90 | 1.38 |
Total Debt to Total Assets | 11.32% | 32.24% | 19.85% | 49.40% |
Pre-tax Return on Net Worth | -541.06% | 89.99% | 89.31% | 6.25% |
Pre-tax Return on Assets | -479.79% | 60.98% | 71.58% | 12.35% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 0.00% | 6.90% | 10.44% | n.a |
Return on Equity | -541.06% | 63.00% | 62.52% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 0.00 | 0.00 | 0.00 | n.a |
Collection Days | 0 | 0 | 0 | n.a |
Inventory Turnover | 0.00 | 0.00 | 0.00 | n.a |
Accounts Payable Turnover | 37.66 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 16 | 26 | n.a |
Total Asset Turnover | 0.00 | 6.19 | 4.80 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.13 | 0.48 | 0.25 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $1,730 | $7,800 | $23,211 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | n.a. | 0.16 | 0.21 | n.a |
Current Debt/Total Assets | 11% | 32% | 20% | n.a |
Acid Test | 5.07 | 2.82 | 4.90 | n.a |
Sales/Net Worth | 0.00 | 9.13 | 5.99 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Record retailer sales | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Live concert record sales | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
CD sales from website | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Contract buy-outs | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Record retailer sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Live concert record sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
CD sales from website | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Contract buy-outs | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Hillary | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Sales | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Distribution | 0% | $0 | $0 | $800 | $0 | $0 | $800 | $0 | $0 | $0 | $0 | $0 | $0 |
Total People | 1 | 1 | 2 | 1 | 1 | 2 | 1 | 1 | 1 | 1 | 1 | 1 | |
Total Payroll | $0 | $0 | $800 | $0 | $0 | $800 | $0 | $0 | $0 | $0 | $0 | $0 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Costs of Goods | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Gross Margin | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Gross Margin % | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | |
Expenses | |||||||||||||
Payroll | $0 | $0 | $800 | $0 | $0 | $800 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales and Marketing and Other Expenses | $250 | $5,500 | $250 | $250 | $5,500 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | |
Depreciation | $33 | $33 | $33 | $33 | $33 | $33 | $33 | $33 | $33 | $33 | $33 | $33 | |
Rent | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Website expenses | $130 | $130 | $130 | $130 | $130 | $130 | $130 | $130 | $130 | $130 | $130 | $130 | |
Utilities | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | |
Insurance | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | $30 | |
Payroll Taxes | 15% | $0 | $0 | $120 | $0 | $0 | $120 | $0 | $0 | $0 | $0 | $0 | $0 |
Returned CDs | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $473 | $5,723 | $1,393 | $473 | $5,723 | $1,393 | $473 | $473 | $473 | $473 | $473 | $473 | |
Profit Before Interest and Taxes | ($473) | ($5,723) | ($1,393) | ($473) | ($5,723) | ($1,393) | ($473) | ($473) | ($473) | ($473) | ($473) | ($473) | |
EBITDA | ($440) | ($5,690) | ($1,360) | ($440) | ($5,690) | ($1,360) | ($440) | ($440) | ($440) | ($440) | ($440) | ($440) | |
Interest Expense | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Taxes Incurred | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Net Profit | ($473) | ($5,723) | ($1,393) | ($473) | ($5,723) | ($1,393) | ($473) | ($473) | ($473) | ($473) | ($473) | ($473) | |
Net Profit/Sales | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Cash from Receivables | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash from Operations | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $0 | $0 | $800 | $0 | $0 | $800 | $0 | $0 | $0 | $0 | $0 | $0 | |
Bill Payments | $15 | $615 | $5,519 | $556 | $615 | $5,519 | $556 | $440 | $440 | $440 | $440 | $440 | |
Subtotal Spent on Operations | $15 | $615 | $6,319 | $556 | $615 | $6,319 | $556 | $440 | $440 | $440 | $440 | $440 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $15 | $615 | $6,319 | $556 | $615 | $6,319 | $556 | $440 | $440 | $440 | $440 | $440 | |
Net Cash Flow | ($15) | ($615) | ($6,319) | ($556) | ($615) | ($6,319) | ($556) | ($440) | ($440) | ($440) | ($440) | ($440) | |
Cash Balance | $19,335 | $18,720 | $12,401 | $11,845 | $11,230 | $4,911 | $4,355 | $3,915 | $3,475 | $3,035 | $2,595 | $2,155 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $19,350 | $19,335 | $18,720 | $12,401 | $11,845 | $11,230 | $4,911 | $4,355 | $3,915 | $3,475 | $3,035 | $2,595 | $2,155 |
Accounts Receivable | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Inventory | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $19,350 | $19,335 | $18,720 | $12,401 | $11,845 | $11,230 | $4,911 | $4,355 | $3,915 | $3,475 | $3,035 | $2,595 | $2,155 |
Long-term Assets | |||||||||||||
Long-term Assets | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Accumulated Depreciation | $0 | $33 | $67 | $100 | $133 | $167 | $200 | $233 | $266 | $300 | $333 | $366 | $400 |
Total Long-term Assets | $2,000 | $1,967 | $1,933 | $1,900 | $1,867 | $1,834 | $1,800 | $1,767 | $1,734 | $1,700 | $1,667 | $1,634 | $1,600 |
Total Assets | $21,350 | $21,302 | $20,654 | $14,301 | $13,712 | $13,064 | $6,712 | $6,122 | $5,649 | $5,176 | $4,702 | $4,229 | $3,756 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $425 | $5,500 | $541 | $425 | $5,500 | $541 | $425 | $425 | $425 | $425 | $425 | $425 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $425 | $5,500 | $541 | $425 | $5,500 | $541 | $425 | $425 | $425 | $425 | $425 | $425 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $0 | $425 | $5,500 | $541 | $425 | $5,500 | $541 | $425 | $425 | $425 | $425 | $425 | $425 |
Paid-in Capital | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 |
Retained Earnings | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) | ($6,650) |
Earnings | $0 | ($473) | ($6,197) | ($7,590) | ($8,063) | ($13,787) | ($15,180) | ($15,653) | ($16,126) | ($16,600) | ($17,073) | ($17,546) | ($18,020) |
Total Capital | $21,350 | $20,877 | $15,153 | $13,760 | $13,287 | $7,564 | $6,170 | $5,697 | $5,224 | $4,750 | $4,277 | $3,804 | $3,330 |
Total Liabilities and Capital | $21,350 | $21,302 | $20,654 | $14,301 | $13,712 | $13,064 | $6,712 | $6,122 | $5,649 | $5,176 | $4,702 | $4,229 | $3,756 |
Net Worth | $21,350 | $20,877 | $15,153 | $13,760 | $13,287 | $7,563 | $6,170 | $5,697 | $5,224 | $4,750 | $4,277 | $3,804 | $3,330 |
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Published Dec.29, 2020
Updated Apr.23, 2024
By: Jakub Babkins
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Table of Content
Do you want to start a music business? Well, that’s a really alluring and one of the most profitable businesses.
To run a music business, you need to hire the services of music artists, musicians, record producers, and composers on a temporary or permanent basis. The business can include creating songs, music sheets, stock music, and theme music. And can also be extended to cover events, ceremonies, and concerts.
The business is exciting, however, due to the large competition in the market, one has to put very much effort in the beginning to earn recognition. Like any other business, the first step would be to create a business plan for music industry. The professional business planning should cover all aspects of the business like workforce, work area, expenses, services, sales strategy, etc.
To give you an idea of how your business plan should look like, we are giving here the business plan of a music business startup, Hymns & Beats.
2.1 the business.
Hymns & Beats will be a licensed music business based in Atlanta. The business will comprise artists and musicians who will work to create new music pieces. The business will utilize the talent of various singers to release stock music, record labels, and theme music for corporates, events, TV shows, movies, and game developers.
A music company needs efficient management in all the areas such as reaching out to singers, making arrangements for concerts, making sure that the edit effects are perfect, etc. Realizing that she would not be able to supervise everything on her own, Amelia decided to hire a manager to help her.
If you are looking for how to start a music business you should study different music business plans. While exploring business plans on how to set up a music business, try to also explore the ways others use to manage multiple tasks of a business at the same time.
Our primary customers will be the television shows and film industries who will seek our services for creating tunes, theme music, and songs. Besides, corporate, institutes, companies, game developers, and event organizers will also be our customers.
Our target is to become one of the most renowned music businesses. We aim at releasing at least 10 albums within six months of the launch. We also aim at achieving a rating above 4.7 within a year of the launch. Our profit goals to be achieved within the three years of our launch are summarized here:
3.1 company owner.
Amelia Stiles will be the owner of Hymns & Beats. Amelia got her degree in Bachelor of Music from the Oberlin Conservatory of Music, Ohio.
During her schooling, she composed two music pieces that earned her national level fame.
Amelia wanted to become a playback singer. She learned and practice music all her life and still couldn’t succeed in getting more than a few singing projects. Owing to her optimistic nature, she decided to find new ways to invest her passion for music. She decided not to sing but just compose the music pieces.
Realizing her creativity and skills in the music composing area, she decided to start her own music business. Now Amelia hires music artists and glorifies people’s lives with exceptional tunes and melodic voices.
Since there are many already established music industries in Atlanta, you should study different examples of music business plans. Exploring as many examples of music business plans as you can, will enable you to come up with unique ideas. Analyzing various music business plan samples will allow you to identify the areas where demand is high despite the large competition.
Hymns & Beats will be started in one of Amelia’s properties in Atlanta. Amelia will hire a home renovating professional to turn her property into a structure for the music business. Meanwhile, she will hire a professional business plan writer to make a comprehensive plan for her business.
Then Amelia will purchase the required musical instruments and other equipment like speakers, cables, amplifiers and microphone stands, etc. After which the startup will start its hiring phase. Staff like audio engineers, musicians, and DJs will be employed after strict testing and interviewing. Meanwhile, the company will ensure to establish a strong web and social media presence to get introduced to the target audience.
The costs for startup are as follows:
The startup requirements are as follows:
Legal | $248,000 |
Consultants | $0 |
Insurance | $38,000 |
Rent | $27,000 |
Research and Development | $31,000 |
Expensed Equipment | $63,000 |
Signs | $3,500 |
Start-up Assets | $325,000 |
Cash Required | $376,000 |
Start-up Inventory | $58,000 |
Other Current Assets | $212,000 |
Long-term Assets | $250,000 |
Start-up Expenses to Fund | $410,500 |
Start-up Assets to Fund | $1,221,000 |
Assets | |
Non-cash Assets from Start-up | $1,604,000 |
Cash Requirements from Start-up | $387,000 |
Additional Cash Raised | $48,000 |
Cash Balance on Starting Date | $33,500 |
Liabilities and Capital | |
Liabilities | $31,000 |
Current Borrowing | $0 |
Long-term Liabilities | $0 |
Accounts Payable (Outstanding Bills) | $44,000 |
Other Current Liabilities (interest-free) | $0 |
Capital | |
Planned Investment | $1,631,500 |
Investor 1 | $0 |
Investor 2 | $0 |
Other | $0 |
Additional Investment Requirement | $0 |
Loss at Start-up (Start-up Expenses) | $366,000 |
Before making a music business plans template, you should be very clear about the services you are going to provide your customers. In this sample plan, we are listing the services of Hymns & Beats. However, to get a broader idea of services that can be provided in this domain, you should study many other music industry business plans too.
1.Creating Production Music
Our primary service will be to produce music pieces that can be used in television, movies, and other media platforms after getting licensed to the buyers. Those music pieces will cover nearly all music genres such as classical, electronic dance, folk, and disco, etc.
This service will also include producing specific music pieces according to the client’s requirements.
2.Record Labels
We will also release albums and songs made with the collaboration of our team with top-class singers and songwriters.
3.Theme Music For TV Shows, Movies, Trailers & Video Games, Commercials
Our third primary service will be to create instrumental and theme music to be used in the background of movies, trailers, video games, commercials, and reality shows, etc.
4.Corporate Background Music
We will also create professional music themes to be used by companies and corporates in their presentations.
5.Hosting Concerts, Music Festivals & Parties
This will be one of our major services. We will host music nights, concerts, events, and parties. We will also offer the service of presenting music and songs in ceremonies according to the nature of the gathering.
The most important component of starting a music studio business plan is marketing analysis. It includes a detailed study of your target market to understand the areas where competition is high or to identify the domains where the demand for your services can be more.
Thus, before you start a music business you should study the dynamics of the marketplace where you will be offering your services. In this music business plan concept pdf we are listing market analysis and market segmentation done by Hymns & Beats for their business. If you are looking for how to write a music business proposal or how to create an efficient marketing plan, you can take help from here.
According to IBISWorld, the average growth that has been reported in the music industry in the last five years is 5.5%. Moreover, Statista reports that the annual revenue generated by the U.S. music industry was recorded to be $21.5 billion in 2019 alone. Simply put, the music industries have always been in demand. To succeed, you just need to be proactive in reaching target customers and creative enough to meet their expectations.
5.2 marketing segmentation.
The detailed marketing segmentation of our target audience is as follows:
5.2.1 TV Programs & Film Industries: Our primary customers will be the television shows and programs that need different background music for different segments and for transitions of one segment to another.
Besides, film producers will require our services to create music pieces for trailers and songs. We also expect this group to avail of our services of producing background and themed instrumental music.
5.2.2 Commercials (TV ads) Production Companies: The second group of our target customers will comprise of commercials producing companies. We expect to get projects from this category from the very beginning as video ad creators usually don’t need music producers with past experience.
5.2.3 Video Game Developers, Corporates & Event Organizers: The third category of our target customers consists of video game developers who need music to be played in the background. This category also includes corporates who need professional background music for their presentations.
Apart from them, we also expect to be called by events and party organizers for playing music, singing songs, and setting up musical nights. We also look forward to being invited to cultural ceremonies for displaying the skills and talent we have.
Potential Customers | Growth | ||||||
TV Programs & Film Industries | 39% | 39,000 | 41,000 | 44,000 | 49,000 | 53,000 | 10.00% |
Commercials (TV ads) Production Companies | 29% | 28,000 | 30,000 | 32,000 | 35,000 | 38,000 | 10.00% |
Video Game Developers, Corporates, Event Organizers | 32% | 30,000 | 33,000 | 36,000 | 39,000 | 43,000 | 11.00% |
10% |
Our business targets are:
Since we are not selling any discrete products therefore we can’t define a strict product pricing strategy. Our prices will vary with the required mastery, the difficulty level of the track and music, etc.
However, in the beginning, we will offer massive discounts on our services of hosting musical events and ceremonies and also in our theme music creation service.
Like marketing analysis, sales strategy for business is also an important component of a music business marketing plan. Sales strategy enables you to attract your potential customers, and compete with your already-established competitors.
From this music business proposal sample, you can learn the competitive aspects and advertisement strategy of Hymns & Beats.
Although we have tough competition, we have entered the market with several competitive aspects. Firstly, we have an excellent team that will help us develop unique music pieces. Secondly, we are collaborating with top singers and songwriters to come up with exclusive albums.
Moreover, we will be offering background music production services for video games and trailers online. So that will enable us to reach a wider audience.
Unit Sales | |||
Creating Production Music & Record Labels | 40,000 | 42,400 | 44,944 |
Theme Music for TV Shows/ Movies/ Commercials | 35,000 | 37,100 | 39,326 |
Corporate Background Music | 18,000 | 19,080 | 20,225 |
Hosting Concerts, Music Festivals & Parties | 36,000 | 38,160 | 40,450 |
Unit Prices | Year 1 | Year 2 | Year 3 |
Creating Production Music & Record Labels | $53.00 | $61.48 | $71.32 |
Theme Music for TV Shows/ Movies/ Commercials | $48.00 | $55.68 | $64.59 |
Corporate Background Music | $30.00 | $34.80 | $40.37 |
Hosting Concerts, Music Festivals & Parties | $37.00 | $42.92 | $49.79 |
Sales | |||
Direct Unit Costs | Year 1 | Year 2 | Year 3 |
Creating Production Music & Record Labels | $47.00 | $51.00 | $54.00 |
Theme Music for TV Shows/ Movies/ Commercials | $42.00 | $44.00 | $47.00 |
Corporate Background Music | $24.00 | $27.00 | $30.00 |
Hosting Concerts, Music Festivals & Parties | $39.00 | $41.00 | $42.00 |
Direct Cost of Sales | |||
excellent work, competent advice. Alex is very friendly, great communication. 100% I recommend CGS capital. Thank you so much for your hard work!
Your business is just a collective representation of your staff and managers. So before proceeding to other steps, you should create your personnel plan in a template for writing a music business plan.
Here we are only listing the permanent staff of the company. The singers and songwriters whose services will be hired temporarily for record albums are not mentioned in this list.
General Manager | $16,000 | $17,600 | $19,360 |
Cashier | $13,000 | $14,300 | $15,730 |
DJs | $31,000 | $34,100 | $37,510 |
Musicians | $45,000 | $49,500 | $54,450 |
Audio Engineer | $14,000 | $15,400 | $16,940 |
Software Expert | $12,000 | $13,200 | $14,520 |
IT Expert | $12,000 | $13,200 | $14,520 |
Sales Executive | $13,000 | $14,300 | $15,730 |
General Assistants | $20,000 | $22,000 | $24,200 |
Receptionist | $10,000 | $11,000 | $12,100 |
Making a music business plan is a little tricky as you have to devise a plan to manage your permanent as well as temporary resources. For example, while creating a financial plan for the music business, you have to consider fluctuations in the price of services. The albums that need to be sung or written by high paid singers and songwriters will require you to reserve a bigger than usual budget.
It is recommended to seek professional help in creating the financial plan for your business. To give you an example of how it would look like, we are providing here the sample financial plan of Hymns & Beats.
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 8.13% | 8.20% | 8.31% |
Long-term Interest Rate | 8.32% | 8.44% | 8.90% |
Tax Rate | 23.95% | 24.68% | 26.50% |
Other | 0 | 0 | 0 |
Monthly Units Break-even | 5290 |
Monthly Revenue Break-even | $133,500 |
Assumptions: | |
Average Per-Unit Revenue | $249.00 |
Average Per-Unit Variable Cost | $0.64 |
Estimated Monthly Fixed Cost | $168,500 |
Other | $0 | $0 | $0 |
TOTAL COST OF SALES | |||
Expenses | |||
Payroll | $170,000 | $187,000 | $205,700 |
Sales and Marketing and Other Expenses | $131,000 | $137,000 | $144,000 |
Depreciation | $2,200 | $2,300 | $2,350 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $2,900 | $3,200 | $3,500 |
Insurance | $1,900 | $2,300 | $2,700 |
Rent | $3,200 | $3,500 | $3,800 |
Payroll Taxes | $37,000 | $39,000 | $42,000 |
Other | $0 | $0 | $0 |
Profit Before Interest and Taxes | $137,800 | $725,471 | $1,590,613 |
EBITDA | $137,800 | $725,471 | $1,590,613 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $27,560 | $145,094 | $318,123 |
Net Profit | $110,240 | $580,377 | $1,272,491 |
Net Profit/Sales | 1.94% | 8.32% | 14.84% |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $55,000 | $59,400 | $64,152 |
Cash from Receivables | $15,000 | $16,200 | $17,496 |
SUBTOTAL CASH FROM OPERATIONS | |||
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
SUBTOTAL CASH RECEIVED | |||
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $32,000 | $37,000 | $41,000 |
Bill Payments | $17,000 | $18,000 | $20,000 |
SUBTOTAL SPENT ON OPERATIONS | |||
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
SUBTOTAL CASH SPENT | |||
Net Cash Flow | $16,000 | $17,000 | $19,000 |
Cash Balance | $25,000 | $26,000 | $28,000 |
Assets | |||
Current Assets | |||
Cash | $276,000 | $309,120 | $340,032 |
Accounts Receivable | $24,700 | $27,664 | $31,094 |
Inventory | $3,900 | $4,368 | $4,900 |
Other Current Assets | $1,000 | $1,000 | $1,000 |
TOTAL CURRENT ASSETS | |||
Long-term Assets | |||
Long-term Assets | $10,000 | $10,000 | $10,000 |
Accumulated Depreciation | $17,600 | $19,712 | $22,176 |
TOTAL LONG-TERM ASSETS | |||
TOTAL ASSETS | |||
Liabilities and Capital | Year 4 | Year 5 | Year 6 |
Current Liabilities | |||
Accounts Payable | $16,000 | $17,920 | $20,142 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
SUBTOTAL CURRENT LIABILITIES | |||
Long-term Liabilities | $0 | $0 | $0 |
TOTAL LIABILITIES | |||
Paid-in Capital | $30,000 | $30,000 | $30,000 |
Retained Earnings | $62,000 | $67,580 | $74,338 |
Earnings | $201,000 | $219,090 | $240,999 |
TOTAL CAPITAL | |||
TOTAL LIABILITIES AND CAPITAL | |||
Net Worth | $296,000 | $322,640 | $354,904 |
Sales Growth | 7.34% | 8.13% | 9.01% | 3.00% |
Percent of Total Assets | ||||
Accounts Receivable | 9.32% | 10.33% | 11.44% | 9.80% |
Inventory | 5.56% | 6.16% | 6.83% | 9.90% |
Other Current Assets | 2.36% | 2.61% | 2.90% | 2.40% |
Total Current Assets | 150.00% | 152.00% | 153.00% | 158.00% |
Long-term Assets | 11.70% | 11.90% | 12.10% | 12.00% |
TOTAL ASSETS | ||||
Current Liabilities | 4.79% | 4.83% | 4.87% | 4.34% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
Total Liabilities | 7.27% | 7.33% | 7.40% | 7.38% |
NET WORTH | ||||
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 95.91% | 98.50% | 101.26% | 99.00% |
Selling, General & Administrative Expenses | 94.68% | 97.24% | 99.96% | 97.80% |
Advertising Expenses | 1.69% | 1.74% | 1.78% | 1.40% |
Profit Before Interest and Taxes | 42.01% | 43.14% | 44.35% | 33.90% |
Main Ratios | ||||
Current | 37.7 | 38.4 | 40.6 | 32 |
Quick | 32.7 | 34 | 34.85 | 33 |
Total Debt to Total Assets | 0.27% | 0.24% | 0.17% | 0.40% |
Pre-tax Return on Net Worth | 76.02% | 77.34% | 79.80% | 75.00% |
Pre-tax Return on Assets | 92.50% | 97.13% | 101.98% | 111.30% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 33.10% | 34.13% | 35.18% | N.A. |
Return on Equity | 58.50% | 60.31% | 62.18% | N.A. |
Activity Ratios | ||||
Accounts Receivable Turnover | 7.7 | 7.8 | 7.9 | N.A. |
Collection Days | 100 | 100 | 100 | N.A. |
Inventory Turnover | 33 | 34.65 | 36.6 | N.A. |
Accounts Payable Turnover | 16.23 | 16.34 | 16.84 | N.A. |
Payment Days | 27 | 27 | 27 | N.A. |
Total Asset Turnover | 2.5 | 2.6 | 2.6 | N.A. |
Debt Ratios | ||||
Debt to Net Worth | -0.03 | -0.04 | -0.05 | N.A. |
Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
Liquidity Ratios | ||||
Net Working Capital | $227,000 | $239,712 | $253,136 | N.A. |
Interest Coverage | 0 | 0 | 0 | N.A. |
Additional Ratios | ||||
Assets to Sales | 0.83 | 0.85 | 0.88 | N.A. |
Current Debt/Total Assets | 1% | 1% | 0% | N.A. |
Acid Test | 27.9 | 28.5 | 30.5 | N.A. |
Sales/Net Worth | 2.1 | 2.1 | 2.2 | N.A. |
Dividend Payout | 0 | 0 | 0 | N.A. |
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Creating a business plan is essential for any business, but it can be especially helpful for musician businesses that want to improve their strategy and/or raise funding.
A well-crafted business plan not only outlines the vision for your company, but also documents a step-by-step roadmap of how you are going to accomplish it. In order to create an effective business plan, you must first understand the components that are essential to its success.
This article provides an overview of the key elements that every musician company business owner should include in their business plan.
Download the Ultimate Business Plan Template
A musician company business plan is a formal written document that describes your company’s business strategy and its feasibility. It documents the reasons you will be successful, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.
A musician company business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.
Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.
The following are the key components of a successful musician company business plan:
The executive summary of a musician company business plan is a one to two page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.
This section should include a brief history of your company. Include a short description of how your company started, and provide a timeline of milestones your company has achieved.
If you are just starting your musician business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your musician firm, mention this.
You will also include information about your chosen musician company business model and how, if applicable, it is different from other companies in your industry.
The industry or market analysis is an important component of a musician company business plan. Conduct thorough market research to determine industry trends and document the size of your market.
Questions to answer include:
You should also include sources for the information you provide, such as published research reports and expert opinions.
This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.
For example, the clients of a musician company may include booking agents, music venues, and corporate event planners.
You can include information about how your customers make the decision to buy from you as well as what keeps them buying from you.
Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or musician services with the right marketing.
The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.
For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and/or advantage; that is, in what ways are you different from and ideally better than your competitors.
Below are sample competitive advantages your musician business may have:
This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.
This part of your musician business plan should include the following information:
The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.
Finally, and most importantly, in your Operations Plan, you will lay out the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a musician business include reaching $X in sales. Other examples include adding new employees or opening a new location.
List your team members here including their names and titles, as well as their expertise and experience relevant to your specific musician industry. Include brief biography sketches for each team member.
Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.
Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix).
This includes the following three financial statements:
Your income statement should include:
Revenues | $ 336,090 | $ 450,940 | $ 605,000 | $ 811,730 | $ 1,089,100 |
$ 336,090 | $ 450,940 | $ 605,000 | $ 811,730 | $ 1,089,100 | |
Direct Cost | |||||
Direct Costs | $ 67,210 | $ 90,190 | $ 121,000 | $ 162,340 | $ 217,820 |
$ 67,210 | $ 90,190 | $ 121,000 | $ 162,340 | $ 217,820 | |
$ 268,880 | $ 360,750 | $ 484,000 | $ 649,390 | $ 871,280 | |
Salaries | $ 96,000 | $ 99,840 | $ 105,371 | $ 110,639 | $ 116,171 |
Marketing Expenses | $ 61,200 | $ 64,400 | $ 67,600 | $ 71,000 | $ 74,600 |
Rent/Utility Expenses | $ 36,400 | $ 37,500 | $ 38,700 | $ 39,800 | $ 41,000 |
Other Expenses | $ 9,200 | $ 9,200 | $ 9,200 | $ 9,400 | $ 9,500 |
$ 202,800 | $ 210,940 | $ 220,871 | $ 230,839 | $ 241,271 | |
EBITDA | $ 66,080 | $ 149,810 | $ 263,129 | $ 418,551 | $ 630,009 |
Depreciation | $ 5,200 | $ 5,200 | $ 5,200 | $ 5,200 | $ 4,200 |
EBIT | $ 60,880 | $ 144,610 | $ 257,929 | $ 413,351 | $ 625,809 |
Interest Expense | $ 7,600 | $ 7,600 | $ 7,600 | $ 7,600 | $ 7,600 |
$ 53,280 | $ 137,010 | $ 250,329 | $ 405,751 | $ 618,209 | |
Taxable Income | $ 53,280 | $ 137,010 | $ 250,329 | $ 405,751 | $ 618,209 |
Income Tax Expense | $ 18,700 | $ 47,900 | $ 87,600 | $ 142,000 | $ 216,400 |
$ 34,580 | $ 89,110 | $ 162,729 | $ 263,751 | $ 401,809 | |
10% | 20% | 27% | 32% | 37% |
Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:
Cash | $ 105,342 | $ 188,252 | $ 340,881 | $ 597,431 | $ 869,278 |
Other Current Assets | $ 41,600 | $ 55,800 | $ 74,800 | $ 90,200 | $ 121,000 |
Total Current Assets | $ 146,942 | $ 244,052 | $ 415,681 | $ 687,631 | $ 990,278 |
Fixed Assets | $ 25,000 | $ 25,000 | $ 25,000 | $ 25,000 | $ 25,000 |
Accum Depreciation | $ 5,200 | $ 10,400 | $ 15,600 | $ 20,800 | $ 25,000 |
Net fixed assets | $ 19,800 | $ 14,600 | $ 9,400 | $ 4,200 | $ 0 |
$ 166,742 | $ 258,652 | $ 425,081 | $ 691,831 | $ 990,278 | |
Current Liabilities | $ 23,300 | $ 26,100 | $ 29,800 | $ 32,800 | $ 38,300 |
Debt outstanding | $ 108,862 | $ 108,862 | $ 108,862 | $ 108,862 | $ 0 |
$ 132,162 | $ 134,962 | $ 138,662 | $ 141,662 | $ 38,300 | |
Share Capital | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Retained earnings | $ 34,580 | $ 123,690 | $ 286,419 | $ 550,170 | $ 951,978 |
$ 34,580 | $ 123,690 | $ 286,419 | $ 550,170 | $ 951,978 | |
$ 166,742 | $ 258,652 | $ 425,081 | $ 691,831 | $ 990,278 |
Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include:
Below is a sample of a projected cash flow statement for a startup musician business.
Net Income (Loss) | $ 34,580 | $ 89,110 | $ 162,729 | $ 263,751 | $ 401,809 |
Change in Working Capital | $ (18,300) | $ (11,400) | $ (15,300) | $ (12,400) | $ (25,300) |
Plus Depreciation | $ 5,200 | $ 5,200 | $ 5,200 | $ 5,200 | $ 4,200 |
Net Cash Flow from Operations | $ 21,480 | $ 82,910 | $ 152,629 | $ 256,551 | $ 380,709 |
Fixed Assets | $ (25,000) | $ 0 | $ 0 | $ 0 | $ 0 |
Net Cash Flow from Investments | $ (25,000) | $ 0 | $ 0 | $ 0 | $ 0 |
Cash from Equity | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Cash from Debt financing | $ 108,862 | $ 0 | $ 0 | $ 0 | $ (108,862) |
Net Cash Flow from Financing | $ 108,862 | $ 0 | $ 0 | $ 0 | $ (108,862) |
Net Cash Flow | $ 105,342 | $ 82,910 | $ 152,629 | $ 256,551 | $ 271,847 |
Cash at Beginning of Period | $ 0 | $ 105,342 | $ 188,252 | $ 340,881 | $ 597,431 |
Cash at End of Period | $ 105,342 | $ 188,252 | $ 340,881 | $ 597,431 | $ 869,278 |
You will also want to include an appendix section which will include:
Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your musician company. It not only outlines your business vision but also provides a step-by-step process of how you are going to accomplish it.
Remember to keep your business plan updated as your company grows and changes. Review it at least once a year to make sure it is still relevant and accurate.
Writing a business plan for your music.
July 25, 2018
When it comes to the independent musician, the music business can be a strange, frustrating and scary concept. A good first step for any indie artist who is serious about creating a career in music, is to create a business plan. The Business plan will act as a roadmap to help the Indie Artist negotiate the music business and help them identify their strengths and weakness and more importantly, once identified, learn how to address them.
The mere mention of a business plan can make many of you freeze in fear. It sounds like a some mystical book of numbers and formulas that will take a business degree to understand. Nothing can be further from the truth. A business plan is a simple outline your goals, how you can achieve those goals and outlines the resources that you have or need to get to reach those goals. It is basically a roadmap of your career and your business. It is the plan that takes you from the Dream to what actions you need to take to get there.
Basically the business plan will allow you to focus and set a realistic plan with realistic goals! The business plan can be used to help bring in key people and companies you would like to make part of your team, such as prospective managers, agents, labels. Having a business plan will shows these people that you have thought about your career, planned how you want to achieve your goals and treat your career seriously. You can also use the business plan if you are looking to secure some financing for new equipment or to underwrite a tour.
Do your research, This article will give you a good framework to work from, but get a good book on the subject of writing a business plan or you can get an Audio book to listen to while you are on the road. Second, BE REALISTIC AND HONEST WITH YOURSELF! Nothing will sink your business plan faster than unrealistic goals and an over estimation of your resources. If your goal is to be a star and make 2 Million a year writing songs from your mansion, keep in mind the amount of musicians that are out there trying to make it vs the small percentage of artists in that top tier. You would be better setting your goals to creating a sustainable income that will allow you make music your career.
Make an outline of your goals, Resources and needs. You will use this outline as you start to write your business plan.
Your Business plan is a “Living Document”, it will change over time. It will also change depending on who you are presenting this plan to. Even if you are just using it as a guide to where you want to go and what you feel you need to do to get there. The reality is, as your band moves towards it’s goals, your resources will change and your goals will change, so your plan will change as well. Breaking it down to basic sections will allow you to update your plan easily. You would add or subtract sections depending on what you are doing or who you are presenting it to.
1. Executive Summary
The executive Summer should be single a page that introduces the band and provide a synopsis of your marketing plan. This would also be where you would personalize the plan to who giving this to. If it is to a bank, you would outline how much you are looking to finance and what the money will be used for.
2. Introduction
This is where you would have a more extensive bio of the band. If the plan is for a specific project (ie: Recording a CD, Setting up a tour, etc.) this is where you would outline that project.
3. Mission Statement
This is a short statement that explains who you are as an artist.
4. Vision Statement
Again this is a short statement outlines your goals as an artist.
5. Music Industry Overview
This would be a section that you would include if you are presenting your plan to someone who is not educated in the Music Business. A simple page that explains how you or your band fits within the Music Business. For example what is a Recording and touring artist, what does a booking agent do, what does a radio promoter do, etc.
6. Band/Artist Bio, History, and Functions
This would be more a resume of the band, accomplishments, key moments and it’s here that you would introduce the bio of the individual band members. You should also indicated who is doing what jobs for the band, For Example you can indicate the Bass player is working as a booking agent and the drummer is also producing and editing the bands music videos. You can also list any additional team members in this section, such as your PR Person, Booking agent, Radio Promoter, etc. This is also a good way to outline who is doing what within your business.
7. Your Market
This is THE most important aspect of your marketing plan, knowing your market. It is the artist who really knows who their audience is, stands out!
You should be tracking who comes to your shows. Do you have more women or men that show up at a gig? Are these people with disposable income, or do they nurse that beer all night. What other artists do they listen to, or go to see live. How do they get their music, CD’s, Downloads, Streaming? The more information you have about your market the better you can understand how to get them at your show. This also applies to markets you want to attract! For example, If you are looking to attract more women under 28 to your shows, then you need to know what women under 28 need to attract them to your show.
Keep in Mind your music is not going to be for everyone, but with a good understanding of your target market the better chance you will be able to expose them to your music.
8. Graphics and Branding
How you present yourself as an artist or band will determine the market that will be attracted to your shows. Your graphics and branding are an important part of your marketing plan. You should also determine how you are going to describe your music, the genre you are going to identify with. How you identify your music Genre can determine your market as well. If you are a “ Country” artist, you will attract a very specific market, or you can us other identifiers to create curiosity or interest with younger markets such as “Alt Country” or “Indie Blues” .
9. Recording Project
If you are using the business plan for a recording project this is where you would put in the information about the project. Include information on who is producing this project, The engineer, any sessions players you are using, the studio you are going to use. Add bios of any additional players, producers and engineers. What is your timeline for the project.
This is also a good place to establish a budget for this project. Create a spreadsheet that allows you to input how many hours (and cost) of the actual recording, Mastering costs, Musician costs, pressing and packaging, radio promotion, packaging for mailings, postage for mailing to reviewers and radio stations, posters, ads, digital agrregators etc. You should also keep track of all sales of the CD as well once it is released.
You may decide to purchase the hardware and software to create your own studio to record your music. Here is where you would also outline the cost of this equipment. Sometimes this can be more cost effective then paying the hourly fee at a studio free you from the stress of watching the clock.
This will help you determine your “Return on Investment” or how many copies of your new project you have to sell before you recoup the cost of it’s production and marketing. This will reveal pretty quickly if you are making good business decisions on any recording project.
10. Press Kit
Here you can outline what is to be included in your press kit. Whether you are going to have a physical kit or an electronic press kit or both. Again what are the costs of producing each kit and the cost of sending that kit to any prospective buyer.
11. Additional Merchandise
Let’s face it, your CD is most likely the least profitable item on your merch table. Once you have sold a CD to someone, they will not purchase it again, You will quickly saturate your market and your merch table will be very quite, very quickly if you don’t have an well stocked merchandise plan. As any band with extensive touring experience will tell you, it’s all about the merch. I have known artists whose take at their merch table would be double their guarantee for the show. Again keep good records on what items you have on your merch table, how much it costs and how many you sold and for how much.
You will be able to see what sells good and what does not, what sizes sell the most and which ones sit for a while, etc. The bottom line it’s all about keeping good records and know what works and what does not. This is Good Business!
If you are looking for good ideas on how to merchandise your band check out this article.
12. Touring Plans
Okay, here is a reality check. The Job of Musician is touring! If you don’t spend more time in your van then you do on stage then you are doing something wrong. Going on tour is not easy, and it’s not something you go into without good planing.
You need to again create a budget spreadsheet that includes how much you are going to spend on gas, Rooms (yes you are going to need a place to sleep even when you don;t have a gig that night), paying the band, food, strings, sticks for the drummer, wear and tear on the van, Oil Changes, Laundry, and make sure you have a reserve fund just in case you break down or you have to bail someone out. See Tips for the Touring Musician
As you book the shows, with a good budget you can quickly see if you will make money or lose money on the tour.
Its here you will also outline your “Tour Support” marketing. Are you sending posters to the venues in advance of the show? Are sending a press release to the press outlets in the area of the venue? Are you doing social media marketing in advance of the show? Do you need to setup interviews with the local radio stations? Have you established a mailing list for this market?
13. Connecting with your Fan Base
Your Fan base is your biggest asset as a touring artist. They are the what makes your business profitable. They scome to the shows, buy your merch and help spread the word about your and your music. With today’s access to social media platforms such as facebook, instagram, snapchat, twitter, etc., it is important to keep your fan base engaged with you and your music.
You need to outline your plan to keep your fan base informed of what you are doing, news of any upcoming shows or releases. Who is going to be responsible for posting and interacting with your fans, what are you posting and when? You should also keep an eye on your fan base to see what platforms they are using to get their information. We all know how fast the social media technology changes and you have to change with it.
You can post a instragram photo of you in front of the venue when you arrive to loadin .. do a facebook live video of the band on the road. Some behind the scenes pics and videos can help your fan base feel engaged and invested in your and your music.
14. Web site
As old school as you may think this is, having a really professional looking website is VERY important! This is your first impression to the music industry. It is the hub where your social media, Electronic Press Kit, Pictures, Tour Schedule, Branding, video’s, streaming players all come together to promote your band and music.
Have a good website development plan that keeps your site up to date and establish who is going to take on this responsibility. Are you going to use Reverbnation for your tour schedule or are you going to input the dates directly on your site. How often are you going to post new content (pics, videos, tour dates)?
Are you going to setup a merch store to sell your merchandise online and if so, how are you going to accept payment, and fulfill those orders.
Are you going to have an area that allows your fans to interact with your site? Are you going to have newsletter and how are you going to capture email addresses. How can you capture demographic information from your fans from your website?
Here is a great review of the Themify Themes and Builder for WordPress
15. Partnerships with Other Artists
Do you have relationships with other artists or do you tour as a supporting act to a larger act? This is a great place to add what artists you have toured with or have opened for while on tour.
16. Video Production
What was once a luxury reserved for only the top selling artists now has become a necessary part of any independent musicians business plan. The good news is the cost of doing a music video has dropped significantly! With the advent of inexpensive HD and even 4K video on Smart phones or Action Cameras like the GoPro , it is now possible for an independent artist to produce a professional music video for a fraction of the cost of what it use to cost.
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You should create a timeline for at least 3 or 4 Videos for each release you record. You should also consider creating a “Pre-Release” “making of” video as well.
You should again create a budge spreadsheet for the cost of creating these videos. Either hiring someone to shoot and edit the video’s for you, or purchase the equipment to do your own.
The John Pagano Band used only a Iphone to shoot their latest video, you can read about it here. You can also learn How to Create Music Video on a Budget Here!
17. Additional Revenue
As a working musician one of the most important concepts you need to come to terms with if you want to make music your career, is the fact you need to have multiple income streams. In this section you can outline any additional streams of income you can create using your music. Whether it is acting as a booking agent for other bands, Teaching music (even on the road you can teach via skype), Songwriting for other artists, creating music for Local Commercials, Film, Tv, etc.
The more income streams you are able to identify and take advantage of the stronger you business becomes.
18. Sponsors/Investors
Most investors would like to know if there are other sponsors and investors involved in the project. They seem to feel more assured if there are other investors involved. This also gives you a chance to highlight any sponsorship deals that you have been able to secure. You don’t need to get into the details of how much investors have put in (this will show up in your financial statements) but you should list them.
19. Strengths/Past Successes
This is really your chance to get out there and strut your stuff. Let the reader know what the strong points about the band/artists are. List key past successes and milestones that you have already achieved. You definitely want the reader to be excited about the project, the band and where you have already been. This gives you a chance to show your track record – you could show past sales (if they have been strong), successful tours, key gigs, awards and honors, etc
20. Challenges
Here is where you can list any challenges that you are currently facing. Now Be honest with yourself. This may include financial concerns, band member relations, weak business skills. More importantly, you should show how you are working to address and solve those particular problems and challenges. This section is important because once you have acknowledged what you challenges are you can start to address them.
Here is where you set your goals for the next 6 months, 1 year, 3 years and five years. For each goal, you should be stating what you want to achieve, when you want to achieve and how you will measure your success. This is a great tool for you as well to see if you are on track. A detailed timeline should also be included in the appendix. Make sure you reference to it in the business plan. The best format for this is a calendar or a chart where you can plot all your dates and what you need to have achieved by then.
22. Assumptions/Scenarios
This is important for traditional investors. Here is where you state what assumptions you are using to base your success and financial statements on. How did you estimate your sales? What formula did you use? How did you estimate your costs?
What key people are necessary to your success? What events/actions are key in your marketing plan to be successful? More importantly, you should indicate what alternatives you have considered if your estimates and assumptions fall through in order to ensure success.
23. Financial
Ok, here comes the scary and most eye opening part of the business plan. This is where you put all those costs and estimate spreadsheets together and create your cost/profit financial report. Now, if your sales and costs are estimates, you should be basing it on past successes or a really thought out formula. Really look at what other artists are selling and ask yourself if you are really being realistic? Call to ensure that the costs that you have set out for yourself actually make sense. If you have been around for awhile and have kept track of your past financial information, you should be including it in this section.
The most common forms of financial reports are Balance Sheet, Income Statement and Cash Flow/Budget. These do not need to be included specifically in the business plan (they can be put in the appendices); however, they should be summarized in your financial section. What are your costs, sales and do you know when you will need the most money?
Finally, some institutions/investors will require that you provide a list of collateral that will go towards the loan. You can list your tour van, Pa System, Recording Equipment, etc.
24. Conclusions
Your conclusion should sum up the band, the project, your request, and why you believe that this is a successful project and why your reader should invest in it. Keep it short, no more than a page should do it.
25. Appendices All your appendices come at the end of the document and they should be used to provide any supplemental information, but the business plan should be able to stand alone.
You don’t need to have all the sections outlined in here. It was created to cover a variety of genres, situations and career levels. Choose sections and develop your business plan to fit your needs.
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Get Growthink's music business plan template and step-by-step instructions to quickly and easily create your music business plan today.
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