Business plan
Management summary
John Smith went fully into the music industry after graduating from college. John Smith graduated with a bachelor’s degree and started work as a production trainee. He then started his own recording label to release studio CD. After graduation, he could not secure a secure job, and this prompted him to convert his passion for music into a career. He approached Laura Heisting, a production manager at black label entertainment. They came together to form the Best Entertainment Company and the future is promising.
Business structure
The business will primarily start as a partnership. All the initial capital will be contributed equally as well as profits and losses. Both parties will be involved in administrative duties and decisions made mutually. In case we don’t get the required capital by our own means, we may consider adding a third partner to the business.
Executive summary
The cost of developing a recording studio is approximately 150,000 dollars. This business plan showcases the expected operations and financials over the next three years. The recording studio will basically provide audio recording, engineering and production services to upcoming as well as developed musicians. The company was cofounded by John Smith and Laura Heisting in 2013.
The recording studio will be devoted to production of high and quality audio and videos that are appealing to the residents of the target market. Live vocal and instrument recording equipment will be offered by the company using the best recording equipments for best results. The company will also offer production services including vocal CD duplication, bar-coding, shrink wrapping, custom music, coaching and training. The business will continue expanding and diversify its recording and production services to meet the wishes and requirements of the customers. Entertainment services will also be expanded depending on the demand. Once the company develops strong relations with the customers, they will introduce a special order service for specific recording services required by the customers.
Service business analysis
The recording industry is highly concentrated nationally based on overall sales. It’s generally controlled by large international co operations. New firms trying to break into the market should concentrate a lot of investments on distribution and advertisements. The indie labels, which are broader than regional companies, also control a section of the market. These labels can be very large, but they tend to do business in a less commercial way. Indie labels usually support professional musicians. Another label is the one that supports musicians, but they are not professionals in the industry. This label has a day time job hence they have to look for extra time to do their musical interests. Most of the labels target audience, but they usually concentrate in a given region.
Company website
The company is planning to use a website for disseminating information. This information will include advertisements of shows and new albums, new artists and selling of CDs. The different bands in the group will also be listed with information about their music. Music samples and thrillers will also be available on the website. The website will be linked to various entertainment portals such as Willamette weekly for the purpose of marketing the site. Development of the website will be contracted to an external IT firm.
Market Analysis
Physical equipments required
The medium on which the music is to be recorded should be decided on first. Most studios nowadays do not use tapes such as cassettes for recording due to advancements in digital technology. Computer hard drives and solid flash memories are the major storage devices nowadays. The basic recording systems are the digital recording mixers and the digital recording software (PC). Digital recording mixers contain a hard drive for recording. These units are portable, unlike computer based systems. Editing is usually accomplished using computers because the waveforms can easily be seen on a large screen. A digital mixer costs 200 dollars approximately.
The second requirement for a recording studio is microphones. Several microphones should be purchased including the large diaphragm condenser microphone and the traditional cardioids model. Knowledge of different characteristics of the types of microphones should be acquired to best match with the instrument and vocal being recorded to the features of the microphone. A microphone costs 100 dollars
Another device required is the signal processors. These are used to enhance the sound of your recording. The signal processors are rack mounted and come in a variety of signal altering types including microphone preamps, pitch collectors, equalizers, compressors, delays and other sound altering effects. The features of the recording system should be well understood before purchasing these units. Digital recording mixer or computer based software have most of this functions already hence more recommended. Signal processors cost 20 dollars.
An audio interface is required to connect inputs from microphones and a musical instrument to the computer is required. These units convert the analog signal to a digital format that can be processed by the computer. This audio interface is generally an analog to digital converter. A digital to analog converter is also required to convert the signals back so that data on the computer can be played back through the speakers. An audio interface goes for round 199 dollars.
Monitor speakers selection will depend whether the producers prefer active or passive speakers. The signal that comes out of a digital recording mixer through the interface is not enough for driving the speakers. Active speakers have an amplifier already built into them unlike the passive speakers which require an amplifier to be purchased separately. For a clear audio sound, speakers that produce a flat and uncolored sound are preferred. For our case, active speakers are preferred since they can directly be connected to the line level output. Speaker costs 30 dollars
Other additional accessories must also be budgeted for. These accessories include microphone cables and, patch cords to interconnect equipments. Extension codes, a good pair of head phones and a workstation should be budgeted for. The expense of these equipments costs roughly 10 dollars.
Human resource required
A recording studio should have a manager who is involved in the day to day running of the business. This individual coordinates clients renting space and equipments at the studio including recording artists, producers and band managers. The manager is also responsible for hiring technical staff, engineers and setup workers. The manager assigns mixing engineers and in-house recording to specific client projects at the discretion of the album’s producer and artist. The studio requires a receptionist at the front desk to manage clients. The other crew required includes instrument technicians, production assistants and other creative staff. The studio should also employ cleaners, caterers and housekeepers.
Other physical requirements
The business will be located on a single building with the following rooms: entry room; waiting room equipped with sofas, chairs, table, shelves and a coat rack; reception room with a desk, three chairs, files, computer, fax, copier and shelves; manager’s office equipped with a desk, five chairs, conference table, files, computer and shelves; lunch room with 10 chairs, tables, computer, speaker, shelves, refrigerator, microwave and a coat rack; engineers’ room with a desk, 2 chairs, computer, files and a shelf; recording booth equipped with a console, rack, computer,5-way speakers,4 chairs; recording studio equipped with 20 shelves and a 5-way speaker; media house and instrument storage. These infrastructures will be leased at a cost of 65,000 dollars.
Financing
The cost of setting up the recording studio is nearly 150,000 dollars. The company is planning to approach a bank for a loan. The company is going to further assume that we will receive a 10 year loan at a 9 percent fixed interest rate. Incase additional funds are required, the company will approach investors to finance the project.
Sale forecasts
Registration
Recording studio is a registered company under the law of New York State.
The studio requires about 175,000 dollars. We will raise 25,000 dollars, and the rest will be financed by a bank a loan. The breakdown of the costs is the table below.
The chart below shows the breakdown more clearly
Organizational budget
The table below shows the Number of personnel required for the period of three years.
The chart below shows the average expenditure for the employees.
Financial plan
For financial forecasting, the following assumptions are held include a 16 percent annual revenue growth rate, $150,000 debt funds and the loan will have a 10 year term with a 9 percent rate of interest.
Sensitivity analysis
The company revenues are highly sensitive to the overall condition of the market. A sudden increase in the rate of inflation can have a significant impact on the company’s revenues. If the economic environment remains stable, then the company will not have any issues to do with top line economy. The demand of audio and video music does not change with climate hence; there are minimal expectations for decrease of the revenues.
Projected loss and profit accounts
Cash flow analysis
Balance sheet
Break even analysis
Business ratio
References
Entrepreneur Media. (2005, May 1). 5 Key Ways to Build Customer Relationships. Retrieved October 25, 2013, from http://www.entrepreneur.com/article/77686
Ameen, S. (2013). Difference Between B2B and B2C Explained Thoroughly. Retrieved October 25, 2013, from http://community.tradekey.com/article-34/Difference_Between_B2B_and_B2C_Explained_Thoroughly.html
Barnes, C., Blake, H., & David, P. (2009). Creating and Delivering Your Value Proposition: Managing Customer Experience for Profit. United Kingdom: Kogan Publishers.
Felten, E. (2005, February 25). How Competitive is the Record Industry? A Natural Experiment. Retrieved October 25, 2013, from https://freedom-to-tinker.com/blog/felten/how-competitive-record-industry-natural-experiment/
Job-centered community for freelance writers. (2007). CCM Music Recording Company -- STEP Analysis, SWOT Analysis, Five Forces. Retrieved October 25, 2013, from http://www.writers-united.org/node/687
Rouse, M. (2007). Customer Segmentation. Retrieved October 25, 2013, from http://searchcrm.techtarget.com/customer-segmentation
