Start-up Funding | |
Start-up Expenses to Fund | $1,100 |
Start-up Assets to Fund | $98,900 |
Total Funding Required | $100,000 |
Assets | |
Non-cash Assets from Start-up | $15,000 |
Cash Requirements from Start-up | $83,900 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $83,900 |
Total Assets | $98,900 |
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 | |
Johnny | $100,000 |
Investor 2 | $0 |
Other | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $100,000 |
Loss at Start-up (Start-up Expenses) | ($1,100) |
Total Capital | $98,900 |
Total Capital and Liabilities | $98,900 |
Total Funding | $100,000 |
Heavy Metal Praise Records, as the name implies, produces CDs of Heavy Metal Christian music groups.
The typical Heavy Metal Praise Records buyer is in the 13-22 year old age bracket–and is a direct result of the attitudes expressed by the label’s bands. The spirit of youth is the driving force of the label, offering proof that the energy of Heavy Metal Praise music exists beyond constraints and categorizations.
While Heavy Metal Praise Records hates to pigeonhole any of its artists’ musical sounds, it can be generalized that all the bands convey an in-your-face sound Christian music. This sound, when coupled with each band’s own creativity and inspiration, allows for the artists to maintain their identity while sharing the same energy, focus and often fan base with their label mates. Heavy Metal Praise Records is an artist-friendly label, priding itself on giving its bands complete artistic and creative freedom.
Heavy Metal music is the music of preference among boys and young men, ages 12-22, who are part of the skateboarding culture. Heavy Metal music generated $180 million dollars in sales last year.
Skateboarding has grown into an enormously popular recreational sport that generated 1/2 billion dollars in sales last year. Each year the base of skateboarder grows even larger. The sport is still enjoyed by young men in their thirties. In many cases, these older skateboarders still enjoy Heavy Metal music. This represents a huge market opportunity for Christian music.
Heavy Metal Praise Records will focus on two customer groups:
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Early Teen Skateboarders | 10% | 3,000,000 | 3,300,000 | 3,630,000 | 3,993,000 | 4,392,300 | 10.00% |
Late Teen Skateboarders | 10% | 4,000,000 | 4,400,000 | 4,840,000 | 5,324,000 | 5,856,400 | 10.00% |
Other | 0% | 0 | 0 | 0 | 0 | 0 | 0.00% |
Total | 10.00% | 7,000,000 | 7,700,000 | 8,470,000 | 9,317,000 | 10,248,700 | 10.00% |
Heavy Metal Praise Records will use their competitive advantages in a new musical area of Christian music to steadily gain market share. The first advantage is based on Johnny’s extensive inside knowledge of the recording industry. The second advantage is an already established network of contacts within the industry.
Presently, there are few Christian Heavy Metal bands with CDs in the marketplace. The only real competition is the acceptance of the skateboard culture. Can a Heavy Metal group with a christian message gain a fan base? The success of a Heavy Metal band is dependent on its fan base and its live performances. If the energy is there, the fan base will grow and CD sales will follow.
Heavy Metal Praise Records understands that their bands must have the energy before the message will be heard.
Heavy Metal Praise Records has established the following Promotion and Distribution strategies.
The strategic alliance with the Coalition of Independent Music Stores (CIMS) and Straight Arrow holds great potential.
Our combined sales strategy of distributing our product online and in stores will result in the following first year sales goals:
The sales totals represent only six months of sales activity. The first six months will be focused on signing the bands and producing the recording.
The following table and chart presents specific sales forecasts by month, over the first year of development. Years two and three are cumulative totals only.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Online | $84,000 | $160,000 | $200,000 |
In Store | $154,000 | $380,000 | $500,000 |
Total Sales | $238,000 | $540,000 | $700,000 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Online | $4,200 | $8,000 | $10,000 |
In Store | $7,700 | $19,000 | $25,000 |
Subtotal Direct Cost of Sales | $11,900 | $27,000 | $35,000 |
Heavy Metal Praise Records will have several milestones:
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Signing of Bands | 1/1/2001 | 3/1/2001 | $10,000 | JY | Owner |
Recording | 3/31/2001 | 6/30/2001 | $65,000 | JY | Owner |
CD Release | 6/30/2001 | 9/30/2001 | $40,000 | JY | Owner |
Totals | $115,000 |
Heavy Metal Praise Records is solely operated by Johnny Young. Johnny is a Christian music industry veteran with over 13 years of music ministry experience with extensive connections with producers and distributors. Johnny toured the USA with the CCM group “Seeds of Change” between 1991 and 1998. It was during this time that Johnny felt God calling him into a ministry that would usher in Heavy Metal music that was so powerful, so fresh…that people would sense the spirit of God and come to a realization that God desired each and every one of His creations to know Him intimately.
This will be a one person business for a while. Johnny’s planned salary is shown in the Personnel table below.
The following sections will outline the general financial assumptions, break-even analysis, profit and loss, cash flow, balance sheet and business ratios.
The following table shows some of the basic financial assumptions used in this business plan.
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 approximately $1,700 is needed in monthly revenue to break even. The Estimated Monthly Fixed Cost varies over the course of the first year, as seen in the P & L appendix table, and this figure is an average based on the first-year totals.
Break-even Analysis | |
Monthly Revenue Break-even | $17,022 |
Assumptions: | |
Average Percent Variable Cost | 5% |
Estimated Monthly Fixed Cost | $16,171 |
The following table will indicate projected profit and loss.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $238,000 | $540,000 | $700,000 |
Direct Cost of Sales | $11,900 | $27,000 | $35,000 |
Other Production Expenses | $0 | $0 | $0 |
Total Cost of Sales | $11,900 | $27,000 | $35,000 |
Gross Margin | $226,100 | $513,000 | $665,000 |
Gross Margin % | 95.00% | 95.00% | 95.00% |
Expenses | |||
Payroll | $27,000 | $35,000 | $42,000 |
Sales and Marketing and Other Expenses | $142,000 | $190,000 | $350,000 |
Depreciation | $3,000 | $3,000 | $3,000 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $0 | $0 | $0 |
Insurance | $6,000 | $8,000 | $10,000 |
Rent | $12,000 | $15,000 | $18,000 |
Payroll Taxes | $4,050 | $5,250 | $6,300 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $194,050 | $256,250 | $429,300 |
Profit Before Interest and Taxes | $32,050 | $256,750 | $235,700 |
EBITDA | $35,050 | $259,750 | $238,700 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $9,615 | $77,025 | $70,710 |
Net Profit | $22,435 | $179,725 | $164,990 |
Net Profit/Sales | 9.43% | 33.28% | 23.57% |
Heavy Metal Praise will begin with adequate investment to cover the beginning months of negative cash flow and, as shown below, have an overall increase in cash balance by the end of the first plan year.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $166,600 | $378,000 | $490,000 |
Cash from Receivables | $31,740 | $111,675 | $183,338 |
Subtotal Cash from Operations | $198,340 | $489,675 | $673,338 |
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 | $198,340 | $489,675 | $673,338 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $27,000 | $35,000 | $42,000 |
Bill Payments | $140,307 | $350,569 | $479,397 |
Subtotal Spent on Operations | $167,307 | $385,569 | $521,397 |
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 | $167,307 | $385,569 | $521,397 |
Net Cash Flow | $31,033 | $104,107 | $151,940 |
Cash Balance | $114,933 | $219,039 | $370,980 |
The following chart and table indicates balance sheet.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $114,933 | $219,039 | $370,980 |
Accounts Receivable | $39,660 | $89,985 | $116,647 |
Inventory | $4,400 | $9,983 | $12,941 |
Other Current Assets | $15,000 | $15,000 | $15,000 |
Total Current Assets | $173,993 | $334,007 | $515,568 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $3,000 | $6,000 | $9,000 |
Total Long-term Assets | ($3,000) | ($6,000) | ($9,000) |
Total Assets | $170,993 | $328,007 | $506,568 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $49,658 | $26,947 | $40,518 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $49,658 | $26,947 | $40,518 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $49,658 | $26,947 | $40,518 |
Paid-in Capital | $100,000 | $100,000 | $100,000 |
Retained Earnings | ($1,100) | $21,335 | $201,060 |
Earnings | $22,435 | $179,725 | $164,990 |
Total Capital | $121,335 | $301,060 | $466,050 |
Total Liabilities and Capital | $170,993 | $328,007 | $506,568 |
Net Worth | $121,335 | $301,060 | $466,050 |
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7929, Musical Groups and Artists, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 126.89% | 29.63% | 15.20% |
Percent of Total Assets | ||||
Accounts Receivable | 23.19% | 27.43% | 23.03% | 6.80% |
Inventory | 2.57% | 3.04% | 2.55% | 3.10% |
Other Current Assets | 8.77% | 4.57% | 2.96% | 33.90% |
Total Current Assets | 101.75% | 101.83% | 101.78% | 43.80% |
Long-term Assets | -1.75% | -1.83% | -1.78% | 56.20% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 29.04% | 8.22% | 8.00% | 38.30% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 23.30% |
Total Liabilities | 29.04% | 8.22% | 8.00% | 61.60% |
Net Worth | 70.96% | 91.78% | 92.00% | 38.40% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 95.00% | 95.00% | 95.00% | 0.00% |
Selling, General & Administrative Expenses | 84.69% | 61.33% | 71.13% | 75.30% |
Advertising Expenses | 13.45% | 7.41% | 7.14% | 2.90% |
Profit Before Interest and Taxes | 13.47% | 47.55% | 33.67% | 2.90% |
Main Ratios | ||||
Current | 3.50 | 12.39 | 12.72 | 1.22 |
Quick | 3.42 | 12.02 | 12.41 | 0.82 |
Total Debt to Total Assets | 29.04% | 8.22% | 8.00% | 61.60% |
Pre-tax Return on Net Worth | 26.41% | 85.28% | 50.57% | 2.90% |
Pre-tax Return on Assets | 18.74% | 78.28% | 46.53% | 7.40% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 9.43% | 33.28% | 23.57% | n.a |
Return on Equity | 18.49% | 59.70% | 35.40% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 1.80 | 1.80 | 1.80 | n.a |
Collection Days | 50 | 146 | 180 | n.a |
Inventory Turnover | 10.35 | 3.75 | 3.05 | n.a |
Accounts Payable Turnover | 3.83 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 43 | 25 | n.a |
Total Asset Turnover | 1.39 | 1.65 | 1.38 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.41 | 0.09 | 0.09 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $124,335 | $307,060 | $475,050 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.72 | 0.61 | 0.72 | n.a |
Current Debt/Total Assets | 29% | 8% | 8% | n.a |
Acid Test | 2.62 | 8.69 | 9.53 | n.a |
Sales/Net Worth | 1.96 | 1.79 | 1.50 | 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 | |||||||||||||
Online | 0% | $0 | $0 | $0 | $0 | $0 | $3,000 | $4,000 | $6,000 | $10,000 | $13,000 | $18,000 | $30,000 |
In Store | 0% | $0 | $0 | $0 | $0 | $0 | $3,000 | $10,000 | $12,000 | $18,000 | $25,000 | $36,000 | $50,000 |
Total Sales | $0 | $0 | $0 | $0 | $0 | $6,000 | $14,000 | $18,000 | $28,000 | $38,000 | $54,000 | $80,000 | |
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 | |
Online | $0 | $0 | $0 | $0 | $0 | $150 | $200 | $300 | $500 | $650 | $900 | $1,500 | |
In Store | $0 | $0 | $0 | $0 | $0 | $150 | $500 | $600 | $900 | $1,250 | $1,800 | $2,500 | |
Subtotal Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $300 | $700 | $900 | $1,400 | $1,900 | $2,700 | $4,000 |
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 | ||
Owner | 0% | $0 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total People | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Total Payroll | $0 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
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 | $6,000 | $14,000 | $18,000 | $28,000 | $38,000 | $54,000 | $80,000 | |
Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $300 | $700 | $900 | $1,400 | $1,900 | $2,700 | $4,000 | |
Other Production Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $0 | $0 | $0 | $0 | $0 | $300 | $700 | $900 | $1,400 | $1,900 | $2,700 | $4,000 | |
Gross Margin | $0 | $0 | $0 | $0 | $0 | $5,700 | $13,300 | $17,100 | $26,600 | $36,100 | $51,300 | $76,000 | |
Gross Margin % | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 95.00% | 95.00% | 95.00% | 95.00% | 95.00% | 95.00% | 95.00% | |
Expenses | |||||||||||||
Payroll | $0 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | |
Sales and Marketing and Other Expenses | $5,000 | $5,000 | $5,000 | $5,000 | $45,000 | $22,000 | $7,000 | $7,000 | $4,000 | $3,000 | $2,000 | $32,000 | |
Depreciation | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | |
Leased Equipment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Utilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Insurance | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
Rent | $0 | $0 | $0 | $0 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | |
Payroll Taxes | 15% | $0 | $300 | $300 | $300 | $300 | $300 | $300 | $450 | $450 | $450 | $450 | $450 |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $5,750 | $8,050 | $8,050 | $8,050 | $49,550 | $26,550 | $11,550 | $12,700 | $9,700 | $8,700 | $7,700 | $37,700 | |
Profit Before Interest and Taxes | ($5,750) | ($8,050) | ($8,050) | ($8,050) | ($49,550) | ($20,850) | $1,750 | $4,400 | $16,900 | $27,400 | $43,600 | $38,300 | |
EBITDA | ($5,500) | ($7,800) | ($7,800) | ($7,800) | ($49,300) | ($20,600) | $2,000 | $4,650 | $17,150 | $27,650 | $43,850 | $38,550 | |
Interest Expense | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Taxes Incurred | ($1,725) | ($2,415) | ($2,415) | ($2,415) | ($14,865) | ($6,255) | $525 | $1,320 | $5,070 | $8,220 | $13,080 | $11,490 | |
Net Profit | ($4,025) | ($5,635) | ($5,635) | ($5,635) | ($34,685) | ($14,595) | $1,225 | $3,080 | $11,830 | $19,180 | $30,520 | $26,810 | |
Net Profit/Sales | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | -243.25% | 8.75% | 17.11% | 42.25% | 50.47% | 56.52% | 33.51% |
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 | $4,200 | $9,800 | $12,600 | $19,600 | $26,600 | $37,800 | $56,000 | |
Cash from Receivables | $0 | $0 | $0 | $0 | $0 | $0 | $60 | $1,880 | $4,240 | $5,500 | $8,500 | $11,560 | |
Subtotal Cash from Operations | $0 | $0 | $0 | $0 | $0 | $4,200 | $9,860 | $14,480 | $23,840 | $32,100 | $46,300 | $67,560 | |
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 | $4,200 | $9,860 | $14,480 | $23,840 | $32,100 | $46,300 | $67,560 | |
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 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | |
Bill Payments | $126 | $3,762 | $3,385 | $3,385 | $4,353 | $31,989 | $18,771 | $10,857 | $11,823 | $13,452 | $16,286 | $22,119 | |
Subtotal Spent on Operations | $126 | $5,762 | $5,385 | $5,385 | $6,353 | $33,989 | $20,771 | $13,857 | $14,823 | $16,452 | $19,286 | $25,119 | |
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 | $126 | $5,762 | $5,385 | $5,385 | $6,353 | $33,989 | $20,771 | $13,857 | $14,823 | $16,452 | $19,286 | $25,119 | |
Net Cash Flow | ($126) | ($5,762) | ($5,385) | ($5,385) | ($6,353) | ($29,789) | ($10,911) | $624 | $9,017 | $15,648 | $27,014 | $42,441 | |
Cash Balance | $83,774 | $78,012 | $72,627 | $67,242 | $60,889 | $31,100 | $20,189 | $20,813 | $29,830 | $45,478 | $72,491 | $114,933 |
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 | $83,900 | $83,774 | $78,012 | $72,627 | $67,242 | $60,889 | $31,100 | $20,189 | $20,813 | $29,830 | $45,478 | $72,491 | $114,933 |
Accounts Receivable | $0 | $0 | $0 | $0 | $0 | $0 | $1,800 | $5,940 | $9,460 | $13,620 | $19,520 | $27,220 | $39,660 |
Inventory | $0 | $0 | $0 | $0 | $0 | $0 | $700 | $1,000 | $1,100 | $1,540 | $2,090 | $2,970 | $4,400 |
Other Current Assets | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 |
Total Current Assets | $98,900 | $98,774 | $93,012 | $87,627 | $82,242 | $75,889 | $48,600 | $42,129 | $46,373 | $59,990 | $82,088 | $117,681 | $173,993 |
Long-term Assets | |||||||||||||
Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $250 | $500 | $750 | $1,000 | $1,250 | $1,500 | $1,750 | $2,000 | $2,250 | $2,500 | $2,750 | $3,000 |
Total Long-term Assets | $0 | ($250) | ($500) | ($750) | ($1,000) | ($1,250) | ($1,500) | ($1,750) | ($2,000) | ($2,250) | ($2,500) | ($2,750) | ($3,000) |
Total Assets | $98,900 | $98,524 | $92,512 | $86,877 | $81,242 | $74,639 | $47,100 | $40,379 | $44,373 | $57,740 | $79,588 | $114,931 | $170,993 |
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 | $3,649 | $3,272 | $3,272 | $3,272 | $31,354 | $18,410 | $10,464 | $11,378 | $12,915 | $15,583 | $20,406 | $49,658 |
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 | $3,649 | $3,272 | $3,272 | $3,272 | $31,354 | $18,410 | $10,464 | $11,378 | $12,915 | $15,583 | $20,406 | $49,658 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $0 | $3,649 | $3,272 | $3,272 | $3,272 | $31,354 | $18,410 | $10,464 | $11,378 | $12,915 | $15,583 | $20,406 | $49,658 |
Paid-in Capital | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 | $100,000 |
Retained Earnings | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) | ($1,100) |
Earnings | $0 | ($4,025) | ($9,660) | ($15,295) | ($20,930) | ($55,615) | ($70,210) | ($68,985) | ($65,905) | ($54,075) | ($34,895) | ($4,375) | $22,435 |
Total Capital | $98,900 | $94,875 | $89,240 | $83,605 | $77,970 | $43,285 | $28,690 | $29,915 | $32,995 | $44,825 | $64,005 | $94,525 | $121,335 |
Total Liabilities and Capital | $98,900 | $98,524 | $92,512 | $86,877 | $81,242 | $74,639 | $47,100 | $40,379 | $44,373 | $57,740 | $79,588 | $114,931 | $170,993 |
Net Worth | $98,900 | $94,875 | $89,240 | $83,605 | $77,970 | $43,285 | $28,690 | $29,915 | $32,995 | $44,825 | $64,005 | $94,525 | $121,335 |
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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 | |||
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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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Are you trying to make a successful company out of your love of music? Starting a business in music production may be exciting and successful. However, to assure its success, just like any business, a sound plan must be in place. We can assist you with our Music Production Business Plan Template & Guidebook. This thorough manual offers detailed advice on how to write a business plan that specifies your objectives and aids in their accomplishment. In order to make sure your strategy is comprehensive and successful, it also offers useful advice and examples. You can easily draft a strong business plan for your music production company using our template and how-to manual.
Get worry-free services and support to launch your business starting at $0 plus state fees.
1. describe the purpose of your music production business..
The first step to writing your business plan is to describe the purpose of your music production business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.
It also helps to include a vision statement so that readers can understand what type of company you want to build.
Here is an example of a purpose mission statement for a music production business:
At our music production company, our mission is to provide high-quality music production services to a wide range of clients in the music industry. We are committed to using the latest technology and techniques to record, mix, and master music for our clients, and to delivering superior results that meet or exceed industry standards. We strive to be a trusted partner for our clients, offering them reliable and cost-effective solutions that help them bring their music to life and reach their audiences. We are dedicated to providing exceptional customer service and support, and to helping our clients achieve their musical goals and aspirations.
The next step is to outline your products and services for your music production business.
When you think about the products and services that you offer, it's helpful to ask yourself the following questions:
You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.
If you don't have a marketing plan for your music production business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals.
A good marketing plan for your music production business includes the following elements:
Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations.
In it, you should list:
To run a music production business, you'll need a range of equipment and supplies, as well as a few permits. Here's a quick rundown of what you'll need:
Overall, running a music production business requires a mix of equipment, supplies, and permits to ensure that you can provide high-quality recording and production services to your clients.
The second part of your music production business plan is to develop a management and organization section.
This section will cover all of the following:
This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.
Typically, expenses for your business can be broken into a few basic categories:
Startup Costs
Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a music production business varies based on many different variables, but below are a few different types of startup costs for a music production business.
Running & Operating Costs
Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.
Marketing & Sales Expenses
You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your music production business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.
A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your music production business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses.
Here are some steps you can follow to devise a financial plan for your music production business plan:
Why do you need a business plan for a music production business.
A business plan is a document that outlines the goals and objectives of a business, as well as the strategies and tactics that will be used to achieve those goals. It is important to have a business plan for your music production business because it helps to focus the efforts of the company, communicate the business's goals and objectives to potential investors, and provide a roadmap for the business to follow. Additionally, a business plan can be used to help secure funding from investors or lenders, who will want to see that the business has a solid plan in place before they provide funding.
To build a business plan for your music production business, start by researching your industry, competitors, and target market. Use this information to define your business's goals and objectives, as well as the strategies and tactics that you will use to achieve those goals. Next, create a financial plan that outlines your projected income, expenses, and profit. This should include a projected income statement, cash flow statement, and balance sheet. Once you have all of this information, you can use it to create a comprehensive business plan that outlines the goals and objectives of your business, as well as the strategies and tactics that you will use to achieve those goals. A well-written music production business plan contains the following sections: Purpose, Products & Services, Marketing Plan (including Marketing Strategy), Operations/Management Plan (including Operations/Management Strategy), Financial Plan (including Financial Forecasts), and Appendixes.
Yes, you can write a music production business plan yourself. Writing a business plan is a valuable exercise that can help you clarify your business idea, identify potential challenges and opportunities, and develop a roadmap for success. While there are many resources and templates available to help you write a business plan, the process of creating one is ultimately up to you.
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In our 21st year now, Bucer’s Coffeehouse & Pub has been roasting our own fine coffee, serving great espresso, baking beautiful pastries, grilling hearty sandwiches, pouring amazing local draught beers, and fine wines, and much more…
We do it all for a vibrant and diverse community that appreciates great food and drink, enjoys live music, and loves to run into their friends here in our pub.
Bucer’s was built on the foundation of carefully selected 100% Arabica coffee, roasted fresh, in-house, every week. Our favorites tend to come from the isthmus area of Latin America (especially Guatemala, Nicaragua, and Costa Rica), the horn of Africa (especially Ethiopia), Sumatra, and Papua New Guinea – but we’re always running into stunning new coffees that we work into our regular rotation.
Our pride and joy – and the focus of our roasting – is our signature Bucer’s Blend. Bucer’s Blend combines beans from Latin America, East Africa, and Indonesia to create a nutty, chocolatey, earthy cup. Balancing these classic espresso notes with a light sweetness and elegant smoothness, it works beautifully as espresso but just as well in a French Press, pour-over, Aeropress, and even as a drip coffee.
Our Roastmaster roasts our coffee a few times weekly with a Turkish-built Toper 10-kilo roaster. The artisan craft originated with Bucer’s founding family and current owner, the Greenfields. Roasting our own guarantees the freshest cup in the region!
The Bucer’s kitchen staff gets started early in the morning, baking our own made-from-scratch muffins, cinnamon rolls, scones, and coffee cake. Our rich quiches come flourless or baked in a fine pastry crust, with options for vegetarians or meat-lovers. Our hearty Pub breakfast pastries and breakfast burritos are filled with eggs, sausage, and cheese. Our panini grilled sandwiches are piled with meats, cheeses, and veggies onto our fresh-baked focaccia bread. Plus a rotating variety of daily soups, pasta salad, brown rice salad (GF), or Asian kale salad (GF), and any number of inspired surprises.
Our homemade dessert selection includes our popular six-layer Guinness Chocolate Cake, Crumb Top Apple Pie, New York Cheesecake, Key Lime Pie, and our rich chocolate truffles and macaroons. Don’t forget to try our signature Affogato with Ferdinand’s local WSU creamery ice-cream.
There’s many more great menu items we could list here, but we recommend coming in, taking a look at our selection which includes many Gluten-Free options, and tasting some for yourself!
Every Thursday, Friday, and Saturday night, Bucer’s offers an eclectic blend of live music. We feature jazz, blues, Americana, Indie, folk, rock, etc. and many a singer-songwriter. Check our Facebook page or follow us on Twitter to get weekly updates about our featured artists and live music times.
All ages welcome and no cover charge! If you are interested in auditioning to play here, it’s simple! Email Pat at [email protected] Subject line: MUSIC and let us know who you are and what your sound is. We line up auditions on Sunday evenings while we’re closed, and then if you’re a good fit for Bucer’s, we’ll schedule you in!
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All our coffee is roasted fresh weekly—only twenty feet away from where we serve it. Our baristas pull ristretto-style espresso with our earthy, chocolatey, and nutty Bucer’s Blend, and can make just about any kind of coffee drink you can imagine. From our impossibly delicious signature Cuban coffees, to milkshake-thick frappés, to old standbys like lattés and Americanos — we’re simply making the best coffee in Moscow.
Our wine list is curated in consultation with local wine experts and afficionados. Pair a glass with our homemade chocolate truffles, or a bottle with our gourmet three-cheese plate and some friends. Our taps feature a rotating selection of local microbrews—including Bucer’s Paradise, a blend of Paradise Creek’s milk stout with Bucer’s Blend Espresso —together with Northwest classics like Mac & Jack’s African Amber Ale and Terminal Gravity’s IPA or choose one of our many fine bottled brews.
Rounding out our drink menu we have real fruit smoothies blended to order, refreshing classics like Italian sodas, comforting staples like hot chocolate steamed on our La Marzocco. Then there’s our loose-leaf tea menu (TeaFountain.com), featuring a variety of complex, exotic loose-leaf teas, hot or iced. An array of other refreshing beverages completes our broad menu.
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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.
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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.
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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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Do you want to start a music production company? If YES, here is a detailed sample music production business plan template & FREE feasibility report
Want a copy of ours? Pre-Written music business plan template available! This 25-page music business plan is fully written and includes example verbiage from a musician. Use it as a template to write your own. Get The Template Creative entrepreneurs have a responsibility to themselves (and their families where applicable) to make good financial decisions for their present and their future ...
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Learn how to write a business plan for your music production business in just 7 steps. Also, download your business plan guides & templates needed.
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THE MUSIC. Every Thursday, Friday, and Saturday night, Bucer's offers an eclectic blend of live music. We feature jazz, blues, Americana, Indie, folk, rock, etc. and many a singer-songwriter. Check our Facebook page or follow us on Twitter to get weekly updates about our featured artists and live music times. All ages welcome and no cover charge!
Learn how to successfully write a musician business plan to help you start, grow, and/or raise funding for your musician business. Start your business today!
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