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1.0 Executive Summary
The purpose of this business plan is to raise $150,000 for the development of a recording studio while showcasing the expected financials and operations over the next three years. The Recording Studio, Inc. (“the Company”) is a New York based corporation that will provide audio recording, engineering, and production/mastering services to musicians within its targeted market. The Company was founded by John Doe.
1.1 Operations
The Recording Studio will offer a variety of recording and production products that appeal to the residents of the target market and its surrounding areas. The Company will offer live vocal and instrument recording, using the best recording equipment, for optimal results. Additionally, the Company will also offer production services, which will include but are not be limited to, custom music, vocal coaching/training, CD duplication, shrink wrapping, and bar-coding.
1.2 The Financing
Mr. Doe is seeking to raise $150,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate.
1.3 Mission Statement
It the goal of Mr. Doe and the Recording Studio is to offer high end professional recording studio services for amateur and professional musicians within the targeted market.
1.4 Management Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the recording industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target musicians within the target market.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Recording Studio, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Recording Studio requires $150,000 of debt funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
Mr. Doe is not seeking an investment from a third party at this time.
2.4 Management Equity
John Doe owns 100% of the Recording Studio, Inc.
2.5 Exit Strategy
If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of the Recording Studio. Based on historical numbers, the business could fetch a sales premium of up to 4 times earnings.
3.0 Operations
The Recording Studio focuses on providing a professional recording experience to musicians and sound recording artists. Management has chosen a number of high end audio production machines that will allow customers the best possible music and sound recordings. As time progresses, the business will continue to expand and diversify its recording and production services according to the wishes of the business’s customers. In addition, the Company will offer full CDs, remixing, mastering, demos, sound-tracks, and audition recording. Mr. Doe will also expand the entertainment services (record label) if the demand for these products is high enough. Once the business has established a rapport with customers and industry leaders, the Company will also introduce a special order service for any type of recording services required by customers.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the recording industry, the customer profile, and the competition that the business will face as it progresses through its business operations.
Current, the economic climate is moderate. The economy is undergoing a transition period due to changes in global trade policy. At this time, interest rates have remained steady due to appropriate and measured policies by central banks. While there has been volatility, this is expected to subside as the economy adapts to these changes.
However, recording artists will still need access to studios to create their music. The business will generate substantial contribution margins from the per hour fees associated with studio usage.
4.2 Industry Analysis
There are approximately 1,270 sound recording studios in the United States. Revenues generated by the industry total more $50 million. There are approximately 6,000 people employed by the industry. The sound production services market is a very small market in comparison to the overall gross domestic product. This is primarily due to the fact that there are simply not many musicians that are in need of audio production services. There are also 285 sound recording studios that act as their own production and distribution agents. Revenues generated by the industry total more $8 billion dollars a year. There are approximately 7,800 people employed by the industry. The sound production services market is a very small market in comparison to the overall gross domestic product. This is primarily due to the fact that there are simply not many musicians that are in need of audio production services. This industry is expected to continually grow as the prices of high quality sound equipment decreases and more competitors enter the market. The United States Economic Census estimates that the industry has grown at a rate of 13.5% annually.
4.3 Customer Profile
The average customer of the Recording Studio will be a musician or sound artist that is seeking to have a sound recording studio produce an album for him or her. Management anticipates that its primary customer base will consist of amateur musicians that are seeking to enter the music business. The business will cater to the needs of all genres of music, and as such, the average customer of the Recording Studio’s services is difficult to categorize.
4.4 Competitive Analysis
This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition.
5.0 Marketing Plan
The Recording Studio intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted music markets. Below is an overview of the marketing strategies and objectives of the Recording Studio.
5.1 Marketing Objectives
- Establish relationships with music distributors within the targeted market.
- Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
5.2 Marketing Strategies
Management intends to use a qualified advertising and marketing firm to help the business reach its intended musician audience within the targeted market. This campaign will include the use of traditional print and media advertising as well as the Internet (via the website described below). Direct advertising campaigns will be of significant importance to the Company as the Recording Studio is offering programs a wide variety of musicians and sound artists. The Company will also establish connections with local recording labels, and will develop a small local advertising campaign that will feature flyers and small advertisements in selected local music publications and newspapers. The business will also maintain an extensive website that will feature information regarding the studio, images of the studio equipment and recording rooms, contact information, and pricing information. Mr. Doe intends to use a number of online marketing strategies to drive traffic to the website including pay-per-click advertising (for people searching for recording studios in the targeted market) as well as advertisements on MySpace.com.
5.3 Pricing
In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
7.0 Financial Plan
7.1 Underlying Assumptions
- The Recording Studio will have an annual revenue growth rate of 16% per year.
- The Owner will acquire $150,000 of debt funds to develop the business.
- The loan will have a 10 year term with a 9% interest rate.
7.2 Sensitivity Analysis
The Company’s revenues are sensitive to the overall condition of the economic markets. As stated before, a sudden and dramatic increase in the rate of inflation or real interest rates can have a significant impact on the overall revenue of the business. However, should the economic environment remain stable then Management does not foresee that the Company should have issues regarding top line income. Musical entertainment is demanded in all economic climates, and only severe recessions are expected to decrease the revenues of the business.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statement
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 Breakeven Analysis
7.9 Business Ratios
