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1.0 Executive Summary
The purpose of this business plan is to raise $125,000 for the development of a record label while showcasing the expected financials and operations over the next three years. The Record label, Inc. (“the Company”) is a New York based corporation that will acquire and develop musical intellectual properties with the intent to distribute albums within its targeted market. The Company was founded by John Doe.
1.1 Operations
The Record Label is multifaceted entertainment company that is currently developing its musical production capabilities so that the business can promote the music of its signed artists from the onset of operations. The business produces artist tracks and downloadable media for each production completed by the business. Most services related to the mixing, engineering, and recording of music will be kept in house, which allows the business to have maximum efficiency of its capital. To achieve these goals, The Record Label will engage an expansive traditional and online marketing campaign to promote album sales, online sales of downloadable music, and of the artists themselves. The Company will also hold a number of promotional events by renting out large bars/clubs that will concurrently promote Record Label artists while generating a large stream of revenue for the business. The third section of the business plan will further describe the services offered by the Record Label.
1.2 The Financing
Mr. Doe is seeking to raise $125,000 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 is the mission of the Record Label to bring new and innovative artist’s music to the mainstream via a comprehensive partnership of music production companies, promotional firms, and the artists themselves. Management will continually strive to supply the market with music that is in style and popular among its targeted demographics.
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 individuals within the target market.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Record Label, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Record Label requires $125,000 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 Record Label, 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 Record Label. Based on historical numbers, the business could fetch a sales premium of up to 3 to 7 times the previous years earnings.
3.0 Operations
Below is a description of the recording and distribution services offered by the Record Label.
3.1 Record Production and Distribution
The primary function of the business is to find, recruit, record, and promote music from new artists within the Western United States. The business intends to provide all of the services needed to record, master, and distribute its proprietary music library. After a new artist or music group is found, the business will actively begin the production of an album and a music video. The most economically viable single(s) on the album will be released for immediate distribution among iTunes, radio stations, You Tube (for videos), and for release among prominent industry executives.
As time progresses and Record Label artists become popular, the business may also release DVD compilations featuring music videos, music tracks, and recordings/videos of live performances. The Company’s marketing campaigns will include the use of print, media, and outdoor advertising campaigns to not only promote the artist themselves but the content that they will be introducing to the public at large. The Record Label will also use outdoor street teams as a guerilla marketing tactic. This strategy has been very popular in the music industry and has been met with tremendous success.
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, the Record Label will operate with great economic stability as people will continue to purchase music despite deleterious changes in the economy.
4.2 Industry Analysis
Revenues within the record label and music publishing industry generate more than $16 billion per year. Additionally, aggregate payrolls for the industry have exceeded $2.2 billion in each of the last five years. There are approximately 38,800 people employed by the industry. The industry has had some pullbacks in recent years with the advent of high speed communications, which has substantially increased the piracy of music on a worldwide basis. The advent of high speed communications has been both a positive and negative for the industry as record labels can now distribute its products much more quickly, but they are now susceptible to music piracy. However, many companies have developed new technologies that seek to stymie the illegal distribution of recorded music.
4.3 Customer Profile
In this section of the analysis, you should describe the type of customer you are seeking to acquire. These traits include income size, type of business/occupation; how far away from your business is to your customer, and what the customer is looking for. In this section, you can also put demographic information about your target market including population size, income demographics, level of education, etc.
4.4 Competitive Analysis
There is a significant amount of competition in the record label industry. This is primarily due to the fact that there are low barriers to entry for this business. Additionally, with the advent of computers, it is now far easier to open and maintain sound recording and record distribution operations. Small studios and labels can now be financed with under $10,000. As such, the market place for music and musical production has become highly fragmented among small and medium sized market agents. Management estimates there are approximately 30,000 independent labels that have their own production and distribution capabilities. High speed Internet and broadband communications have also increased the fragmented nature of the market as many online music sites that specialize in new and upcoming artist distribution have increased significantly over the last five years. Companies like You Tube, Flixya, Grupo, and Veoh are now catering to the new artist movement by providing a free distribution platform to promote new music and music videos.
5.0 Marketing Plan
The Record Label 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 Record Label.
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. This campaign will include the use of traditional print and media advertising as well as the Internet. Direct advertising campaigns will be of significant importance to the Company as the Record Label is offering our programs a wide variety of musicians and sound artists. The Company’s CEO will act as the initial artist and repertoire manager for the initial years of the business. In regards to promoting artists’ materials and music productions, the Company will use many forms of promotion and distribution to generate an audience for its independent genres. The business will produce tracks and music videos simultaneously so that the business can generate as much exposure as possible for each artist. The true goal of the business is to develop an ongoing distribution with a major record label so that the business can shift its distribution capital risk to a third party. While this will decrease the revenues in the business in the long run, Management feels that shifting the capital risk from distribution to a third party outweighs the potential profit benefits in the future. In order to accomplish this, the business must continually develop its track record for the next two to four years.
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 Owner will acquire $125,000 of debt funds to develop the business.
- The Record Label will have an annual revenue growth rate of 16% per year.
- 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
