Business Essentials

[NickHiebert]

Alright, in a different thread, me and a few other forum members hammered out my equipment list rather nicely. Thanks a lot to Rigg and peeder for that!

Now, I must construct my business from the ground up. Everything from registering the name, insurance, finances, etc. And most of the engineers who post here are business owners and/or work closely with business owners, so I figured I should start asking business-related questions here.

I have my location, or what I hope to be my location. I can't afford a house, or even a rental house, but I was lucky enough to find a landlord who was nice enough to permit me to run my business out of my suite if I was to apply and be approved. The suite features solid concrete architecture, so it's already sound-proofed, the live-room is not a common-wall with any other suite besides the ceiling. What's also convenient is that the buildings entire second floor is devoted to small home-based businesses.

So, I know where I'm acquiring my funding from; a local credit union offers micro-loans for small businesses and does not require the applicants to write a business plan, so it should be pretty easy to raise the necessary capital to make this happen.

But, what should I watch out for or invest money/time in? What are some good decisions I should make for a business like this? Like, any tricks-of-the-trade advise?

I'm totally open to suggestions about how to deal with this situation.

[drBill]

I'd start with a full on business plan. As detailed and accurate and honest as you can make it. If you can't make the numbers work there, no loan or building is going to work for you. First things first.

That is unless this is a vanity project, in which case, feel free to bypass this stage and go straight to floorplans!!!

[NickHiebert]

Originally Posted by drBill

I'd start with a full on business plan. As detailed and accurate and honest as you can make it. If you can't make the numbers work there, no loan or building is going to work for you. First things first.

That is unless this is a vanity project, in which case, feel free to bypass this stage and go straight to floorplans!!!

This is a very good idea, I've tried writing business plans in the past but to no avail... These sorts of things tend to overwhelm me easily and I get jaded and discouraged. I've heard of software for writing business plans and such. Any help would be great.

[The Byre]

You MUST read the business pages here

AUDIOTALK-ORG

[jjharvey]

Great site Byre, you have no idea how helpful it is to youngsters like me trying to make their way into this business.

[NickHiebert]

What would be the best resource to acquire funding from? I don't think the government would offer grants to a productions company/project studio... I can get a low-interest loan called a Micro Loan from a local bank.

I just need to know the steps I need to take to get my business running.

[drBill]

Originally Posted by NickHiebert

What would be the best resource to acquire funding from? I don't think the government would offer grants to a productions company/project studio... I can get a low-interest loan called a Micro Loan from a local bank.

I just need to know the steps I need to take to get my business running.

I would NOT suggest taking out a loan for a studio enterprise in light of the current industry paradigm. Best to start slow and grow,

[The Byre]

1. The small, commercial studio-for-hire market (studios with an investment of less than $200k) is over-subscribed by a factor of 10:1 is some places and 50:1 in others.

2. The mid-sized, commercial studio-for-hire market (studios with an investment of between $200k and $1m) is over-subscribed by a factor of 2:1 is some places and 5:1 in others.

3. The large, prestige city centre or desination studio maket with multiple rooms and investment running to several millions is not over-subscribed, but property valuations and other costs have destroyed their viability in many locations.

Music budgets are falling in all markets (film, TV, ads, CDs) and yet the number of hopefuls wanting to open studios refuses to fall along with this reality.

[Sui_City]

Nick,

I worked for quite a few years as a business consultant to companies in the manufacturing environment. There are more similarities than there are differences between them and our line of work.

drBill is absolutely right. A business plan is a must! Not only from a numbers perspective, but from a structural perspective too.

Firstly, think of a business plan as the yet to unfold story of your business.

1. What is its history? How did it start?
2. How has it developed since then?
3. Who are its main characters? (owners, partners, staff, etc.)
4. What does it do on a daily basis?
5. How will it get to know new people? (marketing and promotion)
6. What are its plans for the future?
7. How will it deal with adversity? (is it flexible enough to cope with unforeseen changes or does it only serve one type of client? (specialized but egg in one basket syndrome) Also, what happens should your key staff not be able to work? (illness, etc.))
8. How will the story end? (Exit strategy. Will you do it for the rest of your life? Will it evolve into something else? Will you sell to someone else?)

Secondly, management structure:

The one key thing to understand about management structure is that there are many roles, even if there is only one person doing all of them.

An example:

(Executive)
Owner (generates expensive, expects share value to increase)
Financial Manager (generates expensive)
Human Resources (generates expensive)
Marketing Manager (generates expensive)
Sales Manager (generates expense)

(Infrastructural)

IT Support Staff (generates expensive)
Cleaner (generates expensive)
Chef (generates expensive)
Book-keeper (generates expensive)
Maintenance (generates expensive)

(Operational)

Sales Person (generates expense and income)
Engineer (generates expensive & income)
Assistant Engineer (generates expensive, could generate income)

Each of these roles has a cost. And as you can see, only 2 of them create any kind of income. You will spend an enormous amount of time doing things that will not make money for you. But they need to be done otherwise you will either work in a filthy environment, or your computers will crash, or you won't be creating more awareness of your business, or the phones won't get answered. Get my point?

Thirdly, define the tasks that each role has to perform, and try your best to assign a duration to each task.

Marketing and Promotion (5 hours a week)
Cleaning (half hour a day)
Strategy Development (10 hours a month)
Finances (2 hours a week)

If you want you can break those tasks down into smaller steps:

Cleaning:

Collect wrappers and cans (5 minutes)
Roll up cables (15 minutes)
Wipe down surfaces (20 minutes)
Pack away mics (10 minutes)
Throw out trash (5 minutes)

Then onto the numbers of course.

Rent (might not be a factor in your case, but there are tax perspectives to remember)
Salaries (as i mentioned, each role has a cost. When you're not making money, you're spending it.)
Electricity
Marketing, Promotion and Advertising
Telephone
Insurance
Accounting Fees
Motor Vehicle
Website
Office Expenses (paper, printer cartridges, etc.)
Bank Charges
Interest (of course)
Loan Repayments

This all sounds very intense i'm sure. But when we try to maintain these things in our minds, we inevitably forget some of the things we have to do.

Create a task list for each role as best you can. Monitor your performance. If you can clean up in 40 minutes instead of an hour, you save money. If you can organize your finances so that book-keeping only takes 1.5 hours a week, you save 2 hours a month.

This will all help with the visualization and planning of your business. It will be your own guide, and it will help you keep perspective on how you are really doing.

Lastly, it will also help attract the right kinds of assistance as someone who is interested in partnering with you will appreciate your attention to detail.

Find a business plan skeleton and get started.

I update my business plan every 3 months. Things in my business change. Opportunities i hoped for sometimes don't come through. And sometimes other unexpected opportunities arise.

Good luck.

[Sui_City]

BTW, to The Byre,

Nice site.

[NickHiebert]

Great advise, I was going to use Business Plan Pro 2007 for writing my business plan, the have a lot of templates and probably have one related to production.