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Music Business plan for starting your own building firm
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.
Executive Summary
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.
2.2 Management of Music Business
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.
2.3 Customers of Music Business
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.
2.4 Business Target
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:
Company Summary
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.
3.2 Why the music business is being started
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.
3.3 How the music business will be started
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:
| Start-up Expenses | |
| Legal | $248,000 |
| Consultants | $0 |
| Insurance | $38,000 |
| Rent | $27,000 |
| Research and Development | $31,000 |
| Expensed Equipment | $63,000 |
| Signs | $3,500 |
| TOTAL START-UP EXPENSES | $410,500 |
| Start-up Assets | $325,000 |
| Cash Required | $376,000 |
| Start-up Inventory | $58,000 |
| Other Current Assets | $212,000 |
| Long-term Assets | $250,000 |
| TOTAL ASSETS | $1,221,000 |
| Total Requirements | $1,631,500 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $410,500 |
| Start-up Assets to Fund | $1,221,000 |
| TOTAL FUNDING REQUIRED | $1,631,500 |
| 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 |
| TOTAL ASSETS | $2,072,500 |
| 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 |
| TOTAL LIABILITIES | $75,000 |
| Capital | |
| Planned Investment | $1,631,500 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,631,500 |
| Loss at Start-up (Start-up Expenses) | $366,000 |
| TOTAL CAPITAL | $1,997,500 |
| TOTAL CAPITAL AND LIABILITIES | $2,072,500 |
| Total Funding | $1,631,500 |
Services
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.
Marketing Analysis of Music Business
Note
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.
5.1 Marketing Trends
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.
Business plan for investors
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.
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| 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% |
| Total | 100% | 97,000 | 104,000 | 112,000 | 123,000 | 134,000 | 10% |
5.3 Business Target
Our business targets are:
- To achieve the net profit margin of $9.1k per month by the end of the first year
- To release at least 10 albums hitting a ranking of above 4.8 by the end of the first six months
- To host at least 10 concerts within six months of the launch
- To achieve an average ranking above 4.75 within a year of the launch.
- To balance the initial cost of the startup with earned profits by the end of the second year
5.4 Product Pricing
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.
Marketing Strategy
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.
6.1 Competitive Analysis
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.
6.2 Sales Strategy
- We will establish a strong web and social media presence through SEO optimization
- We will advertise our services through Google Local Services ads, local newspapers, and magazines
- We will arrange a themed musical night for the young people on the day of launch for an entry ticket of just $3
- We will offer a 20% discount on our theme music production services for the first three months of the launch
- We will offer a 50% discount on our offering of playback wedding music by our singers and musicians
6.3 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| 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 |
| TOTAL UNIT SALES | 129,000 | 136,740 | 144,944 |
| 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 | |||
| Creating Production Music & Record Labels | $2,120,000.00 | $2,606,752.00 | $3,205,262.26 |
| Theme Music for TV Shows/ Movies/ Commercials | $1,680,000.00 | $2,065,728.00 | $2,540,019.15 |
| Corporate Background Music | $540,000.00 | $663,984.00 | $816,434.73 |
| Hosting Concerts, Music Festivals & Parties | $1,332,000.00 | $1,637,827.20 | $2,013,872.33 |
| TOTAL SALES | $5,672,000.00 | $6,974,291.20 | $8,575,588.46 |
| 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 | |||
| Creating Production Music & Record Labels | $1,880,000.00 | $2,162,400.00 | $2,426,976.00 |
| Theme Music for TV Shows/ Movies/ Commercials | $1,470,000.00 | $1,632,400.00 | $1,848,322.00 |
| Corporate Background Music | $432,000.00 | $515,160.00 | $606,744.00 |
| Hosting Concerts, Music Festivals & Parties | $1,404,000.00 | $1,564,560.00 | $1,698,883.20 |
| Subtotal Direct Cost of Sales | $5,186,000.00 | $5,874,520.00 | $6,580,925.20 |
6.4 Sales Monthly
6.5 Sales Yearly
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Personnel plan
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.
7.1 Company Staff
- 1 General Manager to manage the overall operations
- 1 Cashier to maintain financial records
- 2 DJs to assume musical responsibilities in concerts and events
- 4 Musicians to play musical instruments
- 1 Audio Engineer to regulate music effects
- 2 Software/ IT Experts to ensure web and social media presence
- 1 Sales Executive to promote the company’s sales
- 2 General Assistants for routine works
- 1 Receptionist
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| 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 |
| Total Salaries | $170,000 | $187,000 | $205,700 |
Financial Plan
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.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| 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 |
8.2 Brake-even Analysis
| Brake-Even Analysis | |
| 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 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $5,672,000 | $6,974,291 | $8,575,588 |
| Direct Cost of Sales | $5,186,000 | $5,874,520 | $6,580,925 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $5,186,000 | $5,874,520 | $6,580,925 |
| Gross Margin | $486,000 | $1,099,771 | $1,994,663 |
| Gross Margin % | 8.57% | 15.77% | 23.26% |
| 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 |
| Total Operating Expenses | $348,200 | $374,300 | $404,050 |
| 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% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $55,000 | $59,400 | $64,152 |
| Cash from Receivables | $15,000 | $16,200 | $17,496 |
| SUBTOTAL CASH FROM OPERATIONS | $63,000 | $68,670 | $74,164 |
| 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 | $58,000 | $63,000 | $68,000 |
| 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 | $53,000 | $56,000 | $61,000 |
| 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 | $54,000 | $58,320 | $62,986 |
| Net Cash Flow | $16,000 | $17,000 | $19,000 |
| Cash Balance | $25,000 | $26,000 | $28,000 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| 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 | $293,000 | $328,160 | $368,852 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $17,600 | $19,712 | $22,176 |
| TOTAL LONG-TERM ASSETS | $22,000 | $24,640 | $27,720 |
| TOTAL ASSETS | $278,000 | $311,360 | $350,280 |
| 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 | $12,600 | $14,112 | $15,862 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $14,200 | $15,904 | $17,876 |
| 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 | $275,000 | $299,750 | $329,725 |
| TOTAL LIABILITIES AND CAPITAL | $289,200 | $311,360 | $350,280 |
| Net Worth | $296,000 | $322,640 | $354,904 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| 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 | 100.00% | 100.00% | 100.00% | 100.00% |
| 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 | 103.90% | 104.73% | 105.69% | 110.00% |
| 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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