Do you want to start Music Venue Business?
Are you thinking about opening a music venue? Music is part of the society and has been around for ages. There are different types of music genres and performances that take place on a daily basis. Musicians and performers rely on proceeds from concerts to make a living and this means there is a high demand for the music venue business. With a good plan to execute this business, you can open a music venue that will attract different types of performances for a fee. It is a profitable business that yields good returns so long you have a smart strategic business plan in place. As music continues to become popular, demand for music venues remains high.
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2.1 The Business
The music venue will be registered under the name BeeMusicals, and will be located in downtown Los Angeles. BeeMusicals will be owned and managed by Robin Bade who is a famous rock music icon. The music venue will offer a cozy, welcoming and entertaining environment that will allows hosting of various music concerts.
2.2 Management Team
BeeMusicals is managed by Robin Bade who is a rock musician and has been in the music industry for over twenty years. His love for music coupled with immense experience in the music industry has been the key driving factor for starting a music venue. Robin aims to offer a customized and unique experience that will set him apart from his competitors.
2.3 Customer Focus
BeeMusicals will primarily cater for musicians and music lovers in Los Angeles looking for a perfect spot to have fun in the city. The music venue will attract people of various ages, cultural and social backgrounds.
2.4 Business Target
BeeMusicals aims to offer a nice venue where various types of musicians and performers can stage performances for their fans. The business will put in place the entire infrastructure required to meet customer expectations.
3.1 Company Owner
Robin Bade is a successful rock musician who has performed for over two decades. He started as part of a popular rock band until ten years ago when he decided to launch his solo career. Bade has performed in big concerts across the U.S. and globally. He’s been nominated severally for various local and global music awards.
3.2 Aim of Starting the Business
Due to his love for music and long music career, Robin had the dream of opening his own music venue because he clearly understood challenges musicians go through to secure a perfect venue for their performances. BeeMusicals will help musicians and performers find a convenient and affordable venue to host functions.
3.3 How Business will be Started
For BeeMusicals to succeed, Robin has hired experts to advise him on how to start a music venue business. This business plan captures the entire financing aspect and sales forecasts. A breakdown of key financial information has been shared below.
|Research and Development||$6,000|
|TOTAL START-UP EXPENSES||$65,200|
|Other Current Assets||$50,000|
|Start-up Expenses to Fund||$150,000|
|Start-up Assets to Fund||$130,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$100,000|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$50,000|
|Cash Balance on Starting Date||$210,000|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$405,000|
|Loss at Start-up (Start-up Expenses)||$350,000|
|TOTAL CAPITAL AND LIABILITIES||$230,000|
Services for Customers
BeeMusicals is a fully serviced music venue that will host various types of events which include:
- Live music venue for with full modern equipment to support live concerts and performances
- Weddings with different packages offered to suit client needs
- Reunions i.e. family and class reunions
- Designing customized apparel and accessories for different venues
- Entrepreneurial and corporate trainings especially during daytime hours
Robin has demonstrated how to open a music venue and make good profits means diversifying service provision and not focusing only on music events.
Marketing Analysis of a Music Venue
To ensure the music venue business achieves its targets, BeeMusicals has done a detailed market analysis. This music venue business plan is meant to formulate a business strategy that will be implemented once operations commence. It is important for BeeMusicals to identify strategies that will help it operate effectively in a highly competitive market.
5.1 Market Segmentation
After completing a market survey, BeeMusicals has identified the following customers to be the target audience.
5.1.1. Musicians and Performers
To market and sell their music, musicians often have to organize regular live performances to showcase their talent and interact with their customers. Both upcoming and established musicians and performers are always on the lookout for perfect venues where they can hold their concerts. The concert business is big and this live music venue business plan will help to elaborate strategies to be used to attract artists. This category of clients is ready to spend a lot of money on booking and using a concert venue, and therefore are a key customer target.
Aside from hosting live music performances, BeeMusicals intends to provide a venue for corporate organizations hosting different events. Such events include staff get-together, Christmas parties, CSR events and trainings. Companies always have regular events and need to hire venues which are nice, cozy, secure and accessible. They are definitely a lucrative target market in this music venue business plan template. BeeMusicals intends use its strategic location to reach out to corporate organizations looking for venues to host their events.
Schools always have an event packed calendar and occasionally, identify external venues where they can hold their events. BeeMusicals is a large music venue with an extended sitting capacity and therefore, can comfortably hold school events. Such events include fun days, music and theatre performances and school parties. Given the high number of schools in Los Angeles, there is a ready market for the business to tap into. This customer segment will most likely seek for venue services at specific times of the school calendar.
5.1.4 Residents/General Public
This is a diverse customer group but is critical for the business because residents and families often look for venues to host receptions, weddings, get-togethers and reunions. Given the high number of residents in the city, it is a lucrative target that will encompass people of different cultural, religious and social backgrounds.
|Potential Customers||Growth||YEAR 1||YEAR 2||YEAR 3||YEAR 4||YEAR 5||CAGR|
|Musicians and Performers||35%||20,000||23,000||26,000||29,000||32,000||13.43%|
5.2 Business Target
BeeMusicals aims to be the best music venue in the entire Los Angeles downtown neighborhood. According to financial statistics and forecasts, the business intends to have fully recovered the initial capital after a period of three years. Projected average sales growth will range between 10%-15% as Robin has adequately planned how to start a music venue business offering numerous services to guarantee steady income throughout the year.
5.3 Product Pricing
Pricing of services has been decided after a careful evaluation of the market and prices other music venues are offering. BeeMusicals will offer customer friendly but competitive prices to grow its market segment and meet its financial goals. These are the prices for major services offered.
In line with business goals, Robin Bade has identified a sales strategy he believes will attract and grow customer numbers. After considering the cost of opening a music store, expenses and other critical financial information, the following sales strategy will be used to develop and market the music venue.
6.1 Competitive Analysis
BeeMusicals is opening when other music venues have already established themselves. The music venue’s strategic location, sophisticated facilities, investment in modern technology and a unique and comfortable environment will be the biggest selling points.
6.2 Sales Strategy
To succeed and become a market leader, BeeMusicals has put in place the following sales strategies.
- Focus on upcoming musicians and performers looking for an affordable yet nice and accessible music venue to host their events.
- Offer attractive packages with start-of-the-art equipment and technology to boost sales.
- Vigorously advertise and market the music venue in local media and digital channels such as social media.
- Uniquely design the venue with attractive colors and designs to ensure the facility has a comfortable and welcoming feel.
- Capitalize on the strategic downtown location to attract direct walk-in traffic to make inquiries.
6.3 Sales Forecast
The business has come with sound policies and strategies to boost profit making and make the brand a household name. Sales forecasts show a steady increase in annual sales which are illustrated in the tables and charts below.
|Unit Sales||Year 1||Year 2||Year 3|
|Live music venue Package||200,000||250,000||300,000|
|Designing customized apparel Package||250,000||270,000||300,000|
|Entrepreneurial Trainings Package||200,000||240,000||280,000|
|Customized Trainings Package||150,000||170,000||200,000|
|TOTAL UNIT SALES||1,450,000||1,660,000||1,870,000|
|Unit Prices||Year 1||Year 2||Year 3|
|Live music venue Package||$200.00||$220.00||$230.00|
|Designing customized apparel Package||$150.00||$170.00||$150.00|
|Entrepreneurial Trainings Package||$100.00||$130.00||$160.00|
|Customized Trainings Package||$210.00||$230.00||$250.00|
|Live music venue Package||$300,000||$310,000||$320,000|
|Designing customized apparel Package||$150,000||$180,000||$210,000|
|Entrepreneurial Trainings Package||$120,000||$140,000||$180,000|
|Customized Trainings Package||$100,000||$130,000||$160,000|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Live music venue Package||$0.50||$0.60||$0.70|
|Designing customized apparel Package||$3.00||$2.50||$3.20|
|Entrepreneurial Trainings Package||$0.40||$0.50||$0.60|
|Customized Trainings Package||$0.35||$0.45||$0.50|
|Direct Cost of Sales|
|Live music venue Package||$120,000||$140,000||$160,000|
|Designing customized apparel Package||$60,000||$80,000||$100,000|
|Entrepreneurial Trainings Package||$40,000||$60,000||$80,000|
|Customized Trainings Package||$20,000||$40,000||$60,000|
|Subtotal Direct Cost of Sales||$420,000||$500,000||$660,000|
BeeMusicals hopes hire qualified and competent personnel with top-notch skills to enable it open a music venue that will become a popular brand in downtown LA. The business has identified a small but effective team that will oversee business operations on a daily basis.
7.1 Personnel Plan
BeeMusicals is owned and managed by musician Robin Bade who will be the Manager of the business. Kevin, an Assistant Manager will be responsible for administration, marketing and staff welfare. In addition, there will be 3 production staff, 2 marketing staff and 1 administrative staff. All staff will undergo intensive training before deployment.
7.2 Average Staff Salaries
In the first three years, BeeMusicals intends to pay its staff the following average pay packages.
|Year 1||Year 2||Year 3|
|2 Sales and Marketing Executives||$100,000||$120,000||$130,000|
|2 Production Staff||$110,000||$120,000||$130,000|
BeeMusicals has an elaborate financial plan that will guide how the business will operate and meet its financial goals. The music venue business will be financed by Robin Bade and two investors. The current funding is sufficient to facilitate business set-up; no credit financing for business is required at the moment. The following tables, graphs and chart show a detailed financial analysis as well as forecasts to tabulate before you start a music venue business.
8.1 Important Assumptions
BeeMusicals has tabulated its financial projections in line with the assumptions below.
|Year 1||Year 2||Year 3|
|Current Interest Rate||12.00%||10.00%||13.00%|
|Long-term Interest Rate||13.00%||11.00%||10.00%|
8.2 Brake-even Analysis
See the graph below showing the Brake-even Analysis for the business.
|Monthly Units Break-even||10000|
|Monthly Revenue Break-even||$200,000|
|Average Per-Unit Revenue||$230.10|
|Average Per-Unit Variable Cost||$1.10|
|Estimated Monthly Fixed Cost||$210,500|
8.3 Projected Profit and Loss
This Profit and Loss data will be tabulated on monthly and annual trading periods.
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$50,000||$53,000||$56,000|
|TOTAL COST OF SALES||$60,000||$64,000||$68,000|
|Gross Margin %||90.00%||93.00%||95.00%|
|Sales and Marketing and Other Expenses||$2,000||$3,000||$4,000|
|Total Operating Expenses||$220,000||$240,000||$260,000|
|Profit Before Interest and Taxes||$100,000||$120,000||$140,000|
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
Find an analysis of Profit and Loss in the table below.
8.4 Projected Cash Flow
Subtotal cash spent, subtotal cash spent on operations, subtotal cash from operations, subtotal cash received and Pro forma cash flow statistics in diagram below.
8.5 Projected Balance Sheet
Projected Balance Sheet is the sum of BeeMusicals’ capital, liabilities, assets, current liabilities and long-term assets.
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$3,000||$6,000||$9,000|
|TOTAL CURRENT ASSETS||$385,000||$430,000||$500,000|
|TOTAL LONG-TERM ASSETS||$1,000||$3,000||$5,000|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$7,000||$9,000||$11,000|
|TOTAL LIABILITIES AND CAPITAL||$210,000||$230,000||$240,000|
8.6 Business Ratios
Business ratios, ratio analysis and net worth for the business have all been captured in the table below.
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.00%||1.02%||3.29%||17.30%|
|Total Current Assets||120.00%||130.00%||143.45%||60.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||64.29%||61.83%||70.37%||75.20%|
|Profit Before Interest and Taxes||36.47%||39.30%||34.00%||3.80%|
|Total Debt to Total Assets||3.68%||2.04%||0.88%||70.00%|
|Pre-tax Return on Net Worth||72.00%||69.00%||6500.00%||5.40%|
|Pre-tax Return on Assets||60.10%||63.30%||66.70%||10.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||20..2%||22.40%||2440.00%||N.A.|
|Return on Equity||50.20%||54.00%||5800.00%||N.A.|
|Accounts Receivable Turnover||5||5.3||6.2||N.A.|
|Accounts Payable Turnover||13.2||14.5||15.79||N.A.|
|Total Asset Turnover||2.4||2||1.8||N.A.|
|Debt to Net Worth||0||-0.06||-0.03||N.A.|
|Current Liab. to Liab.||1||2||2||N.A.|
|Net Working Capital||$230,000||$260,000||$280,000||N.A.|
|Assets to Sales||0.55||0.48||0.45||N.A.|
|Current Debt/Total Assets||5%||4%||3%||N.A.|
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