Every serious band should take the time to put together a realistic business plan. You may want to create a plan simply to help the band get more organized, or you may intend to use it when scouting sponsors or other forms of financing. A solid and realistic plan can be an important tool in establishing your band’s legitimacy as a business when tax time comes around. And, if nothing else, the plan will help you in planning your goals realistically, based on facts and your financial calculations.
A business plan really can’t be hammered out in a day. It takes planning, evaluation, and a lot of thought, which can translate into time. Summer’s the perfect time to start planning your business activities for next year. Here’s a sample outline to get you started:
I. Executive Summary
a. This will include your business concept, current financial situation, your key factors for success, and other information regarding your current situation, such as location and a mention of any staff (band members, management, etc.).
b. Also give basic background on the company (the band or artist), and discuss the skills and strengths of your management team.
c. If you plan to obtain financing, here’s where you’ll discuss why you need it.
d. Talk about the band’s objectives.
e. The Executive Summary will be the first thing in your Business Plan, but it’s the last thing you should write!
II. Mission Statement
a. This is the overall philosophy of your business (in your case, your band). Everything you do should be in accordance to the goals you lay out in your mission statement. Talk about how you plan to make your customers (your fans) happy, what kind of quality and pricing strategies you plan to you (High quality and higher prices, economy quality and lower prices, high quality and lower prices – taking less profit, etc.).
III. Organizational Plan
a. Business Model – Is your band run as a sole proprietorship, partnership, corporation, etc.? Why? What are the benefits of doing it that way, and have you legally taken the steps to operate as that form of business?
b. Products and Services – Describe all products you plan to offer (such as your CDs, shirts, stickers, or other merch) and services (live events, etc.). Talk about your pricing strategy, future products and services you plan to offer, and your competitive edge over your competition’s products and services.
c. Copyrights/Trademarks – Make note of any trademarks such as your band name, and whether or not they’re registered or just common law trademarks. Keep in mind, you only have a common law trademark if no one else at all is using that name, so do searches online for other bands that may be using your name, and find out who was using it first before you claim trademark. Do the same for any copyrights you may own. Be sure to document all of your intellectual property here.
d. Management and Personnel – Here you can include more details about each band member and each member of your management team.
a. Market Analysis – Talk about your target market (include any demographics), your competition for all products and services you’re offering, market trends for the industry as a whole, and be sure to list your sources for any market research you complete.
b. Marketing Strategy – Discuss your plans for selling, such as advertising, publicity, and promotion. Make sure you touch on all of the “4 P’s of Marketing” here – Product, Pricing, Placement (distribution and packaging) and Promotion. Don’t just list generalities, list specific strategies here.
c. Responsibilities – Note whether the band as a whole is responsible for each strategy or if something is being outsourced. If the band is responsible, assign specific duties to each band member.
d. Evaluation – List the ways you plan to evaluate your marketing. You need to evaluate your efforts at least once a year, but preferably every quarter, so that you can adjust your marketing strategies for greater effect. (i.e. if you see that CD sales haven’t picked up at all with your current promotions, you can try something new instead of wasting more time.)
a. The financials may be the most important part of your business plan when tax time comes around, or when you find yourself looking for financing. The financial projections can range from 1-5 years.
b. If you plan to seek a loan, you need to tell how much you plan to need, and what exactly you plan to spend it on. You need supporting documents, such as official quotes from companies you plan to buy from. Scale down any loan requests to the bare minimum you would need to work with. Don’t add fluff.
c. Projected Cash Flow Statement – This is basically just your budget for the upcoming year.
d. Starting Balance Sheet – This will list the band’s starting assets, liabilities, and net worth.
e. 3-year projections – You need to project your income or losses over the next three years. (Don’t try to inflate what you hope to earn. You need to use the facts, and be realistic. Keep in mind, many small businesses don’t turn a profit for 3-5 years.) You can get these estimates by using your income and expense totals from your first year’s budget, and factoring in expected economic or industry trends that you should have mentioned in your Market Analysis.
f. Projected Balance Sheet – Project your assets, liabilities and net worth for the end of the following year.
g. Income Statement (Profit and Loss Statement) – This shows your monthly or yearly financial activity.
h. Break-even Analysis – This is the point where your expenses exactly match your income from products and services. You can think about this in terms of dollars, or in terms of the number of product units you need to sell at your given price. Pull your numbers from your three-year projection to help you figure out your break-even point.
i. Personal Financial Histories – If this is your first business plan, and the band hasn’t officially been “in business” before, with verifiable financial records, you need to include each member’s personal financial histories. If you look for financing, this is an absolute must.
j. Business Financial History – If your band has been in business for a while, and you have verifiable financial records, you need to include the financial history of the business, to explain any growth or downsizing.
Once your business plan is complete, you should add a table of contents and a cover page. The table of contents will simply point to where each section and supporting document can be found. The cover page should include your business or band name, full contact information, the date the plan was created, and the name of the person who wrote the plan. You should update your plan yearly.