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Thread: The business of running a small studio?

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    Question The business of running a small studio?

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    Where might one find a good discussion of the ins and outs of starting and running a small studio? I've been thinking about building out a project studio and trying to make a go of it, but there's certainly a lot to consider when doing so, only some of which actually pertains to studio construction or engineering.

    Thanks,

    ElSilva

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    Re: The business of running a small studio?

    Originally posted by ElSilva
    [B]Where might one find a good discussion of the ins and outs of starting and running a small studio? I've been thinking about building out a project studio and trying to make a go of it, but there's certainly a lot to consider when doing so, only some of which actually pertains to studio construction or engineering.
    Hello elSilva,

    You're right, studio construction is only a small piece of it.

    If you're building a home studio, and occasionally renting it out, the choices are easier because you want a home studio whether you make money or not. You simply want it

    If you're going to acquire commercial space, put a big sign up and advertise your services and live on that income, you'll need to do a lot of research.

    You need to research your competitors. Where are they located? What do they charge for different services? What kind of service can they provide? What kind of services do they actually provide? Are they friendly, curious, and service oriented? What formats are they compatible with? What is their minimum block of time? Do they have practice rooms? How are their engineers trained, certified, and experienced? What is their cancellation policy? How long have they been in business? What are their hours?

    The list goes on, but I'm sure you get the idea. If you have any competition whatsoever, you have to be better than them in multiple planes. And do you really want to do the walmart style of ruthless business practices and offer simply the lowest price? Can you afford better equipment than them? what differentiates you from them?

    I'm going through this myself actually, as I recently acquired "dirt cheap" commercial space that is already carved into two sections, one to be allocated for my studio, one to be allocated for a machine shop that will pay rent, thus I make a profit on the facility even if my half remains vacant, empty, lights out. This allows me more freedom as far as how I can compete.

    Are you going to be an analog studio? Digital? Hybrid (analog board with digital recorders or vice versa?) There are so many options these days you can pretty much do anything you want. Nothing wrong with a Sony DMX connected to a pair of 24-ch otari's. Or, an 15 y/o analog Neve with upgraded op amps/caps connected to a rack of Alesis DM24's. Or whatever.

    What is the investment you can make, and how long will it take you to make it back? Capital expenditures for equipment, space, and acoustically modeling that space can grow very quickly.

    Regarding space, are you going to acoustically treat it? Or are you going to hire an expert like John Sayers, for example? If the answer is "yes", toss in a large consulting/project management fee into your start-up costs.

    Its my opinion most smaller commercial studios fail because they don't plan out their spending as compared to the clients they expect to get right in the beginning.

    Just because you built a nice studio this week, doesn't mean Madonna and Bon Jovi will come there tomorrow to rent it out. If you have those connections with record companies and can leverage such relationships to encourage the top 100 stars to come to your studio, well, you're in great shape already. But since the likelyhood of that is not very high, you need to figure out who your customers are.

    Garage bands?
    Karaoke singers?
    DJ's needing synths/midi to mix with?
    Loopers?
    Masterers?
    Practice room renters?

    I researched my immediate area, and within a 15 mile ride, there are eleven rentable studios. ELEVEN!!! Three are larger home studios, five are what I would call "real" studios, and three are variants in between. four of the larger five have practice space, and the largest studio around here charges $35 an hour, including a house engineer, for 72 tracks of protools, three vocal booths, and use of their guitars, amps, drums and other instruments. Basically, for $35 you have to just show up with a slight clue of what you want. I've personally visited all of these studios, and spoke to the owner(s). Some I let on that I was looking for a suitable place for recording, others I was straight forward.

    Running a studio is another hassle for those inexperienced. Here are some of the things I learned the hard way, and these are not original stories. I'm sure others have suffered these as well...

    1. Payments.

    In order to book in my studio, the time is scheduled and the client must pay a non-refundable 20% deposit by check, cash, or credit card (amex, MC, Visa, Discover and diner's club). If they cancel, the deposit is considered "store credit", but not refunded. No deposit, they don't go into the schedule. Period, end of discussion.

    Upon their arrival into the studio, payment must be pre-paid for the scheduled time. they booked a day, 8-10 hours, they pay the day rate. When the time runs out, they must make another payment or the reels would stop spinning, and get locked up.

    2. Equipment use.

    I would be happy to loan guitars, amps, drums etc, however the equipment was signed out, and in upon their return, with a photocopy of a driver's license and a signed document as to the condition, and replacement value on the same document. This was drafted by my attorney. The reason for this is to give you recourse if god forbid a drummer decides to beat your heads through, or the vocalist walks out with your AKG or Shure microphone. The majority of the time most customers had no issue signing these documents though often I had to explain why. I simply said "we're happy to loan out quality equipment at no charge, however due to prior theft we have to get these documents signed - or you can bring your own equipment, thats perfectly okay too!". One particular client (young garage band) was very upset that their integrity was questioned and my partner at the time made it simple for them - if they don't plan to steal anything, whats the big deal?

    3. Reels/Media.

    In the days I co-ran that studio, we used a pair of 2" 24 tk Otari's as our main recorders. As you can imagine, tape is very expensive and tough to get. We actually had a temperature/humidity controlled room in which we stored our media, and like everyone else, charged per foot, per reel, per whatever. Customers had to pay for this too of course, and if they didn't pay, the reels got locked up in my tape room. Period, end of discussion. It was hard at first running a studio like boot camp, however once we were consistant in doing so, it seemed like everyone was happier. Me, my partner, my staff, and my customers. Everyone knew what to expect.

    4. Specials.

    I have mentioned this before, and this really worked for me because I have close to 3gb of carefully and accurately done midi files of just about any song/artist out there, and it continues to grow. Anyway, I used to run a $250 special whereas people could buy a gift certificate, and give the "gift of recording" to a friend, sibling, loved one. What this entailed was a "pampered day" in a pro recording studio (mine), and treated to breakfast, lunch and dinner (coffee/donuts, sandwiches and pizza), fawned all over while the singer(s) is/are in the studio, recording 10-12 songs of their choice. Then we master it later in the week when the studio is idle, burn to a CD, and stick the CD into the CD printer and slap their face, artwork, whatever they want, onto the CD surface. While not the most profitable offering we had as there is a lot of work involved more than that one day thats charged for, but it made good use if idle time and kept people employed when there were no bookings.

    5. Hours.

    This is personal choice, and depends a lot on who your clients are. Practice rooms were open tue through sun 9am until 9pm, extended without additional costs if scheduled. The above were walk-in times for the practice rooms. The "studio" part always had to be scheduled - we accepted no walk ins and I went out of my way to be closed on Mondays so I could sleep Between my friend and I at least one of us were always there 99% of the time, and we averaged about 3 employees. Which leads me to the next topic.

    6. Accounting and payroll.

    Your employees will expect your payroll to be on time, regular, and accurate. I have always believed people have integrety and since most engineers are paid by project against billed hours, they are fairly easy to track. We had a "receptionist" and a "gig guy" as we called him, which used time cards and the time clock. No show, no pay. We rarely sent anyone home if business was slow or dead. Very rarely. Often, they got dusting duties on such days

    You will need accounting software. Microsoft Money isn't going to cut it. Peachtree, Simply Accounting if you are frugal or IBM Platinum Series if you like spending lots of money. There is no way to run any business without an accounting system, payroll system, and the ability to invoice. We used Peachtree in those days, which at the time had a quirk - it couldn't invoice consulting or hours, only inventory. So it was not uncommon to have -2,654 studio rental hours in stock at any given time Drove my accountant who came every quarter to reconcile this mess, absolutely insane.

    7. Facility

    Obviously, you'll need an office, maybe shared, as well as some other rooms. A small kitchen is a nice touch. Bathrooms are a must. Minimum of two exits are typically code thus required. I had three. Watch these exists carefully - alarm them so they can open freely from the inside, but you'll know if people sneak others or items in. I had one band pop open a fire exit to buy pot. Nice, huh? You have to comply with all the local bulding codes once you are commercial. Electrical, plumbing, overall construction will all cost more and may in your area require union labor. Just something to keep in mind.

    I've only scratched the surface as I'm being summoned to take the wife out for breakfast, but running a pro studio outside your house needs to be figured out as if it was any other business. The same concerns you'd have for a bakery, or a McDonalds, or an auto repair place, from a business sense absolutely apply here.

    Is where you located going to encourage traffic?
    What is the competition like, and can you differentiate yourself from them?
    Branding and Marketing?
    Capitial costs?
    Financing?
    Day to day operations?
    Employee and staff?
    Taxes and government feeds?
    Utilities?

    etc

    Hope the above disjointed stream of conscienceness helped in some way.

    Frederic

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    Awesome

    Thanks, Frederic, for a fantastic amount of information. It was actually your posting about the space you found and what you're doing with it that inspired me to seriously consider doing the same. Certainly, when heading into any unfamiliar venture, research is of paramount importance. I'll take any and all suggestions on putting together the best business plan. You've given me a great head start.

    A little background on me, if anyone cares. My normal career is in computers. My degree is in computer engineering, and I'm very handy with the code as well as the hardware. I've done consulting and led software development teams, integrated systems and built many, many sophisticated web sites. I just really love to build things, whether it's with wood and nails, solder and PCBs, or lines of code.

    I've played guitar on and off for 15 years, and trumpet 10 years before that. The last five years or so, I played in a local band, and we recorded two CDs at a very nice studio in Chicago (Gravity, owned by Doug McBride). Several years ago, before our first CD, I got the bug and bought into a Roland VS880 8-track hard drive recorder. Thus ensued the never-ending quest for more knowledge and better sound. I'm now up to a brand new DAW I built myself from parts, running Sonar (see the computer forum for the details, if interested).

    I've been recording singer/songwriters from my small home studio for a few months, and getting good results and satisfied customers, but it's very small scale stuff, and I'm barely charging anything. I do it for fun. I host an open mike in town, and so there's a never-ending stream of new talent interested in being recorded. Of course, these are also folks who generally have very little money. Regardless, I enjoy it so much, it would be simply wonderful to find a way to make this into a career.

    I believe I've developed a firm grasp of the basics, and hope to develop my skills through repetition and study.

    So here I am, on the brink of a career change, and I'm wondering what the right next step is. For sure, I have a ton of research to do. However, here's a question:

    1. Should I take some time and try to get a job interning at a local studio to gain experience? I have the good fortune for a limited period of time (about 6 months) to be able to volunteer myself free of charge, and I know I'd be of value. I'd be head and shoulders above any joe that walked in off the street without any training, and even many with training.

    or

    2. Should I get to work building out my own studio, and learn as I go? With the resources here and in other places on the 'net, it would seem an apprenticeship or formal training is hardly a requirement anymore to get into this business. At the end of the day, it's the sound that matters, and if it sounds good, business should come (with proper marketing, of course).

    I think interning would be valuable experience, but I doubt anyone would want to hire me if they knew I was just going to turn around and start my own competitive studio. I'm also not a big fan of making other people's coffee and cleaning toilets, and it might be months before anyone would let me near a console.

    Perhaps I might build out a new studio and then hire a qualified engineer to come in and teach me as we go?

    Any thoughts appreciated.

    -ElSilva

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    Re: Awesome

    My advice for any business is to look at it pessimistically, and find your own light that will differentiate you from your competitors. This applies whether you open a recording studio, or a donut shop

    Why would artists (or wanna-be's - ofteh they are less hassle in a lot of ways) desire to record with your studio?

    1. Price - you're the cheapest.
    2. Equipment - you have the baddest stuff.
    3. Environment - your studio is comfortable. It has latte. Free donuts
    4. Quality - obviously the most important, but can you mix? Master?
    5. Relationships - who do you know, why do you know them, and can they throw you business (pro level, not wanna be level).

    Lets say you and I open a donut shop right next door to each other on main street. In a year, if that, one of us will be gone. Why would it be me, or you, that's gone?

    The key is figuring this out ahead of time. Of course hindsight is available after you disappear, but you want to try to figure what that hindsight would be ahead of time

    No easy task.

    The studio I co-own upstate did "okay" because we did not have a lot of local competition (like I will where I am in NJ), thats certainly part of it. But we ran our studio as if it were my living room. Clients paid us to be "guests", and were treated as such. Anything they needed that I had the ability to provide, whether it be equipment, patch cords, coffee, nice clean comfortable environment, etc, we did. I'd like to think the main reason was the people we are, and employed. We took the "customer is always right" very seriously and really went out of our way to make it real.

    Of course if a client asked for an over-compressed thin sounding vocal track, we might make a few suggestions, but since its their art, and we're applying our art on top of that, we felt the fundamental art was the "leader" in all decisions.

    Regarding you specifically - know that mixing a recording is part science, part art. I actually have the same background as you (starting with Netware in the days Novell made hardware using 68000 microprocessors - if you remember those days). Anyway, if you're from the computer industry, you know what i'm talking about. take 10 guys and give them 10 computers and 10 copies of Win2000 and say "make this a secure webserver" it would be my guess you'd have -at least- three different ways of achieving the same goal - and examples of each from the 10 people.

    Music is the same way. Understanding compression, reverb, acoustics and other spacial information, A/D & D/A conversion methods, cabling (balanced versus not), op amp theory, EQ methods (basic, graphic, parametric, etc) analog filter theory (bandpass, butterworth, Twin-T, etc) and all that is true engineering.

    Its also an art - how much compression do you need to make it sound G O O D? Most of us can figure out how much compression to add to keep the tape from saturating, but how much sounds good? Maybe its the same, maybe its not. To me, this is the fun part of being a recording engineer/producer. The "feely" stuff.

    Regarding a business plan - damn good idea. First, decide what your market will be. Garage bands? Mariah Carey? I know you're leaning towards poor starving musicians, thats cool, but figure out what you need to acquire to do that properly. Of course there are a billion right answers, but you need to figure it out ahead of time of course, to make sure you can project the real costs you will have.

    You also have other costs, one thats often forgotten. MARKETING!

    Slapping up a web page and hope people come is not going to benefit you short term, don't let your ISP fool ya Word of mouth is by far the best method in which to acquire new customers, because they come in happy before you twiddle one knob. "Bob liked your work, so I'm a referrel". Good! But before you and all your friends can spread the good news, you need not to starve in the meantime. Newspaper ads and direct marketing worked very well for us - how we got the list of people to directly market was the old fashioned way - we went to every music store, every bar, and every other place we could think of with little papers on corkboard that said "My Band available for Play at your bar!", as well as all the "need bassist" type of things. Here in NYC we have a rag called the Village Voice which used to have pages of these kind of ads. We cold-called every one of them.

    Hope that helped.



    Originally posted by ElSilva
    Thanks, Frederic, for a fantastic amount of information. It was actually your posting about the space you found and what you're doing with it that inspired me to seriously consider doing the same. Certainly, when heading into any unfamiliar venture, research is of paramount importance. I'll take any and all suggestions on putting together the best business plan. You've given me a great head start.

    A little background on me, if anyone cares. My normal career is in computers. My degree is in computer engineering, and I'm very handy with the code as well as the hardware. I've done consulting and led software development teams, integrated systems and built many, many sophisticated web sites. I just really love to build things, whether it's with wood and nails, solder and PCBs, or lines of code.

    I've played guitar on and off for 15 years, and trumpet 10 years before that. The last five years or so, I played in a local band, and we recorded two CDs at a very nice studio in Chicago (Gravity, owned by Doug McBride). Several years ago, before our first CD, I got the bug and bought into a Roland VS880 8-track hard drive recorder. Thus ensued the never-ending quest for more knowledge and better sound. I'm now up to a brand new DAW I built myself from parts, running Sonar (see the computer forum for the details, if interested).

    I've been recording singer/songwriters from my small home studio for a few months, and getting good results and satisfied customers, but it's very small scale stuff, and I'm barely charging anything. I do it for fun. I host an open mike in town, and so there's a never-ending stream of new talent interested in being recorded. Of course, these are also folks who generally have very little money. Regardless, I enjoy it so much, it would be simply wonderful to find a way to make this into a career.

    I believe I've developed a firm grasp of the basics, and hope to develop my skills through repetition and study.

    So here I am, on the brink of a career change, and I'm wondering what the right next step is. For sure, I have a ton of research to do. However, here's a question:

    1. Should I take some time and try to get a job interning at a local studio to gain experience? I have the good fortune for a limited period of time (about 6 months) to be able to volunteer myself free of charge, and I know I'd be of value. I'd be head and shoulders above any joe that walked in off the street without any training, and even many with training.

    or

    2. Should I get to work building out my own studio, and learn as I go? With the resources here and in other places on the 'net, it would seem an apprenticeship or formal training is hardly a requirement anymore to get into this business. At the end of the day, it's the sound that matters, and if it sounds good, business should come (with proper marketing, of course).

    I think interning would be valuable experience, but I doubt anyone would want to hire me if they knew I was just going to turn around and start my own competitive studio. I'm also not a big fan of making other people's coffee and cleaning toilets, and it might be months before anyone would let me near a console.

    Perhaps I might build out a new studio and then hire a qualified engineer to come in and teach me as we go?

    Any thoughts appreciated.

    -ElSilva

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    Man, I don't see how anyone makes any money doing this.
    For instance, let's assume you're going to rent or lease commericial space to run your studio.
    Lets look at monthly expenses:

    The cheaper going rate in my area is about $1/sq. ft.
    Let's say you have 1200 sq. ft.
    RENT $1200/mo.
    UTILITIES $300/mo.
    ADVERTISING $200/mo.
    (not much I know, but we'll use it)
    SUPPLIES $100/mo.
    MISC. $150/mo.

    That's overhead, what it costs you each month to run your business, and it comes to $1950/mo.
    We'll use $2000/mo.

    Ya got to make a living right? So figure in your personal monthly expenses. Let's say $5000/mo. and increase it by 5% each year for 3 years. That would barely cover inflationary costs.
    That's $5250/mo.
    Add in the cost of running your business.
    That's $7250/mo.
    You have to pay taxes too. Property and Income. Plus you're self employed now, and your FICA witholding is double!
    Without going through the calculations, let's say you need $9000/mo. to run your business, make a living, and show a profit.

    There's an average of 173.33 hrs/mo. based on a 40 hour work week.
    Divide 173.33 into 9000 and:

    That's $52/hour you have to charge to do all of the above.

    Thats assuming you can actually BOOK 40 hrs/wk.
    If you can't, and you can only book say 30 hrs/wk. (Which actually averages 130 hrs/mo. Then you have to charge close to $70/hr. and that kind of ruins your competitive edge, at least in my area, where the going rate, is anywhere from $45/hr to $65/hr. Unless you go to the "Big Houses" like ?Arlyn or Pedernales where they have big name draws and can charge a lot more.

    Am I missing anything? Probably a lot! I know this doesn't factor in any start-up or construction costs, insurance, liability, etc.
    Am I living too high on the hog here? I mean 60K per year isn't going to get you in the Fortune 500 Club.

    Maybe if you opened 2 studios!?

    Any thoughts?
    Last edited by Michael Jones; 07-23-2002 at 12:55.
    [SIZE=3][COLOR=RoyalBlue][FONT=Garamond][b][i]"Nobody digs ya music, butcha self"[/i][/FONT][/COLOR][/b][/SIZE]

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    True.

    This is why most recording studios go under - its just too darn expensive for what you can charge.

    Add in most people on this forum (plus all the people not on this forum) that bought a little digital 8-track thing and call it a "home studio", well, that leaves a lot of "pro" studios out of the income stream.

    Nothing wrong with a home studio mind you, I'm not saying that. Just that a pro studio has more competition than ever.

    In my particular case, the building was practically free. I paid cash, thus have anticipated expenses as so:

    Rent/Mortgage: $0
    Electrical: $3000
    Water/Sewer: $480
    Maintanence: $5000
    Insurancee: $2800
    Capital Imprv: $5000
    Phone(s): $1800
    Property Tax $10500
    -------------------------------------
    Basic annual cost: $19,130

    The above costs are just to keep the door unlocked. There are a billion other things to spend money on (warranties, equipment rental/lease, upgrades, wiring changes, replacement of patch cords and instruments as they wear out, etc.

    So at a minimum, just to have the doors unlocked with nothing inside and not functioning, I have a minimum annual cost of 20K more or less. Not too bad, but thats still 20K To break that out in profitability, I'd have to rent out my practice rooms for approximately 550 hours a year, or offer studio time for about 250 hours a year, assuming all the equipment necessary is free and magically shows up tomorrow

    Unlike your numbers I didn't take into consideration advertising and things like that. Easily over $200. While I can scarf some business through contacts I've made over the years, I certainly can't live on it.

    Why I embarked on this adventure is twofold - the property is clearly worth six to seven times what I paid because I snagged it out of mortgage foreclosure - and a good friend who wants to run a machine shop committed to $1000/5000/8000 a month rent (30/60/90) then $8k going forward. First year I'll draw in $86K and going forward I'll draw in $96K, obviously more than my core expenses.

    While the remaining $66k (86k-20K) a month can certainly provide for a healthy recording studio even just for myself, in order to finance large-scale equipment (neve, ssl, amek) obviously I need customers. This stuff is not cheap

    And, if it is in fact a pro studio, I don't think any of you would pay $50 an hour for an engineer to mix on a row of itty bitty tascam TMD1000's, even though I do have six of them.

    Wiring is cheap, I can solder, I have friends who can solder, and I have four spools of 24-ch low-capacitance mogami in my garage shrunk-wrapped. I also have in storage two 24-ch 2" Otari machines with vaccum tube pre/post amps, which certainly need some cleaning and a tune-up, and probably some digital recorders of some sort and slews of patch bays. I can get in cheaper than most, as I have a stockpile of gear, however this is my gear, not "company" gear, and I need to provide accounting to transfer the assets.

    My, this is fun.

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    frederic, where can i buy your book?
    hehe,
    great input.... just had to comment on the amount of input... gotta love it
    -DAN
    -DAN

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    Yep

    Man, wrote a whole reply, and it just disappeared, poof!

    Basically, Frederic beat me to the punch. I was going to add to the mix things like accountant and legal costs.

    'Nuther thought, in building a practice, you're going to have to eat some costs to get established. No way you'll be booking even 30 hours a week. More like 4-6 months of near-free or pro-bono work to establish a reputation and allow word-of-mouth to percolate. That is, unless you've already got a rep and huge rolodex.

    Frederic, you've got me green with envy on that property you scored. Maybe if I move back to NJ and you need an assistant engineer...

    -ElSilva

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    By the way...

    Check out this article in today's Wired.com. Pretty much says it all regarding kiddies in their basements turning out good quality. The trend for a couple years now has certainly not been in favor of those of us wishing to create studios for fun AND profit.

    http://www.wired.com/news/culture/0,1284,53341,00.html

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    Re: By the way...

    Originally posted by ElSilva
    Check out this article in today's Wired.com. Pretty much says it all regarding kiddies in their basements turning out good quality. The trend for a couple years now has certainly not been in favor of those of us wishing to create studios for fun AND profit.

    http://www.wired.com/news/culture/0,1284,53341,00.html
    Good article!

    But know that the software is only an enabler - the reason why recordings sound good (or not so good) has to do with the decisions long the way. Part of this is science, part of this is art. A good engineer has talent in both.

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