notbradsohner said:
Dear Frederic,
Thank you for completing my semester project for my "Business Principles" class I am taking.
You're welcome, and that's exactly what running a recording studio is all about.
It's a business.
Whether you sell cars, recording time or tape dispensers, the concepts are the same.
Niimo said:
when writing a business plan for a studio, and it comes to the yearly projected income of the studio, how do you get those figures. pull them out of thin air or is there a generic way to calculate that.
Projected income is easy. Recording studios sell service based products, so it's easy to take your rate and multiply by the number of available hours in a year.
For my plan many moons ago, I figured it out based on a standard work week of 40 hours, with a two week vacation, knowing full well those hours are "shifted", meaning late afternoon through early morning, rather than 8-6pm. That comes out to a nice round number, 2000 hrs a year. If your rate is $50 an hour, that's 100K per year, rate.
I had several practice rooms that rented out for say, $40 an hour or so. That's potential for $160 an hour on top of my $50 hour rate (service multiple customers at the same time). Two of the three studios I owned or co-owned had more than one setup, meaning I could record, mix, master or whatever, more than one client at a time. So the original $50 an hour could theoretically be $100 an hour, or $200K a year.
Of course those figures are pie-in-the-sky figures. From there you have electricity, rent, insurance, compliance with fire codes, construction, annoying town-provided soliciters (join the commerce club and stuff!), sponsorships of boy scouts or girl scouts if you wish, a company car
, heat, water, sewer, property taxes and repair if you own the facility (and if you do, and have more space than you need, you can rent some space out as we did... recover that way), selling of guitar strings and picks, purchase of replacement equipment after a bass player gets made and decides to throw your microphone out the window (oh, and a replacement window...) a cleaning service, coffee, pizza, etc.
What your business plan really is... is pretending to run the business without actually running it. You project income, and expenses, and some of those figures absolutely won't be right, so you make a decent guess based on experience, potential market, some research, visiting other studios pretending to be a customer, knowledge of your industry contracts that will record with you in a heartbeat, and so forth.
But your business plan is really pretending to run the company, then making it seem prettier for investors, should you want or need any.
Just don't exhaggerate the numbers to your favor... I'm very big on being conservative, and losing some potential investors, as compared to many others who make beautiful "slicks" with wild pie-in-the-sky numbers and have zero chance on delivering any of it.
Very fast way not to get venture capital on another project.
