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.

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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:

3 Years Profit Forecast - Music Business Plans

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.

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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:

Startup Cost - Music Business plans

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
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    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.

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    5.2 Marketing Segmentation

    The detailed marketing segmentation of our target audience is as follows:

    Marketing Segmentation - Music Business Plans

    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 CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
    TV Programs & Film Industries39%39,00041,00044,00049,00053,00010.00%
    Commercials (TV ads) Production Companies29%28,00030,00032,00035,00038,00010.00%
    Video Game Developers, Corporates, Event Organizers32%30,00033,00036,00039,00043,00011.00%
    Total100%97,000104,000112,000123,000134,00010%

    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
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    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

    Unit Sales - Music Business plans
    Sales Forecast   
    Unit SalesYear 1Year 2Year 3
    Creating Production Music & Record Labels40,00042,40044,944
    Theme Music for TV Shows/ Movies/ Commercials35,00037,10039,326
    Corporate Background Music18,00019,08020,225
    Hosting Concerts, Music Festivals & Parties36,00038,16040,450
    TOTAL UNIT SALES129,000136,740144,944
    Unit PricesYear 1Year 2Year 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 CostsYear 1Year 2Year 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

    Sales Monthly - Music Business Plans

    6.5 Sales Yearly

    Sales Yearly - Music Business Plans
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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 1Year 2Year 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 1Year 2Year 3
    Plan Month123
    Current Interest Rate8.13%8.20%8.31%
    Long-term Interest Rate8.32%8.44%8.90%
    Tax Rate23.95%24.68%26.50%
    Other000
    Any questions? Get in Touch!

    8.2 Brake-even Analysis

    Brake-even Analysis - Music Business Plans
     Brake-Even Analysis 
    Monthly Units Break-even5290
    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 1Year 2Year 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/Sales1.94%8.32%14.84%

    8.3.1 Profit Monthly

    Profit Monthly - Music Business Plans

    8.3.2 Profit Yearly

    Profit Yearly - Music Business Plans

    8.3.3 Gross Margin Monthly

    Gross Margin Monthly - Music Business Plans

    8.3.4 Gross Margin Yearly

    Gross Margin Yearly - Music Business Plans

    8.4 Projected Cash Flow

    Projected Cash Flow - Music Business Plans
     Pro Forma Cash Flow   
    Cash ReceivedYear 1Year 2Year 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
    ExpendituresYear 1Year 2Year 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   
    AssetsYear 1Year 2Year 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 CapitalYear 4Year 5Year 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 1Year 2Year 3INDUSTRY PROFILE
    Sales Growth7.34%8.13%9.01%3.00%
    Percent of Total Assets    
    Accounts Receivable9.32%10.33%11.44%9.80%
    Inventory5.56%6.16%6.83%9.90%
    Other Current Assets2.36%2.61%2.90%2.40%
    Total Current Assets150.00%152.00%153.00%158.00%
    Long-term Assets11.70%11.90%12.10%12.00%
    TOTAL ASSETS100.00%100.00%100.00%100.00%
    Current Liabilities4.79%4.83%4.87%4.34%
    Long-term Liabilities0.00%0.00%0.00%0.00%
    Total Liabilities7.27%7.33%7.40%7.38%
    NET WORTH103.90%104.73%105.69%110.00%
    Percent of Sales    
    Sales100.00%100.00%100.00%100.00%
    Gross Margin95.91%98.50%101.26%99.00%
    Selling, General & Administrative Expenses94.68%97.24%99.96%97.80%
    Advertising Expenses1.69%1.74%1.78%1.40%
    Profit Before Interest and Taxes42.01%43.14%44.35%33.90%
    Main Ratios    
    Current37.738.440.632
    Quick32.73434.8533
    Total Debt to Total Assets0.27%0.24%0.17%0.40%
    Pre-tax Return on Net Worth76.02%77.34%79.80%75.00%
    Pre-tax Return on Assets92.50%97.13%101.98%111.30%
    Additional RatiosYear 1Year 2Year 3 
    Net Profit Margin33.10%34.13%35.18%N.A.
    Return on Equity58.50%60.31%62.18%N.A.
    Activity Ratios    
    Accounts Receivable Turnover7.77.87.9N.A.
    Collection Days100100100N.A.
    Inventory Turnover3334.6536.6N.A.
    Accounts Payable Turnover16.2316.3416.84N.A.
    Payment Days272727N.A.
    Total Asset Turnover2.52.62.6N.A.
    Debt Ratios    
    Debt to Net Worth-0.03-0.04-0.05N.A.
    Current Liab. to Liab.111N.A.
    Liquidity Ratios    
    Net Working Capital$227,000$239,712$253,136N.A.
    Interest Coverage000N.A.
    Additional Ratios    
    Assets to Sales0.830.850.88N.A.
    Current Debt/Total Assets1%1%0%N.A.
    Acid Test27.928.530.5N.A.
    Sales/Net Worth2.12.12.2N.A.
    Dividend Payout000N.A.

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