Executive Summary
The business environment is often characterized by dynamics that require financial planning and rationale in making decisions. Specifically, a business in the music industry is dependent on perception and preference of the target clients.
Texas Religious Music Promotion Company is a non-profit sole proprietorship business that will revolve around planning music events and offering logistic support to private events within Texas City. The company’s long-term goal is to be the leading company in the music promotion services in public and private events within Texas in the next three years. On the other hand, the short-term marketing goal will be to acquire ten clients per week for the first six months.
Besides, the company will have a mission of adding value to the target consumers by offering free consultancy services for event planning.The company will strive to ensure that consumers continue benefiting from the music promotion services at all time. The business targets public and private events where music promotion services are required.
Through re-branding and ‘good better best’ pricing strategy, the target segment is projected to increase their demand for the company’s music promotion services. Therefore, applying the costing strategy, the company will reduce the prices to a certain minimum in order to attract customers from this segment and achieve the aim of the quantity maximization by the increasing number of services sold at low prices to cater for administrative costs.
The key success factors will be affordable prices, reliability, and quality of music promotion services. Personal saving and equity will form the main sources of funding for this business. It is projected that the business will break even in six months. The opportunity in the establishment of the business will permit penetration into the abandoned small events market segment.
Essential Elements of the business blueprint
Knowledge of the music industry is necessary to ensure sustainability of the business.Market demand will determine the returns against any investment in the business.Having knowledge of the business start up cost is critical in drawing realistic financing options and planning for expenditures on running the business.Financing options available is important to make the business idea into a reality since there must be a source of funds for investment in the business (Cheverton, 2004).
It is necessary to review the market in order to understand the weaknesses and the number of competitors to draw an ideal business survival strategy.The business should be in a strategic area in order to attract more customers and self advertise. In this case, Texas City forms an ideal location since several music events occur here annually.
Components of the business actualization
The business must acquire or hire the necessary equipment in order to stage any concert. The concert area must be rented prior to the music concert to divert any inconvenience.The deejay will be the main engine controlling the flow of activities during the concert.Ticket sales will form the part of direct returns in the business of music promotion. Budgeting of funds will be necessary to ensure that funds used to organize the concert are accounted for when reconciling the accounts after the concert.
Through printing of burners and fliers, the public will be made aware of the upcoming events. Research will be critical in gaining substantial knowledge of what to expect of the concert, in terms of sales, turnout, and performing artists (Winchester, 2006).
Business Environment Analysis
It is important to review the business environment through a SWOT analysis in order to position the business within its industry. Thus, it is necessary to review the strengths, weaknesses, opportunities, and threats of this business.
Strengths
The majority of theTexas Religious Music Promotion Company’s competitors rely on local consumers. This company will have an advantage since it will create consumer awareness through its promotions and advertisements. Besides, the business will charge affordable fees for its services. The company will use strategies like consumer education on how to get the best from the services by using it appropriately since its has the capacity to quickly expand its network.
Weaknesses
The catchment area for this company is narrow since it targets to serve a small geographical area. Besides, competition from established business may make it difficult to win clients who have established loyalty to other companies offering the same services.
The company depends on three persons as the workforce hence may not maximise its gains in the market. The company has the disadvantage of unreliability in service delivery since the triowill have to do all the work. Apparently, they cannot keep up with the demand even if they work for more than 60 hours per week.
Threats
The services offered by this company are very sensitive to changing client preference. For instance, a bad report or an unfortunately incident during music promotion may alter the perception of its clients. This may discourage them from visiting the business in the future. Thus, the business must create a waterproof public relations exercise to survive in this industry.
Opportunities
With a typical well organized commodity pool, this business is geared to quickly increase its market share since the beneficial interests can be distributed across the commodity users. This strategy will facilitate the restructuring effective sales and public awareness to develop product knowledge. If well merged with appropriate market mix, the strategy will secure a continual quantitative increase of the market by constantly maintaining relatively fare prices of the services it is offering as well as the maintenance of up to per competition levels from other competitors.
Financial Projections
Before deducting expenses
Texas Religious Music Promotion Company. Balance sheet statement As at 30 July 2014
Texas Religious Music Promotion Company
Income statement As at 30 July 2014
Texas Religious Music Promotion Company. Statement of changes in equity As at 30 July 2014
After deducting expenses
Texas Religious Music Promotion Company. Balance sheet statement As at 30 July 2014
Texas Religious Music Promotion Company. Income statement As at 30 July 2014
Texas Religious Music Promotion Company. Statement of changes in equity As at 30 July 2014
Evaluating the business
Reviewing the profitability, liquidity, and efficiency ratios
Profitability ratios give an indication of the earning capacity of an entity. The ratios measure the effectiveness of a company in meeting the profit objectives in the long term and short term. It summarizes the returns for every unit of investment resources. The ratios used arethe returns on resources rationally and marginal ratio. Thus, when the profitability ratios are positive, the music promotion business will go on.
Efficiency ratios focus on the internal operations of the company. These ratios show the company’s level of efficiency. That is, how adequately a company pays creditors, how efficiently the company receives payment from debtors, and how frequently the company purchases merchandise.
Reflectively, some of the efficiency ratios used includes turnover ratios and days in receivables. Besides, the creditor payment period isused. At the end of the three months, stable efficiency ratio will mean that the business is sustainable (Kennedy & Ehrenberg, 2001).
In the event that the music promotion is unsuccessful, the business will not be shut down because it is prudent to analyze the finances of a company after the close of a fiscal year. A firm should only shut one when the profit generated cannot cover the fixed costs incurred in running a business.
Businesses often follow the growth hypothesis. In the first few years of operation, profit is likely to be low due to the high cost of operation. However, after some period, the business is likely to pick and earn higher profit. Thus, it is not prudent to close down a business after a few years of operation. However, when the under-performance persists for long, then it would be necessary to close down the business.
References
Cheverton, P. (2004). Key Marketing skills:strategies, tools, and techniques for marketing success. London: Kogan Page.
Kennedy, R., & Ehrenberg, A. (2001). Competing retailers generally have the same sorts of shoppers.Journal of Marketing Communications, 7 (2), 19-26.
Winchester, M. (2006). Positive and negative brand beliefs and brand defection/uptake. European Journal of Marketing, 42 (6), 553-570.