Writing and preparing a business plan:
The most important and integral part of starting a business is preparing and creating an outline for how you want to build your business and how you plan on monetizing and running this business.
A business plan gives you a lot of insight into some major aspects of your business, like running costs, pricing, how much you would need to invest, what your returns on this investment would be?, how long would it take for you to break even? So on and so forth.
This is often overlooked, since most people want to play it by ear and take these decisions with your gut. In my experience, sometimes it is great to go with your gut and start a business, but knowing the reality of what the current market scenario is as well as understanding the financials involved will arm you with knowledge to make much better decisions as a business owner.
In Fact not just this, but if you ever plan on getting a loan approved for your business, most banks will require you to have this information mapped out to give them assurance that the business they intend on giving a loan to has financial viability. If you plan on bringing on other investors and partners, it’s equally important to have a robust financial and business plan to gain trust from your peers to invest in this business which will generate returns for them in the future.
Let’s discuss a few important aspects of writing a business plan:
1. Cover and Title Page
This is a pretty self explanatory step, here you can write the name of your planned business.
The Title Page can look something like this:
The Jam Studio – Jam Room and Recording Studio
This section should also contain all your contact details along with required information and your address. I would also recommend adding your lawyers as well as a secondary contact information in the bottom right corner.
2. Table of Contents
This section should list down all the sections that the Business Plan lists along with the respective page numbers.
In this section, you should mention details about yourself, your background in the field and your motivation behind starting a professional recording studio business. It’s wise to also write down some of your accomplishments and the details of all the personnel that are going to be involved in this business along with you.
4. Financial Requirement:
Here you should list down the amount that you’re looking for an investment or loan from a bank or an individual and what assets you currently own. This gives a clear instruction to the prospective investors as well as banks to look at whether this meets the criteria for which they can give out loans.
Currently in our country the government offers a lot of small business loans to entrepreneurs under the Mudra or other such government schemes at very attractive rates. Ensure that the loan that you’re asking for is within the maximum allowed limit for these govt business stimulus programs.
5. Startup and Marketing Plan
This is a very important and often overlooked aspect of any given business plan. This section should outline your main strategy in terms of the clientele you’re looking to attract and how you’re going to do this and what the execution strategy would be for this.
This plan should contain details of both your Incoming as well as Outgoing lead generations and the various mechanics you will employ to generate this. Having a general idea of much money it costs to generate or create a lead is also very important.
You should also reveal the details about the research that you’ve done about the marketplace that you intend to work with, are your clients going to be Music composers for Films? Or are you targeting your marketing towards newer musicians starting out that are looking for a budget friendly studio to work with?
6. Available Infrastructure
In this section you should list down all the assets that you already own like any of your pro audio equipment and a detail of all the costs involved along with it.
This gives the bank or the lender guarantee that you have access to enough collateral that they can lend against.
7. Cash Flow Projections
This is the make it or break it section of the plan. Here you should list down what your stream of revenue generation is going to be, how you plan on monetizing the business. Are you looking to rent out the studio per hour and generate revenue from it? Or is your plan to create content from the Stdio and find a way to monetize it on platforms such as Youtube etc?
If your plan is to rent out the studio, how many hours in a month are you expecting bookings?
How much money will you generate from these bookings? If you’re offering bulk packages to your clients currently as a freelancer how many of these can you upsell to the studio business and how much extra revenue is expected to be generated from this?
Have exact details on how much money you expect to generate and how you plan on scaling this up over the next few years. Write down your expected growth rate of income and expected growth rate in terms of clientele over 3-5 years.
Once you do a detailed study here, this should give you clear ideas about flaws or wrong assumptions about your business plan.
Ask yourself these questions:
1. How much money do I need to generate to take care of my monthly expenses?
2. What is the best case and worst case scenario in terms of my monthly income?
3. Do I have enough money to sustain the expenses if I generate worst case income for 6 months?
4. Am I charging too much per hour for the studio and will I get enough new clients coming in at this rate?
8. Growth Plan
This should contain a forecast of the growth of your marketing initiative and how you can justify the growth numbers that you have put in your business plan say of 10-15% per year and show calculations for the same on paper.
9. Tax Returns / Should you apply for GST
This is an important section, in our country you can start a business under the Shop Act License agreement and can be a proprietor of your business. The process of obtaining this License is pretty straightforward and easy. Our country also requires us to have a GST registration which is only for businesses that have a turnover of above 40L, need to charge a GST and have to also take care of all the compliances that come along with it.
For most businesses that are starting out, the first year or so you might not exceed a turnover of 40L but if your plan shows an income that will be generated beyond 40L, you should consider adding the details of the taxation and the costs also that come along with it.