Seeking Capital for Music Rehearsal/Recording Studio

**Russ** · 11-14-2007 05:37 PM

My name is Russ and I am seeking capital for the creation of a music rehearsal/recording studio. So far, we have obtained our LLC., tax id, have created a solid business plan, and working budget. Working business relationships have been established on most fronts of the business including construction, musical equipment, promotion, and real estate. The whole project is just about ready to acquire funds in order to obtain a location and begin construction. Any help would be much appreciated. Business plan, floor plans, and any other information is available upon request. Thanks for your time.

Russ

**BusinessAdviser** · 11-14-2007 05:42 PM

What are your credentials for running a business? Education? Experience? Etc.

**Russ** · 11-14-2007 09:12 PM

Mr Eccer,
Thanks for your help on both of the threads I posted. We really appreciate all the input. Both my partner and I have approximately 5 years each in business management from the startup stage. We have managed finances, placed orders, had employees work under us, dealt in customer service, and sales.

My partner has a degree in applied science and the arts with a concentration on graphic design with prerequisites such as business, marketing, and advertising . I was a music industry major for 2+ years at Oneonta State University and took an honorable leave of absence to pursue a career in music. Courses taken were concentrated in music publishing, marketing, record contracts, law, audio engineering, history, and contemporary issues in the music industry.

As far as musical experience, my partner has approximately 10 experience on the guitar and 5 years playing drums. We both have many friends in bands that have already expressed interest in utilizing our facility once it is open and have assured us they will do what they can to spread the word.

I have been playing guitar for 20 years, drums for 15, and bass guitar for about 7. I have played in multiple bands through the years. In these bands, I have dealt with all managerial issues like booking performances, dealing with record companies, negotiating contracts, and creating long-term itineraries for each band. I have compiled an extensive list of industry contacts through the years consisting of club owners, record company representitives, booking agents, A&R reps and other industry personel who's business relationship is a valued asset to this endeavor.

Again, thanks for your input.

**BusinessAdviser** · 11-14-2007 09:31 PM

When you approach investors, they are most concerned with your business sense. From their point of view, they are giving you free reign on large sums of their money, so they will need to know that you are capable of managing that money competently. View it from that point of view - If you had $700K to invest and someone like yourselves come to you and said, "Here's what we have to offer," would you write them a check? That's how you need to approach it.

**akula** · 11-14-2007 10:34 PM

Originally Posted by jmenq2

When you approach investors, they are most concerned with your business sense. From their point of view, they are giving you free reign on large sums of their money, so they will need to know that you are capable of managing that money competently.

like, 'duh
I don't think the problem here is the management team
It's the way Russ has done his opportunity selection
Russ, you've chosen an opportunity which escapes the radars of all professional private equity investors.

You're choosing to do a lifestyle business which no investor will ever be able to exit at a decent hurdle rate; when you should be doing something like what Music Science | Music Intelligence | Music X-Ray | Platinum Blue is doing. You have to commercialize technology which assists record labels in picking which artists/sigles to back, rather than set up your own record label

**BusinessAdviser** · 11-14-2007 11:00 PM

Originally Posted by akula

like, 'duh
I don't think the problem here is the management team
It's the way Russ has done his opportunity selection
Russ, you've chosen an opportunity which escapes the radars of all professional private equity investors.

You're choosing to do a lifestyle business which no investor will ever be able to exit at a decent hurdle rate; when you should be doing something like what Music Science | Music Intelligence | Music X-Ray | Platinum Blue is doing. You have to commercialize technology which assists record labels in picking which artists/sigles to back, rather than set up your own record label

With all due respect, I think you've missed the point of what Russ here is doing. I didn't gather that he is trying to set up his own record label, but rather is trying to make a profit from providing a state-of-the-art facility for bands to practice and record. I don't think that it is a bad idea. I have a friend near Orlando who has thought of doing the same thing with a building that his company owns, and I've also read that this is an up-and-coming business to enter that shows great promise (Entrepreneur Magazine).

However, as was mentioned, Russ, know that investors are not ultimately concerned with whether you produce great music or can pay your rent. They invest because they want a high ROI in a relatively short time. If you can support this in your business plan, go for it.

**akula** · 11-15-2007 03:00 AM

Originally Posted by jmenq2

With all due respect, I think you've missed the point of what Russ here is doing. I didn't gather that he is trying to set up his own record label, but rather is trying to make a profit from providing a state-of-the-art facility for bands to practice and record. I don't think that it is a bad idea. I have a friend near Orlando who has thought of doing the same thing with a building that his company owns, and I've also read that this is an up-and-coming business to enter that shows great promise (Entrepreneur Magazine).

ahh yes good point

))
totally missed that one

**Cole Taylor** · 11-15-2007 11:13 AM

Investors get involved with these types of investments based more on emotion than your standard number crunching venture capitalist or angel group. Sure everyone invests to make money, but not everyone is projecting ROI, calculating breakeven, and trying to find flaws in your business model.

It's the same reason people invest in movies. They feel as thought they're part of the hollywood scene. They get to go to screenings, meet the actors, etc.

Akula is right however in that you're not in a sexy industry from an institutional investors standpoint and probably wouldnt get a second look.. That's okay though, that really shouldnt be who you're targeting on this.

Everyone wanted to be a rockstar at some point in thier life right?

**Russ** · 11-15-2007 01:09 PM

You make a great point Cole,

In this thread Im focusing more on the business end, but I can assure you there is no lack of emotion from us. Sure, we all would love to start a business and get filthy rich from it, but what we really want to do is become a fixture in a musical community by introducing a facility that I think most bands have been waiting for. Basically, a rehearsal space they can go to that is clean with equipment that actually works and a friendly staff that has experience in the music scene that they are a part of themselves. I mentioned in another post that we are going to work with local venues to show off the bands that rehearse and record with us in order to promote them! We are going to have a lot of things going on in house that will help to promote these bands and support the music scene as a whole.

I could be wrong, but I think the ONLY investor that would actually partake in this endeavor would be someone with an emotional connection to it. Maybe the investor is a musician himself or has a kid thats a musician. I have to be honest, a business like this doesnt exactly jump out at an investor on paper. Its not like a car dealership where you have potential of bringing in tousands and thousands of dollars a day. These are hourly rates with an average of $25 dollars we are talking about. It would be a great day to bring in a few hundred dollars, so I am well aware of the disadvantage I am faced with. I project about 10 years before investments/loans are payed back. Most investors would want to see a return within 5 years tops.

Thanks for all the input.
Russ

**akula** · 11-15-2007 05:06 PM

Cole Taylor's advice is frightfully spot on, as usual

))
russ, congratulations - you're not in the business of selling stock certificates. You're in the business of selling a lifestyle to late 30's-early 50's aged guys who've had sucessful careers and now wanna mix a bit with rock stars (think Done Cheatle's character from Reign over Me..that's who you're targeting) so....put up some pics/videos of parties!!! illustrate the lifestyle that you're selling!!
:-)))

come to think of it, I'd love to be long on a venture like this...think of the chics I'd be getting!!! Screw hanging with my banking colleagues after work, I'd rather go check out a jamming session in my studio.

**BusinessAdviser** · 11-15-2007 05:19 PM

You might be able to find a few guys that have made it big in the business world, but who miss their days of jamming in a band in college. Those will be your investors.

**akula** · 11-15-2007 05:28 PM

Originally Posted by Russ

My name is Russ and I am seeking capital for the creation of a music rehearsal/recording studio. So far, we have obtained our LLC., tax id, have created a solid business plan, and working budget. Working business relationships have been established on most fronts of the business including construction, musical equipment, promotion, and real estate. The whole project is just about ready to acquire funds in order to obtain a location and begin construction. Any help would be much appreciated. Business plan, floor plans, and any other information is available upon request. Thanks for your time.

Ok good..let's sum up where you're at and start getting you some results

1. You've tried pitching your venture as an investment to young business owners. That's not gonna work. In the financing market, you're competing with opportunities like vacancybid.com which can realistically scale to $100m revenues and 30% EBITDA in 5 years. Compared to these opportunities, your pitch will be at a disadvantage.

2. To correct the problem, you need to change your pitch and your target market; away from selling future cashflows to busy people - and towards selling a lifestyle to people who have time.

3. Your ideal audience are doctors and accountants in your local area. Your new strategy should be as follows;

-Open yellow pages
- get 30 doctor addresses
- book for a consultation regarding the ringing in your ears
- when you see the doctor, tell him that you're listening to a lot of loud bands, which is why you have the ringing in your ear.
- at the end of the consultation, leave the doctor with a brochure describing how cool it is to own a recording studio
- ask if you can do a follow up call in two weeks

Try this strategy.

**Cole Taylor** · 11-16-2007 12:47 PM

Good stuff:

Outside of the lifestyle you're selling you may want to think of a way to kill two birds with one stone. I'm thinking band managers, promoters, indie lables, etc. These people understand your business plus they have a need for your services.

I'm thinking you'll probably end up doing an LLC and selling membership units. If the aforementioned have a vested interest in your/thier business where do you think they're sending people? You generate business and get funding at the same time. Something to think about.

**Russ** · 11-16-2007 02:49 PM

Thanks for the ideas guys. Toe be honest, I'm not sure I'm a fan of going to a bunch of different doctors pretending I have a problem just as a way to initiate the conversation, but if thats what I have to do to get the capital I need, then I am absolutely open to try it. Its certainly a good idea that I did not think of.

Seeking out band managers, promoters, etc. is something I have been looking into. Unfortunately, so far I have not been able to come up with any money from these people, but I have gotten plenty of positive reinforcement that what I am trying to do is a great idea, it is needed, and they will spread the word and definitely have their artists rehearse/record at my facility. It seems that everything is falling into place except for the capital. I'm sure it looks good to any investor though, for me to be building up a client base before the doors open and especially before any advertising has begun.

**BusinessAdviser** · 11-16-2007 03:07 PM

Also consider starting small. If I was strapped, I would begin with one office/control area and one recording/practice area. Once you're keeping it consistently booked and need to expand, you'll be able to fix up and equip a second, then a third. Otherwise, you sink a lot of money into fixed costs that are not producing.