Wednesday, January 23, 2008

January Issue 2008

Business Plans
By, Wendy Day from Rap Coalition

My office is red. It’s not a Blood or a Crip thing, hell, my car is blue. It’s just that it was planned around a red chair that I liked in a store, and the next thing I knew, most of the chairs, accessories, and stuff were red to match that first chair.

I don’t mind it at all. It wasn’t planned to be red, but it worked out nicely since my office is so comfortable and pretty. Rarely does not planning something out ahead of time, work out so nicely.

My office set-up did take some planning. Once I decided on the location for it (Buckhead), I then had to make sure I could afford it every month. Office expense is more than just rent—it’s heat, electric, cable, high speed internet, security, furnishings, and payroll for staff. What seems like it’ll be a quick two stacks a month, turns into a monthly nut of about six stacks. Without careful planning, one could go out of business as quickly as one goes into business.

Spending money on one’s company is the ultimate form of sacrifice. It’s not like having kids where they hug you and tell you they love you repeatedly. It’s like having a husband or a wife that doesn’t love you back. Yes, I’d rather buy a new pair of shoes or a new purse than pay to have my website redesigned, but that’s just not realistic, is it?! The website will bring money into the company while the shoes will only make me feel good for a few wears.

The hard thing about furnishing my office was that the actual chairs and such didn’t directly put money back into my pocket. For example, flyers and web sites are expenditures that bring clients and money into my company. A hot conference room table doesn’t bring in business, but not having one could actually cost me business. See what I mean? So when I planned it out, I had to consider my expenditures carefully. I didn’t want to spend a lot of money.

I tell the labels I consult that if it doesn’t directly impact you selling CDs, skip it. That means a $10,000 set of rims on the wrapped vehicle is unnecessary, but spending $10,000 to press the CDs is very necessary. The artists who tell me they want to buy rims because “image is everything,” need to learn to keep their wrapped truck washed and neat while they build their image as one who grinds hard, instead of flossing wildly. Substance matters. The most beautiful scandalous hooker in the world is still a scandalous hooker. She’ll just be pleasing to your eye as she makes you cry.

Just waking up one day and deciding to get out there and grind isn’t enough. You need to have a plan. While hiring a music industry accountant to put together a business plan for you will cost thousands of dollars, you can put together a plan that will at least cover the basics so you know what you need. There is NOTHING worse than having a hit record with no money to back it up with promotions and marketing. That’s even worse than not being able to make a hit at all!

The best way to foment a plan, is to make a list of everything you want to do in order to market and promote your music. Then call around to see what costs are involved for each. The costs may determine which direction you decide to go. For example, an artist who wants to blitz the entire southeast US will quickly discover that the costs involved in that will make him or her plan smaller and slower. Rather than blitz seven southern states, it may make financial sense to start with one or two and expand slowly as the money comes back into the company from sales or performances.

You may decide that spending $10,000 to give away 2,000 T-shirts isn’t as great of an idea as spending $10,000 on 10,000 snippet CDs that you paid an established DJ to mix for you. A t-shirt is a great way for people to learn your name, but a snippet CD is a great way for people to learn your music. Do people buy CDs because of the name or because of the music? That’s a no-brainer…

Getting into your wrapped van and traveling within a few hour radius of your hometown will expand your buzz beyond just your home turf, and will quickly give you an idea if people outside of your area will embrace your music. For the more serious artists that I consult, I always pull SoundScan for the region where we are targeting to see what type of music the fans in each area embrace. For example, in Washington, DC one can sell more copies of BloodRaw, David Banner, Young Jeezy, and MJG & 8Ball than Talib Kweli, Lupe Fiasco, or RhymeFest. In Philadelphia or New York, the opposite is true.

As you make the list of what tactics you want to utilize, whether it’s local BET cable ads during 106th & Park, or posters and stickers sniped everywhere in the ‘hood, it is important to consider what is legal and available in different areas. For TMI Boyz, we were unable to buy local BET ads in our best market, McAllen, TX, because BET isn’t available in that market. In Atlanta, GA, BloodRaw doesn’t spend a lot of time and money hanging posters or putting up stickers because they are illegal and will come right back down as soon as they are put up, with an expensive ticket to the City of Atlanta to pay as the cost of sniping.

Once you have assembled the list, and priced everything out, you will now know how realistic it is for you to begin your promotional campaign. You may want to start your campaign around the time of year that brings large events to your area so you can reach the maximum amount of people at one time. In New Orleans, it would make sense to hit the NBA All-Star Game at the same time as Mardi Gras, followed by the Core DJ event in March. In early first Quarter in north Florida, it makes sense to hit Demp Week, the Gainesville Music Summit, and TJsDJs—all of which occur within about 30 days of each other. August is probably the busiest month in rap music with the Ozone Awards, Core DJ event, TJsDJs, and numerous other conventions and events. Of course, everyone is thinking that, so you run the risk of not standing out among the other hundred or so artists in grind mode. Regardless, getting out on the road is the key to success. Plan wisely.

This industry is over saturated. There are so many rappers and producers per square inch these days that it’s hard to stand out. What will you do to be different? How will you stand out? And most importantly how will you plan to pay for it all? Without a proper plan in place on paper, you don’t stand of chance of doing anything but wasting money.

Here’s an idea of what a plan looks like (roughly):

1,000 t-shirts $4,500
5,000 posters $2,000
10,000 flyers $400
Wrapped vehicle $3,000 (plus the vehicle)
Art work $1,000
Website $250
MySpace page $100
Travel expense $5,000 (gas & hotels)
Mix CD (to sell) $3,000 (DJ)
$5,000 (pressing 5,000 mix CDs)
Club entry $1,000
Buying drinks for DJs $2,000
Snippet CDs $5,000

So, now I know before I even get in my van to leave my house, I need a MINIMUM of $32,250 PLUS whatever I’ve mistakenly left out (like food). Not to mention, I need to have my music mixed and mastered professionally so it sounds good enough for someone to buy, spin at a club, or play on the radio next to Kanye and Jeezy! And if I am going out on the road, I need to make sure that my bills at home are taken care of so I don’t come home to an eviction notice or no lights.

This is why it is sooooo key to make a Plan. It’s also important to not leave anything out—to try and anticipate all of your needs ahead of time. It would really suck to only have $15,000 in your pocket and start down a road that might cost you $40,000. You’d be certain to accomplish nothing more than losing your hard earned fifteen stacks. And quickly, too.

If you are hiring someone to consult your label, make sure they give you a realistic budget (call printers and pressing plants to check prices to make certain your budget is realistic before you start spending money). Your consultant should also tell you when the expenditures will come up, way ahead of time. Nothing is worse than realizing on a Tuesday that you have to press up CDs in the next week or so, and having to come up with $15,000 overnight to make your deadline with the distributor or for a key event.

Make sure you know what that person’s total consulting fee will be, especially if they are charging you monthly—that’s the oldest swindle in this game. Five thousand dollars for the year it takes to put out your CD is actually $60,000. You can get someone with a great track record for $60K; you don’t have to settle for the local industry wanna-be who probably can’t make it happen for you (for the record, I was a local industry wanna-be in the early 90s and both Do Or Die and Twista took a chance on me and both won. Of course, I worked for both projects for free because I had no track record yet). Someone who tells you it will take just a few months is either lying to you or has no clue--either way, the wrong answer. By the way, you should NEVER give up a piece (%) of your company for someone to advise you. There is no need to do so and you will be stuck with them forever, even if they don’t succeed with your project.

I was speaking on a panel in Jacksonville, FL at Bigga Rankin’s Ghetto Grammy/Hood Conference, and a very frustrated man in the audience asked who can be held accountable when he hires someone (he seemed to be a man spending a lot of money without getting any real return on his investment, and little movement forward). The answer is: anyone to whom you hand money is accountable to you. But the real answer is that YOU are accountable to yourself. If you hire someone to help you that has a limited track record and no real success that you can verify, it’s not rocket science to figure out that you will lose money. Most people do. Very few people in this game win. Very, very few. And it is not a quick process. Putting out a CD takes 6 to 8 months on the short side, and a year to a year and a half on the long side. Make sure you can go the distance. Plan it out on paper and then follow the plan!