music retail business plan

8/20/2019 Music Retail Business Plan

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Table of Contents

.) (rojecte& 3alance Sheet......................................................................................................18$able: 3alance Sheet.................................................................................................................18

. 3usiness 7atios........................................................................................................................19$able: 7atios.................................................................................................................................19

$able: Sales %orecast...........................................................................................................................1$able: (ersonnel....................................................................................................................................2

$able: (ersonnel....................................................................................................................................2$able: 6eneral +ssum"tions.............................................................................................................3

$able: 6eneral +ssum"tions.............................................................................................................3

$able: (ro4it an& 5oss..........................................................................................................................4$able: (ro4it an& 5oss..........................................................................................................................4$able: Cash %lo'...................................................................................................................................5

$able: Cash %lo'...................................................................................................................................5$able: 3alance Sheet...........................................................................................................................6

$able: 3alance Sheet...........................................................................................................................6


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Mojo Music

1.0 Executive Summary

Montana Music 'ill be a C8 store that s"eciali9es in use& C8s an& 88 rentals an& a. Our

target customers are the 2;000 stu&ents o4 State


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Mojo Music

Chart: Highlights

1.1 Objectives

• $o become the 4irst "lace our target customers 'ill go to sell an& buy C8s.

• $o create a strong 88 rental business.

• $o increase blan* me&ia sales by 20 each year.

1.2 Mission

Mojo Music?s mission is to o44er our target customers:


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Mojo Music

2.0 Com"any Summary

Mojo Music o44ers "o"ular ne' C8s; use& C8s; 88 rentals; an& C8=88 recor&ing me&ia. $hetarget customers 4or the store are the 2;000 stu&ents o4 the State ue music buying an& 88 rental grou" that is not being serve& by the area?s existing C8

stores or vi&eo rental outlets.

2.1 Start#u" Summary

$he start#u" cost o4 Mojo Music 'ill consist "rimarily o4 inventory an& &is"lay e>ui"ment. !arl(ayne 'ill invest A0;000. /n a&&ition to securing a A100;000 S3+ loan; !arl has also obtaine&an investment o4 A100;000 4rom a silent "artner.

$able: Start#u"

Start-up

Requirements

Start-up Expenses

Legal $1,000Stationery etc. $0Brochures $0Consultants $0nsurance $0Rent $!,000n"entory $1#0,000Expense Equipment $#0,000

%isplay Equipment $&,000'ther $0(otal Start-up Expenses $1)1,000

Start-up *ssets


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Mojo Music

Table: ta!t"u# $un%ing

Start-up Funding

Start-up Expenses to un $1)1,000Start-up *ssets to un $++,000(otal uning Require $#)0,000

*ssets

on-cash *ssets rom Start-up $)0,000Cash Requirements rom Start-up $!+,000 *itional Cash Raise $0Cash Balance on Starting %ate $!+,000(otal *ssets $++,000

Lia/ilities an Capital

Lia/ilities

Current Borroing $0Long-term Lia/ilities $100,000 *ccounts aya/le 2'utstaning Bills3 $0'ther Current Lia/ilities 2interest-ree3 $0(otal Lia/ilities $100,000

Capital

lanne n"estment

4arl ayne $)0,000n"estor # $100,000'ther $0 *itional n"estment Requirement $0(otal lanne n"estment $1)0,000

Loss at Start-up 2Start-up Expenses3 2$1)1,0003(otal Capital 2$1,0003

(otal Capital an Lia/ilities $++,000


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Mojo Music

Chart: Start#u"

2.2 Com"any O'nershi"

$he store o'ner is !arl (ayne 'ho has 'or*e& in C8 stores 4or over ten years. Most recently;he 'as the store manager 4or C8 @arehouse 4or seven years su"ervising a sta44 10.

.0 (ro&ucts

Mojo Music o44ers "o"ular ne' C8s; use& C8s; 88 rentals; an& C8=88 recor&ing me&ia. $he

"rimary 4ocus 'ill be to satis4y the music=88 nee&s o4 the target customers.


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Mojo Music

Mojo Music o44ers the stu&ent the ability to buy a C8 or rent a 88 &uring the &ay 'hile oncam"us.

).1 Mar*et Segmentation

Mojo Music 'ill 4ocus on three signi4icant customer grou"s:

• Used CD buyer/seller: $he shel4 li4e 4or music is very short 'ith young a&ults. @hat 'as

"o"ular three months ago can >uic*ly become boring. $he music in&ustry is a'are o4 this

tren& an& is constantly releasing the next great hit to satis4y this hunger 4or the ne'. 3ut'hat &oes the buyer &o 'ith ol& C8s that are no longer being rotating into the C8 "layerD

Mojo Music 'ill be uni>uely &esigne& to attract an& retain this im"ortant customer grou".

• CD/DVD recording media buyer: $his customer grou" is very signi4icant. $hey have

alrea&y embrace& the technology that gives them the 4ree&om to create their o'n C8s an&88s. $he "urchase=sell turnaroun& on a C8=88 is very >uic* 'ith this grou". $hey 'ill

be a great source 4or use& "o"ular C8s an& 88s. Mojo Music 'ill set u" an in#house cre&itsystem that 'ill bring this customer grou" into the store.

• DVD renters: +s state& be4ore; the stu&ent "o"ulation re"resents a uni>ue grou" o4 88

users. Many manu4acturers no' ma*e chea" C8=88 "layers that are targete& at young

a&ults. So 88 rentals are much higher 'ith this customer grou" than the "o"ulation as a'hole. Mojo Music?s location is "er4ect to ca"ture the 'al*#in business 4or 88 rentals.

$able: Mar*et +nalysis

Market Analysis

5ear 1 5ear # 5ear 6 5ear ! 5ear )otential Customers 7roth C*7R

8se C% Buyer9Seller 1): 10,000 11,)00 16,##) 1),#0+ 1;,!+0 1).00:C%9%!0 ),6#! ),>)& 10.00:


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Mojo Music

Chart: Mar*et +nalysis ,(ie-

).2 $arget Mar*et Segment Strategy

$he a&vancement o4 C8 recor&ing e>ui"ment; /nternet technology; an& ne' recor&ing 4ormatsli*e M(; has turne& young a&ults into a ne' ty"e o4 music an& movie consumer. $his tren&

has alrea&y &e"resse& C8 sales nation'i&e an& many C8 stores have gone out o4 business inlast 4ive years.

$o be success4ul; a store must res"on& to the mar*et o""ortunity the target consumer is"rovi&ing. $hough the game has change&; there is still tremen&ous o""ortunity i4 a C8 store

can rea& the mar*et nee&s an& tren&s correctly.


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Mojo Music

.0 Strategy an& /m"lementation Summary

Mojo Music 'ill be heavily "romoting the store. @e 'ill use the stu&ent &aily "a"er to a&vertise

a A2 o44 "er C8 cou"on. /n a&&ition; 'e 'ill have a &ra'ing 4or 4ive C8=88 "layers each'ee*. @e 'ill continue the &ra'ings 4or the 4irst eight 'ee*s o4 the store?s o"eration.

.1 Com"etitive E&ge

Mojo Music?s com"etitive e&ge is:

• Location: Mojo Music is on $aylor Street; one hal4 bloc* 4rom the entrance to the

university. $he stu&ent 4oot tra44ic on $aylor Street is very strong. $he closest use& C8store to the university area is a ten minute &rive.

• Quality used CDs: @ith the average "rice 4or a ne' C8 at A1#A1B; young a&ults 'oul&

rather buy a use& C8 4or a little over hal4 that "rice ,AB#A11-. /t is even more attractive i4they can get in#store "urchasing cre&it by selling their o'n C8s to the store.

• CD/DVD recording media: oung a&ults bet'een 1#2 years o4 age are the largest

grou" "urchasing C8 an& 88 recor&ers. $here is no store that sells recor&ing me&ia 'ithina 10 mile ra&ius o4 the university.

• DVD rentals: $he closest rental store is 4our miles o44 cam"us. 8ue to the &ro" in "rice 4or

88 "layers; many stu&ents o'n 88=C8 "layers; so their reasonable 4ormat 4or moviesare 88.

.2 Sales Strategy

$he *ey to Mojo Music?s sales strategy is to get the sellers o4 use& C8s to s"en& their money inthe store. $o accom"lish this goal; 'e 'ill o44er the seller t'o o"tions 4or their C8s: cash an&

in#store cre&it. /n#store cre&it 'ill be 20 more than cash. $his can be use& to buy C8s or

C8=88 recor&ing me&ia. /n#store cre&it can also be use& to rent 88s.


13/30

Mojo Music

.2.1 Sales %orecast

$he 4ollo'ing is the sales 4orecast 4or three years.

$able: Sales %orecast

Sales Forecast

5ear 1 5ear # 5ear 6

8nit Sales

e C%s 1>,!00 #0,000 #6,0008se C%s 66,)00 6>,000 !1,000C%9%,000 #1,000%,100 60,000 66,000'ther 0 0 0(otal 8nit Sales +),100 10&,000 11>,000

8nit rices 5ear 1 5ear # 5ear 6e C%s $1&.00 $1&.00 $1&.008se C%s $10.00 $10.00 $10.00C%9%&!,;00 $+;0,000 $1,0>;,000

%irect 8nit Costs 5ear 1 5ear # 5ear 6e C%s $11.00 $11.00 $11.008se C%s $).00 $).00 $).00C%9%


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Mojo Music

Chart: Sales Monthly

Chart: Sales by ear


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Mojo Music

.0 Management Summary

!arl (ayne is the o'ner=manager o4 Mojo Music. !arl has 'or*e& 4or over 1 years inrecor&=C8 stores. +s a stu&ent at State


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Mojo Music

.0 %inancial (lan

$he 4ollo'ing is the 4inancial "lan 4or Mojo Music.

.1 3rea*#even +nalysis

$he monthly sales brea*#even "oint is a""roximately ;200 units.

Chart: 3rea*#even +nalysis


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Mojo Music

Chart: 6ross Margin Monthly

Chart: 6ross Margin early


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Mojo Music

$able: (ro4it an& 5oss

Pro Forma Profit and Loss


Sales $>&!,;00 $+;0,000 $1,0>;,000%irect Cost o Sales $!)>,!00 $)1#,000 $);),000'ther rouction Expenses $0 $0 $0(otal Cost o Sales $!)>,!00 $)1#,000 $);),000

7ross =argin $!0&,600 $!)>,000 $)1#,0007ross =argin : !&.++: !;.##: !;.10:

Expenses

ayroll $16>,000 $1!>,000 $1,000Sales an =ar?eting an 'ther Expenses $100,000 $110,000 $160,000%epreciation $;,1!0 $;,1!6 $;,1!6Lease Equipment $0 $0 $08tilities $!,>00 $!,>00 $!,>00nsurance $0 $0 $0Rent $!>,000 $!>,000 $!>,000ayroll (axes $#0,;00 $##,#00 $#!,600'ther $0 $0 $0

(otal 'perating Expenses $61>,&!0 $6!0,1!6 $6;&,#!6

roit Beore nterest an (axes $>;,&&0 $11;,>); $16),;);EB(%* $+!,>00 $1#),000 $1!#,+00

nterest Expense $>,+1; $;,001 $),00#(axes ncurre $#6, $66,#); $6+,##;

et roit $)),1#0 $;;,)++ $+1,)#+

Net ProfitSales &.6;: >.00: >.!#:


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Mojo Music

. (rojecte& Cash %lo'

$he 4ollo'ing is the "rojecte& cash 4lo' 4or three years.

Chart: Cash


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Mojo Music

$able: Cash %lo'

Pro Forma Cash Flow


Cash Recei"e

Cash rom 'perations

Cash Sales $#1&,1;) $#!#,)00 $#;1,;)0Cash rom Recei"a/les $)0&,1&) $;10,1&! $;+),+>>Su/total Cash rom 'perations $;##,6!0 $+)#,&&! $1,0&;,;6>

*itional Cash Recei"e

Sales (ax,

Expenitures 5ear 1 5ear # 5ear 6

Expenitures rom 'perations

Cash Spening $16>,000 $1!>,000 $1,000Bill ayments $&!!,&+) $;!+,!#> $>#!,Su/total Spent on 'perations $;>#,&+) $>+;,!#> $+>&,

*itional Cash Spent

Sales (ax,


22/30

Mojo Music

.) (rojecte& 3alance Sheet

$he 4ollo'ing is the "rojecte& balance sheet 4or three years.

$able: 3alance Sheet

Pro Forma Balance Sheet


*ssets

Current *ssets

Cash $6&,&)6 $;1,>+; $166,01+ *ccounts Recei"a/le $1!#,6&0 $1)+,&+& $1;>,+)>n"entory $)+,;60 $)#,!#1 $)+,1+!'ther Current *ssets $0 $0 $0(otal Current *ssets $#6>,;!6 $#>!,01! $6;1,1;#

Long-term *ssets

Long-term *ssets $)0,000 $)0,000 $)0,000 *ccumulate %epreciation $;,1!0 $1!,#>6 $#1,!#&

(otal Long-term *ssets $!#,>&0 $6),;1; $#>,);!(otal *ssets $#>1,&06 $61+,;61 $6++,;!&

Lia/ilities an Capital 5ear 1 5ear # 5ear 6

Current Lia/ilities

*ccounts aya/le $;+,!;) $)+,++& $&>,!;!Current Borroing $0 $0 $0'ther Current Lia/ilities $0 $0 $0Su/total Current Lia/ilities $;+,!;) $)+,++& $&>,!;!

Long-term Lia/ilities $>0,00> $&0,01& $!0,0#!(otal Lia/ilities $1)+,!>6 $1#0,01# $10>,!+>

ai-in Capital $#1>,000 $#1>,000 $#1>,000Retaine Earnings 2$1)1,0003 2$+),>>03 2$1>,#>13


23/30

Mojo Music

. 3usiness 7atios

3usiness ratios 4or the years o4 this "lan are sho'n belo'. /n&ustry "ro4ile ratios base& on the

Stan&ar& /n&ustrial Classi4ication ,S/C- co&e ; 7ecor& an& (rerecor&e& $a"e Stores; aresho'n 4or com"arison.

$able: 7atios

atio Analysis

5ear 1 5ear # 5ear 6 nustry roile

Sales 7roth n.a. 1#.1>: 1#.0&: #.!0:

ercent o (otal *ssets *ccounts Recei"a/le )0.)): !+.+): !!.;;: 1>.60:n"entory #1.#1: 1&.!0: 1!.>1: 6>.&0:'ther Current *ssets 0.00: 0.00: 0.00: #1.;0:(otal Current *ssets >!.;>: >>.>6: +#.>): ;>.&0:Long-term *ssets 1).##: 11.1;: ;.1): #1.!0:(otal *ssets 100.00: 100.00: 100.00: 100.00:

Current Lia/ilities #>.##: 1>.;&: 1;.16: !0.60:Long-term Lia/ilities #>.!1: 1>.;;: 10.01: 1!.;0:(otal Lia/ilities )&.&6: 6;.)!: #;.1!: )).00:et orth !6.6;: .!&: ;#.>&: !).00:

ercent o Sales

Sales 100.00: 100.00: 100.00: 100.00:7ross =argin !&.++: !;.##: !;.10: 66.)0:Selling, 7eneral *ministrati"e Expenses !0.&1: 6+.##: 6>.&>: 1>.)0: *"ertising Expenses ).;>: ).1): !.&0: 6.&0:roit Beore nterest an (axes 10.1!: 1#.1): 1#.!+: 1.&0:

=ain Ratios

Current 6.00 !.;6 ).!# 1.++Duic? #.#) 6.>& !.)& 0.;>

(otal %e/t to (otal *ssets )&.&6: 6;.)!: #;.1!: )).00:re-tax Return on et orth &!.!>: )).)1: !!.>+: !.10:re-tax Return on *ssets #;.+&: 6!.&;: 6#.;1: +.00:

*itional Ratios 5ear 1 5ear # 5ear 6


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#en%i'

Page 2


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#en%i'

$able: (ersonnel

Personnel Plan

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Mana$e# 0% (3,000 (3,000 (3,000 (3,000 (3,000 (3,000 (3,000 (3,000 (3,000 (3,000 (3,000 (3,000+ssistant Mana$e# 0% (2,500 ( 2,500 ( 2,500 ( 2,500 ( 2,500 ( 2,500 (2,500 ( 2,500 ( 2,500 ( 2,500 (2,500 (2,500

Csto-e# +ssistants 0% (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000the# 0% (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0&otal 'eo.le 6 6 6 6 6 6 6 6 6 6 6 6

Total Payroll (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500

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#en%i'

$able: 6eneral +ssum"tions

General Assumptions


'lan Month 1 2 3 4 5 6 7 8 9 10 11 12

C ##en t n te#es t !at e 10 )00% 10)00% 10)00% 1 0)00% 1 0)00% 10 )00% 10) 00% 10)0 0% 10)00 % 10)00 % 10)00% 1 0)00%on $te#- nte #est !ate 10 )00% 10)00% 10)00% 1 0)00% 1 0)00% 10 )00% 10) 00% 10)0 0% 10)00 % 10)00 % 10)00% 1 0)00%

&a !ate 30)00% 30)00% 30)00% 30)00% 30)00% 30)00% 30)00% 30)00% 30)00% 30)00% 30)00% 30)00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

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#en%i'

$able: (ro4it an& 5oss

Pro Forma Profit and Loss


Sales (52,000 (54,600 (59,700 (68,800 (80,400 (85,400 (65,000 (55,200 (72,000 (78,800 (89,600 (103,200

Di #e"t Cost o* Sales (27 ,000 (28,70 0 ( 32,1 00 (36,400 (4 3,0 00 ( 46,000 (3 5,00 0 ( 29,200 (38 ,40 0 (4 1,200 (47 ,100 (54 ,300the# '#od"tion .enses (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0

&otal Cost o* Sales (27,000 (28,700 (32,100 (36,400 (43,000 (46,000 (35,000 (29,200 (38,400 (41,200 (47,100 (54,300

#oss Ma#$in (25,000 (25,900 ( 27,600 (32,400 (37,400 ( 39,400 (30,000 ( 26,000 (33,600 ( 37,600 (42,500 (48,900

#oss Ma#$in % 48)08% 47)44% 46)23% 47)09% 46)52% 46)14% 46)15% 47)10% 46)67% 47)72% 47)43% 47)38%

.enses

'a#oll (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500 (11,500

Sales and Ma#etin$ and the#.enses

(20,000 (20,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6,000 (6 ,000

De.#e"iation (595 (595 (595 (595 (595 (595 (595 (595 (595 (595 (595 (595

eased i.-ent (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0

Utilities (400 (400 (400 (400 (400 (400 (400 (400 (400 (400 (400 (400

ns#an"e (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0

!ent (4,000 (4,000 (4,000 (4,000 (4,000 (4,000 (4,000 (4,000 (4,000 (4,000 (4,000 (4,000

'a#ol l &aes 15% (1 ,725 (1,72 5 ( 1,725 (1,72 5 ( 1,725 (1,725 ( 1,725 (1,725 ( 1,72 5 ( 1,725 (1 ,72 5 ( 1,725the# (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0

&o ta l .e #a ti n$ .e nses ( 38 ,2 20 ( 38 ,2 20 ( 24 ,2 20 ( 24 ,2 20 ( 24 ,2 20 ( 24 ,2 20 ( 24 ,2 20 ( 24 ,2 20 ( 24 ,2 20 ( 24 ,2 20 ( 24 ,2 20 ( 24 ,2 20

'#o*it e*o#e nte#est and &aes (13,220: (12,320: (3,380 (8,180 (13,180 (15,180 (5,780 (1,780 (9,380 (13,380 (18,280 (24,680

&D+ (12,625: (11,725: (3,975 (8,775 (13,775 (15,775 (6,375 (2,375 (9,975 (13,975 (18,875 (25,275

nte#est .ense (819 (806 (792 (778 (764 (750 (736 (722 (708 (695 (681 (667&aes n"##ed (4,212: (3,938: (776 (2,221 (3,725 (4,329 (1,513 (317 (2,601 (3,806 (5,280 (7,204

Net '#o*it (9,828: (9,188: (1,812 (5,182 ( 8,691 (10,101 (3,531 (740 (6,070 (8,880 (12,320 (16,809

Net Profit/Sales 18)90% 16)83% 3)03% 7)53% 10)81% 11)83% 5)43% 1)34% 8)43% 11)27% 13)75% 16)29%

Page 5


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#en%i'

$able: Cash %lo'

Pro Forma Cash Flow


Cash !e"ei;ed

Cash *#o- .e#ations

Cash Sales (13,000 (13,650 (14,925 (17,200 (20,100 (21,350 (16,250 (13,800 (18,000 (19,700 (22,400 (25,800

Cash *#o- !e"ei;a


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#en%i'

Cash Balance (46,186 (37,400 (24,795 (20,150 (15,479 (8,691 (6,671 (33,613 (50,035 (34,536 (36,676 (36,653

$able: 3alance Sheet

Pro Forma Balance Sheet


+ssets Sta#tin$ alan"es

C##ent +ssets

Cash (49,000 (46,186 (37,400 (24,795 (20,150 (15,479 (8,691 (6,671 (33,613 (50,035 (34,536 (36,676 (36,653+"" onts !e" ei ;a< le (0 (39,00 0 (78,65 0 (84,36 0 (94,883 ( 110,180 (1 22,340 ( 110,665 (8 8,525 (9 4,020 ( 111,30 0 (124 ,330 (142 ,360n;ento# (0 (29,700 (31,570 (35,310 (40,040 (47,300 (50,600 (38,500 (32,120 (42,240 (45,320 (51,810 (59,730the# C##ent +ssets (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0 (0&o ta l C # #e nt + sset s ( 49 ,0 00 ( 11 4, 88 6 ( 14 7, 62 0 ( 14 4, 46 5 ( 15 5, 07 2 ( 17 2, 95 9 ( 18 1, 63 1 ( 15 5, 83 6 ( 15 4, 25 8 ( 18 6, 29 5 ( 19 1, 15 6 ( 21 2, 81 6 ( 23 8, 74 3

on$te#- +ssets

on $te#- +sse ts (50,000 (50,00 0 ( 50,00 0 ( 50,00 0 ( 50,000 ( 50,000 ( 50,000 ( 50,000 (5 0,000 (5 0,000 (5 0,000 (50 ,000 (50 ,000+"" -late d De. #e "ia tion (0 (5 95 (1,19 0 ( 1,78 5 ( 2,38 0 ( 2,975 (3,570 (4,165 (4,760 ( 5,355 ( 5,950 ( 6,545 (7 ,140&o ta l on $t e# - + sset s ( 50 ,0 00 ( 49 ,4 05 ( 48 ,8 10 ( 48 ,2 15 ( 47 ,6 20 ( 47 ,0 25 ( 46 ,4 30 ( 45 ,8 35 ( 45 ,2 40 ( 44 ,6 45 ( 44 ,0 50 ( 43 ,4 55 ( 42 ,8 60

&otal +ss ets (99,000 ( 164,29 1 (196,43 0 (192,68 0 (2 02,692 ( 219,984 ( 228,061 ( 20 1,671 ( 19 9,498 ( 23 0,940 ( 23 5,206 ( 256 ,271 ( 281 ,603

ia

music retail business plan

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