You’ve probably heard of the story about an old man and the cocoon. He watched the cocoon for days, and then it started to move. The butterfly struggled, so the old man slit the cocoon to let the butterfly out. The butterfly emerged underdeveloped with weak wings. The reason was that the butterfly needed to forcefully squeeze through a small whole to open circulation to its wings. The man deprived it of this process. The struggle for life gave it life.
I have worked as an entertainment business manager since 1985. For the last 15 years I have helped artists strategically position themselves in new business ventures. What I have found is those who do not start out with easy financing (parents for example), tend to have a better chance of success. From a CPA business manager prospective, the adage, “easy come, easy go” has somewhat predicted the ventures. Even though our firm works as consultants, I usually take an emotional stake in my projects because I want to see them succeed. Most entertainment CPA business managers don’t do what we do, but come in after the business is funded. We have found that entering after the initial planning stage is too late.
From an entertainment CPA business manager point of view, here are some steps I suggest you take before opening up your next venture:
- Research your proposed industry thoroughly: You should start by speaking to people in the industry that you trust. Don’t be afraid to ask the difficult questions, and don’t bury your head in the sand. Try to find statistics or news of your competitors and the industry you are venturing in. Most important, speak to your target market. Find out what the industry is not providing to them, and what the industry is providing to them that is unnecessary.
- Find people in areas you lack expertise: If you have areas that are outside your expertise, bring in people who can fill those weaknesses. They may sign on and be a major stakeholder for you once you get started.
- Develop a strategic plan with a long range vision: Start 20 years or more from now and describe a vision that is more than making money. Are you out to change communication and entertainment by putting it in the palms of every person like Steve Jobs? Once your vision and horizon is set, work backwards and set milestones. You should end on your first day of business.
- Consolidate a team: If there are others that will help you, line them up and get them on board. It will show your investors that this business is more than you.
- Build a business plan: A business plan is not a strategy, but a management tool. It starts today and works forward for five years. It is essential that you include the cash flow of the first twelve months. This is when businesses struggle to stay afloat. Make sure your business plan milestones correspond to your strategic milestones. Insert your team bios along with your bio.
- Present the package: Now you can go to your money people. Practice your dog and pony show. A video or slide show can help bring the message across.
Like moving from a worm to a butterfly, artists must go through the “pain” before the doors open. The more pain you endure, then better informed you will be when you meet your investors and launch the enterprise.
As CPA entertainments business managers, we have seen failed ventures that did not take these steps. By engaging in this practice, it does not guaranty success, but will at least give you the wings to soar a little higher.