As an Entertainment CPA, I find my clients are not short of creativity. Every year, clients retain us to create a business (and sometimes a strategic) plan for an entertainment industry venture. Usually they google Entertainment CPA, or Business Manager CPA, or Strategic Planning Entertainment CPA, and find us. However, we convince them that our role is not just as a mere number cruncher, but an integral part of developing the concept.
For example, a common prospective client is one who is trying to start a record company. Usually, it is two musicians that have not posted their first hit. One of them has parents (or potential investors) that believe in them. They want to start a record company and collaborate with other writers and performers offering them 360 degree contracts, or some variation of it.
My response to them is always the same. “So what?” They then look puzzled. I ask, “What makes you different from any other record company that is struggling to survive? Where is your Blue Ocean?” Then I proceed to give them a 3 minute explanation of Kim and Mauborgne’s Blue Ocean Strategy.
From an entertainment CPA point of view, the most troubling of the prospective clients are those who base their success on one band, one writer, or one performer. I remember one time, there were a group of people who wanted to start a record company, but it was dependent on the musical composition of only one of them. The entire business model depended on one guy(who had a tiny bit of success) writing music for potential bands. I asked the question, “What happens if he dies or gets really ill?” They didn’t hire me.
Even though many see us as entertainment CPAs or entertainment business managers, we have designed business plans for more than the entertainment industry. Strategy too, has no industry. Many of the issues are the same. For example, companies both inside and outside the entertainment industry usually make the same miscalculation, i.e., how much start up money they will need. Usually, I find that clients need 2-3 times more money than what they originally project. The reason for this is mainly the start up phase. Most are under the illusion that once they “open their doors,” they will reach operating capacity within a few months. Full capacity takes years. If you create a company with an unusually high overhead for its size, full operating capacity may not make a difference because the “monthly nut” is too high. In other words, if you hire your friends, family, and anyone else who strokes you, your company probably won’t survive. Keep it smart, keep it simple, and you may keep it past a year.
This is a wonderful time to start a business both inside and outside the entertainment industry. Fortunately, as entertainment CPAs we are not emotionally involved in the project and can offer some objective advice. But, creativity, fantasy, and ego has to take a back seat if they obscure your vision.