Record Label Business Plan Template
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Sample Business Plan for an Independent Record Label
Below is a sample business plan to help you create your own record label business plan.
Executive Summary
Business Overview
Broadbase Records is a startup record label located in Nashville, Tennessee. Broadbase Record’s mission is to sign and promote local aspiring musicians and talent to establish or further their career in the music industry. Based in Nashville, Broadbase Records will work with various country musicians because of the proximity to its local talent, but will also be open to working with various artists across a range of music genres. Broadbase Records will sign, promote album sales, and book their signed artists to various concerts and festivals around the country. Broadbase Records is made up of a team of two seasoned music executives, Marty Cole and Sasha Gray, with decades of experience in the music industry.
Service Offering
The following are the services that Broadbase Records will provide:
- Artist Recruitment & Development (A&R)
- Record Contract
- Marketing & Promotion
- Collecting & Distributing Royalties
- Music Distribution
- Licensing Deals
Customer Focus
Broadbase Records will target new and existing musicians in Nashville, Tennessee that are looking to either establish or expand their music presence in the industry as potential clients. They will also target music venues to partner with, music distribution channels such as Google Music, YouTube Music, Apple Music, Spotify, etc. The other target market is recording studios that have produced local talent and need a record label to represent them.
Management Team
Marty and Sasha will be in charge of scouting talent and working one-one-one with music venues, concert promoters, and music distribution channels. While Marty and Sasha will be operating the business at the higher level, they will also employ a CFO to handle all financial forecasts, tax, and licensing obligations of running a profitable record label. A CMO will also be hired to manage and promote not only each signed talent, but the marketing of Broadbase Records as well.
Success Factors
Broadbase Records will be able to achieve success by offering the following competitive advantages:
- Friendly, knowledgeable, and highly qualified team of music producers and executives that come with a long list of industry contacts.
- Dedicated team that will be able to provide its full attention and focus to its signed artists.
- Broadbase Records already come with a long list of partners for artists to choose how they want their music to be distributed and which music venues they want to perform at.
- Clients before profit – Broadbase Records will ensure the artists’ satisfaction with every aspect of the process before taking account profitability. Broadbase Records is about supporting the success of its artists, not just about making money.
Financial Highlights
Broadbase Records is seeking $500,000 in debt financing to begin operations of the business. The funding will be dedicated towards securing the office space and the office build-out. Capital will be required for the upfront costs needed for the first three music artists Broadbase Records signs. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and working capital. The breakout of the funding is below:
- Securing office space, build-out, and design: $100,000
- Three months of overhead expenses (payroll, rent, utilities): $75,000
- Marketing & advertising: $25,000
- Capital required in order to promote new signed artists: $300,000
The following graph below outlines the pro forma financial projections for Broadbase Records.
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Company Overview
Who is Broadbase Records?
Broadbase Records is a startup record label located in Nashville, Tennessee. Broadbase Record’s mission is to sign and promote local aspiring musicians and talent to establish or further their career in the music world. Based in Nashville, Broadbase Records will work with various country musicians because of the proximity to its local talent, but will also be open to working with various artists across a range of music genres. Broadbase Records will sign, promote album sales, and book their signed artists to various concerts and festivals around the country. Broadbase Records is made up of a team of seasoned music executives with decades of experience in the music industry. Owners Marty Cole and Sasha Gray have had immense success in the world of music working with other large independent labels in the United States. They both have represented numerous Grammy award-winning musicians and have lifted their success due to their industry knowledge and relationships. Marty and Sasha have been wanting to begin their own label so they can operate based on their own values and have the chance to sign emerging talent that would otherwise be overlooked by larger-scale record labels.
Broadbase Records History
Broadbase Records is owned by Marty Cole and Sasha Gray, both seasoned music executives that have worked for two major record labels in the United States. Through their tenure, Marty and Sasha have compiled numerous contacts and networks to further musicians’ careers and sustainability. Both Marty and Sasha have signed, promoted, and achieved success in the millions for various artists they have signed over the years.
Recently, Marty and Sasha have found that there are not enough record labels that exist to promote untapped talent in the market. Through their extensive research, they have learned that hundreds and even thousands of musicians with promising potential are not receiving any attention because there are not enough record labels to give them the opportunity. With Nashville being the country music capital of the world, Marty and Sasha found that thousands of aspiring artists and musicians flock to the city at the chance of one day being signed by a label. There are just not enough record labels in Nashville that can accommodate or even have the time and energy into seeking out new, fresh talent.
Since incorporation, Broadbase Records has achieved the following milestones:
- Found office space for lease that is located in Nashville, Tennessee.
- Registered Broadbase Records, LLC to do business in the State of Tennessee.
- Began networking with local music venues and recording studios in hopes of finding local talent.
- Began the branding image, logo, website, and social media accounts for the label.
Broadbase Records Services
The following will be the services Broadbase Records will provide:
- Artist Recruitment & Development (A&R)
- Record Contract
- Marketing & Promotion
- Collecting & Distributing Royalties
- Music Distribution
- Licensing Deals
Industry Analysis
The music business and record label industry are expected to grow over the next five years to over $11 billion. The industry’s performance will be bolstered by the following factors:
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Number of broadband connections: Keeping abreast of new systems and technology can provide producers with stronger distribution models and revenue streams while reducing costs of production. Online music has fundamentally changed how consumers enjoy their favorite artists.
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Per capita disposable income: An increase in disposable income is likely to increase consumers’ purchases of new music, whether via digital or physical outlets. Although physical album sales have continually dropped for over a decade, sales of streaming music subscriptions increase as consumer purchasing power rises, benefiting the industry as a whole.
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Median age of population: All age demographics consume different types of music and discover music through different platforms. Conversely, older individuals are more likely to reduce their total spending on new music. As labels shift toward online distribution, the industry benefits most from a lower median age of the US population.
Customer Analysis
Demographic Profile of Target Market
Broadbase Records will target new and existing musicians in Nashville, Tennessee that are looking to either establish or expand their presence in the industry as potential clients. They will also target music venues to partner with, music distribution channels such as Google Music, YouTube Music, Apple Music, Spotify, etc. The other target market are recording studios that have produced local talent and need a label to represent them.
Customer Segmentation
Broadbase Records will primarily target the following customer profiles:
- Aspiring and existing musicians looking for an independent label
- Local music venues who showcase new and emerging talent
- Music distribution channels
- Recording studios
Download the record label business plan template (including a customizable financial model) to your computer here
Competitive Analysis
Direct and Indirect Competitors
Broadbase Records will face competition from other record label companies. A description of each competitor company is below.
Capitol Records Nashville
Capitol Records Nashville is a major United States-based record label located in Nashville, Tennessee operating as part of the Capitol Music Group. Capitol Nashville was formerly known as Liberty Records from 1991 until 1995 when it was changed back to Capitol. In 1993, Liberty opened a sister label, Patriot Records, but it was closed in 1995. In 1999, EMI launched Virgin Records Nashville but by 2001 Capitol absorbed the short-lived label. Capitol Nashville remained a stand-alone label until 2010 when it launched EMI Nashville.
Thirty Tigers
Thirty Tigers is a Nashville-based entertainment company, founded in 2001 by Grammy Award-winning producer David Macias and Deb Markland. In just over a decade, Thirty Tigers has gone from two employees working out of David’s guest bedroom to thirty employees, most of whom now work out of their Wedgewood-Houston office in Nashville, Tennessee. Thirty Tigers also has offices in Los Angeles, New York, North Carolina, and London. Their collective experience in the industry ranges from record retail to the film industry to major labels.
Third Man Records
Third Man Records is an independent record label founded by Jack White in Detroit, Michigan in 2001. Third Man established its first physical location – a combination of a record store, performance venue, and headquarters for the label in Nashville, Tennessee in 2009. The label opened a Detroit branch location in 2015, which added a pressing plant (Third Man Pressing) in 2017.
Competitive Advantage
Broadbase Records will be able to offer the following advantages over their competition:
- Friendly, knowledgeable, and highly qualified team of music producers and executives that come with a long list of industry contacts.
- Dedicated team that will be able to provide its full attention and focus to its signed artists.
- Broadbase Records already come with a long list of partners for artists to choose how they want their music to be distributed and which music venues they want to perform at.
- Clients before profit – Broadbase Records will ensure the artists’ satisfaction with every aspect of the process before taking account profitability. Broadbase Records is about supporting the success of its artists, not just about making money.
Marketing Plan
Brand & Value Proposition
Broadbase Records will offer a unique value proposition to its clientele:
- Experienced team of music professionals that come with a long list of contacts and connections.
- Focused and individualized attention to each client it signs.
- Broadbase Records doesn’t need to knock on any doors. The doors are already open due to their reputation and industry knowledge.
- They put their artists’ satisfaction before profitability.
Promotions Strategy
The promotions strategy for Broadbase Records is as follows:
Social Media
Broadbase Records will invest in advertising their record label on social media platforms Facebook, Instagram, Snapchat, TikTok, and Twitter. By using targeted social media marketing, Broadbase Records will be able to reach the local music talent of Nashville.
Music Venues & Networking
Marty and Sasha will frequent music venues around Nashville that hold amateur nights where local aspiring musicians get a chance to take the stage. By scoping out the talent, they will approach those musicians that they see potential in and let them know their record label might be interested in working with them. By networking around the local scene, people will also recommend Broadbase Records to their associates.
Website/SEO Marketing
Broadbase Records will invest in a strong SEO presence so that when someone enters “Nashville record label” or “record label near me” in their Google or Bing search bar, Broadbase Records is at the top of the list. Their website will list all of Marty and Sasha’s accomplishments with the clients they have worked with in the past to showcase all of their experience and ability to take musical artists to the next level.
Pricing
The pricing of Broadbase Records will be moderate and on par with competitors so customers feel they receive value when purchasing their services.
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Operations Plan
The following will be the operations plan for Broadbase Records.
Operation Functions:
- Marty and Sasha will jointly own and manage the record label. They will be in charge of scouting local talent, networking with recording studios, music venues, concert promoters and music distributors, and be the point of contact for all signed musicians.
- Chief Financial Officer to handle all financial aspects of the business to include but not limited to accounts payable and receivable, billing, royalty payouts, tax obligations, licensing and permitting, budgeting, and cash forecasting. As the record label grows and profits are stabilized, more accountants will be added to support the CFO.
- Chief Marketing Officer will be in charge of all marketing and promoting of each signed music artist or band. The CMO will be responsible for increasing the awareness and popularity of each artist. The CMO will also handle the social media and website for Broadbase Records as well.
- Administrative Assistant will be employed to manage all administrative assistant tasks of the record label on an everyday basis. This will include being the personal assistant for Marty and Sasha.
Milestones:
Broadbase Records will have the following milestones completed in the next six months.
7/1/202X – Finalize contract to lease record label office space.
7/15/202X – Begin build-out and design of record label office.
8/1/202X – Begin reaching out to their list of contacts in the industry to inform them of the new Broadbase Records.
8/15/202X – Begin social media and website advertising campaign.
8/30/202X – Start scouting out local music venues for local aspiring talent.
9/1/202X – Final walk through of completed office space.
9/5/202X – Hire CFO, CMO, and Assistant.
10/1/202X – Grand Opening of Broadbase Records.
Management Team
Broadbase Records will be jointly owned by Marty Cole and Sasha Gray.
Marty Cole is a former Capitol Music executive with over 15 years of experience. He helped find, produce, and book dozens of music artists and bands that have amassed huge success due to his diligence and industry knowledge. Marty has a strong reputation in the industry as he has always been known to put his clients first without sacrificing their happiness for profit. Many artists respect and recommend Marty to other emerging talent due to his impressive resume and respect for the artist.
Sasha Gray has worked at Virgin Records and Capitol Music over her 10 year career as a music executive. She has traveled all over the world and her client list encompasses not only the United States, but five other countries as well. Sasha is known for her creativity and diligence when working with her clients. She usually has creative solutions for marketing and promotions and is not afraid to step outside the box when representing a client. Sasha’s reputation has garnered her a long list of successful clients and she is known as the record label executive that is willing to do anything to ensure the happiness and success of her clients.
Marty and Sasha will be in charge of scouting talent and working one-one-one with music venues, concert promoters, and music distribution channels. While Marty and Sasha will be operating the business at the higher level, they will also employ a CFO to handle all financial, tax, and licensing obligations of running a profitable record label. A CMO will also be hired to manage and promote not only each signed talent, but the marketing of Broadbase Records as well.
Download the record label business plan template (including a customizable financial model) to your computer here
Financial Plan
Key Revenue & Costs
The revenue drivers for Broadbase Records are the royalty fees and commissions earned when booking one of their signed musicians. Broadbase Records will earn a commission as a percentage of total ticket sales for live music shows and concerts. They will also earn royalties for music that is streamed on music streaming services and albums sold.
The cost drivers will be the capital required upfront to support the artist, such as upfront marketing and promotion and costs for getting their album produced. Broadbase Records will be reimbursed for all expenses made upfront by the commissions and royalties earned once the album begins selling and people pay for their live music appearances. Other cost drivers are the payroll for the staff, rent and utilities for the office space and working capital.
Funding Requirements and Use of Funds
Broadbase Records is seeking $500,000 in debt financing to begin operations of the business. The funding will be dedicated towards securing the office space and the office build-out. Capital will be required for the upfront costs needed for the first three music artists Broadbase Records signs. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and working capital. The breakout of the funding is below:
- Securing record label office space, build-out, and design: $100,000
- Three months of overhead expenses (payroll, rent, utilities): $75,000
- Marketing & advertising: $25,000
- Capital required in order to promote new signed artists: $300,000
Key Assumptions
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
- Initial Number of Clients per Month: 5
- Annual Lease: $150,000
Financial Projections
Income Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
| Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
| Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
| Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
| Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
| Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
| EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
| Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
| PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
| NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
Balance Sheet
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
| Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
| Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
| Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
| Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
| TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
| Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
| Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
Cash Flow Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | ||||||
| Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
| Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
| CASH FLOW FROM INVESTMENTS | ||||||
| Investment | ($180,950) | $0 | $0 | $0 | $0 | |
| Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
| CASH FLOW FROM FINANCING | ||||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 | |
| Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
| Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
| Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
Free Template for a Record Label Business Plan
You can download our free record label business plan template PDF here. This is a sample record label business plan template you can use in PDF format. You can easily complete your record label business plan using our Record Label Business Plan Template here.
Record Label Business Plan FAQs
What is a Record Label Business Plan?
A record label business plan is a plan to start and/or grow your independent record label. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
What are the Steps To Start a Record Label Business?
Starting a record label business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Record Label Business Plan – The first step in starting a business is to create an effective business plan that outlines all aspects of the venture. This should include market research on the industry and potential target market size, information on the services you will offer, marketing strategy, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure – It’s important to select an appropriate legal entity for your business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your record label business is in compliance with local laws.
3. Register Your Record Label Business – Once you have chosen a legal structure, the next step is to register your business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options – It’s likely that you’ll need some capital to start your record label business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location – Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees – There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Record Label Equipment & Supplies – In order to start your business, you’ll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business – Once you have all the necessary pieces in place, it’s time to start promoting and marketing your record label business. Marketing efforts includes creating a website, utilizing Facebook and Instagram, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising to reach your target audience.
Learn more about how to start a successful record label business: