business plan for new studio

Discussion in 'Music Business' started by kujazz45, Apr 10, 2005.

  1. kujazz45

    kujazz45 Guest

    I am doing a project for school. I have to create a business plan for a new recording studio in Leeds, England. (I'm not sure how many people on this forum live in the UK or know much about the recording scene here.) I have a listing of equipment and prices from a friend that set up a studio in Miami, Florida that is similar to what I want the business plan to reflect. So if anybody could answer the following questions, it would be most helpful.

    1. Are the numbers similar to those in the US, or would it be more accurate to convert with the exchange rate?
    2. What would be a reasonable projection as far as paying off the studio before you start making money/financial projections for the first several years?
    3. What are some risks involved with running a recording studio?
    4. What kind of insurance does one purchase to cover the studio?
    5. Is it standard for a studio to rent out a building for its use, or would it be better to purchase a place?

    Thanks so much.
  2. Jeemy

    Jeemy Well-Known Member

    Sep 19, 2003

    I did this start to finish in the UK. However my facility is a growing project studio and rehearsal rooms, not fully operational multimillion£ studio to start with.

    To answer your questions as I can without knowing which you are envisaging.

    1. For UK replace the $ sign with a £ sign. 99% of the time you will be right.

    2. Make a spreadsheet. The running costs are simple: fixed i.e. assets, construction & other startup costs, ongoing such as rent/mortgage payment, maintenance, office facilities etc. You should know from school, or if not, get some advice from a teacher.

    Your income is going to be very different and less predictable. If your proposal is for a large-scale studio with a £50k spend or more on equipment, and similar on construction, then you cannot really make predictions based on 'selling' £500 days in large blocks with no experience is unrealistic. Whether your teachers will know this, or whether you are going to pretend your proprietor/engineer already has valuable experience, references and client base / contacts, is another matter.

    If on the other hand you are talking about project studio & rehearsal rooms my initial investment was approx £16,000 of equipment and £7,500 soundproofing and resculpting an existing building which I rent. Since then I have put in about £10,000 further equipment and work to the facility.

    I broke even within 6 months, and now make a profit, however I 'donated' the bulk of the equipment, some of which I owned already, a lot of which I purchased personally. Its entered as assets anyway which does not affect the profit and loss, subject to depreciation. However I haven't made as much as I spent on equipment.

    I think that from my experience - 10 studios in Edinburgh just now that I know of, most of which I have played or recorded in in my time - that competition is high at the low-to-mid levels and if you aren't doing this for a labour of love and the learning of the art, you are in the wrong business.

    That said, having rehearsal rooms increases your profitability a lot.

    3. Just one risk: nobody will come. Opening rehearsal facilities lessens this. You get people in for a £10/hr investment instead of £25 - £50, and when they're ready, if your attitude is inspiring and you've built a relationship, they will trust you to record for them, especially if they've heard your work in passing.

    4. Buildings and contents insurance standard office/surgery policy, which includes all standard business insurance facilities such as public liability, theft, loss of earnings (which you must prove as per (2) above), with perhaps additional cover for items off the premises if you do hires. Specialist music insurers are happier to cover £1500 microphones but any insurer will do it as long as you name your prize pieces in advance and pay any premium thereon.

    5. For a full facility, I don't know. Given the large amount of construction required, I would imagine you would buy or purchase a long-term lease i.e. 5-25 years. I rent and see it as temporary. I plan to buy this winter.

    Hope this helps,

  3. kujazz45

    kujazz45 Guest

    more questions

    I was thinking more of a mid-sized studio. Not a full out multimillion dollar studio, but quite more than a home studio.

    1. Do engineers typically get any copyright share in the recordings made in the studio they work at?
    2. Are most engineers in studios full time, or is it more of a per project basis?
    3. Do they get commission for each project or run on annual salaries?

  4. Jeemy

    Jeemy Well-Known Member

    Sep 19, 2003
    From what I can answer:

    1. No way. The project belongs to the artist. The most I get is a tacit agreement in the terms and conditions of trade that I am allowed to use the recording for promotional purposes should I so choose, as long as this is not for direct financial gain. This allows me to put quality recordings on my sampler CDs.

    2. Somebody else is better suited to answer this. As we are a small-to-mid-size studio, the engineer is the proprietor; I would imagine this is common. Therefore normal business rules are out the window and it is as if he is self-employed, and he earns when the facility earns.
    My guess is that large studios employ a full-time engineer however they may have a roster of engineers who all use the facility and are assigned by the band or record company, and therefore paid by them too.

    3. Mid-size studios will probably pay an engineer and hourly rate when they have work for them.

    the last 2 are my guesses (informed)

  5. Kurt Foster

    Kurt Foster Well-Known Member

    Jul 2, 2002
    77 Sunset Lane.
    Re: more questions

    Actually, I believe the answer surprisingly is yes. I think they have to apply for their own copyright, siting their contribution as "intellectual property" ... (the mix).

    It depends on the studio. I spent 14 months 7 days a week, sometimes 2 or 3 sessions a day in my facility. I was dreaming of mixing at night when I went home ... I would wake up exhausted! I started to advertise for outside engineers with their own projects at that point. Too much of anything can not be good!

    Usually engineers, if paid by the studio, are paid by the hour. Perhaps if they generated the business, they could be in line for a sales commission. I used to arrange for an engineer for my clients but it was the clients responsibility to negotiate the pay rate.

    As you can see, their are many ways to approach it. My advice is to be creative and not let convention restrict you. That can make the difference between failure or success.
  6. Reggie

    Reggie Well-Known Member

    Dec 20, 2004
    Re: more questions

    I don't know about that one man....might need to get an entertainment lawyer in on that. The only copyrights I can think of that apply would be the copyright for the song itself, and the copyright for the recording itself (this would be owned by the record label if one is involved; if not, artist). Typically when you are an engineer at a studio, you are work-for-hire or whatever it is called, and you have no claim to copyright on what you are working on for a customer. If this guy is asking about royalties, typically it would be just the producer working on the album that would be entitled to royalties on record sales ONLY if the contract with the label includes this. Anyone else?
  7. Jeemy

    Jeemy Well-Known Member

    Sep 19, 2003
    I can see a case for the mix work being intellectual property of the mix engineer. I run a design firm in the days and if we produce corporate artwork for customers, despite the fact the logo is theirs, the colour scheme and corporate ID is ours, unless we agree to sign it over - and if they don't get a document for this, the law sits on our side not theirs.

    However in practice client relations and assumptions may differ.
  8. According to my attorney, its up to the artist. Typically, it is stated in the recording agreement, usually where the rights of each party are involved. Usually, the royalties come from the publisher's cut (if one is involved). It varies from project to project, and most entertainment attorneys advise artists not to sign over any part of their royalties.

    Since its something that is between the engineer and the artist, then it shouldn't need to be included in the business plan.[/quote]
  9. kujazz45

    kujazz45 Guest

    more questions

    1. Do you need any special licenses to run a professional studio?
    2. What would you say your approximate utility usage is for one month?
    3. When are the busiest seasons for recording, if any?
    4. What are some marketing techniques you use to promote your studio's business?

    Everyone's help is GREATLY appreciated!
  10. For some reason, Christmas gets really busy for me. In this area, it seems like everyone and their dog who owns a guitar and can halfway sing wants to make a compilation of Christmas hits for their family. I don't know about licenses required over in the UK as we didn't have to have any in Oklahoma (Oklahoma is REALLY light on licensing businesses). I can't comment on utility usage either since that's included in my rent. Also, I don't know how well this will work over there, but in America we like freebies. Not only can giving away studio time at a battle of the bands or something like that boost your business (client list and more references) but it gets a tax writeoff here.
  11. kujazz45

    kujazz45 Guest

    How much do you pay your engineers/what is the average salary for an experienced engineer?

    Anyone have different answers for my previous post? I'm just trying to be as accurate as I can, or at least get an average. Thanks.
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