The Last E.P.

Business Plan Jessica Kerrigan Spring 2012

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Table of Contents Executive Summary SWOT Analysis The Product Plan Management and Organizational Plan Marketing Plan Location Plan Merchandising Plan Financial Plans Operating and Control Systems Growth Plan 3 5 7 8 10 12 13 16 19 20

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Executive Summary East Passyunk Avenue is known as The Heart of South Philadelphia. It has been built up as a local haven for the arts. This is reflected in the boutiques, shoe stores, restaurants, and markets lining the street. One thing Passyunk Avenue is lacking, however, is a decent record store. The Last E.P. will be an LLC bringing an eclectic range of music and art to the East Passyunk Avenue neighborhood. With the only real competition in this particular district being a dingy, hole-inthe-wall shop featuring a slim range of dusty CDs, the door is left open for improvement on the local music scene. The Last E.P.s success will be certain due to the lack of competition in this particular market. The record industry is said to be a dying industry. However, in this day and age, tangible vinyl records have become more of collectors items, and are therefore more valuable to the consumer. The CD has been replaced by mp3s and Ipods, but to a music connoisseur, the quality of a record is preferable and an aesthetically appealing piece to add to any collection. Furthermore, many bands today prefer to release their music on vinyl due to the fact that it makes it more difficult for the tracks to be leaked before the release of the record. Bands are also attracted to the superior sound quality of a vinyl record. Many bands will also include a slip allowing the consumer to download the songs online for free with the purchase of the record. This allows those without record players to have the tangible product as well as still having the ability to enjoy the music digitally. The Last E.P. will also appeal to the South Philadelphia local arts, as they will feature both the musical stylings of local artists as well as having a gallery for prints, paintings, and photographs on the 3|Page

upper level. The art will include posters and prints advertising musical appearances and photographs of featured artists and bands. Finally, The Last E.P. will provide musical literature from local writers as well as music magazines for the avid reader. The Last E.P will fill a void in the market by bringing together artists of every kind in the community and finally creating a record store that will make everyone feel welcome.

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SWOT Analysis Strengths: Quick decision making skills by owner Strong motivational skills by owner Ability to adapt to changes easily Ability to multi-task Ability to recognize an unfulfilled market and act on it quickly Provides an outlet for local artists

Weaknesses: Poor time management by owner Poor financial management by owner Fear of public speaking by owner

Opportunities: Lack of competition Great location Abundance of local artists supporting local shops Up and coming arts scene/area 5|Page

Numerous events in area showcasing the arts

Threats: Music industry is a dying industry Starting a business during a recession

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The Product Plan The Last E.P. will feature a wide variety of products catering to local artists and music lovers residing in the East Passyunk neighborhood. Being a record store, The Last E.P. will be providing a wide selection of music available on vinyl to the local consumer. There will also be music related art such as exclusive posters, flyers, and photographs created by local artists such as James Heimer. This business will also satiate the needs of local artists, supportive of their peers and interested in new music and art. Magazines and locally published literature will also be available. The Last E.P. will also provide record needles and headphones for D.J.s and avid music listeners. Records 12 7 Art Posters Cards Flyers Accessories Record Needles Headphones Magazines $20 $8-$50 $5-$11 $20 $5 $7 $15 $6-$8

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The Last E.P. is a store focusing on the needs of local musicians and artists, providing an outlet for them to further their careers and nourish the growing art scene in South Philadelphia. There is not much competition in the immediate area. The biggest competition might be Repo Records on South Street or Long in the Tooth in the Rittenhouse area. The Last E.P. will have the advantage of the up and coming East Passyunk area and its developing arts scene. This location is home to a large population of our target market.

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Management and Organizational Plan

The Last E.P. will be a fun and relaxed work environment. Employees will have some musical knowledge and background in the industry. Because of this, they will be passionate about what The Last E.P. stands for, and support the local arts and area themselves. The store will provide a sense of community for those working there, contributors of music and arts, and those shopping. The owner will be responsible for the financials, buying, organizing, and merchandising. The owner will further continue with the planning process, whether it is growth plans or exit strategies, continuing to better the business for the future. The owner will also be assisting management with the hiring process as well as directing and motivating employees. The owner will also be assisting on the floor with sales, stocking, and completing transactions.

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The manager will be largely responsible for the hiring process and assisting the owner. The manager will also handle the visual merchandising and directing employees. Furthermore, the manager will handle all scheduling, while also aiding with customer service, sales, and completing transactions. The manager will report to the owner. The employees will have knowledge of the industry, allowing them to provide superior customer service. They will also handle sales transactions, and help with the visual merchandising, organizing and stocking the merchandise on the floor. The employees will report to the manager, and/or owner if manager is off duty. Employees will be compensated with a 10% discount. They will also have free access and a plus one to any events The Last E.P. hosts or participates in. This will aid in creating a positive work environment, and motivate employees and their friends to actively participate in the community The Last E.P. is striving to promote.

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Marketing Plan The message The Last E.P. is trying to convey is that of an active supporter of the local arts. The Last E.P. will be more than just a store, but also an outlet for local musicians and artists to reach an audience as well. This record store will be one that is supported as much as it is supportive, creating a self-sustaining environment between local business and local artist. The price points will not exceed the budget of the starving musician target market, and while doing some local advertising, will rely heavily on word of mouth and social media as marketing tools.

ADVERTISING BUDGET

Total Advertising Budget=

24999

JAN FEB MAR APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC Totals NEWSPAPER Which one? Metro MAGAZINE What size? Full page 250 400 250 250 250 400 250 250 400 2700 0 0 0 1046 1196 796 796 1046 1046 1046 1992 1046 796 1046 2788 14640 796 796 796 796 796 796 796 1592 0 796 796 796 2388 11940 0

Which one? origivation WEB PAGE Web hosting Tumblr.com Web designerself

The Last E.P. will be advertising through local papers and magazines such as Metro and

Origivation. The target market consists of local artists, so advertisements will reach them through local outlets. The Last E.P. will also rely strongly on word of mouth, as well as the store website, which will
TOTALS

be maintained by the owner. Social media will also be a large factor in the advertising. The remainder 11 | P a g e

of the budget can be put towards special events such as record release parties, Flavors of the Avenue, and Second Saturdays. This will allow for the store to reach the local market, and to participate in improving the East Passyunk business district, gaining support from other businesses in the immediate area.

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Location Plan The site selected for The Last E.P. is 1748 East Passyunk Avenue. This area is a neighborhood shopping district, conducive to those who prefer to support the local business rather than a large corporation. Being an up and coming area, burgeoning a growing arts scene, the East Passyunk District is the perfect location for the supportive atmosphere of The Last E.P. 1748 East Passyunk Avenue is on the corner of East Passyunk Avenue and Moore Street. The space has a monthly rent of $4,500, totaling to an annual rent of $58,500. The basement of the shop will be an office and employee break room. The first floor will be the main selling space and house the cash wrap desk as well as a small listening station in the open-back windows. The second floor will have tri-fold screens featuring photographs and posters of local artists. These screens can also be folded up and removed to create a small venue for live music. With the only immediate competition in the area being the run-down record bar, The Last E.P will be able to provide a positive and inviting environment to the local artists and music enthusiasts. Other competition may be Long in the Tooth in the Rittenhouse area, as well as Repo Records on South Street. Both offer a wide selection of vinyl. However, The Last E.P. provides a nurturing environment to the support local arts as well, which is a market that the prior record stores have neglected. The Last E.P. will be more than just another record store, but a home to local artists, and an insight to what South Philadelphia, specifically East Passyunk Avenue, has to offer.

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Merchandising Plan American Recordings (Sony BMG) Antony Bland antony.bland@sonybmg.com (818) 953-3392 2100 Colorado Avenue Santa Monica, CA 90405

Atlantic Records Julie Greenwald julie.greenwald@atlanticrecords.com (212) 707-2000 1290 Avenue of the Americas New York, NY 10104

Capitol Records (212) 786-8200 150 5th Avenue 3rd Floor New York, NY 10011

Castle Records (Tower Music Group) Kevin Waugh castlerecords@castlerecords.com (615) 401-7110 19 Music Square West, Suite U-V Nashville Red Barn Nashville, TN 37203

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Century Media Records mail@centurymedia.com (323) 418-1400 2323 West El Segundo Blvd. Hawthorne, CA 90250

Columbia Records John Doelp john.doelp@sonybmg.com 550 Madison Avenue, 24th Floor New York, NY 10022

Drive-Thru Records Stephanie Reines (818) 883-3341 PO Box 55234 Sherman Oaks, CA 91413

Epitaph/Asylum (WMG) Brett Gurewitz brett@epitaph.com (213) 413-7353 2798 Sunset Boulevard Los Angeles, CA 90026

Fearless Records Shervon Esfahani shervon@fearlessrecords.com 15 | P a g e

(562) 592-3438 13772 Goldenwest St. 545 Westminster, CA 92683

No Sleep Records Chris Hansen 16651 Gothard Street Unit E Huntington Beach, CA 92647 Ingrooves Fontana Distribution rob.gross@ingroovesfontana.com

Records will be purchased for sale by the labels listed above, as well as local indie labels, or local musicians/artists themselves. Market trips will be determined based on records kept in a purchase journal and on-order log. Some orders will be based on request by the consumer. Markups will be 60% and based on sales will be marked down in increments of 10% bi-monthly. As we do accept used records, all returns will be accepted at any time. After a period of 30 days, depreciation value is to be determined by the owner or manager on duty.

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Financial Plans

Income Statement
XXX Year ended December 31, 2007 Revenue Sales Cost of Goods Sold Gross Profit Expenses Operating Expenses Rent Payroll Expense Repair/Maintenance Office Supplies Travel Expense Advertising Insurance Security Accounting & Legal Taxes & Licenses Telephone Utilities Interest & Principles Furniture/Equip/Racks Sign Grand Opening Owners Draw Total Operating Expenses Total Operating Expenses Income Before Taxes Pre-tax Net Income/Net Loss

499980 199992 299988

58500 50676 xxx 1200 xxx 14640 3504 108 1500 4944 1800 2400 8224 9185 500 1000 2400 160581 160581 139407 139407

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SIX MONTH MERCHANDISE PLAN Total Yearly Sales $499,980 MONTH % SALES COGS AUG. 8% $39,998 $15,999 SEPT. 6% $29,999 $12,000 OCT. 5% $24,999 $10,000 NOV. 8% $39,998 $15,999 DEC. 13% $64,997 $25,999 JAN. 10% $49,998 $19,999 TOTAL 50.0% $249,990 $99,996

Initial Markup % Cost Compliment % MONTH % SALES COGS

60% 40% FEB. 9% $44,998 $17,999 MAR. 8% $39,998 $15,999 APR. 6% $29,999 $12,000 MAY 9% $44,998 $17,999 JUN. 10% $49,998 $19,999 JUL. 8% $39,998 $15,999 TOTAL 50.0% $249,990 $99,996

Instructions: begin by inserting your total yearly sales from the Income Statement. Then attribute % to each month according to anticipated sales volume. Input Initial markup and cost compliment. Sales figures and COGS will be calculated once % and total yearly sales are recorded. H5 + H15 Should equal 100% H6 + H16 Should equal your Total Yearly Sales H8 + H18 Should equal your yearly COGS from your Income Statement

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Operating and Control Systems The security system implemented will be the DSC Power 1832CP01 alarm system kit (Kit32power5) from www.thealarmsystemstore.com, which offers a surveillance rate of $9/month. The owner and the manager will take inventory on the first of every month.

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Growth Plan Moving forward, The Last E.P. will expand not in location, but through special events. Potential opportunities to partake in over the course of the next 3 years will be hosting more parties at local venues, as well as more live acoustic music or D.J.s playing in house on the 2nd floor. The idea will not be to become a bigger company, but expand the awareness of the local arts through special events in the immediate area. With the growing brand awareness and loyalty, The Last E.P. will continue to expand its consumer base, and increase the products sold in house, potentially to include more forms of art than posters, records, and photographs, to local jewelers, and musical equipment and accessories. The Last E.P. will be a place for musicians to share their music, buy their music, and find the utilities necessary to make their music. In the event of lack of success or bankruptcy, our exit strategy will be to first cut back on employees and place more of that responsibility on the owner and manager. Following this, inventory could be decreased, and hosting special events could be eliminated.

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