Location: Brgy.

Aguado Trece Martires City, Cavite

loradio@studio.com | 099876543212

BUSINESS PLAN
EXECUTIVE SUMMARY
LoRadio is an unusual but sustainable business model for a record label. The company has
been founded by Carlo John Toledo. The business operates to promote several Philippines
based bands, all with the common element of improvisation.
Industry Analysis
The retail record industry is dominated by a few large corporations. These corporations control
over 87% of the CD sales in this country. 8% of the sales are controlled by Indie record labels, a
less commercial version of the large corporations. The remaining 5% is a hodge podge of
record labels. Most labels take the shot gun approach to sales. They sign up lots of different
bands and hope a few make it big. On the bands that are a commercial success, there are huge
windfalls of profit to be made by the record corporations. The Indie labels are similar, however,
they are a bit more selective and do not always go for the most commercially viable bands.
In order for this record label to succeed, a lot of sweat equity will be required will little to no
revenue stream for the first year. For many businesses this is quite difficult to swallow. For
LoRadio it helps that these realistic expectations have been establihed up front, and will not be
an unwelcome future surprise. Additionally, the investors (friends and family) are aware of these
parameters and have given their blessing. It will take a lot of work to pull this off, but with
reasonable expectation up front and the right management to execute on the business model, it
will happen.
 TABLE OF CONTENTS
Section One: The Business

a. Description of Business
b. Products/Services
c. Market Analysis
d. Marketing Plan
e. Location
f. Competition
g. Management and Operations
h. Personnel
i. Application and Effect of Loan or Investmen

Section Two: Financial Data

A. Projected Financial Statements

i. Income Statements
ii. Cash Flow Statements
iii. Balance Heets
iv. Assumptions to Projected Financial Statements
B. Break Even Analysis
C. Sources and Uses of Funds
SECTION ONE: THE BUSINESS

a. Description of Business

LoRadio is a new, Cavite, Oregon based record label. LoRadio is taking a new, unusual
approach to band promotion and CD sales. Instead of competing with the large, ultra
competitive national record labels, as well with the larger Indie labels, LoRadio will adopt a
regional, intimate approach where they concentrate on several local bands. By working with
only a few bands at once, LoRadio is able to offer a much more specialized and attentive level
of service for their bands. This will be their competitive edge, something no other record label
can offer.

b. Products/Services

Operations will begin with the production of a compilation CD. This will be a CD that features
many different local artists. Their will be no charge for a band to place a single on the CD, in fact
they are encouraged as it offers an visibility outlet for the band. This favors bands that are trying
to gain visibility within the local market. They are interested in having as many people become
familiar with them, since as more people know about them, they are likely to secure live gigs
and possibly produce a CD and receive revenue from CD sales. Within the first year two
compilation CDs will be produced. These will be free for the bands to be on and there will be
free distribution of the CDs. Enough expectation and anticipation for the up and coming bands
will allow LoRadio to soon begin to charge for releases.

At the same time that the CDs provide visibility for the respective bands, it provides visibility for
LoRadio. This is key for LoRadio’ business model. They need to be known as a hard
working/promoting record label. This is important because the stronger the label appears, the
more attractive the label becomes in terms of being an exclusive promoter for a band.

While the compilations CDs are released, LoRadio will be working with a variety of parties for
networking purposes. The first is local radio stations. Being able to get air play for the CD
depends on relationships with the key decision makers at the various stations. LoRadio will also
be working with various record stores, developing relationships with them so that as some of the
bands on the CDs become known and there is consumer interest, LoRadio can begin to sell the
CDs. Lastly, LoRadio will be working with the different clubs to get the bands live gigs. Playing
live to local crowds will be one of the most productive activities in terms of developing fanfare.
c. Market Analysis

LoRadio will target two primary market segments, record stores and consumers at live shows.
These will be the sources of income so they will be the main targets. Initially, LoRadio focus will
be to develop visibility within the community, enough to be able to sign up bands which are the
key to revenue generation. The need to sign up bands will drive the marketing activities that
LoRadio will undertake in order to generate revenue in the future

d. Marketing Plan

LoRadio has chosen these two distinct market segments because they are the main source of
revenue. LoRadio will remain focused on their important marketing activities aimed at
developing visibility for the record label, however, ultimately it comes down to CD sales for
business viability and the record stores and consumers at live performances being the source of
this revenue. This is a fairly intimate industry, most of the industry participants within a region
know each other. Keeping this in mind, networking will be the most efficient and effective
activity. The only way to get into record stores is by showing potential record sales. The way
you begin to do this is to have good contacts within the stores to get the right people to listen to
you.

Another source of revenue will be the buy out of a band from their Mt. Hood contract in favor of
a larger, national label. These events will not be marketed for, they will tend to occur on their
own. This source of revenue is, however, tracked in the sales forecasts.

e. Location

LoRadio will initially be located in Carlo’s home in Brgy. Aguado Trece Martires City, Cavite. For
years two and three a small space will be used primarily for inventory management and sales
operations.

f. Competition

National record labels – Atlantic, Sony, BMG labels, etc. These distributors care about one
thing, CD sales. The more CDs they sell, the more money they make. Bands do not get much
individual attention. They are carefully trained to develop mass appeal. Commercialization is
key. These companies’ mantra is widespread acceptance, not niche fringes.

Indie labels

– Sub Pop, Ropeadope, Ozone, etc. These companies are also quite concerned about CD
sales, however they tend to choose bands with less commercial appeal and exploit whatever
niche that band exists in. This competitor also faces the pitfalls of not being able to offer
specialized attention as their “reach” is also quite broad. They are basically a smaller, better
behaved version of the large record labels. They are only concerned ultimately with CD sales,
and achieve these goals with less commercial means.

g. Management and Operations

Carlo John Toledo The founder of LoRadio. The goal of the record label was primarily self-
promotion and personal satisfaction. By creating their own label, they could release their one
studio CD. They did not expect to generate profits from this, they saw it as an opportunity to
support their tour with a CD. They toured for a month straight, throughout NY, PA, and NJ,
playing almost every night, driving to the new venue during the day. The tour was quite an
accomplishment, but it really did not make any money, just covered expenses.

h. Personnel

Carlo will be the primary employee. He will be working long hours, often with her husband’s
help, but after some sweat equity, the business model will begin producing revenue. Carlo will
not take a salary for the first two years in order to build the business. For year three he will draw
a salary. Carlo will hire two other employees to assist her.

Sales – this position will sell CDs at concerts by being present at a booth or table at the various
live performances.

Distribution – this position will be responsible for the distribution of the CD to the retailers.

j. Application and Effect of Loan or Investment

At this point Carlo decuded that he could leverage per passion for music into a job, and once
again start a record label. This time around he would be able to rely on his income for the
household for the first year or two of her new business. Carlo recognized that in order to build a
sustainable label he would have to forgo revenue and keep overhead low for the first year. If he
could weather this financial burden he could make the business model work.

SECTION TWO: FINANCIAL DATA

A. Projected Financial Statements
i. Income Statements

Pro Forma Profit and Loss

Sales ₱0 ₱82,160 ₱143,766
Direct Cost of Sales ₱0 ₱23,161 ₱33,022
Other Costs of Goods ₱0 ₱0 ₱0
Total Cost of Sales ₱0 ₱23,161 ₱33,022
Gross Margin ₱0 ₱59,000 ₱110,744
Gross Margin % 0.00% 71.81% 77.03%
Expenses
Payroll ₱1,600 ₱24,000 ₱56,000
Sales and Marketing and Other Expenses ₱13,500 ₱14,500 ₱15,500
Depreciation ₱400 ₱400 ₱400
Rent ₱0 ₱4,000 ₱4,000
Website expenses ₱1,560 ₱1,800 ₱2,000
Utilities ₱360 ₱800 ₱1,000
Insurance ₱360 ₱600 ₱800
Payroll Taxes ₱240 ₱3,600 ₱8,400
Returned CDs ₱0 ₱1,200 ₱1,200
Total Operating Expenses ₱18,020 ₱50,900 ₱89,300
Profit Before Interest and Taxes (₱18,020) ₱8,100 ₱21,444
EBITDA (₱17,620) ₱8,500 ₱21,844
Interest Expense ₱0 ₱0 ₱0
Taxes Incurred ₱0 ₱2,430 ₱6,433
Net Profit (₱18,020) ₱5,670 ₱15,011
Net Profit/Sales 0.00% 6.90% 10.44%

ii. Cash Flow Statements

Pro Forma Cash Flow

Cash Received
Cash from Operations
Cash Sales ₱0 ₱20,540 ₱35,942
Cash from Receivables ₱0 ₱61,620 ₱107,825
Subtotal Cash from Operations ₱0 ₱82,160 ₱143,766
Additional Cash Received
Sales Tax, VAT, HST/GST Received ₱0 ₱0 ₱0
New Current Borrowing ₱0 ₱0 ₱0
New Other Liabilities (interest-free) ₱0 ₱0 ₱0
New Long-term Liabilities ₱0 ₱0 ₱0
Sales of Other Current Assets ₱0 ₱0 ₱0
Sales of Long-term Assets ₱0 ₱0 ₱0
New Investment Received ₱0 ₱0 ₱0
Subtotal Cash Received ₱0 ₱82,160 ₱143,766
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending ₱1,600 ₱24,000 ₱56,000
Bill Payments ₱15,595 ₱48,234 ₱70,690
Subtotal Spent on Operations ₱17,195 ₱72,234 ₱126,690
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out ₱0 ₱0 ₱0
Principal Repayment of Current Borrowing ₱0 ₱0 ₱0
Other Liabilities Principal Repayment ₱0 ₱0 ₱0
Long-term Liabilities Principal Repayment ₱0 ₱0 ₱0
Purchase Other Current Assets ₱0 ₱0 ₱0
Purchase Long-term Assets ₱0 ₱0 ₱0
Dividends ₱0 ₱0 ₱0
Subtotal Cash Spent ₱17,195 ₱72,234 ₱126,690
Net Cash Flow (₱17,195) ₱9,926 ₱17,076
Cash Balance ₱2,155 ₱12,081 ₱29,158

iii. Balance Heets

Pro Forma Balance Heet

Assets
Current Assets
Cash ₱2,155 ₱12,081 ₱29,158
Accounts Receivable ₱0 ₱0 ₱0
Inventory ₱0 ₱0 ₱0
Other Current Assets ₱0 ₱0 ₱0
Total Current Assets ₱2,155 ₱12,081 ₱29,158
Long-term Assets
Long-term Assets ₱2,000 ₱2,000 ₱2,000
Accumulated Depreciation ₱400 ₱800 ₱1,200
Total Long-term Assets ₱1,600 ₱1,200 ₱800
Total Assets ₱3,756 ₱13,281 ₱29,958
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable ₱425 ₱4,281 ₱ 5,947
Current Borrowing ₱0 ₱0 ₱0
Other Current Liabilities ₱0 ₱0 ₱0
Subtotal Current Liabilities ₱425 ₱4,281 ₱5,947
Long-term Liabilities ₱0 ₱0 ₱0
Total Liabilities ₱425 ₱4,281 ₱5,947
Paid-in Capital ₱28,000 ₱28,000 ₱28,000
Retained Earnings (₱6,650) (₱24,670) (₱19,000)
 Earnings (₱18,020) ₱5,670 ₱15,011
Total Capital ₱3,330 ₱9,000 ₱24,011
Total Liabilities and Capital ₱3,756 ₱13,281 ₱29,958
Net Worth ₱3,330 ₱9,000 ₱24,011

v. Assumptions to Projected Financial Statements

The following table lists important financial assumptions.

General Assumptions
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

B. Break Even Analysis

he Break-even Analysis indicates what is needed in monthly revenue to break even.

Break-even Analysis
Monthly Revenue Break-even ₱1,502
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost ₱1,502

C. Sources and Uses of Funds

Sales and Marketing – The compilation CDs will be used for marketing purposes. The initial
goal is to develop visibility for LoRadio as a record label. This will assist in the process of
introducing up and coming bands bands to LoRadio. Once the bands have been signed to
exclusive contracts by LoRadio, then the signed bands will be the only bands on the compilation
CDs. LoRadio has not purchased any equipment for the mixing, mastering, CD production, and
artwork/barcode expenses. These activities will be outsourced to keep capital expenditures low.
Expenses related to the cost of production of the compilation captured in the sales and
marketing costs include:

 initial studio recording time

 mixing, mastering expenses
 CD label costs (artwork, barcode, etc.)
 Promotional CDs given out.