Professional Documents
Culture Documents
Introduction
Gigmasters is an owner-managed company. The two people who run the site are its
co-founders, Kevin H. Kinyon and Michael J. Caldwell. Recently they brought John
Sortino onto their Board of Directors. All three of these gentlemen have extensive
experience in Web development, business development and financial
management.
Services
There are a number of other websites that connect buyers and sellers of services,
however only Gigmasters provides the emphasis on music and entertainment. By
doing so, it offers significant advantages to all of it’s customers. For example, only
Gigmasters provides online press kits allowing customers to both hear and see
entertainers before they hire them. Also, only Gigmasters has developed an online
bidding system which supplies customers with competitive bids from the
entertainers. None of its competitors do.
The Market
Research shows that in the United States, close to $9 billion is spent each year on
music and entertainment. The largest component of this market is the wedding
industry. There are 2.3 million weddings each year, with over $3.2 billion spent on
music. Other components of the industry include corporate events, nightclubs,
festivals, Bar Mitzvahs, fraternity and sorority functions, high school proms, country
clubs, and hotels.
There are also approximately 13,239 traditional (offline) booking agents in the
United States. They earn $2.4 billion annually. Many have websites, but few, if any,
offer the ability to book directly online. These sites are more like corporate
“brochures” and spotlight only a few of their big-name entertainers with little more
than a phone number available for further information. Also, these agents
traditionally focus on high-end bookings, generally ignoring the vast market of
individuals looking for bands for their weddings, private parties, fraternity dances,
corporate Christmas parties, and high school proms. These types of events make
up the Gigmasters marketplace.
The company will seek to form strategic partnerships with sites such as
WeddingChannel.com, TheKnot.com, iParty.com, and Evite.com, whose customers
are planning weddings, parties, and events. Gigmasters will offer these high traffic
sites the opportunity to share in a viable revenue sharing program, and, in return,
Gigmasters will benefit from a steady stream of traffic and increased revenue.
Financial Considerations
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Past Performance
1998 1999 2000
Sales $0 $0 $17,066
Current Assets
Cash $0 $0 $15,793
Long-term Assets
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $1,510
Current Liabilities
Accounts Payable $0 $0 $0
Current Borrowing $0 $0 $0
Earnings $0 $0 $0
Payment Days 0 0 30
Sales on Credit $0 $0 $0
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your own business plan.
1. A customer visits the Gigmasters website and types in her ZIP code, the event she is
planning, and the type of entertainment she is seeking.
2. She is immediately furnished with a list of entertainers in her area. She accesses
online press kits where she listens to audio samples, watches video, reads
biographies, and views client testimonials. She then checks off the ones that interest
her.
3. The customer then fills out a brief description of her event. This description is
referred to herein as a “gig request.”
4. Each entertainer selected by the customer then receives a “gig alert” email
describing the customer’s event. The entertainers then each have an opportunity to
submit a bid for the customer’s event.
5. Based on the bids received, the customer can then decide which entertainer she
wishes to hire, and may contact the entertainers offline for further information to
aid in her decision.
6. The day after the event, a follow-up email is sent to the customer inquiring whether
any groups she contacted were hired. Those that were are then invoiced for an
amount equal to 10% of what they earned. This commission is agreed to in advance
by all entertainers who sign up with the Gigmasters website.
Once the gig request is submitted and verified by Gigmasters, an email is then sent
to each entertainer contacted for the event. This email alerts the entertainer that
they have a potential customer. Upon clicking the hyperlink contained within the
email, the entertainer can then see details about the gig including date, time,
location, and description. At this point, the identity of the customer has not been
revealed, thus preventing the entertainer from bypassing our system and going
directly to the customer. Here is an example of the email the entertainer initially
receives: (Discussion Omitted)
At this point, each entertainer that receives the request will have an opportunity to
submit a “bid” to the customer. This bid will indicate the rate the entertainer plans
to charge based on the information provided. The consumer starts receiving
various bids through email and is in the position to be able to make an informed
decision. At this point she can either hire one of the entertainers on the spot, or she
may follow up with either a phone call or an email.
Out of all the requests Gigmasters receives, the largest component is live bands.
This is due in large part because the company has received the most publicity in
this area. It has been written up in musician magazines (e.g, Gig Magazine, February
2000 “106 Best Websites For Giggers”) as well as wedding magazines (e.g. Bridal
Guide, November 2000 “Webbing Planning”). Gigmasters has established a market
niche for itself in this area.
The percentage of gig requests that result in actual bookings is currently 5%. This
was achieved while both founders were working only part-time on the site. The
company believes it can increase this number to 7-8% in a short amount of time
once both founders are working full-time. This will be achieved through
improvements to the booking system, as well as better follow-up on gig requests.
Currently, follow-up on gig requests is done via automated emails, and the
company will supplement this with telephone inquiry. In addition, once broadband
becomes more prevalent in homes around the country, video streaming will
improve substantially in quality, and this should increase the number of customers
who are able to make their hiring decision entirely online. This number is expected
to grow to 16.9% of U.S. households by 2003, compared to the current 3.1% level.
3.3 Press Kits
Gigmasters provides each entertainer with an online press kit containing:
The purpose of the press kit is to provide the customer with enough information
about the performer to eliminate the need for an offline press kit to be sent in the
mail–a process that can take several days and can become quickly outdated.
Eventually, the audio and video samples provided in the online press kit will also
replace the need for a demo tape to be sent. The entire demo tape will be accessed
online. This will become more plausible once broadband, or high speed Internet
access, becomes more widespread.
There is an additional function of the press kit. The press kit acts as a website or
homepage for those entertainers who don’t already have one. Groups are given a
Web address. For example:(Discussion Omitted)
Bands and entertainers can place these URL’s on business cards, flyers, brochures,
and other promotional material. Besides helping the musicians, this also provides
the added benefit of free branding of the Gigmasters name by being visible in the
URL.
Entertainers are provided with usernames and passwords enabling them to update
their press kits whenever necessary. By letting entertainers update this information
themselves, it keeps the information accurate and current, while eliminating the
need for Gigmasters employees to do the updates themselves. While the
entertainers are updating their press kits, they also gain access to their control
panel, a special screen showing statistics on their account. This information
includes how often their press kits were viewed by others, as well as in which
categories they were most often found (e.g. blues, top 40, etc…). This control panel
also lets them update billing information, pager numbers, email addresses,
category selection, audio & video samples, and username/passwords.
3.4 Technology
One major component of Gigmasters’s service is based on customers being able to
view audio and video samples of each entertainer online. While audio is fairly wide-
scale at present, video streaming is in its earliest stages. Broadband, which is what
makes video possible, is predicted to grow to 16.9% of U.S. households by 2003,
compared to the current 3.1% level. Once video becomes commonplace, it will be
increasingly compelling for customers to make their hiring decisions entirely online
without having to revert to the off-line world. This should dramatically increase the
number of bookings and commissions that take place. Overall improvements to
bandwidth, technology, and computing power will all contribute to a more
favorable user experience on the Internet in general, and on Gigmasters
specifically.
Management’s strategy has been to focus all energies on the current revenue
streams, which are:
1. booking commissions
2. corporate sponsorships
3. merchant services
We recognize the fact that there may be other revenue streams that can be
developed in the future. With a loyal database of 15,000+ entertainers, there will
opportunities to up-sell them additional products and services in the future, but
these have not been factored into revenue projections at this point.
Gigmasters has begun to test its booking system on services outside of the area of
entertainment. It has discovered that the same system that a person uses to hire a
band or DJ could, with some modification, be used to hire a painter or a math tutor.
In the United States, approximately $6.38 trillion is spent each year in the services
sector, and Gigmasters has the potential to expand its reach into this vast market.
Some of the new categories it has tested are listed below: (discussion omitted).
By expanding into these ares, Gigmasters could increase its market exponentially. It
would also provide people with a reason to make repeat visits. For example, a
couple could use Gigmasters to book a band for their wedding. Three months later
they might return to hire a painter. Two months following, they could come in
search of a financial planner. At present, the emphasis continues to be in the area
of entertainment. Expanding into these new areas, however, could greatly increase
revenue and profitability.
Market Analysis Summary
Research shows that in the United States, close to $9 billion per year is spent on live
music and entertainment services. The largest component of this is the wedding
industry.
On the supply side, there are over 124,520 professional musicians and entertainers
earning a total of $13 billion per year. This does not include the vast number of
amateur musicians, many of whom make up the company’s database. The
company has targeted this segment aggressively, and has also begun to target the
91,191 caterers and 65,395 photographers who earn $3.4 billion and $9.3 billion
respectively.
Weddings
Corporate Events/Conventions
Nightclubs/Bars/Restaurants
Bar/Bat Mitzvahs
Festivals
Vacation & Resort Entertainment
Fraternity/Sorority Dances & Parties
High School Proms/Dances
Country Club Entertainment
Hotel Entertainment.
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Market Analysis
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Corporate Events
The corporate events industry includes, among other things, promotional events,
conventions, expositions, and meetings. It is an $82 billion industry with 4.5%, or
$3.76 billion, spent on entertainment. It is estimated that this industry will grow at a
rate of 4.2% per year, paralleling the current boom in the hospitality industry.
Gigmasters will target this segment aggressively and seek to become the definitive
music and entertainment source for corporate event planners and industry
professionals. The company will continue to benefit from the continued growth in
the number of lavish promotional events held by corporations each year.
Bars/Nightclubs/Restaurants
This segment of the market includes bars, nightclubs, taverns, pubs, and cocktail
lounges. There are approximately 52,900 such establishments in the United States.
If the average budget for live music is $400 per week, it is a $1.1 billion dollar
industry. In addition, there are approximately 100,000 restaurants in the United
States, many of which feature live music. This sector should register annual growth
of 3.6%.
There are approximately 73,300 Bar and Bat Mitzvahs in the United States each
year. Families spend an average of $20,000 for the event, making it a $1.5 billion
industry. Approximately 5%, or $73 million is spent on music, 7.5%, or $110 million
is spent on photography, and 37.5%, or $549 million is spent on catering.
Strategy and Implementation Summary
Gigmasters collects a 10% commission each time it brokers a transaction between a
buyer and seller of entertainment services. This is referred to as a “booking.” Since
it instituted its current booking system, Gigmasters successfully booked over 100
gigs at an average commission of $100. This was accomplished with no major
advertising, and with the founders working only part-time on the business. The
company predicts that in the year 2001, when the company is funded and its
founders are working full-time, bookings will grow by 20% per month, and by
October of 2001 will be averaging approximately 145 bookings per month with
commissions each month totaling $14,000. Gigmasters collects the commission
from the seller (the entertainer). Gigmasters does not charge the customer (i.e the
buyer) anything to use its service.
In order to determine the best revenue model, the company tested several
payment scenarios. Initially the entertainers were charged a flat rate to be listed on
the site. Even with a substantial free-trial period, however, there was a reluctance to
pay in advance for a service largely unproven. The company then introduced a
mixed payment option in which entertainers could choose between a flat-rate fee
structure or a commission-based plan.
5.1.2 Links
Because of its value as a resource to musicians, Gigmasters has been listed on
numerous musician websites in their ‘Recommended Links’ sections. For example,
Harmony Central, a popular destination for musicians, has Gigmasters listed as a
recommended site for bands. Other musician sites displaying Gigmasters as a
recommended link include: The Music Scene, the Professional Music Forum, and
the Indie Journal. Links are a vital form of free advertising, and frequently occur
without notice or request. Others need to be actively pursued. Increasing the
number of sites which link back to Gigmasters will be a major focus of the
company’s marketing effort. Often it is a process of browsing from site to site
looking for opportunities to register the company’s link. It is estimated that
approximately 29% of the site’s current traffic is originating from links from other
websites. In addition to links that target musicians, the company will aggressively
pursue links that list Gigmasters as a resource for brides/grooms, corporate event
planners, and club owners. These links should have a substantial impact on the
site’s overall traffic.
Also, many of the musicians and entertainers have put a link to Gigmasters from
their main website. This is accomplished by a logo provided to each artist upon
signing up. The hyperlinked logo identifies the entertainer as “Officially Registered
With Gigmasters.” This lends the group increased credibility by being associated
with a network of entertainers such as Gigmasters. At the same time, it provides a
form of free advertising for the company.
5.1.4 Co-Branding
The company will seek to form strategic partnerships with sites such as
WeddingChannel.com, TheKnot.com, iParty.com, and Evite.com, whose customers
are planning weddings, parties, and events. Gigmasters will offer these high-traffic
sites the opportunity to share in a viable revenue sharing program, and, in return,
Gigmasters will benefit from a steady stream of traffic and increased revenue.
In this type of co-branding situation, a link or graphic is placed on the partner’s site
with words to the effect of “Click Here To Find a Band or D.J.” When a user clicks this
link, it takes them from the partner’s site to Gigmasters. The page will have a look
and feel which mimics the partner’s design but which lives on Gigmasters’ servers.
The user would search just as if he/she came to Gigmasters directly. Then end
result is a revenue share between the partner site and Gigmasters. The partner site
would be providing the traffic, while Gigmasters would be providing the revenue-
generating booking system. Gigmasters would handle the billing and would
distribute a percentage of the revenue to the partner company.
There will likely be additional costs to the company as a result of a co-brand. The
increase in traffic may require the purchase of additional servers to handle the
volume. In addition, Gigmasters will need to hire one or more employees to handle
the increased customer service and billing responsibilities.
The second tier of competition comes from wedding sites such as TheKnot.com and
ModernBride.com, which focus on providing content on wedding planning, but
have also a section providing names and addresses of local merchants. Again,
because the information they provide is so limited, it is not any more useful than a
phone book.
There are also approximately 13,239 traditional (offline) booking agents in the
United States. They earn $2.4 billion annually. Many have websites, but few, if any,
offer the ability to book directly online. These sites are more like corporate
“brochures” and spotlight only a few of their big-name entertainers with little more
than a phone number available for further information. Also, these agents
traditionally focus on high-end bookings, generally ignoring the vast market of
individuals looking for bands for their weddings, private parties, fraternity dances,
corporate Christmas parties, and high school proms. These types of events make
up the Gigmasters marketplace.
Our internal search engine is combined with audio and streaming video samples so
customers can ‘audition’ local performers from the comfort of their living rooms.
Co-branding, as described above, will give the site legitimacy by linking it to other
well-known and trusted websites. In addition, we have completed processes to be
marked as a secure site for handling sensitive customer data and billing.
These gigs must be profitable for performers, or they will stop responding to gig
requests. We will limit each customer to choosing 3 entertainers of each type per
event (for example, three bands, three photographers, etc.) in their gig request.
Each gig request thus represents a 1 in 3 chance for that entertainer to get a gig.
In addition, since each gig request and bid in response are routed through our
system, we will be able to keep tabs on how the matches are going.
Any entertainer who repeatedly fails to respond to gig requests will be contacted to
determine whether there are problems in our listings of their services, or the types
of requests they are receiving. Those who are simply too busy to accept gigs will be
removed from the listings.
Any entertainer who repeatedly submits bids and fails to win contracts will be
contacted to determine the problem. Are they submitting bids far out of line with
their local competition?
The day after an event takes place, the company contacts the customer. The
purpose is to: a) inquire about the level of satisfaction with the performance, and,
b) to discover the rate the entertainer charged to the customer. Once the amount is
revealed, an invoice is distributed to the entertainer for an amount equal to 10% of
his/her earnings.
The invoice is sent both online and offline. An entertainer has 30 days to remit
payment, and may pay online with a credit card or may send a check. If payment is
not received within 30 days, his/her online press kit is de-activated. Press kits are
re-activated once payment is received. To date, the company has collected on 93%
of its bookings.
Because Gigmasters has online billing capabilities, the company will offer the
entertainers the option of having commissions automatically billed directly to their
credit cards. This will shorten the number of days it takes the company to get paid,
and will be more convenient for entertainers.
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Sales Forecast
Sales
Booking Commissions $0 $0 $0
Other $0 $0 $0
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Mr. Kinyon launched Gigmasters in February 1997. Previously, Mr. Kinyon was a
financial management consultant for five years, most recently with Telekurs, USA.
In 1989, Mr. Kinyon earned his B.A. with Honors from Pace University with a double
major in Literature and Communications. He starred in the 1996 award-winning
short film “On The Nod,” has been a guest speaker at Trinity University in Dublin,
Ireland, and is a frequent contributor to Internet industry publications.
Personnel Plan
Other $0 $0 $0
Total People 0 0 0
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General Assumptions
Plan Month 1 2
Other 0 0 0
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Break-even Analysis
Assumptions:
The company estimates it will not achieve profitability in the first year, especially
since we project the need to hire two additional full-time employees late in the year
to assist with marketing and administrative responsibilities. Their goals will be to
increase overall traffic to the site, increase the percentage of customers who fill out
gig requests and increase the percentage of gig requests that result in bookings.
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business plan.
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business plan.
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business plan.
Other $0 $0 $0
Expenses
Depreciation $0 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
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business plan.
Cash Received
Cash from Operations
Dividends $0 $0 $0
Assets
Current Assets
Accounts Receivable $0 $0 $0
Long-term Assets
Accumulated Depreciation $0 $0 $0
Current Liabilities
Current Borrowing $0 $0 $0
Long-term Liabilities $0 $0 $0
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Ratio Analysis
Percent of Sales
Main Ratios
Activity Ratios
Collection Days 0 0 0
Payment Days 27 23 19
Debt Ratios
Additional Ratios
Sales Forecast
Sales
Booking Commissions 0% $2,097 $2,517 $3,020 $3,624 $4,349 $5,219 $6,263 $7,516 $9,019 $10,82
Other 0% $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Total Sales $2,597 $3,017 $3,520 $4,124 $4,849 $5,719 $6,763 $8,016 $9,519 $11,32
Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Booking Commissions $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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Personnel Plan
Payroll 0% $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $12,733
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 0 0 0 0 0 0 0 0 0 0 0
Total Payroll $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $7,933 $12,733
General Assumptions
Plan Month 1 2 3 4 5 6 7 8 9 10
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.0
Long-term Interest 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.0
Rate
Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.0
Other 0 0 0 0 0 0 0 0 0 0 0
Other $0 $0 $0 $0 $0 $0 $0
Expenses
Sales and Marketing and Other $1,149 $1,239 $1,347 $1,677 $1,832 $2,018 $2,242
Expenses
Depreciation $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $9,662 $9,752 $9,860 $10,190 $10,345 $10,531 $10,755
Profit Before Interest and Taxes ($7,065) ($6,735) ($6,340) ($6,066) ($5,496) ($4,812) ($3,992)
Taxes Incurred $0 $0 $0 $0 $0 $0 $0
Cash Received
Cash Sales $2,597 $3,017 $3,520 $4,124 $4,849 $5,719 $6,763 $8,0
Subtotal Cash from Operations $3,159 $3,579 $3,520 $4,124 $4,849 $5,719 $6,763 $8,0
Additional Cash Received
Subtotal Cash Received $3,159 $3,579 $73,520 $4,124 $4,849 $5,719 $6,763 $8,0
Bill Payments $59 $1,767 $1,856 $1,938 $2,262 $2,418 $2,605 $2,8
Subtotal Spent on Operations $7,992 $9,700 $9,789 $9,871 $10,195 $10,351 $10,538 $10
Dividends $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $7,992 $9,700 $13,989 $9,871 $10,195 $10,351 $10,538 $10
Net Cash Flow ($4,833) ($6,121) $59,531 ($5,747) ($5,346) ($4,632) ($3,775) ($2,
Cash Balance $10,961 $4,840 $64,370 $58,623 $53,277 $48,645 $44,870 $42
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Current Assets
Total Current Assets $16,918 $11,523 $4,840 $64,370 $58,623 $53,277 $48,645 $44,8
Long-term Assets
Long-term Assets $1,510 $1,510 $1,510 $1,510 $1,510 $1,510 $1,510 $1,51
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $1,510 $1,510 $1,510 $1,510 $1,510 $1,510 $1,510 $1,51
Total Assets $18,428 $13,033 $6,350 $65,881 $60,134 $54,787 $50,155 $46,3
Liabilities and Capital Jan Feb Mar Apr May Jun Jul
Current Liabilities
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $1,705 $1,792 $1,863 $2,182 $2,332 $2,511 $2,72
Total Liabilities $4,200 $5,905 $5,992 $1,863 $2,182 $2,332 $2,511 $2,72
Paid-in Capital $15,657 $15,657 $15,657 $85,657 $85,657 $85,657 $85,657 $85,6
Retained Earnings ($1,429) ($1,429) ($1,429) ($1,429) ($1,429) ($1,429) ($1,429) ($1,4
Total Capital $14,228 $7,128 $358 $64,018 $57,952 $52,456 $47,644 $43,6
Total Liabilities and Capital $18,428 $13,033 $6,350 $65,881 $60,134 $54,787 $50,155 $46,3
Net Worth $14,228 $7,128 $358 $64,018 $57,952 $52,456 $47,644 $43,6