Good Vibrations

Tweet

The execution question is more straightforward, if also more difficult to resolve. "The key word around here is going to be service," Silverman says. "We're not in the recording-studio business, we're in the hospitality business." But it's not certain whether Sanctuary can deliver what it says it will. No matter how important service is to the people in charge, getting employees to care about it is something else.

And finally there's a more fundamental question, the answer to which Silverman and Kessler take for granted. Will customers really care about the comforts they think are so important? Or is the niche too narrow? True, the hottest studios in New York -- including the place where Springsteen and Madonna record -- may not offer fruit baskets as standard policy, Kessler observes. But he and Silverman think that in the future clients will expect more.

"Once people try us," Kessler says, "they won't want to work anywhere else. We're going to put fun back into the recording studio."

EXECUTIVE SUMMARY

* THE COMPANY: Sanctuary Recording Inc., New York City

* CONCEPT: Midpriced recording and music production studio emphasizing service and comfort

* PROJECTIONS: Third-year pretax profits of $890,660 on revenues of $1,764,740 (net margin: 51%). Profitable from third month of operation

* HURDLES: Convincing artists that comfort can help them perform better, that it's worthwhile to forgo some state-of-the-art equipment for ambience; achieving positive cash flow quickly enough so that thin capitalization won't hurt

FINANCIALS

Sanctuary Recording Inc. projected operating statement, monthly

Year one Year three

Utilization rate 51% 72%

REVENUES

Rentals: studios A and B (average $ 95/hour) $ 58,529 $ 83,568

Rentals: editing rooms (average $ 55/hour) 30,012 48,382

Other rooms 10,241 23,192

Equipment rentals and tape sales 5,329 7,314

Discount 19,557 15,394

GROSS REVENUES 84,554 147,062

EXPENSES

Manager's salary and bonus 3,422 5,766

Other payroll 14,576 16,546

Rent 4,465 5,308

Payroll and rent taxes 3,067 3,446

Utilities and telephone 3,415 3,265

Supplies, contingencies, and decorating 3,091 3,320

Promotion 1,542 1,500

Maintenance 500 1,000

Legal and accounting fees 1,750 1,000

Bad debt (5% prediscount revenues) 5,206 7,757

Miscellaneous 2,058 3,855

Total expenses 43,092 52,763

NET OPERATING INCOME 41,462 94,299

Depreciation/amortization 12,917 13,217

Interest and principal 16,384 6,360

NET PRETAX PROFIT 12,161 74,222

KEY PERSONNEL

Tom Silverman, 34 Founder and owner

Chairman and founder, Tommy Boy Music Inc., which since 1980 has become one of the top 10 independent record companies in the United States and is half owned by Warner Bros. Records . . . partner in New Music Seminar, a music-industry convention . . . owner and publisher, Dance Music Report, a trade publication, since 1978 . . . B.A., Colby College, Waterville, Maine

Howard Kessler, 28 General manager

At Sanctuary since January . . . studio manager of Eastern Artists Recording Studio, East Orange, N.J., 1986 to '88 . . . assistant to music director, radio station WXRK, New York City, 1985 . . . manager, Mr. G's nightclub, Fairmont, W. Va., 1981 to '82 . . . B.A., Salem College, Salem, W. Va.

COMPETITIVE ANALYSIS

Sanctuary, Sanctuary Industry

annual projection annual projection average *

1989 1991 1987

Age of company (years) 1 3 13

Revenues (in $ 000) 1,015 1,765 418

Net profit margins 14% 51% NA

Employees 6 18 10

Control rooms 2 2 1

Room utilization rate 51% 72% NA

Prices ($ /hour) $ 30 to $ 120 $ 30 to $ 120 $ 96 to $ 160

* For New York City studios

Source: Pro Sound News

 PREV  1 | 2 | 3 | 4