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March 2, 2017

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NUMBERS

March 2, 2017

 

 

 

 

 

 

 

 

To be honest, this isn’t the article that’s meant to go up now. I had written this fantastic article titled “A Letter to the Church” and second thoughts on one line in that article drove me into some research and I found that the very foundation for that article was flawed. So, it’s back to square one on that… Vexed! 

 

 

 

While pondering what I would use as cover up, I had a conversation with a friend, Ahabz, and he was talking about the articles and how he really didn’t see anything about revenues, or making sales. I explained that the concept of this blog isn’t to help you make money. It is to challenge your thinking and encourage you to consider the use of proper business strategies and activities to generate value and income for your business. Nonetheless, that brief conversation got me thinking about the different stories I have heard about failed businesses and I decided to write this article. 

 

 

 

Please, this article will not give you a strategy for your business and it will not tell you where money is in the industry or where you can get a part of the 200 Million US Dollars “Investment” money that the government gave to the “entertainment” industry. It will also not tell you how much the returns are regarding that. So, if that’s what you are looking for, you can stop now. The next article will be up in a week… its got controversy and insider secrets on your favorite artistes! *LOL* 

 

 

 

The purpose of this article however, is to discuss the most talked about objective of business and the primary reason why the majority of people come into the music business… this article will also discuss why the industry is missing the necessary infusion of funds it needs. It’s about Money… Revenue… Income… Profit… and it all boils down to one thing… NUMBERS!!!! 

 

 

 

How many CDs can we sell? What percentage of market share can we take? What percentage of Mind Share can we get? How many tickets can we sell to break even at the show? How many tickets can we sell to make more money than invested? How much will distribution and promotions cost us? Why aren’t the Banks paying us any attention? 

 

 

 

…NUMBERS!

 

 

 

A lot of business owners in the music business or any other business always say their ultimate goal is to make money… though they say it in several different words, it’s all the same thing. However, very few can show you numbers pertaining to the start up costs associated with their company and when they intend to break even and/or when they intend to make profit. 

 

 

 

To be fair, there is not enough documentation of anything in Nigeria. If you are talking to an investor and he tells you that his major fear is that the country is not safe due to crime and corruption, there is no response except for what the IG (Inspector General of Police) says. The newspapers then quote him and still provide no proof to back the claims. There is no statistical proof of decrease or increase in the rate of crime in the country. Perhaps this information is kept from us for National Security reasons… If you have any stats please send me. This applies to most sectors in the economy but that doesn’t change the fact that there are over 150 million people in this country and even if you can reach 1% of this number, you would be smiling to the bank. 

 

 

 

What happens with most businesses here is that they can find a rich guy that is willing to take a “stab in the dark” with the loose change he has at his disposal. If it works, “Great! We did it!” and if it doesn’t… well, it doesn’t! The investor should go find a new hobby! 

 

When people use this approach, most of the time there is no business plan or strategy. The guy with the money and the guy who found the guy with the money both have a mental picture of where they want to take the business – Most times conflicting destinations as well. Then they collide and fall out with each other and the artiste is hanging in the middle… Lost… Gone… Sometimes, forgotten! 

 

 

 

Another scenario is that two or more friends come together to start a business and in trusting each other, they don’t discuss their terms or profit sharing. This is mostly because they both believe in the project so much and they both trust each other’s drive and passion (This is rubbish by the way, no offence). The other reason is that they don’t really know what the financial projections are to start discussing profit sharing in the first place. They have an idea, but why offend the other guy and make him think he is not trusted? So, they chill and wait for when money comes. Then they fight over it. 

 

 

 

Let me explain something… A contract is not only about trust, it is mostly about Clarity! It provides a clear understanding of what to expect when the endeavor becomes successful. 

 

 

 

This will not be a long article. What I am saying is that other sectors like the banking sector, will not pay attention to the music industry because they can’t see how what we do in the music business is similar to what is being done by properly structured businesses in other sectors of the economy and this is because we don’t treat what we do like a business. We go into business assuming, guessing and hoping instead of establishing some sort of certainty or assurance for ourselves and for potential investors. 

 

 

 

Do surveys and opinion polls… Distribute and review questionnaires…  organize brain storming sessions… partner with people with the skill sets you need… hire professionals… take the time to calculate what you need, then figure out how you intend to get that money back from the business. Develop measures to project and track expenses… document these things. 

 

 

 

I would advise you to look into developing up a quantitative model… or models.  This helps you see how things might turn out in the future with regards to numbers and how they affect certain parts of the business. Models are sometimes very complicated math constructions done by professionals, especially in big companies. However, for small businesses like most of the ones in the entertainment industry, it could simply be a few numbers on an excel spreadsheet. An understanding of probability would also help. You remember that topic in business maths in school, abi? Yea, that one! I hated it too but see why you should have paid attention in class anyway? The future is uncertain and probability is a way to describe uncertainty in numbers.

 

 

 

By taking these precautionary steps, you take account of the future without having to spend the money, which may result in a huge financial mistake! Let me put this differently; if you decide to try out a new business, it is more expensive to release funds to set it up and test if a business idea would work or not. It is less costly to make projections based on calculated risks of how much sales would be made or what the outcome of such an endeavor would be. The idea is to reduce risks and reduce waste! 

 

 

 

There are other things that make a business, not just numbers, however a business that ignores money altogether is bound to fail. If you intend to make profits, it is important to understand the concept of numbers! 

 

 

 

One more thing, take some time out to update yourself about Management Sciences or Operational Research or Quantitative Analysis. Don’t continue to build your business based on luck… don’t continue to build blindly… Don’t be ignorant! 

 

 

 

I repeat... 

 

 

 

Take some time to understand the concept of NUMBERS!

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