#989387 - 01/21/04 08:04 PM
Thoughts on business structure.
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NYC Drew
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Heinz, Lee Jeans, Cisco, GM, Nabisco etc
Did these companies start from the vision of one person?
How do you create and sustain an entity to function long after you're dead?
I see a LOT of corporations (in NY) that are in essence, sole proprietors protecting themselves behind being incorporated (mee too!!).
What's your business structure? What is your projected "half life" of your company? How far down the road do you look, and plan for?
NYC Drew
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#989388 - 01/21/04 11:13 PM
Re: Thoughts on business structure.
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bdbklyn
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Very good question NYC Drew. However, a very broad topic. I'll have to defer to some of the others here for a bit as I am in the process of "re-inventing" myself......
bill
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#989389 - 01/21/04 11:20 PM
Re: Thoughts on business structure.
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jackpine
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I hide behind a sub-chapter S corp.
Have "parent" company for all my offshoots.
I'll find out how it all worked this year when I meet with my CPA on Monday. 
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#989390 - 01/26/04 05:53 AM
Re: Thoughts on business structure.
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bdbklyn
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NYC DREW,
Most business books will show you a 5 year window for your forcasting and planning. You include the last complete fiscal year, the current fiscal year, next year and the two following years.
bill
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#989391 - 02/04/04 08:22 PM
Re: Thoughts on business structure.
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steveD
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A word to the wise about forecasting.
A 3 month forecast should be very accurate
A 6 month to 1 year forecast should be an educated guess.
A 3 year forecast is more of a wild assed guess based on your aspirations. But market swings can make any one year completely off.
A 5 year forecast can be a little more accurate than a 3 year just because of the law of averages. It should be used in terms of equipment and expense management, and as a guideline for tracking industry changes. The 5 year plan is most useful if you incorporate check points to use so you can compare reality vs forecast along the way and make corrections as needed.
Steve
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#989392 - 02/05/04 01:49 PM
Re: Thoughts on business structure.
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bdbklyn
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Interesting post SteveD although it sort of sefies it's own logic. If a five year forecast is more accurate than a 3 year, why would a 6 month be more accurate than a 3 month according to your law of averages? Without firmed advance bookings for the upcoming three months and doing your forcasting on being booked to capacity 18 days per monthth law of averages dictates that you could be booked for 12 days per month for three months and 24 days a month for 4 months very easily. When doing your forecasting you must use a recent known empirical data to be realistic. Such data would be an average of the last three years if possible. Keeping very good searchable records is paramount (shameless plug) to being able to accomplish this. Also in forecasting it is essential to compare sales as they actually happened versus collections as they occur. I have seen studio's books that have a session that's 90 days past due being collected in the same week that a deposit for a long term project is received showing that months income to be off the scale while the surrounding months are very lean. If this is the only kind of record keeping you do beware....
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#989393 - 02/12/04 09:09 AM
Re: Thoughts on business structure.
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NYC Drew
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Guys,
Thanks for your insight(s) and different perspectives.
I am finding that being in business is akin to riding a saddleless 4000lb piss-angry bull.
So many "pop ups", that require changes in direction and focus.
I started on the path of sole proprietorship in 1998.
What I envisioned in 1998 for 1999, 2000, 2002 and 2004 are quite very different from where I was (or am) at those points in time.
Today, I'm projecting and forecasting towards 2005-2010, but I'm keeping things much looser.
I'm also paying much more attention on how to best protect and maintain those assets I already have (pro audio gear not included in this definition of "assets"), and how to perpetually within legal definitions, maintain tax compliance without parting with a higher % of funds.
Also, I'm taking additional steps to safeguard and firewall my personal stuff from the business side of things. Umbrella insurance. Disability insurance. Handling most/all of my work under the corp versus doing stuff on a handshake - which is my natural inclination.
Last, being creative is harder, with having to process so much "stuff". I haven't exercised in two weeks, not been in the studio for a l-o-n-g while, been off the road since late Dec,...trying to tie down new 2004 business etc etc.
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#989394 - 02/17/04 02:53 PM
Re: Thoughts on business structure.
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steveD
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a 5 year forecast is usually achieved by looking at more objective means, i.e. your BIG goals. You need to set a direction so you know when you are going off course. It is also a long enough period that if you are more likely to end up with an average CAGR (compound Average Growth Rate) that is closer to the orignal you hoped for (more averaging).
Within a 3 year period is very likely that you have 1 or 2 years that are way off due to market conditions (recession, terrorist attack etc). This "off" year will have more effect on a 3 year CAGR than on a 5 year CAGR.
The 6 month to 12 month window is equally volatile because one bad month has a very big effect on CAGR.
You are correct in that one needs to look at averages rather than peaks (rms vs peak) in planning. If you are projecting a budget to support growth over a period of a year, it would be wise to keep any spending increases within the CAGR slope of the previous 3 to 5 years. If looking at a one ime monthly expenditure it is a good idea to keep to the slope of the 3 months previous moveng average.
These are all guidelines. they are best if used as sanity checks for spending aand growth plans (especially if they involve adding fixed cost).
The 2 things that kill most business are: building and staff expenditures.
- Too much and your costs will kill you
- Too little and your competition will kill you.
In the studio business we should add equipment to this list.
Steve
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