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Author Topic: Business Minded Questions  (Read 17648 times)

Nathan Riddle

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Business Minded Questions
« on: September 15, 2016, 06:38:05 pm »

So I have a small company we do maybe 10-15 shows a year of varying sizes.

It started as a hobby, I'm trying to transition into a full fledged small business. I know it won't necessarily make me millions, but I genuinely love this world, install; gigs; gear; etc. and want to pursue it more so.

I'm very curious as to how to obtain the correct knowledge on how to be business like/minded. Details are maybe what I'm after or general advice.

I realize some questions might be a bit forward of me so if it doesn't sit well with you don't answer, answer in PM, or ask me to edit OP.

Some background on me personally, as it may be relevant.

I have an Electrical Engineering degree. I am a software test developer by day. I have a wife,  I'm young. I love research and finding the best/most correct way to do things. I've been in AV since 9yrs old when I learned lighting and sound. I don't profess to know everything, but I am trying to learn as much as I can so that I can grow in my capabilities, so that I can keep doing what I love... AV.

And a big thank you to all the extremely helpful information this form and the good folks here have provided. There is a wide, varied demographic here that gives a certain strength to this forum. I would not be where I am today if it wasn't for this forum. I hope to give back, as I mature and grow in knowledge, to this forum in later years.

I'll gladly except literature, articles, search phrases, etc. to guide my research; I don't want to accept handouts, while I love reading what y'all have to say...I realize it's not always worth your time to write up a huge response when a book might have plenty to say about said subject.

Thanks to all. Feel free to keep things generic; I know some of these might be touchy subjects.

General.

Terminology of personnel? - BE = Band Engineer, Roadie = setup/maintain equipment for touring band, LD = lighting designer, ME = mixing engineer. Etc. what are all of them?

What books should I be reading - Bob McCarthy? others?

What videos should I be watching - Merlijn van Veen and Timo's look good; what else?

Conferences/Training - Syn Audio Con looks good also SMAART training... other ideas?

Rigging/Flying - I took a statics course in college. I know this isn't enough, but when does it become necessary to involve someone higher up and start eating my marginal profits?

Certified - When is it necessary for me to be certified or have someone certified? Electrical installs/gig, Rigging/flying install/gig, 30lbs or 50lbs?

Should I invest in myself in proper training for rigging/electrical work relating to theater/av/company/gigs etc? when is this a good idea?

Money Things.

Wages / HR - I've read an article on the main site about the general pay scale, and I know it varies by area. But what is a fair wage for different personnel roles?

Incentive Fee - I've thought of having this for when someone helps me get a gig, what percentage or thoughts do y'all have?

Price per gig - I've tried doing based upon labor & cost of rental of equipment, but that isn't the whole story...what about depreciation, what percentage per item cost, msrp vs going used price, and other factors?

Discounts - how does this work?

Depreciation - how to plan for that, what software/excels how much/year etc?

ROI - how do I calculate this, what is a good ROI...etc.?

Repair percentage - how much of gross income do you redirect to different places?

Insurance percentage - how much of gross income do you redirect to different places?

Advertising percentage - how much of gross income do you redirect to different places?

New gear percentage - how much of gross income do you redirect to different places?

Cost of doing business - what does it typically look like?

Travel - how to do the costs involved, what percentage of gig is worth it?

Inventory management - how to keep track of things;

Logistics - is this just moving gear from place to place or is there more to it?

Taxes - what should I be tracking? P/L quarterly statements? We have wave apps software for documenting purchases/invoices.

1099's - $600 is when they're needed for employees correct? How to I ensure my employees are protected when giving their SSN to me? Buy a safe or something?




Thanks again, really just grasping at straws for the moment. Not really sure whether to plunge head first into this or keep loafing along as a hobby. Kinda wanna do the research first and find out, ya know?
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Caleb Dueck

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Re: Business Minded Questions
« Reply #1 on: September 15, 2016, 07:15:48 pm »

What I think is best, hence what I did - work for a larger, established company.  I quickly learned not only a lot, but it showed what areas I should focus on. 

A big reason I chose this path, was based on a common observation.  Companies that are experienced with a common size/scope of projects can scale down, but not really scale up.  Example, doing larger shows isn't based on tripling the number of speakers on a stick; it's trucking, logistics, buying what will make money vs fun, ROI, depreciation, etc. 

Then after 5-10 years of working for a large company or 2, you'll have not only significantly more knowledge and experience - you'll be able to evaluate if it makes sense to start your own business.  If it does, you'll have potential for starting with more/better employees, clients, reputation, etc. 
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Re: Business Minded Questions
« Reply #2 on: September 15, 2016, 09:38:48 pm »

You've brought up a lot of good topics about running a business.  Most of your questions may answer themselves based on how YOU want the business to be run and/or to succeed.  The best plan (as was mentioned in the previous post), is to work for a larger company and see what/how/when/why they do things.

First, you need to find out how to "establish" your business... will you be an LLC; will you be an INC; will be an S-CORP?  Your taxes on your business will be affected by how you file your business.  This will probably cause a trickle-down effect for some of your other questions.

Determine where/whom you can market your services to.  Knowing this will also affect how you manage other things in your business (i.e. your list of topics).  You may want to conduct a SWAT analysis of your business in your area.  Look up SWAT (as it's related to new business) to see what it is... it may open your eyes!

I own/run an LLC.  It's a small company, and unless something comes up that will take me to the "big leagues", I have no intention growing any larger.  I work out of my house and am busting at the seems with storing sound and lighting equipment.  There are plenty of sound companies around here (large and small).  I cannot complete with the larger companies; they own that market.  I feel confident that I could play along with them, but for me it's not worth the investment/time for a "pissing contest".  I did a SWAT analysis several years ago... which is why I've decided to stay where I am (as a small business).

There's a lot to running a business and many times doing it alone can be overwhelming.  If you have't already... check this site out:  https://www.score.org/        They can help you with a lot of business related topics (related to the business, not to audio!)
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Nathan Riddle

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Re: Business Minded Questions
« Reply #3 on: September 16, 2016, 10:56:02 am »

Thanks for the replies!

I think I left out a crucial component in my background... I have/did work for a sizeable company for a number of years. It taught me almost everything I know about truck packing; logistics; proper setup; how to interface with the band; etc. I actually plan on reaching out to the owner again as we became good friends and seeing if I can learn from him some more. Really great guy, perhaps not as technical as the people on this forum (he created line arrays out of K12's 9x boxes a side.. crazy comb filtering but the audience doesn't care/know lol [older drunk people]). But a good guy who works hard and does some sizeable festivals/events for our area.

Our company is already structured as an LLC and we did taxes last year. Perhaps my taxes question isn't really what I need.
I have a business partner, but he's not as invested (attitude wise) as I am, so I'm considering buying him out and taking the company to the next level, hence why I'm asking questions.

Honestly, I'm really curious as to the percentage of money in relation to rental, depreciation, gig rate, travel distance, etc. I just want to set my pricing correctly; I feel that as I'm coming out of a hobby my pricing is fairly low/not sustainable. We have made great strides in this avenue, but are still learning.

I would say I have a few different markets. Worship retreats/events, Install, & DJ/wedding. I think I want to stick within the small-medium sized company (The kind of size 2x SM80's and 4x TH118's can handle.


You may want to conduct a SWAT analysis of your business in your area.  Look up SWAT (as it's related to new business) to see what it is... it may open your eyes!

There's a lot to running a business and many times doing it alone can be overwhelming.  If you have't already... check this site out:  https://www.score.org/        They can help you with a lot of business related topics (related to the business, not to audio!)

I did a search for SWAT analasis, It keeps autocorrecting to SWOT. Iíll do some research there. As well as the score.org thanks for the info/help!
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Scott Olewiler

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Re: Business Minded Questions
« Reply #4 on: September 16, 2016, 11:08:24 am »

I am fairly new at this myself but a few things I've realized by making a lot of mistakes trying to grow the business over the last 3 years

Money Things.

Price per gig - I've tried doing based upon labor & cost of rental of equipment, but that isn't the whole story...what about depreciation, what percentage per item cost, msrp vs going used price, and other factors?   Charge at least as much as you can get someone else to do the gig for if you have to last minute. Make sure you're gettng paid a fair wage for all of your actual time. I always shoot for at least $50/hr , but sometimes make as much as $100/hr for my actual time. Depreciation and cost of gear is hard to calculate in I think, because how much per gig depends a lot on how many gigs you're doing. Hopefully if you make sure you're getting a nice hourly wage that takes care of itself? I'm sure someone has a better answer

Discounts - how does this work? Only discount on repeat business, never first time in. The guy who wants a dscount up front just wants it cheap. He won't be back.


Travel - how to do the costs involved, what percentage of gig is worth it? I have set prices for the actual gear and then add on a mileage fee . Traveling takes time. You need to be compensated for your time. Before I started to this I always felt I screwed myself on long distance jobs. Now, if they can't pay  me to drive, I don't sweat not getting the work. This goes back to making sure you get compensated for all your time. I don't mind driving for $50/hr



Don't be surprised if your business model changes as you get more into this. My initial plan was to do live music, but now 75% of my business is equipment only rentals for DIY weddings and similar jobs.  Deliver and set it up. Go back after the event and collect it. Time in between is mine to make other deliveries or do my own thing. Sometimes have 3 small systems out for a lot more money than I would get doing a live sound job.

Also, expanding your business doesn't necessarily mean shelling out more money for more gear. Hard to get any ROI on gear when you have to pay someone else a fair wage to take it out and run it.  If I already have the gear and can't take it, I'll have some else take it out but I'm not buying any more gear than I normally have to carry right now.

My new model is to secure the gigs, and then sub the extra work that i can't do out for 80-90% to someone else who takes their own gear out and does all the work. I keep the difference for a couple of phone calls and emails and no extra investment and am keeping almost the same amount as I would if I owned the gear and was sending someone else out.
« Last Edit: September 16, 2016, 11:12:45 am by Scott Olewiler »
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Ray Aberle

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Re: Business Minded Questions
« Reply #5 on: September 16, 2016, 11:50:30 am »

Hi Nathan,

You've got a great list of questions here! The first thing you need to do, though, is make a firm decision as to where you want the business to go-- stick with small bar/band gigs, larger festivals, touring concerts? Or do a lot of installs and maybe some retail? Then, you're going to want to develop a business plan. This is the blueprint for the boring stuff- all of the money things you asked about-- your goals and how you're going to achieve them. Take it from someone who didn't do a business plan- without one, you'll find yourself spending money on stupid shit.

For your general points- yeah, those are fairly on point- ME might more likely be "Monitor Engineer;" and then you have Systems Engineers/Systems Technicians. A1, A2, A3s. Stage hands. Local crew. Learn the difference between regular crew and union stagehands. Learn how to work with union folks. "Hey buddy, can you do me a favor?" often works better then "Hey you, do this." I wouldn't call the guitar or drum tech with the touring band a "roadie," though. (They probably make more then I do.)

The first book to start with, if you haven't already, is the Yamaha Sound Reinforcement Handbook. I found a copy at a local used book store for cheap.

idk about videos or conferences/training. I've not done any formal training. (And I probably should do the JBL VerTec systems training at some point... but I've had some GREAT mentors, as well as hired GREAT PA techs to deploy my system.)

Rigging/Flying: This all depends on what exactly you're doing. I hate giving a non-answer, but every case is different, as to whether or not you'll be needing to worry about riggers. Many times, a venue has riggers familiar with their facility that you're going to have to use, so if you are flying PA, then they will handle the actual attachment of your motors to their points. But, you'll still need to have someone qualified on the ground (part of your crew) that knows how to safely attach your load to the motor(s).

So let's take a sidebar: Crew and staffing is dependent on the size and scale of your shows. How large of shows are you doing now? Are you doing them by yourself, or do you have a business partner/friend/whatever that is helping you with the show? Are you paying them, and then are you billing this extra labor to the client? Do you find yourself getting worn out on shows because you exerted SO MUCH effort getting setup that now you can't do as good of a job on the show? And then you also have to load your gear out of there at the end...

One realization I came to the past couple of years: When I would spend huge amounts of energy doing the work of three people on load in, all I was REALLY doing was making MY CLIENT richer at the expense of my personal health & well-being. In other words, by not hiring in stage hands to help with the set and strike, I was saving my client money, but it was creating a lot of high paced work placed on my shoulders- and trying to get a lot done in a short amount of time is a big cause of accidents. So, take a look at a job, and here's where you have to learn this on your own- know how to accurately determine how many people it will take to get everything done. And remember, you will have people on YOUR crew (your higher-paid skilled audio technicians) and then the stage hands (lower paid, minions, "please do this," and you move on to another task type people). A typical show may have 2-3 audio company techs onsite, and then anywhere from 4-16 stage hands to move cases, pull cabling, help rig PA together, and so on.

Electrical: Again, this is going to be dependent on the shows you do. Typically, venues have a house electrician that will arrange for the power. They'll have a "company switch," where you've got cams to connect there, and a switch to make it live. Allow the house electrician to throw that switch. METER YOUR SHIZZ. Trust, but verify. The first time you fail to meter power could be the last show you do, as all of your gear lets out the magic smoke. For smaller shows, you might have more responsibilities on this- make sure that your setup is safe, and following all applicable local codes to the best of your ability. Ensure that any needed permits and inspections are made, or if you're going to let the onus for this rest on your client's shoulders, make sure you inform them of what they need to know. For example, in Seattle, a permit and inspection is required for generators over 5,000w. They must be fully grounded. However, if you order from, say, Hertz or Sunbelt, they don't do this permit for you. They literally will deliver the generator to your job site and-- that's it. The permit, inspection and grounding is still up to the client. Also common is when the client picks it up from the rental company. It's not up to the rental company to check where you're going with the generator or what it's being used for. So, make sure you can knowledgeably guide your client as to the law and proper procedures. Checking with your city's Department of Planning & Development is a good start for asking about generators for Temporary Power For Special Events.

All Money Things
Wages: That absolutely depends on your market and the skillset/experience of the people you're hiring. I could tell you how things are here in the PNW, but that might not be applicable for your area. I don't do low-end bar gigs, as they don't generally pay well enough for my business to support. I pay labor rates on the higher end of the pay scale, because I firmly believe in paying people well for a good job- I want to make sure we have a successful event AND ensure that my techs will answer the phone when I call them in the future. :) And perks are important. Of course, most soundcos will provide bottled water. I also have my RedBull fridge mounted in a road case- RedBull is a business expense for me, because it's a quick and easy way to perk my guys up as well as make friends with the stagehands. :)

HR: Once you hire an employee, speak to an employment lawyer to make sure you're covering your butt.

Incentive Fee: I really don't do them. In the business networking world, you help each other get new business because it's a collaborative effort-- I pass a friend to your business because he needs a new insurance broker, and then you meet someone who is planning a corporate party who needs sound & lighting rentals, and you give them my name and number. You don't expect a kickback for sending the insurance agent the lead.

Price Per Gig: Once again, that's something that really only you can answer. Some people line item most things, some people just put "here's your package price." I like line items because then if someone wants to change a console or number of speakers, there's a visual impact to their invoice amount. They know why the price went up or down, due to the change(s). Break out Gear Rentals, Labor Charges and Other Expenses (Travel, mainly) separately. Make sure the client sees what they're paying for the gear, and what they're paying for labor. (By having a specific gear rental price, that's the same price whether we deliver and run the show or you pick up from the shop and dry hire it. The labor charges on the invoice, therefore, is how we cover our staffing costs for a delivered/run show. And we're still making the gear rental charge.) However, many things on my invoice aren't charged for. They're listed to indicate they're included, but at no cost. That includes wired mics/stands/XLR cables, speaker cabling, fly frames, stage AC cabling and pop-up canopies. These are things that are imperative to the success of the event, but not things I charge specifically for. When a speaker system is listed, the speaker price includes amplifiers, so again, even though they are no-charged, my VerTec amp racks are listed on the invoice to show the client that they're getting those.

I sometimes have "packages" which include, say, 2-over-1/side of VRX, with FOH console, processing rack, and all mics/stands/cables. I'll list the console, at no cost, to show them what I am proposing. If they want a nicer board, then there could be an upcharge there, but for the most part, you can get one of my small Mackie analog boards, or one of my LS9s, included in that package price. It's a great value for a budget-minded event. As for the percentage per item cost- well, there's no firm hard rule. You'll hear 2-3% of the retail value for a day rate. Now, that means a Mackie SRM450 would rent for $12.50-$15.00 per day, and a Yamaha CL5 would rent for over $800 per day. Neither of those prices are realistic- the CL5, way too high, and the SRM450, way too low. (In the PNW, 450s are $40-$50/each/day, with stand, and CL5s are $425-$495/day, excluding Rios and snake.)

That all being said, a good point to be at is price your major gear so that it's paid for in two years. So, if you know you can rent that CL5 for $425/day, and you're paying $27K for it, you need to rent it out 64 times in those two years to pay for it. If you don't think it'll be out 64 times, then you either need to charge more, or consider just renting when you need it instead of purchasing. "Excess Capacity is Infinitely Expensive." If you buy $50K of gear for a show you only need it once a year, and you're only getting an extra $2,500 on that one show, then it'll take you 20 YEARS to pay for it. Better to rent when you need the short term increase of gear.

That rolls into Discounts. There's two schools of thought for client discounts: 1) NEVER DO IT! and 2) Maybe help out deserving groups that you like. Dick Rees was fond of saying "Charge everyone the same, and if you choose to donate something back to the charity, do so after the show." (Paraphrased, of course. And maybe it's Bob Leonard who has said this. I dunno.) I have Community Sponsorship Discounts I will do for organizations that I like & support. On the tax end of things (WARNING: I am neither a tax advisor nor an accountant. This information is not to be construed as tax advice. For specific information on your tax situation, please consult an accountant or tax advisor.), when you charge a client money, that's taxable income. The cash donation you make back reduces that taxable income. There is (as far as I know) NO DIFFERENCE (from a tax liability point for view) between charging money-then-donating-money and just simply not charging the money (reducing the invoice fee). In my case, by charging money then donating, I would actually be on the hook for state B&O taxes on that invoice amount, so it is cheaper and more beneficial for me to reduce the invoice fee. Caveat: Some non-profits, when determining your sponsorship level, will penalize the reduced-invoice by calling it an "In-Kind Donation," and then instead of your $1,000 donation giving you recognition at the $1,000 level, you only get recognition at the $500 level.

The other discounts you will encounter are cross rental discounts. That's where you rent gear from another company, or they rent from you, and you provide a discount to the other company. The logic being that you can then mark the rental back up to a normal rate, and the client is paying the same where they rent from you or from the other company. This works as long as you're consistently shooting business back and forth-if you're always just giving a discount to the other company and you never rent from them, it's gonna seem like a bad relationship. :) Here in the PNW, cross rental discounts are typically between 25% and 40%. I see some 50% discounts, when it's older gear that doesn't get used much.

Depreciation: Well, that's an IRS thing. Talk to your accountant.

ROI: Again, the desired ROI depends on your specific situation. You want gear that pays for itself. Once it's paid for, then that's just pure profit. However, you need to make those gear purchases logically. Ideally, new gear will either expand your business into new events and clients that you were unable to previously handle, or will allow you to increase billing for your current clients. If both of those happen, AWESOME! If neither of those happen... well, you just blew a bunch of money for nothing. :(  If I look at my QuickBooks for this year, right now it says I lost money. But, that includes a pair of motors, 2 Worker WT-150 lifts, Radial mPress Press Box system, half a dozen new cases from Rock Hard Cases, and $58K of Harman lease for new I-Tech HD amps. If I hadn't spent that money, I'd have pulled a tidy profit for the year! This new gear allowed me to do some new shows that I hadn't done before, and the new I-Tech HD amps (replacing a bunch of conventional ones) are improving the reliability of my system. So, it's worth it to me. I have a trio of shows I am looking at for next year- same A1 for all three. First show is a repeat (2nd year for us); the other two would be new to us. Between them, with one in San Jose, one in Reno, and a potential in Pittsburgh, it's $50K of work. After travel/lodging/staffing, I'll put $30K in the bank. However, I have to buy a CL5 to handle them- here's a $30K purchase with Rios, snake, and case. Now my profit is gone. But, I'll have a board, paid for, that can do *other* work for me, and make money there. And then, in 2018, presuming we do them all again, well shit, there's $30K in the bank.

Repair Percentage: No real percentage. (No fake percentage either. Haha.) You don't know when things might break-- but you don't want to be caught off guard either. I knew a guy here locally that he would blow an 18" driver or whatever, but not have the money to get it repaired. Then, the next time, he had to charge a bit less because of the blown driver. Then something else would break, since he has to now run things harder to get the same results. And then still couldn't get it repaired. And so the cycle continued. I'd suggest having 2-3% of your annual revenues in a reserve for emergency repairs.

Insurance percentage: There's no such thing. This is gonna be an expense based on whatever your insurance company charges you. :)

Advertising: Depends on your market. I know people who have no advertising budget or expenditures AT ALL and they're tripling their business year over year.

New Gear: Covered above, for the most part. What new gear do you need to increase your business, and is it more worthwhile to buy or to rent? Again, this is something you alone can answer.

Cost of doing business: Again, depends on your business structure. But, this typically is EVERYTHING you spend to run your company, and a lot of these I've already mentioned. It can include: wages (don't forget to pay yourself!), insurance, taxes (local, state and federal), business licenses, repairs, rent for a warehouse/office, gig expenses (sub rentals, local labor, supplies, travel, lodging, meals), accounting/professional fees, marketing/advertising, postage/office supplies, and new gear. Again, you'll want to speak with a good local accountant who can help you get something like QuickBooks set up for you, if you've not done so already.

Travel: As Scott mentioned, this is something that can and should be passed to the client. I'll give about the same radius from Seattle or Portland for free- 50-75 miles, but if we're going long distance, out of state, or needing to load in one day and the show's the next, there's a hotel involved. Per diems for food. I'll do mileage rate, plus either book the hotel or at least find out what the approximate charge will be, and that's what I quote the client. Don't forget a truck rental cost! And when you're renting a truck (and check into DOT number if you're going out of state. Depends on your state's rules.), you'll pay a day rate for the truck PLUS mileage PLUS the fuel you're putting in it.

Inventory Management: I don't have one. Other then an Excel spreadsheet listing everything. There's lots of threads on rental management software; I will refer you to those. :) However, COME UP WITH A CABLE LABELING SCHEME NOW. And stick with it. A LOT easier to be consistent from the beginning then it is to change over at some point. And remember, "Buy Once, Cry Once." Get the best quality cables you can afford- they'll last a lot longer. As for the logistics of pulling shows, etc, I work off my invoice, to make sure everything I have listed there gets on the truck. I have pre-packed AC, speakon and XLR workboxes, so I don't have to pick those every time.

Logistics- pretty much. As you grow, this will change, but for now, just make sure you either have enough gear to handle the shows you have booked, or being able to identify exactly what you need to sub-rent from another company to do the show.

Finally.... pay. 1099-MISCs are for Independent Contractors. And yes, you issue one when you have paid them more than $600 in a calendar year. EMPLOYEES will receive a W-2 at the end of the year, and you withhold payroll taxes. PLEASE review the IRS rules in determining whether your team are contractors or employees. In my area, many people are erroneously classified as contractors/1099-MISC, and are not being protected by state L&I insurance or unemployment benefits. If your employee (and you're paying them as a contractor) is hurt on the job, that state L&I insurance won't cover them and your company will probably get sued. Scott's example of
then sub the extra work that i can't do out for 80-90% to someone else who takes their own gear out and does all the work. I keep the difference for a couple of phone calls and emails and no extra investment and am keeping almost the same amount as I would if I owned the gear and was sending someone else out.
is a great example of a contractor relationship. The sub-contractor provides his own gear, supplies, and pays for their insurance/taxes/etc. For a flat fee, they handle the work for Scott. If the person came to Scott's shop, clocked in, picked up Scott's gear, and then went did the show, came back, unloaded and clocked out, that would be an employee relationship and the pay situation would change. (Once again, I am not a lawyer or employment specialist. Please consult your own resources on this subject; this advice is not to be construed as applicable to your situation.)

Sorry to write a lot. Please lemme know if you have any other specific questions!

-Ray
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Nathan Riddle

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Re: Business Minded Questions
« Reply #6 on: September 16, 2016, 03:12:24 pm »

As far as more sound research I found this topic which Iím going to go through and buy/read each book.

I already have read through the Yamaha book a couple of times wayyyy back when I just started out. Since Iíve gleaned much of the advanced stuff from the forums here.

I really want the Bob McCarthy book so I can continue my learning. Iíd love to go to seminars like SynAudio Con, but I donít have money for that now and my company canít afford training meÖ

http://forums.prosoundweb.com/index.php/topic,145172.msg1336953.html#msg1336953

Discounts - how does this work? Only discount on repeat business, never first time in. The guy who wants a discount up front just wants it cheap. He won't be back.
Don't be surprised if your business model changes as you get more into this. 

Thanks Scott,
Thatís an interesting statement! One I didnít think of. I was thinking of an incentive discount for first time for small rentals and such.

For instance, this weekend a DJ wants to rent 2x K12ís and a KW181 I said $200 [I donít really know where else in my area people would rent this sort of setup so I donít have a base for pricing, but it seemed fair].

I then said Iíd give him a 1st time discount of $50 as a goodwill measure. Then he expected me to deliver it at that rate which I said no and said $50 to deliver/pick up. I contemplated the time it would take to drive there 2x times and figured I would make 25/hr which is more than I make at my day job so I was content.

Now heís backed out of the speakers and only wants the sub. Oh well; but Iím still charging $100 for just the subÖno discount and no delivery. It made sense to me for that kind of pricing structure. It may be 10% the cost of the sub, but itís a one day/one off event.

If it was longer percentage would go downÖetc. Thatís my thinking anyways.

Sorry to write a lot. Please lemme know if you have any other specific questions!
-Ray

Wow, Ray, the time...the thoughtfulness. You are the man! I really am glad you wrote a lot. It gives so much insight and is exactly what Iím looking for. I really have appreciated your posts through the years especially in my ďarenaĒ thread. 

The first thing you need to do, though, is make a firm decision as to where you want the business to go-- stick with small bar/band gigs, larger festivals, touring concerts? Or do a lot of installs and maybe some retail?

Not sure, currently where we make most of our money is on the weekend church retreats where we run a live band. We have nearly enough money to cover that fully without renting any additional equipment. We charge an extremely competitive rate imho. The other area is install market; I make a good rate installing things and as far as I'm concerned it's directly pocketed (since the rest of the company never pays me).

Then, you're going to want to develop a business plan. This is the blueprint for the boring stuff- all of the money things you asked about-- your goals and how you're going to achieve them. Take it from someone who didn't do a business plan- without one, you'll find yourself spending money on stupid shit.

I might say this a lot, I wanted to do this with my business partner, buttttÖ.. he never had the time or the desireÖ Thus Iím sorta figuring things out on my own at this point. Once/if I do buy him out thatís one of the first things on my list of to:doís.

And heís actually a decent guy, he just has different goals than I do. I invest my time in research to learn how to do this stuff; and he doesnít anymore. Iím okay with that, I just want to be the best I can be for my clients/area.

Rigging/Flying: This all depends on what exactly you're doing. I hate giving a non-answer, but every case is different, as to whether or not you'll be needing to worry about riggers.

I understand that in this area it is very much an ďIT DEPENDSĒ ĖIvan sort of area. Iím not into motors yet. I want to expand into flying things from something like genieís or a CM manual hoist, but that still involves a secondary safety system etc. It would just be nicer than stinkin speaker on sticks or scaffolding. (my typical client is pretty picky as to aesthetics of things).

Do you find yourself getting worn out on shows because you exerted SO MUCH effort getting setup that now you can't do as good of a job on the show? And then you also have to load your gear out of there at the end...

You have said this before I believe. It has actually led to us(me) being more aggressive in our pricing and personally my labor. Very wise words and I thank you for them so Iím not so pissed off at being 'used' by the client. So really, thanks!

I donít leave the house for less than 25/hr on practically anything. (aside from volunteering, things I want to do..etc) Iíd rather hang out with my wife.

45/hr is my standard rate for lighting/install work. Company install rate is 60/hr (2x people).

Most of our help at gigs is band members or local Ďfriendsí we pay them a decent (15/hr), but as most of it isnít technical work just a Ďput this hereí I think itís fair. If Iím able as the client is paying a fair wage for the gig then I pay more/tip for the more competent members of my team.

Electrics.

My dad was an electrician and taught me how to wire houses. So I had the basics from a young age. I know that wasnít sufficient for what we do so Iíve been a constant lurker in the power forum. I always meter both the cams/lugs, the distro, and the outlets. Havenít run into any generator gigsÖbut when I get there I am so thankful for the extra tidbits of info you provided. Knowing these things helps me know what I need to know in order for a gig to go off smoothly.

I pay labor rates on the higher end of the pay scale, because I firmly believe in paying people well for a good job- I want to make sure we have a successful event AND ensure that my techs will answer the phone when I call them in the future. :) And perks are important. Of course, most soundcos will provide bottled water. I also have my RedBull fridge mounted in a road case- RedBull is a business expense for me, because it's a quick and easy way to perk my guys up as well as make friends with the stagehands.

Eventually I want to do the same as you pay a great rate.

Water is a big deal and because I care about my peeps Iíve been doing it out of pocketÖ it should be a company expense. But that whole lack of communication between business partnerÖetc.
We do pay for lunch for all day gigs though. So thatís a plus, haha.

HR: Once you hire an employee, speak to an employment lawyer to make sure you're covering your butt.

YeahÖ thatís probably a good idea. I dislike all these regulations on small businesses. It destroys the micro economies of our communities all in an effort to help people who donít want or need help. Business owners canít concentrate on what needs to get done instead they devote 50% of the time to keeping the government happy. Anyways, thatís my beef.

Your line item advice has helped us out in the past. I like that, but also having packages. Somehow I havenít looked at your website before and I enjoyed going through it looking at the prices and inventory.

I love your tax warning; I think itís crazy in this day and age we have to do so on a simple forum, but alas CYAÖ

The rest is great helpful info. Iím going to take this and run with it to learn more :)
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Scott Holtzman

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Re: Business Minded Questions
« Reply #7 on: September 17, 2016, 05:33:20 am »



YeahÖ thatís probably a good idea. I dislike all these regulations on small businesses. It destroys the micro economies of our communities all in an effort to help people who donít want or need help. Business owners canít concentrate on what needs to get done instead they devote 50% of the time to keeping the government happy. Anyways, thatís my beef.


Keep in simple with the contractors.  You can't tell a contractor how to do their job, only the results.  If a guy can arrive 5 minutes before show and make everyone happy then you can't complain if he isn't your employee.

So if you want control over how it's done they have to be direct reports, if you are OK with sending them out with a system and a contract to do xxx then you can live with a contractor.

The key is finding the right contractors.  It's been the key to my growth.  The good guys don't need supervision. 

We just hired our first direct employee but I cheated and hired him into my IT company and the leased him back to the sound company.

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Ray Aberle

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Re: Business Minded Questions
« Reply #8 on: September 17, 2016, 09:22:47 am »

Keep in simple with the contractors.  You can't tell a contractor how to do their job, only the results.  If a guy can arrive 5 minutes before show and make everyone happy then you can't complain if he isn't your employee.

So if you want control over how it's done they have to be direct reports, if you are OK with sending them out with a system and a contract to do xxx then you can live with a contractor.

The key is finding the right contractors.  It's been the key to my growth.  The good guys don't need supervision. 

We just hired our first direct employee but I cheated and hired him into my IT company and the leased him back to the sound company.
But according to the IRS rules, depending on the relationship, the investment, and who is paying for expenses (and whose banner the final results are being presented as), these contractors may in fact need to be considered employees. For example, the IRS states that "if a worker provides services that are a key aspect of the business, it is more likely that the business will have the right to direct and control his or her activities." So in our industry, since setting up and running the sound system is a 'key aspect' of our business, and the final result is being presented as your company's production (and not the contractor's work), chances are they might legally be an employee.

Other factors:
- Are they maintaining their own business license and insurance?
- Are expenses such as supplies being reimbursed by you?
- Are they purchasing and maintaining their own equipment (could be as simple as a mic locker, iPad and wifi unit, and could be as extensive as their own console, monitors, and wireless)?

Non-Industry-Related-Example:
Ron's Contracting Company hires Dave's Plumbing to install the plumbing on a new house. Dave has his own shop, truck, an employee of his own, a business license, insurance, and pays for the supplies needed to finish the job. He bills Ron's Contracting Company $1,500.00 for the job. Dave's Plumbing is an independent contractor.

Not-Our-Industry-But-Is-A-Great-Example:
I hire a local college student to clean my office. He has a key to the office, and can come any time after 6PM to do the cleaning. I don't care how it gets done, but I have certain expectations (The recycle bin and trash can are emptied, the soda is re-stocked into the fridge, and I have plenty of those little airline bottles of liquor in my bottom desk drawer.). I provide all of the supplies. I pay him by the hour, on a weekly basis, when I do my other payroll. He doesn't run a cleaning company, and so he does not have insurance or a business license. This college student is most likely an employee.

In our example(s) of sound technicians, if you're providing the sound system and other supplies, and they're performing a show under the auspices of your company banner, and regardless of the fact that you don't dictate *exactly* how they get things done, you still have certain standards and expectations (ring out the stage, properly deploy the sound system, don't get drunk at the show, make the client happy) and therefore they are most likely your employee. This technician doesn't have a business license or insurance of their own as a sound company.

Where it gets sticky:
When you do a full sub contract, and hire in another person or company who owns their gear. You've taken a few phone calls or whatever to manage the booking. They go out and do the show. If they're performing under *their* company name, then it's definitely (most likely) a contractor relationship. If they are working under your name but sending out their employee to do the work, that person is an employee of their company and this company is probably a sub contractor of yours. But if the free lancer you send out to cover the show is bringing his own gear, but still is not licensed or insured as their own sound company (whether as a sole prop/DBA, or something fancier), there is a strong possibility that he should properly be your employee. Once again, you most likely are still setting expectations to their performance and the scope of services provided. (There's many times that employees can have large investments into personal tools to do their job, and still be an employee. Take a construction worker, for example. They can have thousands of dollars of personal tools they've purchased, and still be a W2 employee.)

I *strongly* urge anyone who is considering their freelance techs an independent contractor to consult with an employee attorney to ensure you are accurately determining this is the correct relationship.

I remain NOT a lawyer, tax accountant, employment specialist, or HR person.  :o :-*

Ray

[edit: to indicate how the imaginary college student is paid. And FYI there's really not any little shot bottles of liquor in my desk.]
« Last Edit: September 17, 2016, 09:25:39 am by Ray Aberle »
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David Morison

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Re: Business Minded Questions
« Reply #9 on: September 17, 2016, 09:35:46 am »

I did a search for SWAT analasis, It keeps autocorrecting to SWOT. Iíll do some research there. As well as the score.org thanks for the info/help!

Strengths, Weaknesses, Opportunities & Threats: SWOT is correct. Either Bob was testing you to see if you were paying attention, or he had an attention/autocorrect slip of his own  ;)
Cheers,
David.
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