Dynamic Audio Teaching Ltd.: Business Plan

Executive Summary

Objectives

Dynamic Audio Teaching Ltd reflects the next generation of education providers. D.A.T. embraces a combination of in-depth theoretical classes and intensive specialist training.

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It was founded in 2006 by Charikleia Koukouvinou, former C.E.O of Kriminal Productions Ltd, after completion of Recording Arts Degree studies. The institute is directed towards the Recording Industry to supply the next generation highly skilled Audio Engineers.

Mission

Our graduates will posses a deep knowledge and experience on the real world of technologies relevant to the Recording Industry. This level of education will be acquired from intensive practical studies on board high spec technology common placed within the Industry.

In addition the theory obtained from our team of highly rated educators solidifies and lays foundation to the practical knowledge gained.

Keys to Success

The Educational marketplace we serve has been on a steady increase, running parallel with the new technological advances. An estimated £142 million is the present market worth even though the market consumers stay disgruntled with the lack of providers and existing facilities offered for education purposes. The government recently reported a £45 billion package to tackle the growing concerns of inadequate facilities.

The Dynamic Audio Teaching projects development was devised to rectify current problems and constructed with industry collaboration. This gives us a competitive edge through industry recognition coupled with Industry stand facilities.

Given the market position, projections of trading curves is upwards from a very modest forecast to profits in the region of £385,000 per year without any additional funding.

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Company Summary

Company Ownership

Dynamic Audio Teaching Ltd is a privately funded Education Institute aimed at becoming the U.K. leading supplier of next generation Audio Engineers. D.A.T. was conceived during the last years of Degree studies relating to the Recording Arts and has progressed to a position of seeking realistic financial investment. The company has been formed on a Limited Liability structure consisting of one Director and Secretary. The company’s Chief Executive Officer and project creator is Mr Timothy Octave, former C.E.O. of Kriminal Productions Record Co. and its Secretary a Mr J Smith, former C.E.O. of New-Generations Charity Organisation.

Start-up Summary

To competently enter the marketplace a financial investment is required of £226,000 sort by way of Debt Capital and repaid every month. The business has just received its endorsement and accreditation by the London Open College Network about the Sound Engineering and Post Production education packages offered. The design, methodology and practical assessments of our education packages are result of direct collaboration between the project creator and Industry Professionals and leading Technological manufacturers, resulting in ‘recognition’ being one of our competitive advantages. The recognition and depth of interest expressed by the Industry and Governmental Education bodies’ gives insight to the potential success the business harnesses.

During the course research evidence pointed towards a ‘expressed interest’ gained conclusive of a survey conducted at student level relating their relevant education experiences (Longenecker, Moore & Petty, 2002). In addition our educators contracted to the business all have in depth training and recognition gained from prior industry employment, bringing confirmation of Industry awareness.

Products

D.A.T. offers several short-term education packages as alterative to the long-term packages offered by existing Education providers. The curriculum structures are carefully designed by present and former industry professional ensuring the relative skills are taught for industry entry.

Utilizing a combination of intense practical experience, onboard state of the art Technologies and precise theoretical lectures within relevant fields, D.A.T. training ensures graduates have increased their present or future employment potential.

Packages range from Recording/Post Production through to Copyright Law with a full time course lasting for x12 weeks broken as follows:

  • 2 x days per week, 6 hours per day

Each course is accredited with the O.C.N.L.R. Open College Network London Region, giving opportunity for further studies. O.C.N.R. credits are recognized by all U.K. Higher Education Institutes.

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Market Analysis Summary

The market analysis for this plan is hinged based on strength, weakness, opportunity and threat analysis (SWOT). It is through this kind of analysis that proper and detailed information can be achieved in the process of information enquiry about the possible success of the company.

Market Segmentation

The Educational marketplace we serve is unique; it is based in format that runs parallel with the new technological advances. This market segment is estimated to be worth £142 million currently. It is said that this segment of the market are disgruntled with the lack of providers and existing facilities offered for education purposes. This is even though the government recently reported a £45 billion package to tackle the growing concerns of inadequate facilities.

To analyze the whole market structure and prospect, the Internal Strengths & Weaknesses of the company, and the External Opportunities & Threats it faces will be used, as has been summarized below:

Target Market Segment Strategy

SWOT Analysis

STRENGTHS
  • Up-to date technologies
  • State-of art equipment
  • Up-to date curriculum design
  • Low direct costs
  • Quick adoption of further technologies.
  • Ability to adapt to market trends
OPPORTUNITIES
  • Increasing market segment
  • Growth of consumer’s technological awareness.
  • Inclination of new customers.
  • Access to Governmental funding
WEAKNESSES THREATS
  • High cost for resources
  • High running costs
  • Contractual relations dependent.
  • New Government funded academies.
  • Consistent increase of newly developed technologies manufactured.
  • Major corporation entrants

Industry Analysis

The competitive market analysis below combined with the adopted Inside-Out Marketing perspective defines the Competitive Market Strategy employed by D.A.T.

Industry Analysis using Porter’s Five Force Framework (Porter, 1979):

Power of Suppliers: Given the fact that D.A.T. serves the Technological Education market, our suppliers will be considered our resource base being the Technologies manufacturers.

This being a highly intensive market itself from its share scale and high competitor ratio weakens the power of suppliers, as there is always an alternative.

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Threat of new entrants: Placing ourselves as entrants and analyzing the obstacles overcome, concluded in two points of sector protection and entry barriers:

  1. Large initial financial investment.
  2. Reputable standing.

However, with the acquired in depth knowledge, the amount of borrowing requested resulting to the acquisition of a leading technology foundation, and superior service delivery, D.A.T. furthers the benchmark of entry, concluding to a low threat posed from further new entrants.

Power of buyers: The ratio of providers to customer demand is extremely low due to the mentioned financial requirements needed to facilitate such service. Therefore the restriction of available services combined with the increasing body of demand concludes in a low risk from ‘Power of Buyer’.

Threat of substitute products: Being accredited, all services provided result in a qualification to which can be considered a product.

Accreditation is awarded upon education packages meeting governing body criteria determining levels of learning.

Due to this criteria being based around depth of study, lecture planning and learning applications, our ability to adapt to new criteria’s of education are not hindered. This lowers the threat from substitutes.

Rivalry amongst existing firms: Due to a small collective of operations servicing the increasing market demand. The rivalry between providers is related more to reputation positioning rather than financial. Elements of rivalry range from facilities at use to Industry awareness or recognition.

Competition and Buying Patterns

 At present it is reported that a 3 Billion pound turnover is estimated regarding education within the London region. There are documented 21 subjects of study ranging from Agriculture through to Sports and Recreation, resulting in a potential £142 million turnover per segment. The Music, Dance and drama segment is divided into 13 categories.1This concludes in a potential £10.9 million per category. 43 Institutes out of a potential 97 providers provide for the Music Recording market.

Market Competitors

Competitors of the short course niche are only 6 in number and divided into 2 categories, Government and Private funded providers

Government

  • Usually large in scale and funding, providing a wide range of education packages (Sullivan, 2005).
  • Disadvantage concludes in the lack of ability to expand facilities to specialise in offered packages, budget equally split across facilities of study.
  • In addition no relative short-term courses offered
  • Ex. City of Westminster University

Private

A smaller scale of establishment usually specialises on a specific area.

Disadvantage is growth restricted to revenue received through tuition fees – no annual government funding. Heavy reliance on external investors, high resource costs.

Ex. Point Blank Music College:

  • Sound engineering course
  • 12 x week’s duration. 4 intakes per year
  • Cost of £1200

Strategy and Implementation Summary

Given that Education is the service or product offered, D.A.T. will define it’s marketing as Product Orientated, focusing on the process and resulting conclusion of education offered.

Embracing the 4 P’s of The Marketing Mix being defined as Product, Price, Place and Promotion and previously discussing our Product and Price levels of Place/distribution and Promotions to be discussed (Ryan & Hiduke, 2003).

Competitive Edge

The advantage D.A.T. had gained from initial conception was the ability to objectively design a package of specialist education and educative environment with the aid of Industry collaboration and prior student experiences.

Our production strategy consists of developing adequate premises of prime location to which houses all elements of our Educational service:

  • Research and Development – (education module design)
  • Manufacturing – (facilities available for studies)
  • Distribution – (teaching environment)
  • Operations Management

It also portrays a direct representation of the Recording industries working environment.

Therefore the capital required to obtain strategy objective dictates 90% of the investment to be divided into the following assets:

  • Premises
  • Equipment/Facilities
  • Working capital

Marketing Strategy

Place/Distribution

North/Northwest London was chosen as a result of Demographical Statistics.

A small scale of this region was taken and following statistics analysed.

Example Haringey:

  • Age 16 – 44 Populations. 133,037 peoples
  • Existing Student headcount. 17,375
  • Inactive % of 16 – 44 Populations. 62,740 (up to 60% of population)2
  • College of North East London is one and only provider for region.3

From research into Music Tech facilities of study, only 7 Institutes serve the whole of the North/Northwest region.

Another element considered was accessibility to our service.

A student customer based dictated a reliance on easy and affordable transportation to which North/Northwest London adopts with its selection of Underground, Train and Bus networks available (Legge & Hindle, 2004).

Sales Strategy

  • With use of the O.N.C.L.R. accreditation, advertising through Education publications such as Hot courses and Course guide to London, each with On-Line listings.
  • Affiliations with Education bodies such as Association of Colleges, Department for Education, London Development Agency, Learning and Skills Council. Etc.
  • Advertisements placed within Recording Industry publications, such as Sound on Sound, Computer Music Etc.
  • Advertisements placed within local publications such as Yellow Pages, Thomson Local Etc.
  • A Budget of £5000 per annum as been allocated to cover such costs and each promotions category’s effectiveness evaluated by a simple questionnaire.

Sales Forecast

Also note that maximum student intake for any one three-month course is 60 in number, potentially £96,000. This would result in an Institute max. Income of £384,000.00 per year, estimated for year 6 onwards. All documented payments are result of Credit/Debit card payments as fees are due in full on commencement of studies.

Milestones

Given that Education is the service or product offered, D.A.T is expected to create a milestone in the education sector by offering quality course and units that suits the current industry needs. In other words, we will define it’s marketing as Product Orientated, focusing on the process and results in conclusion of education as offered in our programs.

Management Summary

Personnel Plan

Due to a heavy dependence on Technological equipment acquired at start-up, the production costs are restricted to very little and can only be increased by acquisition of additional assets relative to future expansion.

As a result of such low costs recorded Gross Margins are extremely high.

Cost % of Sales Price
Lecturer 500.00
Total Unit Production Cost 500.00 16%
Selling Price 1,600.00 100%
Gross Margin per Unit 1,350.00 84%
Margin after Sales & Dist. 1,350.00 84%

Financial Plan

Important Assumptions

The main assumption is based in the premise that the pricing will rely on the stable economic growth of the country. It therefore means that we assume that the economic stability will continue to be relied on such that the business prospects do not fall.

Break-even Analysis

Fixed Costs

Premises:

  • Approx. 5100 sq foot, Lease rental.
  • Commanding approx. 7% of Initial Investment Capital as payment, remaining percentage mortgaged over 10 years.

Equipment/Facilities:

  • Appox. 41% of Initial Investment Capital, one time payment. Consists of all facilities required to design and distribute our educational service. The equipment required is based on the standard facilities used by the market’s privately established competitors.

Working Capital:

  • Approx 41% of Initial Investment Capital adhered to all day-to-day operational costs in accordance to projected cash flow.

Direct Costs

Lecturer:

  • Subject to 16% of selling price in accordance to average Teacher pay, based on minimum class number of 10 (Percentage of selling price falls about class numbers reaching max yield of 20).

Student Capacity

Based on Min.10 – Max.20 class size results a capacity of 30 – 60 students per quarter, 120 – 240 students annually.

Projected Cost

Considering the minimum number of students needed to open business concludes in 10, the company shall receive sales from its first month.

The table below gives bearing to the finance required for covering the business operational costs on a month-to-month basis.

Premises/ Security £5670.00
Repayments 2741.00
Utilities 433.00
Wages/Salaries/Draw 6716.16
Insurances/Fees 177.50
Promotions/working cash 816.00
Total £16,553.66

Projected Cash Flow

The documented cash income about the attached Annual Cash Flow breaks down as follows:

£16,000 10 students
£24,000 15 students
£32,000 20 students, 1x class capacity reached.
£48,000 30 students, 2 x classes.

Projected Balance Sheet

The attached forecast predicts the following sales figures relate to a steady upward curve consisting of the following representative years:

Year 1 £136,000.00
Year 2 £208,000.00
Year 3 £240,000.00
Year 4 £272,000.00

Long-term Plan

The business wil produce a monthly overheads figure of £16,553.66 subject to the fixed and varible costs previously mentioned. The Annual equivalence is £198,643.00.

Given the required amount in addition to the projected sales, erodes any needs for additional funding for our first year trading.

Reference

Legge, J., Hindle, K. (2004) Entrepreneurship –Context, vision and planning. Basingstoke. Palgrave Macmillan.

Longenecker, J. G., Moore, C. W., Petty, J. W. (2002)Small Business Management: An Entrepreneurial Emphasis. South Western Publishing.

Porter, M. (1979) How competitive forces shape strategy, Harvard business Review.

Ryan, J.D., Hiduke, G. P. (2003) Small Business: An Entrepreneur’s Business Plan, 6th edition, London. South-Western, Thomson Learning.

Sullivan, L. (2005) hot courses. Hotcourses Ltd.

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