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How to get the funding to expand a start-up?

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How to get the funding to expand a start-up?

Postby Joel Nichols » Wed Jan 04, 2012 11:41 am

Hi all,

I'm currently working on developing a small live sound business that does some dry-hire, but generally hires out both the rig as well as my engineering services, as well as a crew member. At the moment we've got a Soundcraft LX7ii 24 desk, a bit of outboard processing, the usual mix of Shure wired and 1 Sennheiser wireless mics, all going into one DB Technologies SW18 sub, and 2 Mackie C300z FOH speakers. Monitors are Active DB Technologies M10-2 Plus. FOH is driven by one Yamaha P7000S, with one channel going to the sub and one running the Mackies in Mono. Inbuilt filters in the amp act as a crude form of crossover.

Our problems at the moment is that we're struggling to both sort out logistical issues (lots of money needed, explanation coming!) and expand the rig to the point where we are more credible (again, money!)

At the moment the rig is stored in a friends bedroom smaller than most cupbards (no, seriously!) so we have no more space to expand. Also, the only car I can drive is my Honda Jazz which means transporting the rig takes 2 runs, limiting how far we can go and annoying some of our clients. I ideally need to fund a van as well as storage but a van is £7k per year fr insurance as I'm a 17 year old, an am therefore instantly a recipe for disaster!I also need to fund a unit of some sort.

At the same time, I'm trying to work out how I can grow the rig. At the moment the music scene in my area is very "on-the-edge" with promoters with limited budgets coming and going all the time. Therefore at the moment I can't really charge more than £150 per night, which is very low I think but I can't go any higher. I'd like to break out of Yeovil (pretty small town) to other areas, but this involves having a more serious rig (particularly in terms of FOH speakers) as well as storage and transport.

As I only have a Saturday job paying £4.50 an hour, and my friend who runs this with me was recently made redundant, money is very tight. And with the difficulties of getting our name out there without the equipment, and lack of certainty about market trends, I'm struggling to see how as a 17 year old I could get a business start up loan.

Therefore, I just wanted to throw out the question of how people secure funding to get all the equipment they need to get off the ground. Any advice is greatly appreciated!
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Re: How to get the funding to expand a start-up?

Postby The Korff » Wed Jan 04, 2012 11:49 am

Have you thought about running nights yourself, and taking the money from the door? I presume you know some bands already, and if you can find a reasonable size venue (who may pay you for the extra money they'll take at the bar), you'll have everything you need. Then it's a case of figuring out how much you can charge for entry, how much to pay the bands, getting posters and tickets sorted, promoting online, etc... It'll be a lot of extra work, but if you're sensible you may find the money you take home makes it worth the effort.

Cheers!

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Re: How to get the funding to expand a start-up?

Postby Joel Nichols » Wed Jan 04, 2012 11:52 am

Have thought about it a couple of times. We're lucky in Yeovil to have a hall that could probably hold about 200, has a stage and some lights, for just £80 a night. It's just that I've watched promoters fail to get more than 25 people to shows despite advertising.

I may well try it this year, particularly when my last year of college is out the way. Unfortunately it's things like a van that I need quickly, because my car's suspension is creaking in pain a worrying amount!
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Re: How to get the funding to expand a start-up?

Postby Bossman » Wed Jan 04, 2012 12:01 pm

Joel Nichols wrote:Unfortunately it's things like a van that I need quickly...


hire a van?
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Re: How to get the funding to expand a start-up?

Postby Joel Nichols » Wed Jan 04, 2012 12:10 pm

Also looked into it, but with the variable music scene around Yeovil, it didn't cover costs. Would you say my rig it's big enough to market elsewhere, and how much do you think I should charge? The full spec is on www.facebook.com/revolutionaudio.

Thanks for all the help guys, I really appreciate it!
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Re: How to get the funding to expand a start-up?

Postby The Korff » Wed Jan 04, 2012 12:11 pm

How about pub/venues? Some of them (round my way at least) will actually pay you to put on a night, if you can fill the place up to a decent extent so they get plenty of people at the bar. Have a wander round some local places that have an ents licence and ask around!

Cheers,

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Re: How to get the funding to expand a start-up?

Postby Joel Nichols » Wed Jan 04, 2012 12:17 pm

Thanks Chris, I'll try that over the next few weeks! There is also a business start up grant here in Somerset for young people with ideas but not solid enough business models for conventional loans. It's up to £4k, thinking about giving it a go.
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Re: How to get the funding to expand a start-up?

Postby grab » Wed Jan 04, 2012 12:34 pm

How's about a second-hand horsebox trailer? Cheaper to buy than a van, and won't hit you on insurance either. Sure you can't get as much in there, but if you're still going in 5 years time and have been successful enough that you can buy enough gear to outgrow the horsebox, then you'll probably be looking at getting a Luton van anyway.
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Re: How to get the funding to expand a start-up?

Postby Joel Nichols » Wed Jan 04, 2012 1:11 pm

Good idea! I'm also thinking of developing my garage for storage, but obviously it needs to be dry, warm and secure. Anyone got any tips for this? The only issue I can see is the thorny matter of how much it will add to my parents house insurance!
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Re: How to get the funding to expand a start-up?

Postby Dave Rowles » Wed Jan 04, 2012 2:03 pm

Don't worry about house insurance covering the gear...because it doesn't.

If the gear you have is used for business purposes then it won't be covered by household insurance. This goes for any musical instrument you gig with too. You get away with a laptop that you use for work, but that's the only cross over I know of.

However, upgrading the garage, making dry and warm, can only add value to the house, so I can't see them being too upset about it...provided it doesn't cost them to get it done...
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Re: How to get the funding to expand a start-up?

Postby christianmurphy » Wed Jan 04, 2012 3:28 pm

It might not be what you wanna hear, but you seem to be looking for a get rich quick kinda scheme, which very likely won't happen. Keep at it, put in as many hours at work as you can (maybe a different job if the pays not enough?), start saving until you have the gear/travel options you need to push out. It's not easy but generally dedication and hard work are the two most important factors.
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Re: How to get the funding to expand a start-up?

Postby Joel Nichols » Wed Jan 04, 2012 3:50 pm

I think it may just be me being a little too overenthusiastic about expanding, getting new gear and all that! I'm not desiring to get rich from it, I just want to get it to the stage where it can be my main source of income, as it's something I really love doing. Thanks for the guidance on insurance, saved me a lot of bother!
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Re: How to get the funding to expand a start-up?

Postby Exalted Wombat » Wed Jan 04, 2012 5:04 pm

Joel Nichols wrote:Therefore, I just wanted to throw out the question of how people secure funding to get all the equipment they need to get off the ground. Any advice is greatly appreciated!

Here's my advice. Don't do it! "Funding" is only another word for "debt". Just sell your skills, using whatever equipment you own or can buy for cash. When you make some money, if there's anything left after buying food and shelter, consider investing in more equipment.

Otherwise you'll just be struggling to service a debt. And, 99% likely, you WILL go under.

Sorry.
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Re: How to get the funding to expand a start-up?

Postby grab » Wed Jan 04, 2012 5:08 pm

Oh BTW, if you want to make more money then maybe get into DJing. As you say, you can't get paid much to provide sound for a band if the band themselves aren't getting paid much - and of course whatever they're paid has to be divided however many ways. But if you're DJing, it's at least £300 (which seems to be the lowest going rate) straight to you and your mate, and there's likely to be more opportunities for DJing than live sound too.

Of course it takes a bit of practise to DJ well, and you need a stack of tracks too. But that does seem to be the best return for a smallish PA system.
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Re: How to get the funding to expand a start-up?

Postby James Perrett » Wed Jan 04, 2012 5:30 pm

grab wrote:How's about a second-hand horsebox trailer?


There are much better alternatives to a horse box!

When I was doing PA and DJ'ing I replaced my old Transit with a Lynton Load Lugger trailer

http://www.lyntonshowpoint.com/Trailersloadlugger.html

and found that it was one of the best investments I ever made. Fortunately I had somewhere fairly secure to park it so the gear could stay in the trailer all the time which meant there were no storage problems. The one I had (not the biggest by any means) could hold more gear than a standard Transit and could be towed by anything from a Vauxhall Astra upwards (so the Civic would be fine).

Later I noticed that quite a few DJ's were starting to use similar trailers.

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Re: How to get the funding to expand a start-up?

Postby Joel Nichols » Wed Jan 04, 2012 5:33 pm

Thanks for the extra advice guys! I'm thinking now that a trailer probably is the way to go. I wish it was a Civic, but unfortunately it's a Jazz so is a little down on power!

That said, it's still at the menders because somebody decided to drive into me!
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Re: How to get the funding to expand a start-up?

Postby OneWorld » Wed Jan 04, 2012 5:53 pm

James Perrett wrote:
grab wrote:How's about a second-hand horsebox trailer?


There are much better alternatives to a horse box!

When I was doing PA and DJ'ing I replaced my old Transit with a Lynton Load Lugger trailer

http://www.lyntonshowpoint.com/Trailersloadlugger.html

and found that it was one of the best investments I ever made. Fortunately I had somewhere fairly secure to park it so the gear could stay in the trailer all the time which meant there were no storage problems. The one I had (not the biggest by any means) could hold more gear than a standard Transit and could be towed by anything from a Vauxhall Astra upwards (so the Civic would be fine).

Later I noticed that quite a few DJ's were starting to use similar trailers.

James.


When we used to gig and outgrew the transit, a trailer became the answer, smaller gigs we could fit the equipment in the transit and follow by car, larger gigs, put seats in the tranny and PA/Cabs in the trailer. And on occasion used the sax player's estate car to pull it.
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Re: How to get the funding to expand a start-up?

Postby Scramble » Wed Jan 04, 2012 9:23 pm

Don't mean to be negative but running your own PA company is hard work for not much money. You need to love it. As Wombat says don't spend too much money you don't have.
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Re: How to get the funding to expand a start-up?

Postby Joel Nichols » Wed Jan 04, 2012 9:56 pm

Hi guys,

Sorry if the way I wrote it made it come around as me wanting a get-rich scheme! I do genuinely do it because I love the excitement and sheer variety of the job, rather than the financial reward. I was just trying to work out how to develop.

Thankyou guys so much for all your wisdom that's really taught be to just be patient! As well as all the extra tips for getting known more through other event types. All your advice, and any more that is to come, is massively appreciated!
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Re: How to get the funding to expand a start-up?

Postby grab » Thu Jan 05, 2012 1:05 am

Yeah, should have said horsebox "or similar". Probably easier to find a second-hand horsebox though. I've just about outgrown the carrying capacity of our Berlingo myself (full gear involves a couple of boxes on the passenger seat as well as a full-to-the-rafters back), so considering this myself.
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Re: How to get the funding to expand a start-up?

Postby christianmurphy » Thu Jan 05, 2012 2:38 am

James Perrett wrote:
When I was doing PA and DJ'ing I replaced my old Transit with a Lynton Load Lugger trailer

http://www.lyntonshowpoint.com/Trailersloadlugger.html

Very cool piece of kit. I'd be interested to see how much you could get in the even smaller one (especially for a grand+vat). Seems like it could pay itself off pretty quick.

grab wrote:Yeah, should have said horsebox "or similar". Probably easier to find a second-hand horsebox though. I've just about outgrown the carrying capacity of our Berlingo myself (full gear involves a couple of boxes on the passenger seat as well as a full-to-the-rafters back), so considering this myself.

THIS I can relate to. I think I have a picture somewhere of my berlingo filled to the top, have to dig it out .

Joel Nichols wrote:
Sorry if the way I wrote it made it come around as me wanting a get-rich scheme! I do genuinely do it because I love the excitement and sheer variety of the job, rather than the financial reward. I was just trying to work out how to develop.

I might have come across wrong with my wording when I said that. I just used it as an expression for getting the money to spend on the gear together quickly (which usually ends up leaving you in a less than favourable position), rather than actually making it, apologies.

I don't think I'd ever accuse someone of getting into this business for MAKING money
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Re: How to get the funding to expand a start-up?

Postby turbodave » Thu Jan 05, 2012 8:35 am

I have the Lynton loadtrekker which I have used for about 4 years. It has been used for PA, for runs to the tip and as gear storage for our holidays. With a little TLC it has come through still intact. I (with some maths) have put a 6k rig in it. Dave
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Re: How to get the funding to expand a start-up?

Postby TheChorltonWheelie » Thu Jan 05, 2012 9:42 am

Joel Nichols wrote:Hi all,

I'm currently working on developing a small live sound business that does some dry-hire, but generally hires out both the rig as well as my engineering services, as well as a crew member. At the moment we've got a Soundcraft LX7ii 24 desk, a bit of outboard processing, the usual mix of Shure wired and 1 Sennheiser wireless mics, all going into one DB Technologies SW18 sub, and 2 Mackie C300z FOH speakers. Monitors are Active DB Technologies M10-2 Plus. FOH is driven by one Yamaha P7000S, with one channel going to the sub and one running the Mackies in Mono. Inbuilt filters in the amp act as a crude form of crossover.

+1 to Wombat, "funding" is just another word for debt. There are so many people that do this kind of hire, I can't think of anything that are doing well either, they're all just about surviving.

For 99% of businesses it's about having a unique selling point, something the separates you from your competitors, but in this business it's purely about the price: in the Midlands you can hire an active PA (decent make, nice desk, mics/leads etc) at about £100 per 1kw, and over 2kw you'll get an engineer too. Now, I have my own PA for my bands purely because I prefer to be fully-enclosed, but there are plenty of gigs where we'll just hire it in to save on the hassle.

If you're going to do this, you're going to have to separate yourself from the competition, and one such action could be your willingness to travel, only the large firms are prepared to do that.

As for transport, you're never going to be the old tranny (that's the Ford variety, not a lady with appendage), and if you're shrewd you'd go for the petrol 2.0 and have the LPG conversion (the same as I have). It's cheaper to buy in the first place, you'll get an adjusted 50-60mpg, and you can drive it as an every day vehicle too. Get one that's ply-boarded, spend £100 on carpet tiles and rubber matting, then do the floor out in rubber and the sides in carpet: the carpet protects the kits when it slides about, the rubber matting prevents the kit from sliding about.
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Re: How to get the funding to expand a start-up?

Postby Exalted Wombat » Thu Jan 05, 2012 1:33 pm

TheChorltonWheelie wrote:As for transport, you're never going to be the old tranny (that's the Ford variety, not a lady with appendage), and if you're shrewd you'd go for the petrol 2.0 and have the LPG conversion (the same as I have). It's cheaper to buy in the first place, you'll get an adjusted 50-60mpg, and you can drive it as an every day vehicle too. Get one that's ply-boarded, spend £100 on carpet tiles and rubber matting, then do the floor out in rubber and the sides in carpet: the carpet protects the kits when it slides about, the rubber matting prevents the kit from sliding about.

He's too young to get affordable insurance. And when he tells his insurers that his present vehicle is going to be used for business, and what that business is, prepare for a nasty shock.

Don't kid yourself that next time the police take an interest in the vehicle for any reason (even if someone else runs into him) they'll glance at the load and write down "business use" without even asking. When that hits the system, there'll be some explaining to do.
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Re: How to get the funding to expand a start-up?

Postby Daniel Davis » Thu Jan 05, 2012 1:51 pm

If your numbers don't add up the last thing you would want to do would be to be given the funding - that way you'd loose more. If you numbers do add up you won't find much trouble finding the money. You can't force a business proposition to work.

In my town the cost per sqft of business property in rent and rates is more than I could charge my clients - so I still work from an extension on my home. I actually do know how to borrow the money to set up in town, but if I did so I would loose money. If it doesn't make money it isn't a business. Period. Sorry life sometimes sucks. But you're only 17 - it'll probably take a few knocks for you to learn that one.
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Re: How to get the funding to expand a start-up?

Postby Joel Nichols » Thu Jan 05, 2012 2:34 pm

On the insurance front, what's the deal with insuring a trailer to run behind my car? Obviously it doesn't go everywhere with the car, and the car itself is not carrying any business stuff.

Back on funding, I think you're all right! What I had been thinking is if I had been able to sort the logistical problems out as well as get a more credible rig, I could charge more and therefore help balance it all out in the long term. But I'm much happier knowing it'll be a long slog of saving rather than getting myself into lots of bother with debt!
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Re: How to get the funding to expand a start-up?

Postby Scramble » Thu Jan 05, 2012 2:44 pm

Daniel Davis wrote:if I did so I would loose money.

Loose money sounds good. Any of it floating loose around my way?
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Re: How to get the funding to expand a start-up?

Postby James Perrett » Thu Jan 05, 2012 4:49 pm

As far as insurance is concerned you have to tell your insurer that you are using your car for your own business. In my case, it doesn't seem to add much to the insurance premium but it may be different for a 17 year old. Towing a trailer is usually included but you would need to check your exact policy wording.

I was 22 when I first bought a van and found that different insurers had very different attitudes to the music business - some wouldn't touch it at all while others had no problem so it pays to shop around. If you are insuring a van the insurers tend to automatically give you business insurance but always check.

James.
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Re: How to get the funding to expand a start-up?

Postby Exalted Wombat » Thu Jan 05, 2012 5:17 pm

Joel Nichols wrote:On the insurance front, what's the deal with insuring a trailer to run behind my car? Obviously it doesn't go everywhere with the car, and the car itself is not carrying any business stuff.

Nice try, but I don't think you'll wriggle out of it that way! :-)

The basis of any insurance contract is full disclosure of the risk.
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Re: How to get the funding to expand a start-up?

Postby grab » Thu Jan 05, 2012 9:04 pm

Just check your current insurance details first. Many companies would like you to use your own car for occasional commutes for work (it saves them needing a load of company cars), so an awful lot of insurance companies throw in "business use" at no extra cost. But you *do* need to check.

Note that this doesn't insure anything inside the car (or trailer)...
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