State of the Art

Earned Revenue? Contributed Revenue?

Jim Undercofler — Fri, 10 May 2013 15:20:40 +0000

I continue to be puzzled, or is it defensive about the question of whether contributed revenue can be considered sustainable, especially as opposed to earned revenue. Perhaps because of my not-for-profit background, I see both types of revenue the result of sales (although we cloak the contributed revenue domain in flowery language and avoid sales language). #

This puzzlement has become a problem, as I have come to know colleagues on the for-profit side of business development, who mostly discount contributed revenue as unsustainable, soft and risky. #

It seems to me that the same number equations that drive estimates of sales can and should drive estimates of contributed revenue. The same can hold true on reasonable year-to-year estimates. #

One organization that I led relied heavily on contributed revenue, too much so. However, the internal discussion concerning contributed revenue was not whether we would receive any or not, but how much over our reasonable estimates we could raise. In other words, we knew that $10 million was secure, but needed $13 million. The internal craziness was around how we could or should close this $3 million gap. #

I would think the same discussion takes place in the sales offices of for-profit businesses as they make their projections for the upcoming quarters and year. They know that a certain number of sales is secure, but need to stretch to a higher number. The internal discussion is all about how to close this gap. #

My defensiveness on this topic grows from having had my students enter a number of business idea and plan competitions, and having had them judged negatively because their revenue plans included contributed revenue. In many cases judges simply said, I’m sorry, but contributed revenue is unsustainable… #

What am I missing? #

Entrepreneurship in Music and the Arts Redux I

Jim Undercofler — Wed, 08 May 2013 14:54:23 +0000

Student teams made their final presentations last week. They were evaluated according to the rubric previously published. What I would like to do in this blog posting is to feature the winning plan. I will include the team’s PowerPoint presentation, and a copy of the scoring rubric. The name of the project is Will Power. I’m confident that in publishing this it will not be copied, in that the expertise needed to carry out the plan is highly specialized. #

Please be reminded that this was a one-credit class. As such, I limited the amount of detail that would normally be included in a full business plan. Additionally, the PowerPoint was accompanied by a verbal presentation followed by questions posed by the evaluator. #

Will Power Will Power #

Entrepreneurship in Music and the Arts Project Evaluation

Jim Undercofler — Mon, 22 Apr 2013 13:09:10 +0000

My friend, Bob Ellis, a business school professor will be evaluating student projects next week. He has provided them (and me) with this rubric. #

Summary
Clear communication of business concept
Good understanding of “what business are we in?”
Good understanding of key success factors
Good understanding of financial aspects
Complete analysis of concept feasibility
Complete analysis of value proposition #

Market Analysis
Clear identification of target segments
Clear understanding of customer buying triggers #

Competitive Analysis
Clear identification of competitors
Understanding of competitors’ strengths
Understanding of competitors’ weaknesses
Understanding of future threats and opportunities #

Product Analysis
Clear description of product
Understanding of role of customer service #

Marketing Strategy
Price discussion
Promotion discussion
Placement and channels discussion #

Operational Analysis
Personnel discussion
Facilities discussion
Customer service plan
Supplier discussion #

Financial analysis
Development of integrated pro formas
Special focus on Cash Flow Statement and ongoing cash position #

Entrepreneurship in Music and Arts Student Projects

Jim Undercofler — Sat, 13 Apr 2013 14:45:09 +0000

Here are all but one of the student projects – as promised. #

Sound for Spaces is a group of musicians and composers that specializes in creating sound installations, designed to aurally transform a space. These installations utilize space in unique ways, surrounding listeners with sound and musical texture. By performing these works in art galleries, Sound for Spaces helps create a unique experience for visitors, while simultaneously attracting new patrons. Installations can also be created to cater to specific needs, tying in directly with the current exhibit, or even incorporating the artists themselves. #

Chameleon Cafe is a profit/non-profit organization that has live performances for aspiring musicians while providing a source of entertainment, food and drink to the community. Chameleon Cafe invests in it’s performers by giving weekly clinics on various skills and tools for entertainers. Every third month, Chameleon Cafe will host a showcase for the musicians and perform for talent agencies in hopes to attain possible contracts. #

Finger Lakes Opera – FLO – will provide professional opera for the Finger Lakes and surrounding area audiences. FLO will produce 3 fully staged productions a season and will include standard operatic repertoire, musical theater, and contemporary works. These 3 productions will be supplemented by special performances, concerts, and lectures throughout the season. FLO will encourage tourism & patronage for area businesses including hotel, restaurant, and wineries. FLO will also enhance the community culture by creating jobs, and through educational outreach programs. #

“Will Power” is a consulting/arranging business focusing on marching ensembles. It will provide custom arrangements/compositions to organizations along with visual design. Additionally, it will provide in-person consulting and rehearsal techniques for each individualized show. #

OpLift is a non-for-profit organization that provides classical voice training to underprivileged youth, allowing them to perform opera scenes and small recitals. Our mission is to further diversify the audiences and performers of classical music. #

Entrepreneurship in Music and the Arts, Class Reporting

Jim Undercofler — Wed, 10 Apr 2013 13:29:46 +0000

Within a day or two I will post students’ project ideas and an update on progress, but for this post I want to share some observations of the process over the past 2 weeks of classes. #

My first observation and perhaps pearl of wisdom comes from student teamwork. I have taught arts entrepreneurship a number of times, but have not formed students into project teams before. Previously I formed students into groups to critique each other’s ideas and business plans. The reason I decided to form students into project groups was twofold. For one, numerous entrepreneurship writers, researchers and practitioners stress the importance of the executive team as a critical success element in venture creation. I wanted the students in this class to experience the challenges of working within a team to create a business plan. Two, I wanted to see how it would work as a pedagogical tool. In the past I had avoided this because I worried that some students would carry all the water and some would slough off. Now I will have the opportunity to weigh the plusses of students’ experiencing the challenges of teamwork v. the possibility of work imbalance. Ah, but isn’t this one of the most knotty challenges of teamwork? #

My second observation is difficult to explain. The students are consistently balancing their venture creation plans between a class exercise and “real life.” Especially the team leaders, those whose ideas were chosen, see their ventures becoming realities; but the time allowed to get the work done is limited, so choices need to be made that contribute to the “real life” plan, but don’t fully get the job done. For example, one team is developing a plan to launch Finger Lakes Opera (FLO). They have devised (at my direction) an in-depth, multi-directional market feasibility plan. They will only have time (now) to execute one aspect of it. Managing this frustration, plus understanding that their results from executing only one aspect may yield inconclusive or misleading results is difficult. #

So more soon – #

Entrepreneurshp in Music and the Arts, 2nd Class Report

Jim Undercofler — Wed, 27 Mar 2013 12:44:37 +0000

So even from my own (humble) assessment, the 2nd class was a huge success, going beyond my expectations. #

Approximately half the students (15) pitched their ideas to the class. Each had 2 minutes for their presentations, plus a bit more time to answer clarifying questions. After each pitch, the student taped a paper to the wall with h/her project’s name on it. #

After all the pitches, each student then gave a 15 second description of h/her project, as a reminder. What was so interesting about this was how easily each could encapsulate the essence of h/her project so easily. #

Each student in the class was then given 3 sticky dots and was instructed to ‘vote’ with them. They could place all 3 on one project, or do otherwise. After the voting I removed those project pages that had 2, one or no stickers on them. Then
spontaneously the students starting finding similarities between projects, and began negotiating mergers. After discussion one merger occurred and 6 projects were selected. #

To form the teams I asked each student to list h/her first, second and third choices, the invited 2nd year grad students to select their team, then 1st year grads, then seniors, juniors and sophomores (there are no freshmen in the class). The seniority-based approach was accepted by the class as a fair method of selection. #

I closed each team at 5 members. #

The teams had 15 minutes to meet each other and informally discuss their projects. Next week they will organize to build their business plans. In a future post I will ask each team to describe their projects and post them for comment. #

Entrepreneurship in Music and the Arts, Class Planning

Jim Undercofler — Sat, 16 Mar 2013 14:22:14 +0000

I have completed my planning for my course that begins next week. The course catalog entry reads, “Frequently the failure of the most creative ideas lies with an inability to build a working model and “business plan.” In this course students will learn to build business plans, both linear and non-linear for projects and entities in the arts. Having a pre-existing project idea is not a pre-requisite for this course, as for students without project ideas, the instructor will provide theoretical ones.” #

The recently completed course read, “Never has it been more critical for students in the arts to imagine new cultural landscapes, to develop fresh ideas to revitalize the impact of the arts on society. In this course students will explore and shape innovative ideas. They will learn how to develop, then take an abstract idea and mold it into a feasible form, ready for the next step: making it a reality.” #

I planned these in this fashion because some students will continue from the first to the second course, while at the same time some new ones will enter the second one. #

I plan to orient students to 2 different models of business plans: a traditional one and the one designed by Osterwalder and Pigneur. We will study these in detail and practice their use. I will have explained to the students that they will be working in groups during the duration of this class, and that at the beginning of the second class they will be asked to “sell” ideas to the class, and that after the “selling,” students will choose an idea/group to work with for the remainder of the course. I will limit group sizes to no more than 5. I believe the size will be determined in part by the idea itself. After the “selling” process, I will give the students a 10 minute break during which I will draw up papers that list the idea at the top and that offer a certain number of spots below. Students may or may not get their first choice — not a big deal in my opinion, as the course is about learning processes, not about developing a personal idea. #

The 3rd class will consist of teams beginning their work together. I will surely post a blog about the 2nd class before elaborating on plans for the 3rd one. #

Entrepreneurship in Music and the Arts: Class 5 Redux

Jim Undercofler — Tue, 05 Mar 2013 14:55:03 +0000

I have learned a lot from teaching this recent class (now at the end of the first half of the semester). The students’ projects are superb: in imagination, breadth of subject area and commitment to positive change. However, it was their work in developing their projects that gave me greater insight into how to teach this difficult subject of arts entrepreneurship. #

First, asking them to develop their ideas in a stepwise fashion really worked. Asking, what are the next 3 steps (or more) that you would need to take to flesh out or “grow” your ideas gave the students an easy to understand pathway. Part of this process of idea development involved aspects of examining feasibility, but not always. In some cases the development process opened the door to examination of feasibility. #

It was in the feasibility stage that I came to understand two distinct aspects. This realization is nothing new, as I have gone back to trusted sources and found what I learned right in front of me. #

The first aspect of feasibility is whether the idea can hold up on its own. Do its parts fit together into a whole? Is the relationship between estimated cost and income in the ballpark? Is there artistic talent available to be hired in the community where you envision your program? #

In some cases this phase of feasibility involved contacting manufacturers to find out if a particular device could be manufactured, at what cost, in what numbers, etc. In others it involved demographic analysis. It was only after this first phase that students could go to the next phase of market feasibility testing. This is, of course, always very interesting when students interact with potential consumers. In most cases they found deep interest and potential involvement from their interviewed clients, but when they explored price points, they learned so much more: that the product or service they are envisioning may not be feasible from an income v. expenditure standpoint. #

I find this learning and understanding of price point to be particularly powerful for artists (in this classes’ case, musicians). It raises so many provocative discussion points, and gives the students a wider perspective about the challenges they will face moving into their various professional worlds. #

Recap, Class Four, Entrepreneurship in Music and the Arts

Jim Undercofler — Tue, 19 Feb 2013 16:41:04 +0000

Here is the email recap + assignments that I sent to my class this morning. #

Dear Class, #

Here’s a recap of last night’s class + your assignments for the next 2 weeks. #

I congratulated you as a group for your superb ideas. I am genuinely impressed by your imaginations and ability to create in a practical manner. #

We opened by talking about how ideas develop, grow, sometimes die and are reborn. I stressed that some of the best ideas come after pursing a related one that fails. #

I talked about how business entrepreneurs need to be able to make a “pitch.” I asked you to develop an elevator speech and share them in small groups. We then modeled expanding on, and critiquing ideas. Then still in small groups you practiced this model. The level of sound in the room told me that this activity was working! #

I interrupted your work to introduce a rubric on evaluation of ideas. I listed and explained 5 items to consider when developing an idea. They are: #

Value Proposition
Customer Segments
Revenue Streams
Capital Requirements
Sustainable Competitive Advantage #

We discussed each of these, providing multiple examples. #

We then completed the critiquing activity. #

For your assignment I asked you to work up a development plan for your ideas. What are the next 3 steps you will need to take to expand and fill them out? I asked you, while at the same time in developing your next steps, to also devise a market feasibility measures. I explained that these measures may be part of your development plan, but also may not. You will know as you begin your work. #

I asked you to consider employing 3 techniques in your market feasibility testing. One of these should be benign research. Find out through research everything you can find out about your product or service. Has it been done before? Is some other entity doing similar work? Find out EVERYTHING you can about similar ventures. One of your measures should be talking to people who are a potential market. A couple of you are developing new literature for your musical instrument. Talk to your fellow flutists to get a sense about what you are proposing to do. If you can, ask them if they would be willing to pay for it, if and when it would become available. Last I stressed that you could do a targeted online survey to those who might be interested in your venture. #

I stressed that we musicians often take criticism as a challenge to try harder, but that when developing a new enterprise this quality can be defeating. Listen to your feedback and incorporate it into your development plan. Listen to your audience, your future clients, as they are the ones who will make or break you! #

Before February 25, next Monday: Development Plan
Before March 5: Development Plan + Feasibility Study #

Read Brinckerhoff, “Social Entrepreneurship,” Chapters 5 and 6; Optional, but recommended: Chapters 1-4. #

Recap, Class 3, Entrepreneurship in Music and the Arts

Jim Undercofler — Tue, 12 Feb 2013 13:48:44 +0000

Class 3 focused on personal branding, and then transitioned to idea development and enterprise creation. #

We talked about 3 issues related to personal branding: alignment, extension and integrity. #

We (often humorously) compared students’ responses from their assignments (asking 2 people who knew them personally to describe what makes them distinct as individuals, and 2 people who know them musically to describe what makes them distinct as musicians) to their Facebook pages to how they, themselves want themselves to be perceived. We discussed the importance of alignment, and the intentional use of non-alignment. Most of all I stressed the importance of intentionality. #

I challenged the class to think deeply about what they had learned about themselves and what they know about themselves, and to consider developing and extending those aspects of their personae that could advance their professional ambitions. This discussion led to a small group activity in which I asked them, “can branding impede artistic integrity?” #

The reporting from the small groups surprised me a bit. Several groups interpreted (perhaps correctly) branding as institutional culture, or institutional unwritten policies and procedures. Instead of analyzing individual branding these groups focused on organizational branding. #

Last, I moved them into my Zone 2a and 2b, giving them concrete examples for each. I lectured (maybe a little too long) on enterprise creation and on entrepreneurship in general, then gave them the following assignment: #

“You may work as individuals, or in groups of 2 or 3. Begin to develop or devise an idea for a new creation that could become an enterprise. Think about and react to your immediate world. What challenges or problems to you face every day? What are your passionate concerns — that YOU could address, or solve through the creation of an enterprise that addresses them? #

As you begin to shape your idea (s), email me and open a conversation on the topic. Nothing is off limits. Ideas don’t have to be music-based, although this is where your deepest expertise lies. “ #

I have already heard from one student, who told me she took the class to advance the idea she posed to me… #