Bar/None Records

Careful Planning Helps Company Navigate Volatile Industry

No one ever said the record industry was easy - especially for independent labels with big aspirations. A few big names dominate the industry and possess the dollars needed to propel artists to the top, while the rest tend to flounder in mediocrity.

But not Bar/None Records, a Hoboken, N.J., independent record label that's proven that with careful strategic planning, anything is possible.

Following a hunch might seem foolish to some, but most successful entrepreneurs note an implicit confidence in their gut feeling when making decisions. It panned out for Bar/None Records, whose industry is particularly volatile and dominated by mega-media companies.

"You live from hit to hit, so to speak," says partner Glenn Morrow. "Songs become hits because someone at a record label who feels they have potential bankrolls the recording."

Filling the Pipeline

With a history of cultivating several top-shelf acts that have moved on to major labels, including Freedy Johnston and Luka Bloom, and retaining others, like Juliana Hatfield, Esquivel and Poi Dog Pondering, who enjoy the creative freedom Bar/None affords them - the company knows what it does well. Bar/None continues to work its niche as a house where the quality of the songwriting prevails regardless of musical genre, and one whose current business plan largely rests on the promise of four or five up-and-coming artists.

The Bar/None label was founded by Tom Prendergast in 1986, and its second release was a debut by the band They Might Be Giants. Prendergast sensed the release would find its audience and, in fact, it went on to sell more than 100,000 copies - astronomical by indie-record standards.

For a company like Bar/None, which operates in an unstable environment like the music industry, avoiding the temptation to overstaff to meet demand during unpredictable peak periods are the crux of its growth planning. Excess staff, for example, can cause a company to ratchet the whole operation to a level where it's filling the pipeline with lots of records that aren't worth promoting, just because the company had a temporary need for sturdier operations and promotion.

When completing his annual business plan, Morrow says his projections typically reflect actual revenues. However, forecasting for growth in his company is a challenging task that's laden with responsibilities. For example, it involves projecting the sales revenue for the planning period, which will determine the scope of all other activities required to achieve those projections.

For any company, resources must be forecast in order to ensure that the products or services make it to the selling stage. Both types of forecasts can be undertaken based on an entrepreneur's sense of the market and its wants, market surveys of customer preferences and buying patterns, time-series analyses, which examine the past relationship between sales and time to determine patterns on which to base a forecast, and econometric models, which take into account the factors affecting sales and production including price, competing products, complementary products, availability of credit, consumer tastes and other key components.

Develop Budgets

To make a company's growth effort add up, budgets must be developed. The sales budget, based on the sales forecast, is of prime importance, and the production, marketing and administrative budgets fall in line based on those figures. Methods can become rather sophisticated, but in short, you can prepare variable budgets, which allow for the possibility that actual output will differ from forecasted figures, or moving budgets, which are modified periodically - usually monthly - so that the appropriate changes can be made and managers can react accordingly, while learning as the business takes shape.

Lastly, companies like Bar/None must institute policies to support the growth plan's objectives. Plans for expansion, for example, will invariably involve changing how the firm does business with vendors and customers. Such policies should be clearly articulated, consistent with the company's vision, and coordinated among the departments that will be called on to interact concerning them.