Future Trends For The Entertainment Industry

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Within the last couple years, a major shift has taken place that has changed the future of the entertainment industry. That shift comes from trending mobile apps that have blown the roof off the market as we know it. When it comes to Internet start-up companies, their beginning path used to be set in stone, establish and maintain a major presence on the Web first, then attempt to come up with a version of your same services for mobile devices. However, this does not play out the same in today’s industry. Now companies are going backwards, Ben Lerer, a manager of the venture capital firm Lerer Ventures, said he preferred to back companies that were building services for mobile first and the Web second, because “businesses that are thinking that way are planning for the future” (Wortham, 2012).

New entrepreneurs are more than eager to hop on board the mobile trend. According to the research firm CB Insights, mobile apps and companies attracted 10% of the total investment dollars from American venture capital firms in last year’s fourth quarter, and 12% of deals were mobile-related, up from 7-8% in previous quarters.

As the masses continue to increasingly abandon their laptops and desktop computers for their smart phones and tablets, the downloads are reaching more than 800 apps per second at a rate of more than 2 billion apps per month from the App Store, more and more businesses will want to tap into this market in new ways. Brands that are looking to leverage the growing mobile audience are lining up to get their branded mobile apps so that they can develop a closer connection with their audience and ultimately generate a larger user base and more revenue (Moorjani, 2013). It is a major change from just a few years ago, underestimating just exactly how the momentum in the tech world is shifting to mobile from computers.    

Alternative Funding Sources

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The Corporation for Enterprise Development (CFED) is a national nonprofit 501(c)3 organization that empowers low and moderate-income households to build and preserve assets by advancing policies and programs that help them achieve the “American Dream.” This includes buying a home, pursuing higher education, starting a business, and saving for the future. CFED is one of the leading sources for data about household financial security and policy solutions. This company promotes programs on the ground and invests in social enterprises that create pathways to financial security and opportunity for millions of people (CFED, 2013). Some of the advantages of using alternative financing include:

•       Easier approval, as opposed to bank loans that can be advantageous in certain situations, but are not available to everyone
•       Flexible repayment terms, instead of making fixed monthly payments, the business owner may have the option of variable payments
•       Promote new business concepts, many businesses with novel ideas are available to come to the forefront of the industry and become successful

National Community Investment Fund (NCIF) is a company that invests in CDBIs that display both strong financial and social performance. To determine if an institution meets these criteria, NCIF evaluates the institution using a Development Impact analysis as well as an internal CAMELS analysis. The institution must also provide a planned exit strategy. NCIF performs a thorough analysis that examines both historical performance and future projections for these institutional characteristics. The CAMELS rating is a supervisory rating system originally developed in the United States to classify a bank’s overall condition. These are the components of a bank’s condition that are assessed:

•       (C)apital adequacy
•       (A)sset quality
•       (M)anagement capability
•       (E)arnings
•       (L)iquidity
•       (S)ensitivity

NCIF selectively provides analysis of portfolio institutions for investor clients. Using publicly available financial information and the NCIF Social Performance Metrics, NCIF constructs an analysis document that provides an examination of each portfolio institution as well as overalls summary data and comparisons to relevant peer groups (NCIF, 2013). 

Incorporating and utilizing what the experts recommend

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“It’s fine for the Fed not to have a rigid plan—it’s even good—but your company needs a plan.”

(Forbes, 2013)

In the previous post, we discussed the critical and key components that investors are looking for in a business plan according to industry experts: Mark Cuban and Dr. Steven Gedeon. Now that the recommendations have been analyzed, it is time to incorporate what business students have learned from their own research on the experts previously profiled. For a business plan that is focused on a large-scale concert venue, these are the recommendations that can be incorporated and utilized: make sure to specify how much equity the investor will receive or how they will get a return on their investment (Cuban, 2013). When writing a professionally formatted business plan, the investor must walk away with a clear understanding of how long it will take them to get a return on their investment and how much equity they are receiving. They will also want to see a clear exit strategy: a way to make a profit and move on to the next deal. Business students have reformatted their business plans and made specific changes based on the information provided by the experts which include: beefing up their executive summary, and focusing on the needs and desires of the investors solely.

Understanding what the business is, and whom you are selling to, is an integral part of the business plan description for target markets (Scrhamm, 2012). Investors want to know exactly whom a company has targeted as their main market. Meaning who is the product or service targeted towards, and who actually buys it for that target market. The most important sections of a business plan to an investor reading your plan are considered to be the executive summary, management section, and the financials.   

What do industry experts say about business plans today?

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Mark Cuban is an American businessman, philanthropist, and disciplined investor who is also recognized as an expert in reviewing business plans. This entrepreneur comes from the world of business plan development and venture capital investing. Mark Cuban has been engrossed in the art of business dealings since the energetic age of 12, and by his senior year of high school opted out and enrolled full-time at the University of Pittsburgh. Cuban later transferred to Indiana University and graduated from the Kelley School of Business with a bachelor’s degree in business administration. According to entrepreneur and billionaire investor Mark Cuban, the critical and key components that investors are looking for in a business plan include (Blog Maverick, 2013): 

•       Demonstration of part of your business plan that you sell   your product or service for more than what it costs you to produce, fully encumbered
•       Must have a cash flow break even within 60 days
•       Must be profitable within 90 days
•       Everyone must work. The organization is completely flat. There are no employees reporting to managers. There is the founder/owners and everyone else.
•       In a business plan, make sure to specify how much equity the investor will receive or how they will get a return on their investment. 

These components are considered key because they encompass the very basics of a good business plan strategy. Business plans serve as the framework for a company and provide benchmarks to see if they are reaching the specified goals (Forbes, 2013).

Dr. Steven Gedeon is one of the utmost experts on the value of a business plan, as well as business writing and reviewing. Currently, Dr. Gedeon is a professor at the Ted Rogers School of Management in Entrepreneurship & Strategy. According to Dr. Gedeon, the critical and key components that investors are looking for in a business plan include:

•       Understanding what the business is, and whom you are selling to
•       What is the price point for the product and services the company offers
•       One of the most important components is the executive summary and what the qualifications of the management team are, as well as the overall business idea and the financials.

These components are considered key because it is important to know ahead of time to measure the effectiveness and to prevent a business from failing and making avoidable mistakes (Schramm, 2012).  
Dr. Steven A. Gedeon also emphasizes that the key elements to a successful business plan are whether or not it has creditability and if there is a guide to action.