Small-scale business to help funding events like the Midi Fight Club
Results 1 to 10 of 10
  1. #1
    Schreiberie Meister Afterhour Ali's Avatar
    Join Date
    Jun 2008
    Location
    Tekki's crotch
    Posts
    1,568

    Default Small-scale business to help funding events like the Midi Fight Club

    After kicking off the first Midi Fight Club a lot of people have shown interest in starting their own parties.
    The usual problem is "where to get money from".

    My idea is to build a small business to help funding events like this.
    This is not about sponsoring though (which would mean the company gets no money back).

    Let me explain it with an example:

    -"DJ Beggar" wants to make a cool party
    -He sets up a concept, makes sure venue will be available, gets in contact with booking agencies, DJs etc., makes a financial plan
    -He asks "the company" for help with funding
    -The company checks concept etc.
    -if the concept works out "DJ Beggar" gets some money from the company (lets say 1000)
    -there must be some kind of contract with terms like:
    if "DJ Beggar" makes 2.000 on the party, he has to pay the money back + 250
    if the party fails he has to pay back 750 only


    The idea for charging a fee when the party is a success is to equate the losses of others.
    I really don't want to loose too much money on this but the goal is to help people getting started.

    I really don't have a clue about that business stuff and this is just a first idea. There should be some people with business-knowledge around here who may able to help improve this idea.
    DJDiscourse.com the new DJ community

  2. #2
    Tech Mentor bmo's Avatar
    Join Date
    Feb 2010
    Location
    Toronto/ Waterloo, Canada
    Posts
    423

    Default

    this would be a really useful outlet for capital for midifightclub events, etc. Usually after the first successful event, the company can sustain on it's own. It's usually that first event that is most difficult, because the start-up company doesn't have the capital to invest in the artists and booking a venue, and promotions.

    After the first successful event, the company will most likely have made a profit and can just retain the initial capital invested that was made back and then start to build a consistent and sustainable stream of events without third-party loaner money.

    I think the $250 fee if it's a success is reasonable. As well as the $750 if it's a failure.
    My Mixcloud Page!
    Macbook Pro 13", Kontrol Z2, Kontrol F1, Kontrol X1, 2 x Pioneer CDJ-850, 2 x Pioneer CDJ-400, Traktor Scratch Pro, Audio 4 DJ.

  3. #3
    Tech Mentor
    Join Date
    May 2010
    Location
    Germany
    Posts
    295

    Default

    you have to get the money from someone in the first place and to get money from a bank or another institute you have to be able to make a profit out of your business.

    say you have 4 guys that you lend $1000 to. the weekend is over and 3 of them tell you it failed. you get $750 from each one, $2250 back and $3000 spent. the last one made the cut and had a good night, so you get $1250 instead of $1000.

    at the end you lost $500 and have to tell the one you lend the $4000 that you cant pay him the money you lend and his interest can't be payed either.

    as noble this idea is, it just wont work right. Business is an asshole by design.

    edit:
    there are people that fund things without a crazily good looking businessplan: buisiness angels.
    Xone 42, 12x0 mk2, Adam Audio Monitors and Sub

  4. #4
    Schreiberie Meister Afterhour Ali's Avatar
    Join Date
    Jun 2008
    Location
    Tekki's crotch
    Posts
    1,568

    Default

    I don't need to to get a loa as I'm building venture capital myself.

    These numbers were just an example but considering I have to pay taxes for any profits it may turn out even more difficult.

    Can't run this under charity.
    DJDiscourse.com the new DJ community

  5. #5

    Default

    As great as this idea is, you should really contact someone who knows the legalities of becoming self employed. You gotta have a really good businessplan, considering any other companies that do alike, where you want to get with your company, where it will be in 2 years, how much profit you make etc etc etc.

    With a good business plan its more easy to see any faults in your plan, and its something you can stick to... u, know.. like a plan

    Anyways, id support you where and when ever u need to, if you got any questions dont mind asking.
    Samsung R780, Novation Launchpad
    NI AUDIODJ 2, DJTECH IMIX RELOAD, BEHRINGER BCD 3000, KORG NANOPAD
    VESTAX VMC002XL, NUMARK DM3000X, NUMARK TT200
    NI TRAKTOR DUO, VIRTUAL DJ 7 PRO FULL

  6. #6
    Tech Mentor Frank112916's Avatar
    Join Date
    Mar 2011
    Location
    Boston, MA
    Posts
    395

    Default

    I'm sorry but this is an awful business plan. The moral hazard involved is just awful.

    Essentially you're giving away 250 dollars for free and quite honestly why wouldn't someone lie to you? "Oh sorry I had a bad night, here is your 750" as they laugh all the way to the bank with an extra 250 on top of the profit they made for the night. Considering doing shows is pretty much a cash business exclusively and for the most part bookkeeping is non-existent you'd be hard pressed to prove they are lying.

    Unless you're willing to oversee every operation that you fund, personally, I'd be very skeptical of such terms. Plus you should do some market research. How many of these shows end up failing? You should have an idea of how much return you expect and calculate payoffs that way (if you REALLY want to go with that model). For instance, say you want to make a 10% return on average (therefore your expected value should be 100 dollars)

    If 70% of shows lose money under your current plan the NPV is 70%*(-250) +30%*250 = -100 dollars per show. In other words, on average, you will expect to loose 100 dollars per show in the long run (if everyone is honest - or lose 10% of your total investment). That seems like an awful payoff to me. Even if it is 50/50 you just break even, which is worthless and not worth the risk.

    To yield a 10% positive return you would need to find a combination of loss and profit that would yield you that. So either you get 10% return on 1000 flat with guaranteed repayment of $1000 or some other combination. Never EVER go off profits/losses. The numbers are too easy to fudge. If you want to be a bond holder, be a bond holder and you can sleep easy. If you think there is more value to be had in holding equity, hold equity, but you better be prepared to oversee the operation otherwise you'll find your equity stakes going to zero and yourself SOL.

    Whenever you loan money always CYA. Have written contracts, well defined terms, and give yourself recourse to take action against the individual. Do not trust anyone, do not become friends with anyone, and do not cut anyone deals until you have sufficiently vetted them. You have to remember that most of the shows you would fund are being put together by what you'd probably call "wankers" (I'm from the US) who don't know their head from their ass. Any promoter and planner worth his salt probably already has the capital to put on a show. Micro-finance is well and good if you're in a third world country, but it just creates adverse selection anywhere else. Just remember that.

  7. #7

    Default

    I just checked back with my lawer, and i sadly got some bad news for you Ali. Basically ask yourself one question... who is allowed to lend money in Germany?
    Banks and Institutes like banks, and those are overseen by the BAFIN ( Bundesagentur fr Finanzen). Believe me, you dont want to expose yourself to those conditions.

    There are some working business models like your idea, but those are running in India or Africa, no pun intended. Quite frankly, Germany is to strictly regulated

    greetings none the less, btw hope you do well now your studies are done
    Samsung R780, Novation Launchpad
    NI AUDIODJ 2, DJTECH IMIX RELOAD, BEHRINGER BCD 3000, KORG NANOPAD
    VESTAX VMC002XL, NUMARK DM3000X, NUMARK TT200
    NI TRAKTOR DUO, VIRTUAL DJ 7 PRO FULL

  8. #8
    Schreiberie Meister Afterhour Ali's Avatar
    Join Date
    Jun 2008
    Location
    Tekki's crotch
    Posts
    1,568

    Default

    Thanks Arne. This renders the concept useless.

    Studies are finally done since Monday, I'll call you tomorrow <3
    DJDiscourse.com the new DJ community

  9. #9

    Default

    Congratulations on finishing your studies, well talk soon than i guess
    Samsung R780, Novation Launchpad
    NI AUDIODJ 2, DJTECH IMIX RELOAD, BEHRINGER BCD 3000, KORG NANOPAD
    VESTAX VMC002XL, NUMARK DM3000X, NUMARK TT200
    NI TRAKTOR DUO, VIRTUAL DJ 7 PRO FULL

  10. #10
    DJTT Infectious Moderator photojojo's Avatar
    Join Date
    Apr 2010
    Location
    Sherman, TX
    Posts
    13,939

    Default

    The way I read it the whole deal sounded like a DJTT mob loan shark of sorts I think for the event to be a success the promoter needs to be able to pull of the event in the first place.
    Chris Jennings FHP

    Podcast - Soundcloud - Mixcloud - Beatport Charts - x

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •