[Transcript] Episode 038 – David Barnard (Part 2)
Transcript: Episode 038 – David Barnard
Today is part two of my conversation with David Barnard. Last week David joined us to talk about the music cooperative as a business model that is helping teachers build sustainable studios by joining together.
Today David’s talking about how to form a cooperative. Some of our discussion applies specifically to coops, but a lot of our discussion centers around how to write a business plan, which is a great exercise for any teacher no matter what business model you’re using.
Here’s our conversation.
Andrea: Hi David. Welcome back to the podcast. In our last interview we talked a lot about music cooperatives in the UK and how that is a potential business model not just in the UK but in the US or worldwide to support self-employed music teachers. Today we’re going to talk more about how one would go about starting a music co-op, so can you get us started here?
David: Okay, so starting a cooperative is actually very easy. The first thing you need to do is if there are a number of people who want to form a cooperative is come together as a group and agree why did you want to be a cooperative. So I’m working with a group of teachers at the moment who have operated as independent teachers and they’ve come to the realization that they are under continued pressure to reduce their fees. They’re struggling with marketing and promoting their services and that it would be better for them to come together to work as a collective or cooperative in order to benefit from shared services to create their own website if they’re selling or promoting their services to organizations, sometimes coming to that organization as a cooperative, which is seen as a consortium of many teachers as opposed to one individual. It gives them a much more powerful negotiation stance.
But also, if you want to apply for any kind of public funding or sponsorship, if you apply as an individual, it’s harder to get the funding, whereas if you apply as a collective of teachers with an agreed constitution, your chances of getting funding have increased. So this group of teachers, at the moment I think there’s seven of them, and what they’ve done so far as they’ve come together, they’ve had that discussion of why do we want to be a cooperative? Do we agree that this is a good thing to do? And we send them a copy of our Teachers Code of Practice and they have now simply signed a document saying, “We agree with the Code of Practice and we are a cooperative.” It’s very, very loose. It’s not incorporated at that point in time. It is just a desire to work together to support each other and they have a kind of constitution developing in the form of that teaching agreement.
So that’s stage 1 and it can be very loose. It can be very free. There’s a cooperative in Gloucestershire that operates in that way. Now if that group of teachers says, we want to be a bit more structured and we want to start providing a service to the members whereby the cooperative is doing invoicing or marketing or doing more structured organization, that’s the point when you then say, “Right. We need to incorporate the organization.” In the UK, we have a wonderful organization called Co-ops UK, which I would recommend for them to look at and they provide a series of template documents to enable you to form a limited company. I don’t know how easy it is in the US to form a limited company but it’s very easy here in the UK. There are two ways: You can buy a company online and there are template articles that help you do that for you, or you can just go to a lawyer and say, for £200, form a company and the lawyer will do all that thinking for you and by far the best route to go. And then you have a proper limited company limited by guarantees, so the only liability then to the members is £1 and that protects the members of the cooperative should the cooperative get into financial difficulties.[00:04:48]
Andrea: Alright, in the US we have limited liability companies and limited liability partnerships. Do you know how that translates to your context?
David: Not very well, but we have looked at a similar model in the UK of limited liability partnerships and there is a different tax treatment for that. I think we are looking at that as potentially the next kind of evolution of the cooperatives and how they continue to evolve. So I think the best thing would be to, in terms of our US friends, is to see if there’s an equivalent of Co-op UK in the US; I’m sure there is.[00:05:27]
Andrea: I’m sure there is, yeah. I will compare and put something in the show notes on that topic. So at basic level, just an agreement between teachers and that can form a co-op and then if you want to formalize it, you’re actually creating the legal structure.
David: I think between that, the next thing really is to write your business plan which looks at what do we, as a cooperative, want to achieve. What’s our vision? What are we about? What are the services we’re going to provide looking at how we market your place, market your service and looking at practical things such as do you have an office? Do you employ people? What are you going to call yourself? And how do you manage the logistics of the organization? Our business plan becomes very much a core of identifying who and what you are. I think that is possibly one of the most important stages if you move forward as a more formal organization.
The thing is there are a lot of template business plans online that you can look at but often, they’re built around in looking for investors or going to the bank and asking for a loan. I think in many ways, a business plan has got to be an honest document. It’s got to be a true reflection of what is it we’re going to have, what is it we want to achieve and how we’re going to achieve it. And what does this look like in five years’ time? What does success look like?[00:06:56]
Andrea: I’m so glad you bring that up because I talk about business plans as you’ve got your vision and your business plan is how you’re connecting the vision to reality. It costs money to pull off a vision and it doesn’t mean it’s not worth it but it’s a check and balance.
David: Yeah, absolutely. I’ve written several business plans for various organizations and I spent ages trying to work out what was the difference between the vision statement and the mission statement. Eventually, I just thought, “Stop trying to work through other people’s definition. Let’s look at what is our organization trying to be? What do we believe in? What are our values?” If you just write a business plan so that it should be an enjoyable read, you should be able to pick it up and read it and it has some progression to it and you understand what it is you’re trying to achieve. Where people then struggle is in the finances and again, I think, sometimes the help, it depends on who your financial statement is for because if you’re trying to put a financial statement together for a bank, they will expect to see things in a very different way. A bank doesn’t look at your balance sheet and your asset values and all of those things, when in fact, to begin with, that’s important to just look at the profit and loss, and to look at is the organization viable? As I said, it’s an honest conversation amongst everybody, but I think the help from an accountant at some point is essential and to convert that into a format that would be seen as a professional business plan, which you then might submit to an organization for some funding.[00:08:38]
Andrea: So can you outline what parts you would include in a business plan?
David: I would start with a vision statement. What is it we want to be? What are we all about? I wrote a business plan not long ago for Project Resonance and the thing about a business plan is they get better and better the more you do them. So in this business plan, what I would suggest is a good format is, first of all, I think it’s useful to put together some research that you understand the marketplace that you’re entering. That’s important. And to provide some kind of context why are you trying to form a cooperative and what’s the context?
If you’re trying to form a cooperative and you live in the middle of nowhere and there are no customers, then clearly, the business has no future. So it’s very important to set out the context why are we forming this cooperative. Then, I think it’s important to go on to who are we, what we stand for, what do we want to achieve, what are our values. That will include things like those core values that you would expect from your members but also you would expect your customers to be able to feed back to you. It’s a little bit like the Stephen Covey’s 7 Habits of Highly Effective People where he asks you to talk about how you would like to be remembered. So it might be that you would like your customers to feed back to you that you’re a committed company, you’re mindful, you’re fair, you’re transparent, you’re kind, you’re honest, you’re responsible, you’re accountable, it’s about entrepreneurship, you’re distinctive, you’re unique, you’re aspirational, open-minded and reflective.
So those kinds of things, if you do it from that point of view, then in our case, how does that now shape the way we operate as an organization and as individual members of the cooperative? Because, in many ways, that also becomes part of your membership agreement which is that we are going to be committed to each other in the success of this business. We’re going to be mindful of supporting each other, mindful of the challenges that we have, and that we’re going to be open, honest and transparent with each other, kind and honorable, responsible for our own activity and our own business but we’re responsible to each other, et cetera. So I think that’s a really important workshop activity that I think cooperatives in the early stages need to go through. It can be very powerful in terms of bringing people together.
The next part of the business plan, really, is to start looking at what is it we’re going to sell. What’s the product? What’s our service? And how does that meet with the market that we’ve identified in our contextual part of the business plan? So in the sense of when we’ve done our market research, we believe that there are, for example, 40% of young people who are not engaging in music but are proactive listeners to music but what they’re listening to is pop and rock. Then as a part of your business plan will be how are we going to engage with that 40% of young people and what do we, as a cooperative, do to skill ourselves up, but also, what kind of service are we going to offer these young people? What do we need to enable us to do that?
I do think it’s very important in this business plan to talk to your customers as well. If your customers are aged between 12 and 18, then you’ve got to find a way of getting it to them, whether it’s an online survey, whether it’s working with a local retailer who has lots of young people coming into the store and you’re there with a clipboard asking questions. It’s about understanding your customer at the end of the day.
And coming back to what we were talking about in Part 1, a lot of those teachers who are working in employed circumstances didn’t have to think about that because, often, the people would provide it for them to teach. And when you become a cooperative, there’s no guarantee that those people are going to come knocking on the door so you’ve got to put together a proposition that will appeal to those young people and be at the right price that parents are prepared to pay.
So I think that moves on the course then to so you got product price. How are you going to price your services? In your market research, what are your potential competitors charging? What seems to be the national rate? And the glorious thing about the cooperative model is that decision is then made by the members. So when we formed the cooperative in Swindon, I invited teachers and rather than me telling teachers what I think they should be charging, I invited three teachers who I knew had a different angle on this to present a case like how much the cooperative should be charging. So one gentleman stood up and said, “I think we should be increasing our costs,” and put his case forward. Another agreed on remaining the status quo. And the final proposition was to reduce prices. And everybody went kind of, “Why would you do that? Why would you reduce your prices?” And the argument was, “We want to rebuild a foundation to our business and therefore, by reducing our prices, we can get more people learning.”
The challenge then is, “How do you then bring your prices back up?” And the mistake that the cooperative made was they got to about Year 5 in operation and realized they haven’t put their fees up. And then put their fees up and everybody saw this as a massive hike in cost, so you gave for that lower level to build market, then make sure that you’ve got a systematic annual increase so that parents and other customers are used to seeing an increase in your fees.
I think the other part of the business plan which I think is useful and, again, it’s all part of that analysis of the product, is look at diversification. So one of the activities we did with the cooperative and we’ve done with several of the cooperatives, so if you’re an instrumental music teacher but your foundational skills are music, so what other things could you do with that music? So for example, it might be that somebody says, “Well, I’m a composer so I could maybe compose music for other colleagues within the cooperative.” So it might be a teacher who is not a composer might come to the colleague in the coop and say, “Could you compose me a piece that is based on the whole-tone scale or that uses a very simple 12-bar blues pattern.”
The other thing it might be the teacher say, “Well, I’m a good performer therefore I will team up with three or four other people and part of my week will be visiting schools, colleges, community centers, churches, et cetera, doing performances to draw and develop attention and awareness of what the cooperative is about.” It might be that some people got IT skills and music technology skills that might be that somebody says, “Well I’m actually a qualified therapist therefore it’s possible that I might be able to run a music therapy program.” So it’s about diversifying the offer that you make.
I think the next stage of the business plan is identifying where you’re going to base yourself and taking some consideration as to, are you going to have an office? And if you are, where is it going to be, what you want it to be, what are the costs involved in that? Or is it that you don’t need an office but what you need to have is a virtual office which would be your website, et cetera. So that’s worth giving that some consideration. I think that in that part of the business plan, it’s also good to be aspirational in terms of five years down the line. Yes, we would like to have an office because it becomes a meeting place for the teachers to come but it also becomes a reception for parents and people to come and pay their fees or to collect information, brochures, et cetera. So the business plan, in many ways, needs to have some progression through it and I think a 5-year plan, but perhaps a 10-year aspiration, too, is worth having, but not to get to a point where it’s just too big, too bold, that it becomes impossible.[00:17:26]
Andrea: Sure, yeah, just enough to set your budget around.
David: Yeah, yeah, give it some reality. Then of course, the next section is about the people and how you organize yourselves in terms of people. So in the cooperative’s case, it is the organizational element of it, having a board of directors who are there to not be board of directors in the terms of a command and control system, but those are people who are representatives of the members of the coop and they take just a wider, more strategic perspective. In your first business plan, it may well be that you’ve identified who those people are going to be.
When I formed the cooperative in Swindon, I essentially head-hunted the right people but also others who generally kept themselves to themselves but suddenly come forward and say, “Well I would love to be on the steering group,” and reveals some amazing talents I never knew existed. And that becomes your steering group which then becomes your first board of directors. The thing to remember in this is you’ve got to have a succession plan. In other words, in the UK system—I don’t know if it’s the same in the US—our board of directors rotates, so after three years, they are expected to stand down. They can re-stand and get elected but it’s very, very important that you do have a succession plan and start looking for who the next members of the board might be. And it might be those people are being encouraged to come on to the board meetings to get an understanding of what goes on and are given some training and support. That succession planning is very, very important.[00:19:12]
Andrea: That’s really good advice.
David: Thank you. So then we get to the other part of the plan which is marketing and first of all, looking at where your organization fits in terms of what we call market segmentation. This again goes back to your values which is, where do you want the organization to be? Is it going to be chirp and cheerful or is it going to be high-quality? Is it going to be your BMW of cars or your Ford? You see, there’s that difference between Ford and BMW. You got to understand where we want to be. Are we going to be viewed by parents as being a high-quality professional outfit? In which case, the marketing and the message and how we promote ourselves needs to match that identity and this is where I think it is important to spend some time thinking about your brand, the name of the organization, having a brand identity, a style consistency so that you were using language that’s appropriate to your aspiration.
It may be that if you’re forming a cooperative that you get someone in to help you with that. There are marketing consultants out there who can, quite cheaply, provide you with that guidance and to help you then develop that brand identity. And of course, that then permeates all the way through how your website is created, even to a point where you start looking at the design of your logo, the design of the font that used, and that gives a real sense of corporate identity. Again, throughout all of this process, the members are involved, so it’s not a decision made by an executive board that nobody ever sees. It is made by the members and everybody should be encouraged to get involved and it’s amazing what comes out of that.[00:21:12]
Andrea: It sounds like the way you’re describing the business planning process in the context of a co-op is really getting all the teachers on the same page, figuring out what their unique hidden talents are that they can offer and bringing everyone together in a really cohesive way.
David: Yeah, absolutely. And therein lies its strengths because at times when there will be challenges, there will be times when there are going to be some tough times, that’s when an organization pools together and supports people. And that’s one I think is lacking in so many corporate situations in that you might be at the bottom and it’s not your problem if the company’s having problem. It’s only those at the top. Where in fact, the solution to the company’s problem might actually be somebody who works in the warehouse but nobody thinks of asking him where, you know. I have always been pleasantly surprised and challenged and have had to eat humble pie on many occasions when somebody who from nowhere comes up with an absolutely blinding idea and I thought, “Why haven’t I thought of that?”
Coming back to the next part of the business plan is having a look around at the market, as I said earlier, understanding who your competitors are. Are they competitors? What is interesting is that competitor doesn’t necessarily mean to be another music organization. It maybe competitors in terms of, let’s say that your core customers are young people or young children aged 12. Let’s say that’s your average starting age. Well there are a lot of things being thrown at 12-year-olds these days. Your competitors might be another organization that provides sporting activities or whatever and you need to just be aware of what’s going on in the marketplace because you’re actually, to a certain extent, competing for time. So you want everybody to learn a musical instrument and to enjoy music and it’s about how you proposition and how you put that forward. Be aware of other organizations around you and what they’re doing.
Then, finally, and this is the crunch bit that everybody puts off to the last minute is the finance plan. As I said earlier, this does need to be carefully thought through. Is it viable? Does the proposition work? And how are the finances going to develop over the next five years? Again, as we were saying with marketing, sometimes it’s helpful to get somebody who can help you with that. A lot of teachers are great musicians. They’re great teachers but they wouldn’t necessarily understand how you put a finance plan together and to identify weaknesses in cash flow going forward. That is really worth doing and again, there are people who can give you help in that, particularly if there are other cooperatives out there that provide business support startup consultancy. Certainly, in Co-ops UK, we have a lot of people who are consultants as part of the cooperative so their fees are often very generous but they also understand what it is you’re trying to do.[00:24:25]
Andrea: I’ve noticed the same weakness and maybe some fears around the finance part of business planning in my music teachers. I studied Entrepreneurship in college and we had a series of three classes, two of which were entrepreneurial finance classes focusing on this, just this part of the business plan and my professors just over and over again said, “You’re going to want to spend a lot of time on the marketing and the personnel and the pricing and all of those aspects of the plan, and you should, but it’s the 80/20 Rule. That should be 20% and the finance part should be 80% of your time.” And usually people want to flip it when whatever time they spend on the opening parts of the plan they consider the 80 and almost do the finance part as an afterthought when it’s pretty critical.
David: Yeah, and I think part of the challenge for teachers with no business experience when they’re starting off an organization is that they have a tendency to run before they can walk. They have very big ambitions and it’s not until you then dissect those ambitions in financial terms that you understand that, okay, yes, we wanted to have our own building with its own performance venue and recording studios and broadcasting radio station, whilst I now understand how that works. Financially, we might have to put that off to Year 20 as opposed to Year 10.
But when you start a cooperative, the biggest challenge in terms of your financial plan is in assuming that you follow a model based on the tool we got in the UK where the cooperative is providing administration services to its members is, first of all, working out how much is that administration going to cost and so, once you’ve defined that figure, then the next stage is saying to the teachers, “Okay, how much are we going to charge our customers?” bearing in mind that there is going to be a top slice figure coming back to pay for administration. Bear in mind you can then tax-deduct that burden, it is so that teachers understand what their take home pay is going to be. Then individually teachers need to realize, when they’re self-employed, is they then have to pay tax and all the other things that you have to pay. Now in the UK, we are very lucky we have tax, we have national insurance. We will pay for our pension but we don’t have to pay for health. It’s all free.
Andrea: That’s significant.
David: Yeah, whereas in the US, you have to think about the health insurance, so a business plan in the context of a cooperative needs to take two viewpoints in terms of financial projections. One is the cooperative as an organization but also bearing in mind what it means for individual members as well. That will have a bearing on what the teachers decide to charge.
Andrea: Which is true of a school that is not a cooperative too, like you have to be aware of the teachers who are teaching there even if they are employed by a school.
David: But I think you’re absolutely right. Getting your finances clearly understood, clearly set out at best on this as you can possibly be, bearing in mind that I’m working on a business at the moment and we’re now probably on version 27 of my financial plan. It is constantly evolving; constantly changing as things kind of pop into the system, but it is worth getting it right. I think the other important thing is communicating it and writing it in a way that everybody understands. The financial plan shouldn’t be complicated. Some people don’t get numbers. I understand that, but in the context of a business plan, every member of the co-op should be able to pick it up and read it and understand it and that’s why do you think that it’s important that, I mean, certainly, in the business plans that I’ve written, either I’ve looked at it as simple as I possibly can. And there’s a danger if you give it up to a business consultant you’ll get a very business-sounding business plan but nobody will understand it.[00:28:25]
Andrea: That’s also good advice. If the plan is accessible then people can feel responsibility for it. If it’s above their head, then they’ll just say, “I don’t understand that,” and ignore it.
David: Yeah, and the thing is that where the cooperative, you’re all collectively responsible. So if you are an employee of an organization and you don’t understand the business plan, it’s not my problem. Whereas in the cooperative, it is your problem and there is a mechanism because you are a democratically run organization, for you to say something about that. And if you don’t, then you’ve let the group down. The other important part of a business plan is what we call the SWOT analysis. Did you do that?
Andrea: I did.
David: Yeah? So Strengths, Weaknesses, Opportunities, and Threats, and often a lot of people kind of just still list them without much thought, but they’re actually it’s a very useful document, very useful part of a business planning. For people to actually have that reflection and say, “What are our strengths?” That’s a really great way to look at diversification as well. What skills do we, as a collective, bring together? What are the weaknesses? That’s often a hard bit but it’s essential. The same with looking at opportunities and then looking at the threats, but once you’ve identified what those weaknesses are, then you need to say, “Okay, so what’s our solution? How do we overcome those weaknesses and those threats?” and that’s a very important part of a business plan.[00:29:56]
Andrea: Yeah, that’s a really good analysis tool, the SWOT analysis, and good for individual teachers to go through too to see what they offer to the whole group.
David: Yeah, yeah, I mean, it may well be, you know, one of the weaknesses because I think doing this past sight as well as for the cooperative _ is very useful. It might be one of your weaknesses might be that you know I’m a classically-trained trombonist and I teach classical trombone music. In some cases people say that’s a strength, but if I know that having done my research, that most of the kids out there wants to play a guitar and form rock bands, that suddenly becomes a weakness and so that is a threat in terms of my future viability as a trombone teacher. The challenge that I will be saying, “So what are the opportunities here for me?” and it maybe that I knew good training, I knew to change my approach, it might be that I become a trombone player that looks at teaching jazz, teaching rock, but through the trombone and suddenly it becomes more appealing to them and then I have to change my business model. So I think it’s useful for individuals to do it.[00:31:05]
Andrea: And the weaknesses and threats are there whether you’re aware of them or not, so it’s just going through the exercise so you’re aware and then you can deal with it or come up with some solution. If you’re not aware, they’re still going to happen but then you’re just kind of out of luck.
David: I ask my wife to do my weaknesses for me. She’s very good at that. [LAUGHTER] The next bit in the business plan is, of course, having key milestones, having some key steps. What are those smart objectives to help us achieve the outcomes that we want? I mention S.M.A.R.T as making those objectives very, very clear, specific, measurable and achievable, but also having it time lined as well, so you’re going to achieve this particular task by this particular time. If people aren’t familiar with that, it’s been around for a long time, and it’s probably been replaced by other things, but I think the key thing is making sure that the milestone is very precise what it is you want to do. So forming a website, getting the website launched is an achievable target as opposed to designing a marketing strategy, which is a process.[00:32:21]
Andrea: I think that’s really important to include in the business plan too, not as some separate document because it brings you back to reviewing the business plan on a regular basis, which is something that, you know, sometimes we write up a nice one and then it’s on the shelf, not even on a shelf, just on a hard drive, and we never look at it and it loses its value when we’re not paying attention to it.
David: Absolutely. I have rewritten and continue to write business plans. It’s always on the table at all meetings and I say, “So where are we on this?” and you didn’t realize you kind of get, “Oh that was full of waffles. That needs clearer communication,” and often sometimes it’s usually one person who sits down and writes it on behalf of the members but it’s everybody should take responsibility for reviewing it. And that person who was involved in writing it doesn’t take it personally when I become critical of it. I think it’s very important that it’s always reviewed and that you take some pride. It’s the kind of thing you say, “Yeah, I’m going to have that on my bedside table because I’m so proud of this document.” And don’t be frightened to share it around your family and get people to read it.
Andrea: Yeah, look them in on some of your goals and dreams.
David: Yeah, yeah.[00:33:37]
Andrea: Alright, so we’ve talked about gathering members. Lots of process to get members thinking along the same lines. Are there any other steps that we need to talk about for forming a music cooperative?
David: I think it’s important to make sure that you’ve got some professional advice in terms of legal support and also financial support in terms of an accountant, just making sure you’ve got those professionals available as when you need them. Their costs will be in your business plan anyway, so take time to audition a lawyer and an accountant, somebody that really understands what it is that you’re going to do and what you want to achieve and feels just as passionate about what it is you do, and that can become an invaluable support line.
I think the other thing in terms of professional support is having somebody who is good at giving personal advice because, often, when you’re working as a cooperative, there will be times when personal issues will come up or there might be a dispute between members and you need to find a mechanism by which you can resolve that. That will be within your code of practice anyway about how you resolve personal disputes but sometimes it’s good to have somebody outside of the organization that you can lean on and say, “Okay, I’ve got a problem. How do we resolve it?” And you might find the other element of professional service that you might need is somebody who deals with safeguarding? Do you know what I mean by safeguarding?
Andrea: I’m not sure.
David: It’s about child protection, how you deal with that, because sometimes things are constantly changing as case and law comes about that the government will initiate some kind of policy and then you need to be able to turn to somebody and say, “So what does that mean in terms of my work that I do?” And again, that’s one of the benefits of a cooperative because rather than having to do that individually, you do it as collectively as an organization. It might be that you say, “Well, okay, everybody contribute £20 towards getting a professional fee and part of that fee will be to write a policy document that we can then sign up to and that protects us should ever there be an issue that presents itself.” In the UK, we’ve got some very, very stringent safeguarding child protection laws which are constantly being updated when those circumstances around has changed.
So with the Covid virus issue at the moment, a lot of teachers are looking at doing online teaching. The first question that comes out is, “Do we have an online safeguarding policy?” I don’t know if you have them in the states but we’re now saying, “Okay, so if you’re going to teach online, there are certain things you got to do in terms of protecting that student’s data, their identity, and as a professional, you have a responsibility if you see that there’s anything that is going on. What do you do about it? That kind of professional support is very useful. For being in individual teaching means you wouldn’t necessarily go if you’re looking for that advice.[00:36:47]
Andrea: Yeah, I can see the value in where it might be cost-prohibitive for an individual teacher to seek out that advice, but if you’ve got 15 teachers, you’re splitting the cost between and you just do it and it kind of raises your level of professionalism too.
David: Yup. I think the other thing I would say is worth doing, just to add, is look out for other cooperatives and they could be in any sector. It doesn’t necessarily need to be music but look out for those cooperatives network with them and if necessary, look at doing some collaborative things with them. I went to an actor’s cooperative some years ago and it was just wonderful because I don’t know whether it’s because actors are more outward going and as musicians tend to be a little bit insular and silent. But just going into this organization and see how they ran their cooperative, and on that particular day that I was in, what they do in terms of central administration was that everybody would volunteer three hours of their time to go into the office. But on this particular day, there were eight people in the office. My question was, “Are you all contributing your time today?” They went, “No, we’re actually here because we want to be here.” and that was important in understanding was that, particularly with those cooperatives that had gone through that transition from being employed to being self-employed and part of a cooperative is creating that sense of group team identity.
If you play in a symphony orchestra some people would say, “Yes, you’ve got that sense of group identity but often its 90 individuals playing their own individual part, whereas actors, I think they’re very good at collaborative work. I think networking with other cooperatives just continues to create networks and you learn from each other. In England, we now have an organization called AIMS, which is the Association of Independent Music Services and that is a collective of the ten cooperatives plus three other independent organizations that are charitable organizations. They meet two or three times a year and share ideas, share resources and they’re all talking tomorrow online about Online Teaching because you know, how they’re going to create a unified safeguarding policy and an online teaching contract, et cetera. So it’s about pooling resources and expertise, so I would recommend that to anybody who wants to start a cooperative.[00:39:22]
Andrea: Alright David. Thank you so much for all this information for taking the time to share how music cooperatives work and how we can set up our own. Thank you so much.
David: Thank you.
We’ve talked a lot about various business models and you’ve probably gathered some new ideas on how to build a sustainable studio. You might have a clearer vision for what you want your studio to look like.
Today we talked about how to bring that vision to life.
David talked about the process of putting together a business plan as an exercise to get all the founding members of a cooperative on the same page and aligned toward the same goals.
I’d argue that even solo business owners can benefit from doing this exercise.
When you put a plan down on paper, your dream self gets on the same page as your real self.
Business planning has a way of revealing the places where we might be overly optimistic or unrealistic in our assumptions.
On the other hand, business planning also makes big business goals more attainable by breaking them down. And, like David said, the business plan should be aspirational!
Done well, a business plan can be motivating to write and read.
Ok, let’s talk finances.
The finance section of a business plan is where you figure out what it costs to run your business, how much you should charge, whether or not it’s worth it to invest in that extra training or fancy instrument. It’s where you budget for marketing and growth. It’s how you determine if you’ll need a loan to get started or to get through that summer slump.
You may have a huge vision for a music school. Maybe one that employs conservatory-trained music teachers, teaching in beautifully-designed, soundproofed studios, with top-of-the-line instruments, with an acoustically-optimized performance hall and a recording studio with cutting edge technology and solid gold metronomes in every student welcome packet.
OK, maybe the metronomes are over the top, but you get my point. You have a glorious vision!
But as the person responsible for paying the bills, you’ll want to make sure it’s a financially viable vision.
A financial plan will help you there. What’s more, putting together a financial plan lets you test and tweak the model, to make sure it’s sustainable, before you start investing real money and energy.
I’m reminded of the comment Ken Thompson made back in episode 031. He was talking about his business in the early days and said its sustainability was dependent on his ability to suffer.
This got old after a while, so he tested and tweaked the finances until he found a financial model for the school that sustained his vision.
Now, if you’ve followed my podcast or blog or Instagram, you know I’m a nerd about the numbers, but I KNOW it’s not a strong suit for most teachers.
I’ve been putting together a course that guides teachers through this process of financial planning.
Teachers who have gone through the course and described themselves as “non-numbers people” have said it gave them new confidence in their finances. One teacher said if she had gone through the course earlier, she would have launched her independent studio sooner! Another used it to help decide whether or not to finance the purchase of a piano.
I love seeing the impact it is making in teachers’ studios!
Like David said, when teachers understand the finances, it empowers them to take ownership in the management of their business.
If you want to know if this course is for you, send me an email or dm or drop your email address in the interest form at musicstudiostartup.com/finance
Thanks again to David for joining me on this fantastic two-part episode.
That’s all for today, I’ll be back next week.