Shakeout, Rattle, and Roll – By John Stiernberg

May 18, 2010 by Dan Walsh

BUSINESS CHOPS™

Shakeout, Rattle, and Roll

By John Stiernberg

THE TIMES THEY ARE A CHANGIN’: HOW TO SEIZE THE OPPORTUNITY

Change is in the air for mobile entertainers. Clients are demanding more and wanting to pay less. Vendors (like gear manufacturers) are changing distribution policies and dealer affiliations. The DIY threat (aka the “iPod wedding”) looms large. Some of your competitors have gone out of business; others are stronger than ever. Where is it all headed? What impact will it have on your business? Are there opportunities amidst the challenges? This article takes a look at industry shakeout trends and suggests three action tips for success.

INDUSTRY LIFE CYCLE: IS IT TIME FOR A SHAKEOUT?

Most industries—including mobile entertainment—have long-term growth cycles followed by softening or decline. For example, real estate enjoyed big growth from 2002 to 2007 but has been in a down cycle since 2008. Of course there are regional variations. We’re talking big picture to make a point.

The business swings in mobile entertainment are not as dramatic as those in the automotive or fashion industry. That’s because of what I call the “Entertainment Factor.” When times are good, people use entertainment to celebrate. When times are bad, people use entertainment to escape and deal with their troubles. There are still plenty of weddings, proms, anniversaries, birthdays, corporate events, and community gatherings that need entertainment and related services.

So why talk about a mobile entertainment industry shakeout? Let’s define it. According to Barron’s Dictionary of Business Terms, a shakeout is a “change in market conditions that results in the elimination of the weaker or marginally financed participants in an industry.” Hmmm…did any of your competitors go out of business in the past year? Did they come to you and offer to sell you their gear, go on your payroll, or sell their company outright? Yes, a shakeout is happening, and that’s a good thing.

WHY MOBILE ENTERTAINMENT COMPANIES FADE AWAY

Many DJs report that their business is better than ever. They tend to be the stronger, better-managed companies, whether single operators or multi-ops with a lot of rigs. What’s happening with the others? Here are three common scenarios.

  1. Can’t afford to continue. Some don’t have enough gigs and can’t make a living and pay their bills. They may need to consider merging with or selling to another DJ or entertainment firm, or just go out of business.
  2. Lost interest. Gigs or not, some mobile entertainers get distracted by day jobs, family, and other interests. They may be full-time or part-time. In any case, someone else is going to pick up the slack with clients.
  3. Ready to move on. Many successful DJs are nearing retirement age and looking ahead to the next phase of their lives. Their businesses may be strong, and worth selling to an employee or competitor.

HOW TO “RATTLE AND ROLL”

Amidst all the change in the industry, you can plan to do more than just survive. There is plenty of work out there and it looks like the consumer economy has (at least) stopped getting worse. That spells opportunity—time to rattle the competition and roll with the coming “up cycle.” Here are three suggestions.

  • Action Tip 1. Analyze your own situation. Are you a survivor, or is it time to do something different? How do you feel about the risks involved? Are you properly financed? Get feedback from close advisors and family to help you view the situation objectively.
  • Action Tip 2. Analyze your competitors and their situations. Who’s getting the work and why? Are there competitors who meet one of the shakeout scenarios described above? Are they approachable about a possible merger or acquisition?
  • Action Tip 3: Update your business plan. Look back on your mission, vision, values, and brand positioning statement. How do they square with what is happening in your market today? How do your bookings for the rest of the year line up with your financial objectives? Remember, whether you are buying, selling, merging, or just keeping the status quo, you need to have a plan and work it.

HERE’S THE POINT…

Industry shakeouts are the natural and healthy results of changes in the marketplace. The mobile entertainment industry is changing now and will continue to change. Will you be one of the winners? The critical difference is how you run your business, not the size of your music library or sound system. Remember that the sequence of the Action Tips is important: 1) analyze your own situation, 2) analyze the competition, and 3) update your business plan.

John Stiernberg is founder and principal consultant with Stiernberg Consulting, the Sherman Oaks (Los Angeles) CA-based business development firm (www.stiernberg.com). John has over 25 years experience in the music and entertainment technology field. He currently works with audio and music companies and others on strategic planning and market development. His book Succeeding In Music: Business Chops for Performers and Songwriters is published by Hal Leonard Books. Contact John via e-mail at john@stiernberg.com. Find John on LinkedIn, Plaxo, and Facebook. Follow John at http://twitter.com/JohnStiernberg.

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