I.

) INTRODUCTION
Recording studio is a facility for sound recording. Ideally, the space is specially designed
to control audio reflections. Different types of studios records bands and artists, voiceovers and
music for television shows, movies, cartoons, and commercials, and/or even record a full
orchestra.
This is a study that has been conducted in order to measure the recording industrys
capability to survive under a different market conditions as well as to meet the peoples demand
of such enterprise. It also seeks the resources needed with its corresponding amounts in order for
the proper allocation of the resources.
The Studio was named Rockoholic because many people are addicted in music. The
Rockoholic recording studio will be located at Matina Town Square fronting Ateneo de Davao
University Grade School building. The studio is located right wing of the Matina Town Square
vicinity.
We gathered a lot of data given by the different establishments. We interview some
persons who have a lot of knowledge about music and by observing and studying the
informations given. We also make use of our little knowledge about music because most of us
are member in the band and also tried recording. Our data gathering started on the month of
January, year 2007 and what we did was we went to different kinds of recording studio, practice
studio and music stores here in Davao City. We ended on the month of January, year 2008. We
make use of our critical minds and careful analysis in order the study will be sufficient and
adequate.

The names of the Entrepreneurs with their cell phone numbers are the following:
Joseph Gubantes

09192276613

Johnwyn Maruhom

09187103063

Joshua Paguican

09205113146

Kashmeruddin S.Abdul

09283112548

Librado Echevarria III

09176981592

The Capital of each Partner:

The Companys total capital is One Million, Five Hundred Thousand Pesos
(PHP1,500,000.00). Each partner will contribute an amount of Three Hundred Thousand Pesos
(PHP300,000.00).

II.) EXECUTIVE SUMMARY

The Rockoholic recording studio is a type of business that offers recording and practice
services to all artists and music enthusiasts here in Davao City. The following are the charges
that we charge to our customers: for Recording, which includes Demo (includes Vocal Recording
and Dubbing) and Multi tracks are Php 450.00 and Php 600.00 respectively. For Practices, which
includes Band practices and Acoustic, are Php 150.00 and Php 100.00 respectively. Payments
may be in cash or through checks. The company operating hours is from 9:00 am until 9:00 pm
daily. The company space that is needed for the operation is from the range of 50-70 square
meters. The Rockoholic recording studio will be located at Matina Town Square fronting Ateneo
de Davao University Grade School building. The studio is located right wing of the Matina
Town Square vicinity. The building is just rented with a monthly rate of Php 27,685.00. The
building and location is right for our business because theres a lot of musician there and also,
lots of potential customers are there. We also choose that location because there is no existing
music recording studio in that place. The office equipments that will be needed are the following:
a computer, couch, desks, chairs, side tables and some office supplies like bond paper, sign pen,
log book etc. These office equipments will be purchase. The capital of the business is
approximately Php 1,500,000.00 composed of a manager, senior technician, maintenance
supervisor, cashier, assistant technician, and maintenance personnel as the manpower. The
service revenue of the company on the 2nd year was assumed to have additional sales on off peak
season and 5% increase in sales on the 3 rd year. Since it is a service oriented company, it is
expected to have a minimal increase on liabilities. Maintaining the studio would be an important
factor to determine since it is a determinant on whether to continue the business or not.
The entrepreneurs are the following:

 Kashmeruddin Abdul, a graduate of ADDU, 20 years of age, member of a music band,

Drummer.
Joseph Gubantes, a graduate of ADDU, 20 years of age, member of a music band,
Vocalist.
Joshua Paguican, a graduate of ADDU, 20 years of age, member of a music band, Bassist
and Rhythm.
Johnwyn Maruhom, a graduate of ADDU, 20 years of age, Sound specialist and Pianist.
Librado Echevarria III, a graduate of ADDU, 20 years of age, member of a music band, Lead
Guitarist and Vocalist.

III.) MARKETING PLAN

A. Situational Analysis
1. Industry Analysis
a. Industry Background and Overview
Our company, which is the Rockoholic, belongs to the recording industry. The
said industry is not that big because it is just 12% of Davao Citys total industry, and been
recognize for almost 10 years in Davao.
Rockoholic is a full service recording studio that provides a high-class / highquality sound using the new Equipments and offers the following:

Professionally- equipped recording studio

Sound quality
4

Digital Mastering

Arranging / composing

Audio conversion to MPEG, MP3, WAV, etc.

The total industry sales for the past five years were, 2003 has P6,108,658.00. On
2004, it increased to P8,952,341.00 and on 2005 decreased to P5,361,752.00. But for
2004 and 2005 was P7,668,431.00 and P9,253,224.00 respectively.

b. Growth Rate
The anticipated growth rate in this industry will be positive and expecting that the
Return of Investment will be 25% of this coming year. There were only 1 new firm who
entered this industry in the last three years. The new service that the said firm introduced
in the industry were high quality and well maintained equipments. Our competitors
sales were changing depending on the different factors, as what was shown on the graph
below.
Figure 3.1

Sound Quality

Service

Polyfusion

Polyfusion
Mix a Tune
Rockoholic

Mix a Tune

Rockoholic

Equipments
Polyfusion
Mix a Tune
Rockoholic

2.) COMPETITORS ANALYSIS

a. EXISTING COMPETITORS
The companys key competitors are Polyfusion Recording Studio and Mix-a-Tune
Recording Studio. Their services have been operating for quiet a long time. Polyfusion had
played a large role of providing recording services here in Davao City. It started in the early
90s and still continued its operation nowadays. The studio was part of the period wherein
local artists were making its name in the national music scenes. It also sponsored a lot of
significant events in the city. On the other hand, Mix-a-Tune studio is younger than
Polyfusion recording studio. Mix-a-Tune studio began its operations in the year 2004. It is
slowly making its way to be the best recording studio in Mindanao particularly in Davao.
Both of these studios have been trying their best in their operations. Most of the people in the

city have been acquainted to their services. They were known as the sound technicians of
music in the region. Their strategies in attracting customers to avail their services are simply
by way of advertising through local radio stations and by sponsors. In this way, they make
the people aware to their services. Potential customers in our target market avail there
services as of now because there is no other good services that provides such services that
they need and if they want to avail a better service, they will have spend more money
because high quality recording studio are situated somewhere in Manila which would lead
them to cost more.
After giving out questionnaires, we have identified some of the major concerns of
the people to about the recording studio services. Through these, we can distinguish our
services from theirs. Existing recording studios have some weaknesses as shown in the
illustration below. We can use this information in order to cover up their weaknesses in our
proposed recording studio. Covering up their weaknesses can make our recording studio a
high class studio and these involve a high quality sound, clean and well maintained, and
spacious studio with a friendly staff. We can distinguish our services from theirs in this way
and we can attract more customers.

Figure 3.2
(The following illustration shows Strengths, Weaknesses, Opportunities and Threats of Polyfusion and Mix-a-Tune Recording
Studio.)

POLYFUSION

MIX-A-TUNE

Strengths:
Opportunities:
Strength:
Good quality
Increasing
New
of sound
number
of
equipments
aspiring bands
Efficient
in
Friendly staff
or local artists
recording
Highly

National
Used hi-tech
maintained
music
equipments in
Clean facility
competition
recording
that requires
demo
from

Opportunities:
Increasing
number
of
aspiring bands
or local artists
National
music
competition
that requires

the
artists

local

Weaknesses:
Threats:
Weaknesses:
Threats:
Lack
of
Increasing
Small space
Increasing
maintenance
number
of
for recording
number
of
to
their
music studios
music studios
Crowded
equipments
who have the
who have the
potential
to
potential
to
Old and dirty
offer
a
offer
a
facility
recording
recording
services
services
(The chart illustrates how big their market is.)

(57 percent of the total local artists and bands in the region have chosen Mix-a-Tune recording
Studio as the most excellent studio.)

b. POTENTIAL COMPETITORS
WHO: Aside from the existing recording studios locally, we also assume that theres a lot more
competitors in the future. Those competitors are capable of building a recording studio that is in
harmony of making the public satisfied with what the Rockoholic aims at. The Potential
Competitors would be the department stores that are selling musical equipments. This would
include malls and appliances stores.
WHEN: Competitors will surely appear if our business, The Rockoholic, would be successful
and be in-demand locally. Based on our study, this business will shine to the public after several
years or maybe more or less 3 years after the business is put up.

WHY: Practically speaking, competitors will take place simply because they want to take advantage also
of the financial capability or the ability to earn high on this type of business. Based on our survey, at
present, the recording studio locally does not satisfy the customers. We believe that the Rockoholic will
absolutely provide the necessary or all the demands of the people where in they could not find it in the
present existing recording studio locally. Thats the nature of competence, to imitate once business, that
click the market. All of us wants to earn more than the others, thus potential competitors arise because of
money. Competitors will try all their best to attract the people who are in demand of a good recording
studio.

B.) TARGET MARKET

The target market of the Rockoholic Recording Studio, based on the survey results, shows that
males and females who are music enthusiast are the target market of the studio. Most of these males and
females are likely in a band, play/write music as a hobby, and be of all ages. The Rockoholic Studio
differs from the other since our recording studio has tied ups with different companies, organization and
sectors in order for us to offer them our services instantly if theyll need our services. The Target market
of the recording studio is also focused on people who are seeking perfection. Also, our target market
includes people who are locally aware on the local music industry.

C.) MARKETING OBJECTIVE

The Rockoholic Recording Studio wishes to capture 25% of Davao Citys of its target
market by next year. It also wishes to embark on a new type of advertisement which is to sponsor
contests on singing competitions. Through this, the Rockoholics market share in Davao City
would increase by 20%.

D.) ADVERTISING and PROMOTION

Figure 3.3
ADVERTISING EXPENSE
DESCRIPTION

QUANTITY

UNIT

AMOUNT

Banner

Pieces

270.00

1,350.00

Poster

10

Pieces

600.00

6,000.00

Leaflets

100

Pieces

2.60

260.00

Radio

Radio Station

8,000

8,000

TOTAL

TOTAL AMT.

15,610.00
(The table shows the following composition of the Companys advertising expense and the
projected amount on the advertising expense)

IV.) ORGANIZATIONAL PLAN

A.) Form of Ownership

The business Rockaholic Recording Studio is a partnership form of business. In a

partnership form of business, profits and losses are distributed equally among each
partner. The advantage of a partnership type of business is that it is easy and inexpensive
to form.
10

The Rockaholic Recording Studio is composed of Capitalist partners Librado

Echevarria III, Joseph Gubantes, Joshua Paguican, Johnwyn Maruhom, and
Kashmerrudin Abdul.
Profits and losses would be divided equally among each five partners. The Managing
partner would be Librado Echevarria III. He would receive an additional Salary as
manager.

B.) Registration Process

A.) Securities and Exchange Commission
1. Verify the proposed business in the verification unit of SEC.
2. Submit the Articles of Partnership, Verification Slip for the Business Name, Written
Undertaking to change name if required, Tax identification number of each partner
and/or that of the partnership, Registration data sheet for partnership duly
accomplished in six copies, and other documents that may be required.
3. Pay the registration and filing fees.
4. Have the documents forwarded to the SEC Commissioner for signature.
B.) Department of Trade Industry (DTI)

11

1. Applicant must secure two copies of registration form and pay Php 500 for the
registration processing fee.
2. Accomplish DTI Form no. 16B.
3. If the partnership is fully owned by an alien or the capital of which is more
than 40% owned by aliens, the SEC Certification must specify that it is in accordance
with the foreign investment Act of 1991.
4. In case there is an increase of capital, submit certificate issued by SEC.
Partnership using only its registered corporate partnership or cooperative names may
no longer register under the Business Name Law.
An applicant who maintains a business with branches must register the main business
and every branch thereof.

C.) Business Bureau

The partners must apply for a Business Permit from the business bureau. This is a
permit to operate a business for the partners to comply with the government requirement.

Present your DTI Certificate of Business Name the fill up the application form.

Get the printed application and process the application by letting sign the authorize
government agency reflected in the application, like
1. Real Property tax-in-charge
2. Notarization of lawyer worth P50
3. Business bureau assessment

12

4. City Engineers Office

5. Bureau of Fire
6. If the business pertains to Food and Drug, let the application sign by the City
Health Office.

Secure a partnership residence certificate (Cedula) worth P500.00 from the barangay.

Get a barangay clearance where your business is located.

Let the manager of the partner sign the printed application.

Pay to cashier the corresponding amount as assessed by the assessment division for
the first quarter of operation.

Attach the authorization letter with corresponding photocopy of ID of the manager

authorizing with a specimen signature below the letter.

Submit the application to the Business Bureau for a LOGO or for a Business permit.

There would be a registration fee more or less than P5,000.00

D.) Bureau of Internal Revenue

1. Fill up the application for Registration of Business
2. Submit the application with attach authorization letter of the one who process
and the in-charge of the documentation
3. Wait for the issuance of Certification of Registration with corresponding TIN
Number of the Partners
4. Apply also TIN Number of your employees
5. Let your Books of Account be Registrar
6. The printer will be the one who take charge of your invoice registration with
BIR. The annual registration fee of P500.00
13

E.) Social Security System

1. Fill up the application for partners SSS Number
2. Attach the Business Permit and the authorization letter
3. Submit to the In-charge
4. Wait for your SSS number
F.) Philippine Health Insurance
1. Fill up application for partners SSS number
2. Attach the Business Permit and the authorization letter
3. Submit to the In-charge
4. Wait for the Phil. Health Number

i. Organizational Chart
Figure 3.4

Owner

Manager

Senior Technician

Cashier
14

Maintenance
Supervisor

Assistant
Technician

Maintenance
Personnel

(The chart shows the structure of the Company Top Management (Owner and Manager), Middle (Bookkeeper, Cashier, Senior Technician and Maintenance Supervisor), and Lower Management

(Assistant Technician and Maintenance Personnel.)

1.) Owners Equity

The form of ownership will be a partnership. The business will be composed of five
partners namely Librado Echevarria III, Kashmeruddin Abdul, Joseph Gubantes Johnwyn
Maruhom, and Joshua Paguican. The initial capital of the partnership will be PHP1,500,000.00
and each partner will contribute P300,000.00 each. The profits and losses would be equally
distributed among the partners. Mr. Librado Echevarria III would serve as the Managing Partner.
He would be in charge mainly on managing the business and will receive additional Salary for
being a manager. Mr. Joseph Gubantes would be the Senior Technician, Mr. Joshua D. Paguican
as Maintenance Supervisor and Maintenance personnel, Mr. Johnwyn Maruhom as the cashier,
and Mr. Kashmeruddin Abdul as the Assistant Technician.

2.) Personnel
1.) Manager

15

In-charge of the whole operation.

The assigned manager shall be responsible in assigning tasks.

The manager is required to have good communication skills.

2.) Senior Technician

-

This requires a degree on COMPUTER and electrical engineering.

This employee is responsible for recording tracks.

Must have background of good listening to Sound Waves technically.

3.) Maintenance Supervisor

-

Help customers for setting up their instruments.

Maintain the cleanliness of the studio.

Must also have the knowledge on musical instruments.

4.) Cashier
-

The person responsible for computing the amount due for the service charge
of the consumer.

They collect payment for the services.

5.) Assistant Technician

-

Plays a critical role in assisting the Senior Technician

Someone with experience and training in the production and manipulation of

sound through mechanical (analog) or digital means.

16

6.) Maintenance Personnel

-

Needed to understand how to troubleshoot and maintain the condition of the

equipments.

work to keep building systems operating safely and efficiently

Maintenance personnel also respond to various requests for repairs to the

property of the studio and are sometimes involved in special projects.

Job specification

Manager

Senior Technician

Qualifications
-

Should be a graduate in any business course

At least 2 years of experience as a manger

Pleasing personality

Knowledgeable in the music industry

Music lover

20 years of age

Graduate of any business course

Specialized in technical matters

Maintenance
Supervisor

1 year experience as a technician

Experienced working on a music studio

High school graduate

Knowledgeable
instruments.

17

in

working

with

musical

Cashier

Must have at least 1 year of experience as a

cashier

Assistant Technician

.pleasing personality

Good in communication skills

At least 1 year of experience for this job

Pleasing personality

Should be a graduate of a vocational course

Maintenance

related to the job itself

personnel

Must have 3 years of experience in recording

Must respond well with the Senior Technicians

Figure 3.5 Job Specification and Qualifications

Figure 3.6 Salary and Benefit Matrix
Salary and Benefit Matrix
Job

Gross pay

SSS

Phil

Pag-IBIG

Health

Withhol

Net Pay

ding Tax

Manager

10000.00

333.30

125.00

200.00

1208.00

8133.70

Senior Technician

8500.00

283.30

100.00

170.00

1008.00

6938.70

Maintenance

8000.00

266.70

100.00

160.00

858.00

6615.30

Cashier

6000.00

200.00

75.00

120.00

483.00

5122.00

Assistant Technician

5,500.00

183.00

75.00

110.00

530.00

4602.00

Supervisor

18

Maintenance Personnel

5,000.00

166.00

70.00

105.00

510.00

4149.00

Total

43,000.00

1,432.3

542.00

865.00

4,597.00

35,560.70

(The table shows the following cost of the companys salary and benefits)

D.) Facilities

Company Space Requirements

The Rockoholic recording studio will be located at Matina Town Square fronting Ateneo
de Davao University Grade School building. The studio is located right wing of the Matina
Town Square vicinity. The size of the place is 70 sq. meters with a rental rate of Php. 395.50/ sq.
meter. The contract for renting the place would be Php. 90,000.00 for five (5) months. And the
total monthly rate would be Php. 27,685/ month. The payment may be made in cash or through
check.
The studio is composed of 5 rooms and a reception area. Upon entering the studio, you
will see the reception area where you find the cashiers desk. Situated behind the cashiers desk
is the managers office. The next room is the storage room and followed by the editing bay. The

19

rooms parallel to the managers office is the practice room. The door positioned at the end of the
hallway is the location of the recording room.

20

21

Equipment / Technologies

The equipments that the company will be using are first-class because it came from
the different well-known stores in the Philippines which are known in terms for their high-end
and technologically advanced equipments and gadgets. The brands of our equipments for
recording studio are the following - M-Audio ProjectMix I/O Control Surface, Laney LC15R
Electric Guitar Valve Amplifiers Combo, Squier Affinity Stratocaster Electric Guitars RW Black,
Squier Affinity P-Bass Guitar RW Brown Sunburst, Collins DCM57 Dynamic Instrument
Microphones, Korg microX Keyboard Synthesizer White, Pearl Vision VLX 5-Piece Standard
Drum Set, 1 Metre Mono Jack to Mono Jack Cables, Fender Bassman 100 100-watt Bass Combo,
AKG K171 Closed Back Studio Headphones, Event TR8 Tuned Reference 8 Active Studio Speaker
(Pair), Edirol OP-R09C Microphone Stands R-09, Arturia Moog Modular V Software Synthesizer, Collins
CC120 Classical Acoustic Guitar and a Computer.

22

For our practice studio, these are the following equipments - Behringer GM108 V-Tone
Modelling Guitar Combo Amplifiers, Yamaha Pacifica 012 RM Electric Guitars Red Metallic, Ibanez
SR900 TKF Electric Bass Guitar Trans Black Flat, Collins DCM57 Dynamic Instrument Microphones,
Korg microX Keyboard Synthesizer White, Pearl Vision VLX 5-Piece Standard Drum Set, Fender
Bassman 100 100-watt Bass Combo Amplifier, Edirol OP-R09C Microphone Stands R-09, and 1 Metre
Mono Jack to Mono Jack Cables.

Equipment

Quantity

Amount

Total

Useful

Depreciation

Net Book

Life

Value

Value

M-Audio ProjectMix I/O Control

Surface

43,667.00

43,667.00

10

4,366.70

4,366.70

Laney LC15R Electric Guitar

Valve Amplifier Combo

16,100.00

48,300.00

15

1,073.33

3,220.00

Squier Affinity Stratocaster

Electric Guitar RW Black

8,857.00

17,714.00

1,771.40

3,542.80

Squier Affinity P-Bass Guitar

RW Brown Sunburst

10,142.00

10,142.00

2,028.40

2,028.40

Collins
DCM57
Dynamic
Instrument Microphone

2,415.00

9,660.00

483.00

1,932.00

23

Korg
microX
Synthesizer White

Keyboard

26,973.00

26,973.00

10

2,697.30

2,697.30

5-Piece

27,076.00

27,076.00

10

2,707.60

2,707.60

1 Metre Mono Jack to Mono

Jack Cable

245.00

1,470.00

49.00

294.00

Fender Bassman 100 100-watt

Bass Combo Amplifier

15,138.00

15,138.00

15

1,009.20

1,009.20

AKG K171 Closed Back Studio

Headphones

4,830.00

19,320.00

966.00

3,864.00

Event TR8 Tuned Reference 8

Active Studio Speaker (Pair)

25,200.00

25,200.00

10

2,520.00

2,520.00

Edirol OP-R09C
Stand R-09

1,200.00

4,800.00

10

120.00

480.00

15,000.00

15,000.00

3,000.00

3,000.00

Collins CC120 Classical

Acoustic Guitar

6,420.00

6,420.00

1,284.00

1,284.00

Computer

35,000.00

35,000.00

7,000.00

7,000.00

31,075.93

39,946.00

Pearl Vision VLX

Standard Drum Set

Microphone

Arturia Moog Modular

Software Synthesizer

TOTAL

31

238,263.00

305,880.00

Table 1.1 Equipment for the Recording Studio

24

Equipment

Quantity

Amount

Total

Useful

Depreciation

Net Book

Life

Value

Value

Behringer GM108 V-Tone

Modelling Guitar Combo
Amplifier

16,100.00

48,300.00

10

1,610.00

Yamaha Pacifica 012 RM

Electric Guitar Red Metallic

8,045.00

16,090.00

1,609.00

3,218.00

Ibanez SR900 TKF Electric

Bass Guitar Trans Black Flat

10,100.00

10,100.00

2,020.00

2,020.00

Collins DCM57 Dynamic

Instrument Microphone

2,415.00

4,830.00

483.00

966.00

Korg microX Keyboard

Synthesizer White

26,973.00

26,973.00

10

Pearl Vision VLX 5-Piece

Standard Drum Set

27,076.00

27,076.00

10

2,707.60

2,707.60

Fender Bassman 100 100watt Bass Combo Amplifier

15,138.00

15,138.00

15

1,009.20

1,009.20

Edirol
OP-R09C
Microphone Stand R-09

1,200.00

1,200.00

10

120.00

240.00

1 Metre Mono Jack to Mono

Jack Cable

245.00

980.00

49.00

196.00

TOTAL

17

107,292.00

150,687.00

12,305.10

17,884.10

2,697.30

Table 1.2 Equipment for Practice Studio

Additional Equipments:
Guitar Strings
Bass Strings

10 sets

PHP150.00/set

PHP1,500.00

5 sets

PHP550.00/set

PHP2,750.00

PHP245.00

PHP 490.00

Mono Jack Cable

(Extra)
Behringer GM108

25

4,830.00

2,697.30

Guitar Ampliifier
(Extra)

PHP16,100.00

Total

PHP36,940.00

TOTAL EQUIPMENT COST

PHP493,507

V.) PRODUCTION PLAN

Custome
r

Process Flow

Select
Service
26
Reservatio
Practice

PHP32,200.00

Recording

Instrument
set up for
recording
Preparation of
instrument

Practice

Payment
Inspection
and
keeping
the
instrument

Preparation
of
instruments

Record

Mixing /
Editing

Rental

Inquire
reservation

Down payment

Preparation
of
instruments

Deliver of
instruments

Transfer to CD
Set up
instrument
Payment

Process Flow

Payment

(Recording Studio)

For customers who want to practice in our studio

The customer must go to the cashier first for reservation. After having the reservation, the
technician would prepare the necessary equipments and instruments to be used for their practice
session. In this stage, instruments are tuned well and are set up to produce the best sound

27

possible. After having the necessary preparations, the customers are then allowed to perform.
During their performance, the technician is prepared for whatever problems that will occur. After
the customers are finished with their practice session, they will pay to the cashier while the
maintenance supervisor and his personnel inspect the condition of the equipments and
instruments recently used.
For customers who want to record in our studio
The customer must go to the cashier first to inquire. This will give time for the technician
to prepare the necessary instruments for recording. This would include preparation of the
computer and mixer. Next, the instruments would be prepared after the preparation of the
computer and mixer. After having the necessary preparations the customer then would start the
recording session. After the customer is done, mixing and editing would follow. This process
would involve the technician and customer himself. Editing and Mixing is aimed on giving the
customer on what type of quality sound he prefers. After the customer is satisfied, the mixed and
edited piece would then be transferred to a compact disc (CD). After transferring to the compact
disc, the customer then would pay to the cashier.

For customers who want to rent instruments in our studio

The customer must go the cashier first for reservation. The customer then would pay the
necessary down payment for the rent. After securing the down payment, the technician would
then prepare the necessary equipment and instruments to be rented. The assistant technician
would then supervise the delivery of the instruments rented. After the delivery, the assistant
technician will help in setting up the instruments. After all these, the customer would pay the
28

remaining balance when returning the rented instruments. The returned instruments and
equipments will be checked by the maintenance supervisor and his personnel.

V.) FINANCIAL PLAN

Assumptions:
The Financial Statements to be presented in the following pages are based on
assumptions.
1. The sales generated are based on the customer frequency of availing the services
rendered by the Rockoholic Recording Studio. In the first year of operation, it is assumed

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that there would be 2,100 customers who will avail our services. 1,300 of these customers
came from recording service while the remaining 1000 customers are from practice
service. In the second year of operation, there 3,100 customers. 1,900 customers are from
recording while 1,200 customers are from practice. In the third year, there would be
3,900 customers. 2,500 customers are from recording while the remaining 1,400
customers are from practice.
2. Initial working capital would be P 100,000.00.
3. The expenses of the Rockoholic Recording Studio are assumed to be fixed and variable.
Fixed expenses are composed of Salaries and Wages, Depreciation (Straight-line
method), Telephone, Electricity, Water, Maintenance, Office Supplies, Advertising, Rent,
SSS premiums, Philhealth premiums, and PAG-IBIG premiums. Variable Costs include
installation costs and organization cost.
4. Straight-line method would be used in computing for the depreciation of the equipment
and furniture.
5. Advertising expense in the 2nd year and 3rd year would only be composed of leaflets and
Radio.
6. There will be no salaries for the first year to cover up for the expenses.
A.) Project Cost

The Rockoholic Recording Studio incurred a total project cost of P990,380.20.

The total project cost is composed of the Organizational cost, Purchase of equipments, Furniture
and Fixtures, Rent for three months, Initial electricity , water and telephone cost, Initial working

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Capital, and Initial Advertising cost. The computation for the total project cost is shown as
follows:
Definition
Organizational Cost
Purchase of Equipment:
Practice Studio (table 1.2)
Recording Studio (table 1.1)
Additional Equipments

Sub-Amounts
150,687.00
305,880.00
36,940.00

Leasehold Improvements (table 1.3)

Purchase of Office Equipment:
Computer (table 1.4)
Purchase of Furniture and Fixtures (table 1.5)
Couch
Side Tables
Chairs
Desk Fan
Installation Cost
Electricity
Initial Working Capital
Advertising Cost (table 1.6)
Banner
Leaflets
Poster
Radio
PROJECT COST
Add: Utilities (3 months)

493,507.00
161,532.00
56,000.00

9,000.00
3,000.00
9,600.00
4,680.00

26,280.00
1,000.00
100,000.00

1,350.00
260.00
6,000.00
8,000.00

Electricity

33,286.20

Telephone

3,000.00

Water
Initial Rent Payment

Amounts
14,120.00

15,610.00
868,049.00

450.00

36,736.20

(table 1.7)

83,595.00

TOTAL PROJECT COST

P990,380.20
Rockoholic Recording Studio
INCOME STATEMENT
As of December 31, 2007, 2008, 2009

2007
Service Revenue
Gross Income
Operating Expenses:
Salaries & Wages

820,000.00
820,000.00
0

2008
1,155,000.00
1,155,000.00
426,728.40

31

2009
1,525,000.00
1,525,000.00
426,728.40

Water Expense
Electricity Expense
Telephone Expense
Advertising Expense
Maintenance Expense
Depreciation Expense
Rent Expense
SSS Premiums
Phil Health Premiums
Installation Cost
Office Supplies
Expense
Total Operating
Expense
Income before tax
Less:
Income taxes (35%)
Net Income/loss

1,800.00
133,144.80
12,000.00
187,320.00
4,500.00
87,360.38
334,380.00
17,187.60
6,504.00
1,000.00

1,800.00
133,144.80
12,000.00
99,120.00
4,500.00
87,360.38
334,380.00
17,187.60
6,504.00

1,800.00
133,144.80
12,000.00
99,120.00
4,500.00
87,360.38
334,380.00
17,187.60
6,504.00

22,620.00

13,032.00

13,032.00

807,816.78
12,183.22

1,135,757.18
19,242.82

1,135,757.18
389,242.82

4,264.13
7,919.093

6,734.99
12,507.83

136,234.99
253,007.83

(See Schedule of Expenses and Revenue in the Appendix section)

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Rockoholic Recording Studio

Balance Sheet
As of the year ended December 31, 2007, 2008, 2009
2007
Assets
Current Assets:
Cash
Total Current Assets
Non-current Assets:
Equipment (Appendix Table 1.1 1.2)
Furnitures and Fixtures (Appendix Table 1.5)
Leaseholds Improvements (Appendix Table 1.3)
Office Equipment (Appendix Table 1.4)
Gross Property, Plant and Equipment
Less: Accumulated Depreciation (Appendix Table 1.1, 1.2 -1.5)
Accumulated Depreciation Furniture and Fixtures
Accumulated Depreciation Office Equipment
Accumulated Depreciation Studio Equipment
Accumulated Depreciation Leasehold Improvements
Total Accumulated Depreciation
Total Non-Current Assets

913,959.67

2009

1,013,827.89
913,959.67

1,354,196.09
1,013,827.89

1,354,196.09

493,507.00
26,280.00
161,532.80
56,000.00
737,319.80

493,507.00
26,280.00
161,532.80
56,000.00
737,319.80

493,507.00
26,280.00
161,532.80
56,000.00
737,319.80

2,628.00
11,200.00
57,830.10
16,153.28
87,811.38

5,256.00
22,400.00
115,660.20
32,306.56
175,622.76

7,884.00
33,600.00
173,490.30
48,459.84
263,434.14

Total Assets
Liabilities
Current Liabilities:
Total Liabilities
Equity
Partners Equity

2008

1,525,548.99

33

619,508.42

561,697.04

473,885.66

1,533,468.09

1,575,524.93

1,828,081.75

0.00

0.00

0.00

1,563,017.10

1,575,073.92

Net Income
Total Liabilities and Equity

7,919.093

12,507.83
1,533,468.09

34

253,007.83
1,575,524.93

1,828,081.75

B.)Profit and Loss (3 Year Forecast)

The Rockholic Recording studio has a net income of P7,919.093 on its first year,
P12,507.83 income on its second year, and P 253,007.83 income on its third year. This shows
that income increases by each year. The company has recovered from the first year of operations
to the second year of operation. The sales of the company increased by 96.87% from the first
year of operations to the third year of operations

C.)Projected Cash Flow

The table below shows the projected cash flow of the Rockoholic Recording Studio. The
desired cash balance is P 100,000. But base on the projected cash flow, there is no need for the
Recording Studio to borrow cash to achieve the desired balance since it already has excess cash
in each every year. It is also shown that the cash of the recording studio increases each year.
Year 1
Beginning Cash Balance

Year 2

Year 3

1,500,000.00

913,959,67

1,013,827.89

820,000.00

1,155,000.00

1,525,000.00

2,320,000.00

2,068,959.67

2,538,827.88

1,800.00

1,800.00

1,800.00

Telephone Expense

12,000.00

12,000.00

12,000.00

Electricity Expense

133,144.80

133,144.80

133,144.80

Add: Cash Receipts

Total Cash Available

Less: Cash Disbursements
Water Expense

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Installation Cost

1,000.00

Maintenance Expense

4,500.00

4,500.00

4,500.00

334,380.00

334,380.00

334,380.00

Office Supplies

22,620.00

13,032.00

13,032.00

SSS

17,187.60

17,187.60

17,187.60

6,504.00

6,504.00

6,504.00

426,728.40

426,728.40

4,264.13

6,734.99

136,234.99

Advertising

187,320.00

99,120.00

99,120.00

Equipments

493,507.00

1,406,040.33

1,055,131.79

1,184,631.79

Excess

913,959,67

1,013,827.89

1,354,196.09

Ending Cash Balance

913,959,67

1,013,827.89

1,354,196.09

Rent Expense

Philhealth
Salaries
Income Taxes

Furniture
Renovation/Leasehold
Total Cash Disbursements

26,280.00
161,532.80

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D.)Return on Investment

The formula for Return on Investment is Earnings before interest and taxes/total assets.
Based on the projected balance sheets and income statements, the Return on investment on year
2007 is .8% In year 2008, the return on investment is 1.22%. And in year 2009, the return on
investment is 21.29%. The results showed that after the first year, the recording studio has found
ways to utilize their assets more to contribute more income to the recording studio. The Return
on investment on each year is computed as follows:
Year 2007
P 12,183.22/ 1,533,468.09
= .8%

Year 2008
P 19,242.82/ 1,575,524.93
=1.22%

Year 2009
P 389,242.82/1,828,081.75
=21.29%

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E.) Break Even Analysis

To compute for the break even in sales, the fixed expense is divided from the
contribution margin ratio. The contribution margin ratio is the contribution margin
divided by the sales. Fixed Expenses include Salaries and Wages, Depreciation,
PAGIBIG, Philhealth,, SSS, Telephone, Electricity, Advertising, Maintenance, Rent, and
Office Supplies. Installation composes the variable costs.
The results show that in year 1, P 806,816.78 is the break even sales,
P1,135,757.18in year 2, and P 1,135,757.18in year 3.The break even in sales is
shown as follows:

Year 1
Sales

Year 2
820,000.00

Year 3
1,155,000.00

1,525,000.00

819,000.00 (99.87%)

1,155,000 (100%)

1,525,000.00 (100%)

Less: Fixed Expenses

806,816.78

1,135,757.18

1,135,757.18

Break even in Sales

807,867.01

1,135,757.18

1,135,757.18

Less: Variable Expense

Contribution Margin

1,000.00

Note: figures are shown from the balance sheet and income statement

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