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Business Plan Danny Gross - CEO Tyler Sweeney -Operations Manager Jessica Wyers - A&R Teresa Dunn - Publishing and Distribution Travis Kotara - Legal

Crooked Road Records Kenmore, WA 90828 T (936) 546-6256 F (206) 555-8942

crookedroadrecords@gmail.com


Crooked Road Records

Table of Contents Letter of Intent

ii

Business Form

iv

Business Analysis

vi

Financial Plan

xvii

Facilities

l

Personnel

lv

Projected Time-line

lx

Conclusion

lxiii

Appendix

lxiv

Group Information

lxxxii

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Crooked Road Records

Letter of Intent Mission Statement !

Crooked Road Records’ mission is to provide an independent record label that is not a

machine. We will cater to our artists supplying friendly, sincere service. Sticking to the essence of music, Crooked Road Records will offer top-notch studios that give listeners

what they want - the artists.

Crooked Road Records is an independent label that is in the music industry to find and

distribute new progressive independent music. We strive to foster a creative environment

and offer a one on one approach when bringing a new artist or band in to the label.

Business Idea !

Crooked Road Records is an independent record label based in Seattle, Washington. We

feel that the independent music industry in the northwest region is growing at a rapid rate,

which is why we feel our record label would benefit the most located in the Seattle area.

We have the ability to represent, publish, and distribute our artists. We exist to find a quality product to fill the need for independent fold, alternative, pop, and rock.

Introduction of Principals !

Danny Gross - CEO

Tyler Sweeney - Operations Manager

Jessica Wyers - A&R

Teresa Dunn - Publishing and Distribution

Travis Kotara - Legal

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Basic Outline of Resources

Crooked Road Records currently has $20,000 (from family investments) and is seeking a

$251,073 loan for housing, startup costs, salaries, and the ability to function as an

independent record label.

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Business Form Form of Ownership

Crooked Road Records will be a Limited Liability Company.

Background/Role of Principals

Dany Gross, CEO Crooked Road Records

Danny has been a part of the music business, in various forms, for the past 6 years including: producing, engineering (live and in the studio), training on various audio consoles including Digidesign integrated control surfaces, and he is a certified ProTools HD operator in music. He has a degree in Sound Technology from South Plains Technical College, which includes education in audio electronics, music theory, copyright law, audio acoustics, audio post production, and advanced audio mixing. He understands what it takes to lead, create a business, and function as an effective organization. All of these skills combined make him the ideal candidate for the CEO position at Crooked Road Records

Tyler Sweeney, Operations Manager Crooked Road Records

Tyler has experience in the world of organization and management in several aspects. He currently works as the radio station KWTS The One 91.1 FM’s Operations Manager. It is here that he organizes, manages, and leads students in an effective manner. Tyler is an ambitious individual who has the drive and will to know how to lead and how to run a business. He is currently enrolled in two management classes (media management and management principles). Tyler’s leadership and human relation skills both in school and out of school will make him qualified for the position of Operations Manager at Crooked Road Records.

Jessica Wyers, A&R Crooked Road Records

Jessica, over the past two years, has spent time as the Music Director for KWTS The One 91.1 FM. Through this job she has worked with and learned from countless independent record labels from all over the country. It is here that she has learned about the business of band promotion through radio, which is vital for the band as well as their label. She has also worked endless hours

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in planning the University’s Homecoming concert for the past two years, in which she planned and brought big name bands that have graced Billboard’s Hot 100, such as Safetysuit and Quietdrive. In addition to all of this, Jessica is currently fronting the planning and production of a brand new live music show in the University’s AT&T High Definition Studio. All of these skills are sure to bring success to the A&R of Crooked Road Records.

Travis Kotara, Legal Crooked Road Records

Travis is qualified for the legal position based on his ability to research and understand all leal aspects of the industry. Having taken Media Law class he has learned very valuable information for the job. Through that course he has learned how and where to find the right people for legal advice. He is willing to accept the job and put in the many hours of research to understand full the ins and outs of the legal aspect of the industry. When need be (especially for start up purposes), he will contact a lawyer who is knowledgeable in the field of media and that will fit in with the needs of a record label. The time he willing to put into the job, as well as what he has already learned, makes Travis a great candidate for the legal side of Crooked Road Records.

Teresa Dunn, Publishing and Distribution Crooked Road Records

Teresa is qualified because she knows that it takes to succeed. She is willing to research and know how to publish and distribute. Teresa’s experience with the WT volleyball team and KWTS The One 91.1 FM has allowed her to have a clear grasp on the importance of teamwork and networking. It is with KWTS that she has developed her personal and marketing skills via her leadership as Sport’s Director and selling underwriting for her special show on KWTS. Teresa’s basic understanding of media law will help her will royalty companies and distribution of music to iTunes and other music platforms. It is Teresa’s perseverance and determination that will make her fully capable to fulfill the position of Publishing and Distribution at Crooked Road Records.

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Business Analysis Explanation of Business

Crooked Road Records (CCR) is an independent record label, which will provide profitable

and positive services within the music business. CCR firmly believes that quality, palatable entertainment can be recognized without compromising commercial appeal.

CCR distinguishes itself through the commitment it undertakes with each of its artists. By

spending as much time and money on the marketing and promotion of projects as we do on the production, CCR plans to utilize a group of experienced and resourceful producers to ensure the highest quality products within specific budgets that will be established ahead of time.

CCR will compete for and earn revenue beginning with the bands and their works of

recorded music and the manufacturing the CDs, enhanced CDs, vinyl albums, digital downloads, on our own websites as well as iTunes. Additional income will be produced distribution, video, merchandising, and concert promotion.

Of each of the albums CCR puts its label on, it will create valuable short-term streams of

revenue. Owning and having partial monetary rights to each completed project will enable CCR to develop a lucrative catalog of albums that will become CCR’s biggest asset.

Specific Services • Artist Development • Artist Promotion • Providing funds for recording artists (will be recouped after sales of albums) • Distribution network for artist’s music • Online store for Artist’s products (Merchandise, CD’s, LP’s, digital downloads)

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• Tour Support • Work with independent radio and/or retail promoters

Need for Business

As the music world continues to grow and to evolve, we believe independent music will

play a greater role in this evolution. The market is becoming more accepting and more

open to independent music. For example artist’s like: Iron and Wine, Fleet Foxes, Bon Iver,

and Grizzly Bear have been featured in major motion pictures and have received airplay

across the U.S. At Crooked Road Records we want to help foster the early stages of

independent music and allow artists time to develop. We think this is important so the

artist can produce music without feeling the pressure of trying to market their material to a major label and possibly change their music based on such pressure. We want to

present new and upcoming artists without their workflow being altered based solely

on profits. Since the demand for new independent artists is on the rise, we feel that Seattle,

WA is on the forefront of this trend and we want to be right there with them. Crooked Road

Records will be able to cultivate this mecca of untapped talent in the area for the nation to

hear.

Marketing Plan Market Research

Music and especially independent music (brought to you by Crooked Road Records) is

highly relevant in today’s society. For our target audience of 15 to 24 year olds, this remains

true. Music is the driving force behind most everyday things. Some statistics to back this: • 60% would rather go without sex than music for a week. This is increased to 70% for 16-19 year olds1

1

Marrakesh Records Ltd Youth and Music Survey 2009

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• 75% have watched a music video online in the last 3 months, 70% bought a CD, 62% listened to music on their mobile phone, 52% bought a music download, and 45% played a music game on their music console

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• MP3 players are the most widely used device for listening to music 81%, followed by a computer 80% (thus making our digital download market even more important)

• Radio is the most important medium for finding about for finding out about new bands/artists 67%, followed by friends’ recommendations at 63%

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Crooked Road Records is also planning on launching a coffee shop overhaul by holding concerts in independent coffee shops, promoting our record label using the sleeves on coffee cups, and pushing our artist into their shops speakers. • There are 2.5 coffee shops for every 1,000 people in Seattle, WA 2

3

2

ZDNet Research March 2005

3

Google Maps 2010

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• The average coffee consumer will spend 49 minutes with a coffee sleeve (that’s more time for our advertising) 4 • The average recall of the information on a coffee sleeve is 65% • In addition to the consumer holding the cup, the average sleeve is viewed by six additional consumers. As a part of our marketing strategy CCR will also launch a social media campaign to promote our record label: • In the U.S. 25% of all page views came up from the top social networking sites and that is up 83% from December 2008 5 • One in ten went to social networking sites in December 2009, up almost 100% from 2008’s December 5.8% (showing social media is increasing) • Facebook’s market share surged 286% year-over-year, all the while growing As for our target market (15 to 24 years old): • There are roughly 7% of the Seattle, WA area and the surrounding area.6

4

coffeesleevemojo.com 2010

5

Johanasmeyes,Tom bloggingstocks.com Feb 11 2010

6

seattle.gov Seattle’s Population and Demographics 2010

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Market Area(s) The market area for Crooked Road Records is Seattle, WA. Our target market info is listed in the Market Research Section of our plan. Our competitors information, including where they are located will be listed under the Competition Section as well. There are currently 500 million itunes users, making this CCR’s greatest consumer venue.7 Seattle’s music industry is booming and CCR only hopes to tap into this and will do so. With hundreds of successful bands coming from the Seattle area including: Nirvana, Pearl Jam, Soundgarden, Alice in Chains, Screaming Trees, Green River, Mother Love Bone, Temple of the Dog, Mudhoney, Candlebox, Crooked Road Records will bring music to artists.8

7

NumberOf.net Itunes users 2010

8Grierson,

Tom about.com Top 10 Most Influential Seattle Bands 2010

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Marketing Strategy

One of Crooked Road’s goals is to design and provide creative and effective marketing for its artists. As music is being produced in the studio, promotion and marketing strategies

will be formulated. It is crucial that the marketing plan for each new release is in motion

several weeks before the project is even completed in the studio.

CCR will employ a multifaceted promotional strategy for its product releases including:

seeking out and hiring regional independent record promoters and create radio promotions,

Internet sites, broadcast videos, in-store promotions, and promotions to the general public

through print and video mediums.

To support the sales of the completed product, CCR will produce and release music videos

for each album release by the company. We also hope to make our website a viable tool to

the promotion of the artists music, music videos, and blogs. In addition to our online presence, CCR will have a strong presence in social media. i.e. Twitter give-a-ways,

Straight to Facebook interviews with our artists, YouTube video premieres, etc.

Crooked Road Records, in addition to being on top of the marketing and promotion game,

will be on the forefront o new media to use it to our advantage. CCR will begin

development of a mobile app a few months before the start of the company so that we can

launch the app soon after the CCR opening as possible. This mobile app will push traffic to

all these channels. THis will be the most accessible entity in our marketing plan. Users who

have the app will be the first to know about release date, tour dates, news about artists,

and be able to listen to our client’s music. To save cost, principle members have the ability

to design and develop the app with little help.

Crooked Road Records wants to be a common name in the Seattle area community, and

hope to be a part of their every day life. In Seattle, there are 2.5 coffee shops for every

1,000 people. And even though cities like Los Angeles and New York have more shops.

Seattle has the highest amount of people drinking coffee per capita. We want to use this to

our advantage. CCR wants to collaborate local independent coffee shops and have our

logo and upcoming events that are happening in the area that the Label is holding on

coffee sleeves.

The Crooked Road Music Festival will be an annual event that will showcase our current

clientele. This event will be the biggest promotion for the Label and will possibly bring in new clientele as well as fans of the label that will keep up with our work.

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Another big aspiration would be to connect with KEXP, an independent non-profit radio

station that is run through the University of Washington. They support independent music, and will help us recruit interns for our company as well. We would collaborate with them on

local events, promotions and as an outlet to help launch our new up and coming artists.

Competition

There are several independent record labels in the Seattle, WA area. Those include: • Barsuk Records • CZ Records • Hardly Art Recods • Sup Pop Records • Loveless Records • LuckyHorse Industries • Sarathen Records • Tarnished Records • Up Records • Virt Recrods 9

9

Seattle Music Industry cityofseattle.net 2010

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*Record Labels in the area10

Crooked Road Records will differentiate from our competitors in several ways including: our

Iphone app, returning more profits from sales back to the artists (whereas most labels have

a set rate, we will be more of a artist oriented label), the way we treat our artists ( we will

not be the ‘Wal-Mart’ of the record label industry), our yearly showcase of our artists will

become large, our partnership with KEXP (the college radio station at The University of

Washington), integration with local charities, cross promotion with local businesses.

Advertising/Promotion/Public Relations

As stated previously, Crooked Road Records will launch an online social network

campaign, a partnership with KEXP, coffee shop sleeve advertising, annual concert event,

and miscellaneous promotions throughout the year. CCR will hire freelance graphic designers to assist with the creation of our ads and other miscellaneous printed materials

as needed. As for our ad campaign and public relations our Operations Manager and A&R

position will work together as our company starts out (Tyler our Operations Manager is

minoring in AD/PR), as the company grows and matures we will hire and partner up with

GSD&M Idea City to create a more profitable advertising campaign.

10

Bing Maps

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Prospective Clientele

Crooked Road Records wants to work with the following artists: • Mumford and Sons • Iron and Wine • The Shins • The Morning Benders • Regina Spektor • Fleet Foxes • Sufjan Stevens • Jamie Liddell • Grizzly Bear • Andrew Bird • Keane • Adele

We feel as though these artists represent the independent rock feeling that we are going for

and would be a great asset to our company.

Diversification and Expansion Possibilities

Crooked Road Records has big plans for it’s future. After our first year, we hope to continue

our efforts for signing and promoting new and upcoming artists. We also plan on finally

moving into an office space and running our business from that location. CCR will eventually take over the Seattle area and become one of the nation’s leading independent

record labels. We will accomplish this by developing a marketing strategy that starts in the

West Coast and will expand to other major independent music hubs around the U.S. such

as: Austin, TX, Nashville, TN, and New York, NY.

With the expansion of our offices, will also come with the expansion of our employees. We

plan on hiring a company media lawyer, advertising specialist, bookkeeper, and other

personnel as needed.

With our ideas and passion for the industry, we plan on making Crooked Road Records a

very successful business.

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Financial Plan Detailed Statement of Total Capital Needs

Crooked Road Records total capital needs for one year will be $230,819.44. The first four

months our total capital needs will be $55,718.48 and the next eight months will be

$175,100.96. First Four Months

Salaries

No Pay

Benefits

$3,342.48

Insurance

$1,476.00

Rent

$6,400.00

Advertising/Promotions/Marketing

$11,000.00

Deposit for House (1 time)

$1,500.00

Utilities

$4,400.00

Travel Expenses

$2,000.00

Food

$1,600.00

Misc. Supplies

$1,000.00

General Expense Account

$4,000.00

Artist Development & Production

$19,000.00

Total

$55,718.48 Last Eight Months

Salaries

$66,664.00

Benefits

$6,684.96

Insurance

$2,952.00

Rent

$12,800.00

Advertising/Promotions/Marketing

$22,000.00

Utilities

$8,800.00

Travel Expenses

$4,000.00

Food

$3,200.00

Misc. Supplies

$2,000.00

General Expense Account

$8,000.00

Artist Development & Production

$38,000.00

Total

$175,100.96

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Total Capital Needs for First Year

$55,718.48 + $175,100.96 = $230,819.44

Detailed Statement of Existing Financial/Capital Resources

Crooked Road Records current Financial Resources are at $20,000. We have received multiple investor loans. One loan is from Joe Wyers for $10,000 and a loan from Sue Whiteaker for $10,000. Both of these investments were made from family members from our principals.

Detailed Statement of Needed Funding

Crooked Road Records will be needing $210,819.44 of funding. We have received

$20,000 from outside investors. Our total capital needs is $230,819.44. Needed Funding

Total Capital Needs

$230,819.44

Outside Investors

$20,000.00

Total Needed Funding

$210,819.44

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Itemized Capital Budget Item

Price

Quantity

$2,386.95

6

$14,321.70

Printer/Scanner all-in-one

$389.99

2

$779.98

Wireless Router

$149.99

2

$299.98

$2.33

5

$11.65

$143.30

6

$859.80

$1,899.00

5

$9,495.00

Pro Tools 9 LE

$450.00

3

$1,350.00

Mbox2

$175.00

3

$525.00

Shure SM 58

$99.00

2

$198.00

XLR Cables (10 ft)

$21.19

4

$84.76

1/4� TS cables

$8.79

4

$35.16

Desks

$119.99

5

$599.95

Office Chairs

$89.89

5

$449.95

Conference Table

$349.99

1

$349.99

Conference Chairs

$109.99

8

$879.92

Sofa

$399.99

1

$399.99

Chairs

$99.00

2

$198.00

Coffee Table

$79.99

1

$79.99

Internet & Phone Services (monthly)

$75.00

1

$75.00

$1,795.00

1

$1,795.00

$99.95

5

$499.75

$199.95

5

$999.75

iMac (MS office software incl.)

Cat 5 cable Computer Peripherals

Total

(headphones, speakers) Adobe Creative Suite

Phone System Cell Phone Small Business Plan (monthly) Cell Phones Initial Office Supplies

$409.76

Misc. Supplies

$250.00

Rent

1600

House Deposit

12

$19,200.00

1

$1,500.00

Insurance

369

12

$4,428.00

Advertising/Promotions/Marketing

2750

12

$33,000.00

Utilities

1100

12

$13,200.00

Travel Expenses

500

12

$6,000.00

Food

400

12

$4,800.00

General Expense Account

1000

12

$12,000.00

Artist Development & Production

4750

12

$57,000.00

Total

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$186,076.08

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Break-Even Analysis For selling of CD’s

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For Selling of iTunes downloads

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For selling of MP3 Downloads from Website

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For selling of Vinyl Records

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For selling of Merchandise

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Projected Monthly Revenue Projected Monthly Revenue PPU

Units Sold

Total Revenue

iTunes Sales

$0.99

2196.67

Digital Downloads

$0.99

500

CD Sales

$14.00

416.67

$5,833.38

Vinyl Sales

$18.00

100

$1,800.00

Merchandise Sales

$15.99

175

$2,798.25

$2,174.70 $495.00

(CRR site)

Recovered

# of Artists

expense Cost recouped from

$875.00

6

$5,250.00

Total Monthly Revenue

$18,351.33

artists

Projected Monthly Operating Budget Monthly Budget Per Month Cost Salaries

$8,333.00

Benefits

$835.62

Rent Insurance Advertising/Promotions/Mktg.

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$16,000.00 $369.00 $2,750.00

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Crooked Road Records

Monthly Budget Deposit for house (1 time)

$1,500.00

Utilities

$1,100.00

Travel Expenses

$500.00

Food

$400.00

Misc. Supplies

$250.00

General Expense Account

$1,000.00

Artist Development & Production

$4,750.00

Total

$23,387.62

*The first four months of Crooked Road Records Operation will not have salaries so the budget will be at $15,054.62*

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Pro Forma Balance Sheet Crooked Road Records PRO FORMA BALANCE SHEET 2011 to 2012 CURRENT ASSETS Cash A/R less doubful accts. Net Accounts Receivable Notes receivable Inventory Prepaid expenses Other

2011

2012

$20,000-$74,348.71 0 $220,215.96 0 0 0 0 0

0 $220,215.96 0 0 0

Total Current Assets

$240,215.96

$145,867.25

FIXED ASSETS Land Buildings Equipment

0 0 $34,448.33

0 0 $34,448.33

Total Net Fixed Assets Other assets

$34,448.33 0

Total Assets CURRENT LIABILITIES Accounts payble Note payable Accrued payable Taxes payroll Other

$34,448.33 0

$274,664.29

$180,315.58

$112,073 $112,073 0 0 0 $6,000 $6,000 0 0 0

Total Current Liabilities

$118,073

$118,073

Long-Term Liabilities Equity Retained Earnings

$231,000 0 $349,013

0 0 $118,073

Net Equity

-$74,348.71

$62,242.58

Total Liability & Equity

-$74,348.71

$62,242.58

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Pro Forma Income Statements PRO FORMA YEARLY INCOME STATEMENT Year Ending January, 2012 [2011]

[2012]

$000

%

$000

%

REVENUES Net Revenues Cost of goods sold

$142,140.00 $77,073.00

100 54.2

$281,760.00 $97,073.00

100 34.5

Gross Margin

$65,067.00

45.8

$184,687.00

65.5

EXPENSES Direct (total)

$99,664.00

100

$132,996.00

100

Salaries Promos/Ads Other

$66,664.00 $33,000.00 _________

34.2 16.9 ___

$99,996.00 $33,000.00 _________

42.7 14.1 ___

General/Administrative

$5,200.00

3.7

$7,800.00

30

$10,027.44 $5,997.00 $19,200.00 $4,428.00 $29,680.84 $409.75 $7,182.55 $13,200.00 _________ _________

5.1 3.1 9.8 2.3 15.2 .2 3.7 6.8 ___ ___

$10,027.44 $5,997.00 $19,200.00 $4,428.00 $33,417.28 $409.75 $6,797.32 $13,200.00 _________ _________

4.3 2.6 8.2 1.9 14.3 .18 2.9 5.6 ___ ___

TOTAL EXPENSES

$194.989.58

100

$234,272.79

100

Net Income before taxes

$61,047.00

100

$118,695.00

100

Provision for taxes

$9,157.05

15

$17,804.25

15

Net Income after taxes

$51,889.95

85

$100,890.75

85

+/- Retained Earnings

-$143,099.63 100 -$133,382.04 100 [Crooked Road Records]

Benefits Professional Rent Insurance Amortization Office supplies Interest Utilities Bad Debt Allowed Other

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Accounting Procedures Cash Receipts Procedures The Operations Manager receives all incoming mail. All checks received by the Operations Manager should be recorded on a cash receipts log, which states the department to which the income is attributed, and stamped Afor deposit only. The Operations Manager then makes two copies of the check with one copy forwarded to the CEO and the other copy to the responsible department. Next, the CEO prepares a deposit slip and deposits the funds into the savings account. The validated deposit slip should be attached to the CEO’s cash receipts log and filed. All check copies should be filed according to month received. A deposit not forwarded or mailed to the bank should be locked in the lock box. No deposit should be locked in the file cabinet for more than 24 hours. If the funds are mailed to the bank, the CEO should indicate the date mailed and received on the cash receipts log. The CEO should make a copy of each check mailed and file them in a separate file folder. No single account should contain more than $100,000 - or the amount over which the FDIC will not insure. Funds Received by Wire Transfer: The Operations Manager will request a wire transfer of funds. This request will be prepared by the CEO and should be signed by the Operations Manager. Where appropriate - as in reimbursement of federal funds - the CEO should forward a project financial statement to the Operations Manager who prepares a request for reimbursement or advance and files or mails the necessary documents, providing a copy to the CEO. Next, the CEO will monitor the transfer of funds and maintain the appropriate records of this transaction. As soon as the funds are credited to the XXX savings account, the bank should send a credit memo to the Operations Manager. The Operations Manager should reconcile these credit memos to the total cash received at the end of the month. In the absence of the Operations Manager, the CEO or, in dire emergencies, Legal, should authorize wire transfers. Inter-Fund Transfers: The XXX operating checking account should not exceed $10,000 at any time. All funds received should be deposited into the savings account. It will be necessary to transfer funds from the savings account into the checking account. In order to transfer funds from the savings into the checking account, the following procedures should be followed: The CEO should monitor the balance in the checking account, and determine if there are adequate funds to pay the daily expenses. The Operations Manager should prepare a transfer memo for signature by the CEO to transfer the necessary amounts from the savings account to the checking account, as long as the remaining balance does not exceed $10,000. These Business Plan

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transfers will occur concurrently with the associated disbursements Funds received from Credit Card Charges: The Operations Manager are responsible for processing the receipt of funds through the credit card authorizer directly into the savings account. Transactions should be processed on a weekly basis, with a list of the credits and date processed delivered to the CEO in order to double check against the bank statement. The statement of deposits and service charges will be reconciled by the CEO. Cash Disbursements Procedures 1.

Incoming invoices will be logged in by the Operations Manager (naming the staff person responsible for ordering the product or service) and delivered to the responsible staff person for his/her approval and to prepare a check request voucher prior to disbursement dates.

2.

The staff person responsible for ordering the product or service will check the validity of the invoice against proposals/bids, etc. and work accomplished/delivered and prepare a check request voucher prior to disbursement dates.

3.

Twice monthly on the 1st and 16th days (or the next business day if the date falls on a weekend or holiday), cash disbursements should be prepared by the CEO for signature by authorized XXX officials for expenses, debts and liabilities of XXX.

4.

The CEO is responsible for the preparation of disbursements. All disbursements are to be made by check unless the item is considered a petty cash item.

5.

A check request voucher should then be completed by the purchasing staff person and attached to the original vendor invoice, and/or any other supporting documentation. The voucher should include the account codes to which the expense will be applied. Approval for an expense by the Operations Manager must be indicated on the check request voucher.

6.

After inputting all the check requests, the CEO will prepare a master list of all checks to be paid for approval by the Operations Manager or Legal. If there are any questions or concerns about the amounts, the CEO should provide necessary information prior to running any disbursements. If there are any items removed from the batch, the totals on the payment summary form should be corrected, initialed and dated by the Operations Manager.

7.

The CEO should then run aging accounts payable, which is generated by the accounting software. A total of the disbursements to be paid will be recorded on the form and sent to the Operations Manager for approval, along with the current balance in any and all cash accounts.

8.

Once the amount to be disbursed has been received, the CEO should print the checks from the computer system. The checks should be attached to the invoice, and other supporting documentation, being paid and submitted for signatures. A check register should be run and filed together with the disbursement transmittal form.

9.

While the CEO or Operations Manager signs each check, he/she should double check the check request voucher. This approval is to ensure the account and grant/project is charged to the correct expense and line item. Any checks made to pay invoices in excess of $10,000 must be signed by the CEO and authorized for payment in writing by one of the original partners authorized for signature.

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10. After the checks have been signed, the second signatory will double check the work, cancel the invoice by stamping APAID on it in red ink, and pass the checks on to the Operations Manager for mailing. In the event that the Operations Manager is out, Legal will assume these duties. 11. All checks will be mailed as soon as this process is completed. 12. Supporting documentation should be filed by the CEO in appropriate vendor files. 13. The CEO will utilize the paid invoice files to respond to any discrepancies, which arise with vendors or other payees. 14. Once monthly, the CEO will check the invoice log to determine if there are any outstanding invoices, which have not yet been paid. If so, the Operations Manager will investigate the nonpayment of these invoices with the responsible staff member. Reconciliations Cash Flow: XXX is to maintain a minimum of ten percent (10%) of the operating budget between its operating and savings bank accounts at all times. In the event that balances fall below that amount the President and Treasurer should be notified immediately. Bank Reconciliations: 1.

Bank statements are to be received unopened by the Operations Manager. The receiving party should review the contents for inconsistent check numbers, signatures, cash balances and payees and endorsements at a minimum. After this cursory review is conducted, the official should initial and date the bottom, right hand corner of the first page of each bank statement reviewed. The reviewed bank statement should then be forwarded to the CEO to reconcile the bank accounts using the approved reconciliation form.

2.

The person charged with this responsibility should reconcile each account promptly upon receipt of the bank statements. All accounts will be reconciled no later than 7 days after receipt of the monthly bank statements. In the event it is not possible to reconcile the bank statements in this period of time, the CEO should be notified by a written memo from the Operations Manager.

3.

When reconciling the bank accounts, the following items should be included in the procedures: a.

A comparison of dates and amounts of daily deposits as shown on the bank statements with the cash receipts journal.

b.

A comparison of inter-organization bank transfers to be certain that both sides of the transactions have been recorded on the books.

c.

An investigation of items rejected by the bank, i.e., returned checks or deposits.

d.

A comparison of wire transfers dates received with dates sent.

e.

A comparison of canceled checks with the disbursement journal as to check number, payee and amount.

f.

An accounting for the sequence of checks both from month to month and within a month.

g.

An examination of canceled checks for authorized signatures, irregular endorsements, and alterations.

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h.

A review and proper mutilation of void check.

i.

Investigate and write off checks which have been outstanding for more than six months.

4.

Completed bank reconciliations should be reviewed by the Operations Manager and initialed and dated by the reviewer.

5.

The CEO upon receipt of the completed bank reconciliations, prepares any general ledger adjustments.

Reconciliations of Other General Ledger Accounts: 1.

Each month the CEO and Operations Manager should review the ending balance shown on balance sheet accounts such as the cash accounts, accounts receivable, accounts payable and deferred revenue. The CEO and Operations Manager should review the bank reconciliations, schedules of accounts receivable and deferred revenue and the aging of accounts payable to support the balances shown on the balance sheet.

2.

Assets - These accounts will include cash, petty cash, prepaids, property, equipment and fixtures, security deposits, and intangible assets.

3.

a.

Cash - The balances in cash accounts should agree with the balances shown on the bank reconciliations for each month.

b.

Petty Cash - The balance in this account should always equal the maximum amount of all petty cash funds. The current amount equals $100.00.

c.

Prepaids - The amounts in these accounts should equal advance payments paid to vendors at the end of the accounting period.

d.

Property, Equipment & Fixtures - The amounts in this account should equal the totals generated from the audited depreciation schedules. When additional purchases are made during the year, the balances in the accounts may be updated accordingly.

e.

Security Deposits - The balance in this account should equal amounts paid in escrow to landlords and lessors and should not change frequently, but should be updated as applicable.

Liabilities - These accounts are described as accounts payable, payroll tax liabilities, loans and mortgages payable, and amounts due to others. a.

b. Payroll Tax Liabilities - The amounts in these accounts should equal amounts with held from employee paychecks as well as the employers portion of the expense for the period, that has not been remitted to the government authorities.

c.

4.

Accounts Payable - The balance in this account should equal amounts owed to vendors at the end of the accounting period and the aging report.

Due to Others - If there are any amounts owed to others at the end of the period they should be recorded and the correct balance maintained in the general ledger accounts.

Income/Expenses - These accounts are described as income from membership, con- tributions, publications, and other expense line items such as salaries, consulting fees, etc. a.

Income - The amounts charged to the various cash accounts should be reconciled with funding requests, funders reports, draw down schedules, etc.

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b.

Gross Salary Accounts - The balances in the gross salary accounts should be added together and reconciled with the amounts reported on quarterly payroll returns.

c. Consulting - The amounts charged should be reconciled to the contracts. Petty Cash Fun 1. The petty cash fund should never exceed $100.00. 2.

The Operations Manager is the custodian of the petty cash fund.

3.

A single disbursement from petty cash shall never exceed $15.00.

4.

The petty cash fund shall be operated on an impress basis. This means that when it is time to replenish the petty cash fund, the Operations Manager shall total out the expenses made and identify those expenses by general ledger account number. When the check request is submitted for payment it should indicate the total amount needed to bring the fund back up to $100.00. Also, the check request should breakdown the various expense accounts being charged and the amount charged to each.

5.

When a request for petty cash reimbursement is made to the Operations Manager, the item will be listed on the Petty Cash Fund Reconciliation Sheet. A description of the item charged should be recorded together with the amount. A vendor receipt must be received by the Operations Manager for the amount of the request in order for the request to be approved.

6.

The recipient of the petty cash funds must sign the sheet to indicate receipt of the funds. The paid receipt should be attached to the sheet. All paid information should remain in the locked petty cash box until it is time to replenish the fund. At that time, the Petty Cash Fund Reconciliation Sheet and associated receipts are attached to the check request voucher.

7.

The petty cash box is to be locked at all times when the Operations Manager is not disbursing or replenishing the fund. The locked petty cash box is to be kept in the locked file cabinets within the finance office.

8.

At least once annually, the CEO should conduct a surprise review of the fund. When this is done, he/she should count, while the Operations Manager is in attendance, the total monies on hand and the total amount of receipts in the petty cash box. The two amounts should equal exactly $100.00. Any discrepancies should be discussed and resolved immediately.

9.

It is a policy of XXX not to cash checks of any kind through the petty cash fund.

10. The XXX postage meter is not to be used for personal mailings under any circumstances. Staff may use the UPS service provided they indicate that the mailing is personal and reimburse XXX at the time the appropriate invoice is paid. Purchases To Prompt a Purchase: 1. When the normal cash disbursement procedure of invoice, etc., is not appropriate, (i.e., postage, petty cash, etc.) a check request should be completed and forwarded with any order form or other documentation to the CEO for approval. If the check is made out to either the CEO, he/she cannot approve the check request voucher. 2. Approved check requests should be sent to the Operations Manager for payment. 3. In the absence of backup materials, receipts for the purchase must be provided to the Operations Manager for attachment to the check request within two weeks from the Business Plan

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check date. Credit Card Purchases: 1. Only the CEO carries company credit cards in his or her name. The purchase of airline tickets and other authorized business expenditures may be made by other employees using the corporate credit card. In every case of credit card usage, the individual charging an XXX account will be held personally responsible in the event that the charge is deemed personal or unauthorized. 2. Authorized uses of the credit card include: a.

Airline or rail tickets (at coach class or lower rates) for properly authorized business trips. XXX=s designated travel agency will require that employees supply the travel agency with an account code in order to charge to the XXX American Express. The account code will help reconcile the costs of travel with the proper XXX program to be charged. The travel agency will provide XXX a monthly report of all travel charged to the American Express.

b.

Lodging and meal charges that do not exceed the authorized reimbursement rate for persons traveling on official XXX business

c.

Car rental charges (for mid-size or smaller vehicles) for properly authorized business trips

d.

Properly authorized expenditures for which a credit card is the only allowed method of payment (such as monthly internet access)

e.

Business telephone calls

f.

Properly authorized entertainment at a rate, which is consistent with the employees level of responsibility within, or on behalf of, XXX and within the limits of the approved budget.

3.

Receipts should be compiled and submitted with an expense report on a weekly basis.

4.

Unauthorized use of the credit card includes: a.

Personal or non-business expenditures of any kind.

b.

Expenditures which have not been properly authorized.

c.

Meals, entertainment, gifts or other expenditures which are prohibited by: 1.

XXX budget and/or policies

2.

Federal, state, or local laws or regulations

3.

Grant conditions or policies of the entities from which XXX receives funds.

Proper Documentation for all Purchases, including XXX Credit Card Purchases: Every instance of credit card or other purchase use must be documented with travel authorizations, receipts, individuals paid for, nature of business, etc. before the expense will be considered authorized and will be approved for reimbursement. See details below. A.

Lodging - Provide an itemized receipt from the hotel detailing every charge and the name of the person(s) for whom lodging was provided.

B.

Meals/Entertainment - Provide a receipt showing separately the cost for food/beverage and gratuities, and including the names of every person for whom food or beverage was provided and the specific business purpose which was furthered by the expenditure. For example, a Luncheon Meeting with Nancy Neville, president of the Des Moines Economic Development Corporation, and Reginald Burke, executive director of the Iowa Housing

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Partnership, to finalize the speakers and program for the November 10-12, 1996 XXX annual conference in Des Moines. C.

Other Expenditures - A receipt from the vendor detailing every individual good or service purchased (including class of service for commercial transportation) accompanied by an explanation of the specific business purpose, which was furthered by each expenditure. For example, a Round trip coach flight Washington to Des Moines for Conference Director Susie Reed to review hotel proposals and facilities for the 1996 XXX annual conference.

The CEO wills double-check all reimbursement requests against receipts provided and run a calculator tape, which will be attached to the reimbursement form. Capital Expenditures: For all major expenditures such as computers, furniture, audit services, printing services, etc., three bids must be obtained before a purchasing decision is made. If the annual amount will exceed $2,000, a bidding process and review will be conducted. All bids, including phone quotes, must be recorded and kept on file. Consultants: Contracts with consultants will include rate and schedule of pay, deliverables, time frame, and other information such as work plan, etc. Justification for payment should be submitted to file. For example, if XXX hired a writer to create a publication, a copy of the final version should be included in the file. Contracts: Contracts for purchasing products or services, similar to a purchase order, should be created and maintained for the file whenever appropriate. All contracts to exceed $10,000 over the course of the year should be approved by the CEO. Fixed Asset Management 1. A permanent property log or database is to be maintained by the Operations Manager for all fixed assets purchased by XXX. 2.

The log should contain the following information: a.

date of purchase

b.

description of item purchased

c.

received by donation or purchased

d.

cost or fair market value on the date receipt

e.

donor or funding source, if applicable

f.

funding source restrictions on use or disposition

g.

identification/serial number (if appropriate)

h.

depreciation period

i.

vendor name and address

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j.

warranty period

k.

inventory tag number (all fixed assets should be tagged with a unique identifying number)

l.

number of the XXX check used to pay for the equipment

3.

At least annually, a physical inspection and inventory should be taken of all XXX fixed assets and reconciled to the general ledger balances. Adjustments for dispositions should be made.

4.

The Operations Manager should be informed, in writing, via an interoffice memorandum of any material changes in the status of property and equipment. This should include changes in location, sale of, scrapping of and/or obsolescence of items and any purchase or sale of real estate.

5.

All capital items which have a cost greater than $250.00 will be capitalized and depreciated.

Payroll Personnel: 1.

The Operations Manager is charged with the responsibility of maintaining personnel files on staff persons.

2.

Each personnel file should contain the following information, at a minimum.

3.

a.

Employment application or resume

b.

A record of background investigation

c.

date of employment

d.

position, pay rates and changes therein

e.

authorization of payroll deductions

f.

earnings records for non-active employees

g.

W-4 Form, withholding authorization

h.

I-9 Immigration Form

I.

termination data, when applicable

All personnel records are to be kept locked in a locking file cabinet in the Operation Manager’s office. Access to these files other than by the Operations Manager, CEO or the auditor should be requested in writing.

Payroll Preparation and Timekeeping: 1.

Time sheets are to be prepared by all staff persons and submitted semi-monthly on the 15th and last day of each month. Time should be input on a daily basis and, if in writing, completed in ink. Correction fluid should never be used in preparing timesheets. If an error needs to be corrected, a line should be drawn through the item and the corrected information recorded, and initialed by the person who made the correction.

2.

Time sheets are to include specific time spent on each grant/project.

3.

Time sheets are to be signed by the staff person and his/her supervisor.

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4.

All approved time sheets should be submitted to the Operations Manager, who will verify the hours worked against his/her record.

5.

The Operations Manager should then process the time and report the information to the payroll service bureau. The information reported should include:

a.

hours worked, by cost center

b.

changes in pay rates or employment status

c.

vacation, sick or personal hours used and earned

6.

The CEO should review the payroll summary page of the payroll service report for inappropriate payees or unusual hours.

7.

Paychecks should be distributed by the Operations Manager on the designated day and hour, one week after the end of the pay period according to a prearranged schedule distributed by the Operations Manager. In the event that a paycheck is picked up by a designated person other than the staff person, a memo should be received in writing from the staff person and proper identification should be requested from the party picking up the pay check.

8.

As an employee benefit, XXX offers direct deposit through the employee’s own financial institution and also offers cost-free checking through Citibank. Through direct deposit, payroll is deposited as cash into the employee’s account on payday.

Financial Reporting Monthly Reports: The Operations Manager should prepare a set of monthly financial reports for distribution to the CEO. The reports should include: a balance sheet and a statement of income and expenses for each department (operating, project); a consolidated balance sheet and consolidated income and expense report which show all departments combined; a budget-to-actual report for all accounts included in the annual operating budget; a list of deferred and receivable funds, and a cash flow projection. In addition, the monthly reports for the quarterly periods (December, March, June, September) will be submitted to the CEO for their review and acceptance at the following board meeting. The CEO prior to distribution to Legal for initial comments should review the monthly statements. After Legal’s approval, the statements will be mailed to the Budget and Finance Committee every month and to the full board as stated above. The monthly statements will be finalized by the conclusion of the month following the statement period. Year-End Report/Audit: At fiscal year-end, and in time for the winter retreat of the Board of Directors, a year end Audit report should be prepared summarizing the total income and expense activity for the year. A balance sheet should be prepared as of September 30 and should be attached to the income and expense report. This report will be initially reviewed by the CEO and Operations Manager, and then by Legal, prior to distribution at the annual meeting. Bids for an independent auditor to conduct this review will be accepted between September 1 and October 15. In accordance with XXX policy, at least three proposals will be considered. The auditing process will begin on or about November 1.

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Fiscal Policy Statements 1. All cash accounts owned by XXX will be held in financial institutions which are federally insured and have received a favorable CRA (Community Reinvestment Act) rating. 2.

All capital expenditures which exceed $250.00 will be capitalized on the books and records of XXX.

3.

Employee paychecks and/or personal checks will not be cashed through the petty cash fund of XXX.

4.

No salary advances will be made under any circumstances.

5.

No travel cash advances will be made except under special conditions and preapproved by the Operations Manager. Reimbursements will be paid upon full expense reporting using the official XXX form within the normal disbursement schedule.

6.

Any item whose value exceeds $50.00, received via donation, will be recorded in the books and records of XXX.

7.

Fiscal Management personnel are required to take annual vacation which will not interfere with fiscal procedures. Variances to this policy shall be made in special circumstances, with written permission from the CEO.

8.

All volunteer time which exceeds $50.00 shall be recorded in the books and records of XXX.

9.

It is the policy of XXX to reimburse out of pocket expenses only when supporting documentation has been presented for approved costs incurred.

10. It is the policy of XXX to establish pay rates which equal or surpass the federal minimum wage. 11. It is the goal of XXX to maintain a minimum of ten percent (10%) of the operating budget between its operating and savings bank accounts at all times. In the event that balances fall below that amount the President and Treasurer should be notified immediately. 12. All funds received by XXX for each project will be segregated into separate project accounts in the general ledger to avoid any possibility of commingling project monies with general operating funds. A full computerized ledger accounting system will be maintained. Monthly financial statements including Balance Sheet and Statement of Revenues and Expenses will be produced for each project as a separate Department. 13. The CEO or Operations Manager is a signer of all XXX bank accounts. A third signature will consist of the XXX Director with the most seniority. Two signatures are required for all disbursements and any disbursements exceeding $10,000 must be authorized in writ ing by Legal. 14. Bank statements will be reconciled monthly in order to account for any outstanding or lost checks. 15. Expense reports will be maintained which will disclose the nature of expenses, and the dates incurred. 16. Separate files will be maintained for each bank account and each vendor. Files will be kept separately for each fiscal year. 17. The services of a Certified Public Accountant will be engaged to prepare a formal financial audit of the XXX fiscal year-end. 18. Correction fluid should never be used in preparing time sheets or any accounting documents.

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Hypothetical Personal Financial Information for all Principals

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Facilities Location Crooked Road Records will be located in a home for the first couple of years of operation.

11

61st Avenue NE and 185th NE Kenmore WA, 98028 *Kenmore, WA is located right next to Seattle, WA* The location is close to bus routes, shopping, and Lake Washington.

11

googlemaps.com 2010

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Description

This four bedroom, two bathroom two story home in Kenmore WA will serve as the home of Crooked Road Records. It’s approximately 1700 sq. ft. and is equipped with washer/dryer hookups. It comes with a large deck, hardwood floors on the main level, gas heat, private wooded setting, lawn surrounded by trees. The rooms will be converted into office space and a conference room as needed. The main living area will contain a waiting room and guest reception area.

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Needed Renovation/Construction The home we are looking at needs no renovation or construction. It is recently remodeled with flooring and painting throughout.

Floor Plan

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Equipment A list of required equipment is as follows: • iMac (hardware included) • Printer/Scanner all-in-one • Wireless Router • Cat 5 cable • Computer Peripherals (headphones, speakers) • Adobe Creative Suite • Pro Tools9 LE • Mbox 2 • Shure SM 58 • XLR cables (10ft) • 1/4” TS cables • Desks • Office Chairs • Conference Table • Conference Chairs • Sofa • Chairs • Coffee Table • Internet & Phone Services • Phone System • Cell Phones • Initial Office Supplies • Misc. Supplies

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*See Financial Section Itemized Capital Budget for pricing and quantities of each equipment*

Installation/Maintenance All instillation and Maintenance will be done by our own staff to start off with. Travis Kotara (legal) works with IT at West Texas A&M University and is efficient with installing and maintenance for computer software, etc.

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Personnel Job Descriptions CEO The responsibilities of the CEO of Crooked Road Records are to oversee the entire company, manage staff, lead weekly staff meetings in conjunction with Operations Manager, financing, marketing strategy, creation of company culture, and finally the success or failure of the company. The CEO must be a leader and visionary and must always be thinking of bettering the company, creatively and fiscally. Operations Manager The Operations Manager of Crooked Road Records is in charge of Human Resources, Accounts Payable, moderator of diversification and expansion possibilities; coordinate a staff meeting with the CEO, organization of documents. The Operations Manager must have excellent interpersonal skills, a collaborative management style, high comfort level when working in a diverse environment, and have excellent communication skills, both verbal and written. A&R A&R for Crooked Road Records locates and signs new talent, work with the artist in song selection, choice of producers, recording studio selection, and communicate with the label’s Operations Manager to make sure all the paperwork and all accounting is in order, and finally be the liaison between the artist and record label. A&R must be able to communicate efficiently, stay up to date with the latest in the music business as a whole. Legal Legal for Crooked Road Records will help startup our business. They will be in charge of tackling all legal issues related to our company. Legal, will also set up contracts with the artists that we sign and make sure that we stay in regulation with media laws. Legal will also work in tandem with the CEO and Distributing and Publishing. If needed, Legal will hire a lawyer for our certain needs. Legal qualifications must include: communication skills, knowledge of basic law (including copyright), and the ability to research.

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Distribution and Publishing Distribution and Publishing for Crooked Road Records will work with publishing companies to get the artists published, look for deals for the sale of the artists records, promote to radio stations, work closely with A&R to confirm what should be distributed and to whom, keep records of what is sent out and if and where the artists are getting played at radio stations.

Salaries and Employee Benefits

For our first year of operation all employees (the five original partners) will not be getting

paid for the first four months of operation. After that each employee will receive $20,000 for

the full year.

Employee Salary Dany Gross, CEO

$20,000

Tyler Sweeney, Operations Manager

$20,000

Jessica Wyers, A&R

$20,000

Teresa Dunn, Publishing and Distribution

$20,000

Travis Kotara

$20,000

Total

$100,000

Crooked Road Records will provide several benefits for its employees, these are to include but are not limited to the following: • Cell phones with plans • Health Insurance • Kitchen at workspace • Flexible Schedules • Travel Expenses

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Estimated Monthly Premium Employee

Employer

Employee

Total Monthly Premium

Danny Gross

$133.04

$33.26

$166.30

Jessica Wyers

$244.60

$61.15

$305.75

Tyler Sweeney

$106.69

$26.67

$133.36

Travis Kotara

$106.69

$26.67

$133.36

Teresa Dunn

$244.60

$61.15

$305.75

Total

$835.62

$208.90

$1,044.52

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Small Group Compare and Choose

https://www.ehealthinsurance.com/ehi/SGCompare.fs?mcei.app....

Health Insurance Plan

Plan Summary Company Choice Plus 9LG

Plan Name

PPO

Plan Type

1044.52 monthly

Estimated Total Cost

Doctors

Online Physician Directory Primary Care Physician Required

No

Specialist Referrals Required

No No

HSA Eligible Out-of-Network Coverage

Yes (More Details)

Optional Benefits (Dental, Vision, Life)

Yes (View Quotes)

In-Network Coverage $500 Individual $1500 Family

Annual Deductible

20% Coinsurance after deductible

Coinsurance

$2000 Individual $6000 Family (Does not include Deductible)

Annual Out-of-Pocket Limit Office Visit Primary Doctor

$25 Copay

Specialist

$50 Copay

Periodic Health Exam

$25 Copay

Periodic OB-GYN Exam

$25 Copay

Maternity Pre/Postnatal

No Copay after first Physician Office visit for prenatal care, 20% coinsurance after deductible $25 Copay

Well Baby Care Chiropractic Mental Health

$25 Copay, No Coinsurance after deductible, Limited to 20 visits per calendar year Outpatient Services: $50 Copay, No Coinsurance after deductible, Limited to 20 visits per calendar year

Prescription Drugs Generic

$15 Copay

Brand

$35 Copay

Non-Formulary

$60 Copay

Annual Deductible Lab/X-Ray

None 0% Coinsurance, Deductible does not apply

Emergency Room

$150 Copay, 20% Coinsurance after deductible

Outpatient Surgery

20% Coinsurance after deductible, Including Maternity

Hospitalization

20% Coinsurance after deductible, Including Maternity

Additional Information Lifetime Maximum More Insurance Plan Details Exclusions and Limitations Administrative Fees

1 of 2

Business Plan

Unlimited More Details Exclusions and Limitations UnitedHealthcare requires no processing fees in addition to the premium payment.

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Management Approach

Crooked Road Records will have a very unique management approach. Although everyone

is equal as a partner, the CEO and Operations Manager will be at the forefront of the

leadership in our company. Crooked Road Records will operate much like Google, in the

sense that each employee has the right to come in as they please and decorate their area

as they please.

Our CEO and Operations Manager will lead the company with a just complete your

assignment type of workload. Just as long as the employees complete their tasks on time,

they will have the luxury of completing it at any time they wish.

At CCR we are committed to our employees. We try and follow Maslow’s Heirarchy of

needs. We have provided a kitchen area and a lounge/entrance area as well. We will take a strong hand at times whenever assignments are not done.

It has been proven that the best way to motivate someone is through SMART (specific,

measurable, attainable, realistic, and timely) goals. CCR will follow this SMART goal idea

and set them from the start of our business. We will be actively involved with our

employees and include them in major managerial decisions.

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Projected Time-line Activities/Goals on a monthly basis for the first year Projected Timeline Activities and Goals Subject to revisions. All goals will be SMART; Specific, Measurable, Attainable, Realistic, Timely

1st month

Move to Seattle, Open Business, Begin Marketing, Set up office.

2nd Month

Artist Showcase, bring on new at least 2 new clients, keep up strong marketing

3rd Month

Begin the Production process with our clients; get to know them and figure out what they need, unveil partnership with KEXP,

4th Month

Begin the initial distribution, while still getting our client’s name and our name out there.

5th Month

Continue with distribution and promotion of both our business and clients.

6th Month

Continue business but take time to reestablish goals for the second half of the year. See what has worked and what hasn’t worked.

7th Month

Evaluate finances, adjust salaries based current levels of income.

8th Month

Goal of having an artist break into the top 100 in iTunes sales.

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9th Month

Expand clientele by 33%

10th Month

Gain a larger web presence through social media, and any way possible

11th Month

Keep recruiting bands, and begin planning end of year festival.

12th Month

Host Crooked Road Festival and look at our business as a whole, and reevaluate the up coming year.

First Date of Operation

As soon as we get accepted for a loan, we will move and set up our label. For an esti

mated date we all agreed that around sometime during the months of February and

March of 2011 we will start our operation.

Activities and goals every six months for second and third year

During the second year of our business, during the first six months, we would like to have

expanded our clientele by another 25% after our festival put on at the end of our first

year. Continue distribution of artists and meeting their needs would be our focus.

During the last six months of the second year, we would like to have gained enough reve

nue and clientele to move to an upgraded office. We will have worked out of a rent house up until now, so that will be our main goal during this time. Also we will put

on our yearly festival during this time as well.

In the first six months of the third year of our record label we would focus on our clients.

Gaining more artists will be a huge goal, but also keeping the trust and respect from our

already signed clients is very important to us. With our profit up now, and hopefully a better

office and experience from the past 2 years we will be moving up in the list of record labels

in Seattle.

In the last six months of the third year of our business we will be focusing on expansion.

We hope to have by now made a great name for ourselves not only in the Seattle, WA area but all along the West coast as well. During this time period however we would like to have

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another Crooked Road Records hub in another part of the country. Our preferred location

to expand to would be Austin, TX. Again our yearly festival will be put on for our artists

and other hopefuls.

Anticipated Date of Profitability

Our estimated date of profitability is seven to nine months after our initial open date. Of

course it could change depending on how many artists we sign and how quickly we

distribute their works, but according to our projections that is a time we believe to begin

gaining profit. IF we start our business in February, the month we hope to being gaining

profit is around October or December.

Five (5) Year Plan Within five years of our label being under way, we hope to have signed at least 20 to 30 bands and kept them happy by doing our best to distribute their music to the public. Also we hope to have expanded with at least 2 separate offices around the country, one in San Francisco and the other in Austin. A goal we would love to have had met by now would be a multiple number of our artist’s alums reach the Top 100 Indie Billboard Charts. Also we hope to be the leading Indie record label in the Seattle, WA area.

Ten (10) Year Plan

After ten years Crooked Road Records still hopes to going strong as a company. At this

time we hope to have roughly 70 artists. At this time we will also have spread out across

the U.S. with several record label locations including a New York. NY office. We also hope

that several of our artists will have been on the Top 100 Indie Billboard Charts and several

of our artists will have became an in house name among our target audience in the nation.

As our offices and company has expanded we will have a Vice President and other

employees as needed and the original five partners remain close and steadfast in their

representation of independent artists from across the globe.

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Conclusion In Conclusion, Crooked Road Records will be a successful independent record label because we all have a passion for the industry and what we are trying to accomplish. Moving away from the Panhandle, and starting the business of our dreams is for many of us a lifetime goal and we are committed to making it work. Crooked Road Records will work because we do not wish to be the Wal-Mart of the record label industry and are going to provide personal attention to every artist that we encounter. We hope that with this initial loan we will be able to succeed and continue in the industry that we all love.

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Appendix Logo

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Letters from Potential/Confirmed Clientele

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Policy Statements Credit/Accounts Receivable/Barter/ETC All of these policies may be found in the Accounting Procedures Section of this Business Plan. Producer Payments Timing of payment schedules to producers for services shall be determined by principles on a case-by-case basis, consistent with sound business practices and in compliance with restrictions imposed. The managers shall administrate payments on a day-to-day basis. Payments to producers will be equitable in relation to quality delivered and services performed.

Travel Expense An employee, any time association funds are spent for travel must submit an expense report. When necessary for an employee to remain away from home overnight on association business, the association will pay reasonable lodging and meal expense not to exceed $___. Paid receipts must be submitted along with the expense report by the employee for all lodging expense and for any single item of expense that exceeds $. An employee may occasionally be requested by his/her supervisor or general manager to use his/ her personal vehicle for association business. In such instances, the employee will be paid (.08) cents per mile for the actual miles driven, upon presentation of an expense report. Public transportation will be used when specified by the general manager. In such instances, the employee will be reimbursed upon presentation of the paid travel receipt.

Personnel Records A personnel file shall be maintained for each employee. Individual personnel files will be considered confidential. This file shall contain such information as the employee’s application form, physical report, references, State and Federal withholding tax forms, yearly performance appraisal reviews, and other employment history. An inactive file shall be maintained for at least 3 years for persons who have left employment of the association.

Communications The board will actively communicate with members, patrons, communities being served, other cooperatives, and the public, as appropriate, and in keeping with the cooperative’s communication plan. Attitudes about the cooperative shall be gathered and recorded and the information will be used to shape programs, procedure, and policy.

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All communications will consistently project the desired image of a well managed, soundly financed, and democratically controlled cooperative established to improve the economic condition of members and patrons.

Discrimination The association will not discriminate against hiring of any applicant or the employment of any person because of race, color, national origin, sex, age, handicap, or religion in accordance with the Equal Employment Opportunity Act.

Holidays The following holidays will be observed: New Year’s Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, Christmas Day, and a personal holiday. The personal holiday may be used however an employee desires, but must be cleared with the supervisor before using it. Permanent full time and permanent part time employees shall be paid their normal salaries and hourly rates for holidays. If a permanent full time or permanent part time employee is required to work on a holiday, he/she will be given an additional day of vacation. The additional day is to be selected by the employee, but must be approved by their supervisor and/or the general manager. The pay rate for the holiday will be the normal pay rate. If a holiday falls on Sunday, the following Monday will be observed. If a holiday falls on Saturday, the previous Friday will be observed. If a holiday occurs during an employee’s vacation, the employee will be charged with one less day of vacation. Sick Leave An employee is entitled to take sick leave during those periods incapacitated from performing duties by reason of sickness, off the job injury or for medical, surgical, dental, eye examination or treatment, or where the employee’s presence at their post of duty might jeopardize the health of others. Both permanent full time and permanent part time employees accrue sick leave benefits. A maximum of (5) working days may be accumulated. Permanent full time employees while at their job site shall accrue sick leave at the same proportional rate of permanent full time employees. The employee shall be paid at the normal rate of pay for the actual time absent from work up to the extent of the sick leave accrued. No employee shall be paid in lieu of accrued sick leave. Sick leave may be used in increments of one-half of a working day. However, if an employee is absent for two hours or less the general manager may waive the charge against the employee’s sick leave. The cooperative must be notified of absence be-

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cause of sickness not less than one-half (l/2) hour after the beginning of the work day in which the absence began. Return to work after sick leave shall also be reported. Requests for sick leave for medical, dental, optical, or chiropractic examinations or treatments shall be submitted for approval to the supervisor and/or general manager prior to the beginning of sick leave. If sick leave accrual becomes exhausted, an employee may charge excessive sick leave against vacation time if any is accrued. Time lost for disabling work-related injuries will not be charged against sick leave. A sick leave record will be maintained by the association for each employee showing the total number of accrued sick leave days and the number of sick leave days taken. Employees shall have on file with the cooperative the name, address, and telephone number of the person to be contacted in case of accident or illness on the job. The general manager reserves the right to deny, in whole or part, payment for sick leave in cases of proven abuse or malingering.

Analyses

Independent Labels It has become common practice to classify all but the major labels (those having their own distribution systems) as independent labels. Independent labels have been described by knowledgeable music industry professionals as "the lifeblood of the business." In fact, in 1995 independents accounted for over 19.2% of the music industry's market share. Lacking large budgets for project production and marketing, independent record companies have had to be more resourceful over the years. Such facets of the business as, intense talent scouting (Artist & Repertoire) and grass roots marketing campaigns have been utilized to compete with major record companies. Furthermore, independents cannot rely on the occasional "big hit" record, but rather have established and grown music catalogs to provide streams of revenue. In growing a music catalog it is imperative to compile a reliable group of artists, who are dedicated to producing quality music. This enables the company to steadily increase the number of unit sales for a particular artist over a two to three album process. Major recording companies frequently invest in independent labels when confidence in the company's roster and management exists. In these strategic alliances and joint ventures, the larger company may invest money to: a) assist in completing album projects, b) manufacture compact discs and tapes and c) assist with marketing and promotion plans. Although independent distribution channels (Johnson, Wallace and Cordoba) exist, many independent labels choose to utilize the independent distribution services offered by major Business Plan

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labels. This is an attractive choice for independents, due to the breadth and reach of the distribution in addition to the clout which the majors possess with retailers. In these situations, independents can "piggy back" on the reputation of the major. Several UK companies that started as independent firms and joined forces with a major include Clover, Maid and Roots. Similar success stories are documented with U.S. based companies such as: Appleton, Chatham and Mill Point. From the outset, these companies demonstrated creative leadership, quality product and determination. Industry Sales Volume in the U.S. The U.S. record business, which grossed two billion dollars in 1970, exploded to four billion dollars in sales by the end of 1978, with a unit volume of 726 million records and cassettes sold. Sales fell sharply over the course of the next six years, mainly due to the declining American economy and the popularity of home cassette taping. It wasn't until 1988, when unit volumes reached 726 million, that the industry exceeded the pinnacle reached ten years ago. Recent calculations of industry figures indicate more than 10 billion dollars in sales and a volume of more than 955 million units.

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Group Information Differences from Business Concept

Our Business Plan differs from our original Business Concept in several ways. The first big

change that you may notice is that our clientele has changed. Originally it was from 16-32

year olds, but now it is 15-24 year olds.

We are still located in Seattle, WA and an independent record label. And we still stand by

our original thoughts and ideas presented in our business concept. We have elaborated so

much more in our Business Plan though and have expanded our ideas. Another difference

is that we have also included much more of our financial information and our management

style as far as how we wish to run the company. Essentially our Business Plan is a much

more detailed explanation of our Business Concept.

*See attached Original Business Concept*

Team Meeting Records/Student’s Participation/Self-Evaluations *See attached documents*

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