Building a DJ Business in an economy that can't support it.
Have you ever noticed when a new business appears in your neighborhood and it’s new and exciting, then before you know it there is one on every street corner?
Sometimes in business some company’s don’t take into consideration the area of saturation, population or the economic status of an area when it comes to their business.
Take for instance McDonalds back in the seventies. There was one restaurant every twenty to thirty miles, now there is one every few blocks. It has come to a point that many McDonald’s restaurants are closing down because there are just too many of them in a limited area and can not hold a sustained cash flow or employees due to the lack of population, over saturation and/or economic status and similar restaurants willing to undercut the price in order to steal the customers away.
Many years ago one of the first Subway restaurants in Minnesota was a few blocks from where I lived. I actually looked into purchasing a franchise before I decided to go full time as a DJ. The Subway Corporation was smart enough to devise a limitation plan so that they wouldn’t over saturate any area. They do this by selling not only a store front to a buyer, but also a geographic area to the purchaser. This limits the closeness of the restaurants to each other. If you own a geographic area and decide to place multiple restaurants into this area, then you have only yourself to blame if your restaurant can not hold enough revenue to sustain the business.
Subway now has to fight (much like DJs) with the new guys in town who try to sell their product at a lower price while promising the clients a superior product.
I only bring this up as an example because I was reading a forum post from a fellow DJ who complained that he couldn’t raise his rates because he lives in the middle of nowhere with a low population and must drive a minimum of thirty miles to the nearest location that holds events. He claims that all the other DJs charge so little that he couldn’t charge more and lose business to them, so he charges the same as they all do.
He also speaks about how easy it would be for a DJ in a big city when compared to a DJ out in the country. How city DJs have the benefits of many locations to perform so close to home and how the city clients are willing to pay more for their entertainment then the clients out in the country.
My only question to this particular DJ is WHY?
Why would you decide to open a business in an area that can not sustain the business?
Why would you open a business in an area that you have to drive thirty miles or more to get to any venue?
Why would you open a business where the economic situation is poor and people can’t afford to pay you your needed salary?
Why would you open a business in an area that already has other businesses exactly like yours struggling to stay in business?
Why would you open a business where you have to fight to be the lowest priced DJ in order to sell your service?
Why do you continue with your business knowing all that you do now and the situations that you must face?
It makes as much sense as building a McDonalds in the middle of the desert in India.
1: The desert would not have the needed traffic.
2: They do not eat meat from cows in India because cows are considered sacred.
I would hope anyone opening a business would do the research in order to create a business plan and a profitable and successful business.
As my prices began to rise greatly above the standard "average" DJ in the area of my business (Northern Suburbs of Minneapolis) I had to consider the economic situation of the area.
I was hanging on to hopes the stadium would be built there because this would bring more event locations and the possibility of an economic growth spurt for a slowly declining area.
Being in the chamber involved with this stadium plan, I was able to speak with important political dignitaries during the planning process. When I heard things that lead me to believe the stadium would not be built there, I decided to uproot the business and find a new location.
In order to draw more of the quality, higher paying events I decided to move the location of my office. I did research to find areas that had a standard of living (higher incomes, higher class, and greater disposable income) and then while looking for a new home, concentrated on these areas.
Eventually we purchased our home in a "fast economic growth" area. The growth of the area was quickly raising, the economic situation was on the upswing, and the population was that of a wealthier class of people.
I'm slightly out of the big city but still right on the edge and close enough to attract a class of people who are willing to pay more for a quality DJ Service.
These are the kinds of things one must investigate before opening a business.
Just my thoughts......
Jeff Richards: Party Time Productions