Executive Summary

Mojo Music will be a CD store that specializes in used CDs and DVD rentals as well as blank
CD/DVD recording media.  Our target customers are the 23,000 students of State University
and 40,000 non-student residents of the university area.

Mojo Music will be located one half block from the university campus on Taylor Street
which is the major retail/commercial section of the university area.  The student foot traffic
on Taylor is heavy.  The university bookstore is on Taylor Street, as well as numerous coffee
houses, restaurants, and shops that cater to the student population.

Though the location is perfect for our target customers, it is more important to understand
what our customers want from a CD store.

Twenty five years ago, it was popular among young adults to create mix cassette tapes of
their favorite music for personal use and as gifts for friends. Today, with the wide distribution
of CD recording equipment, Internet technology, and new recording formats like MP3, young
adults now have the ability to create personalized presentations of their favorite music.  The
market for used CDs has exploded as a consequence of young listeners' ability to create
quality duplication from CDs. With the average price for a new CD at $16-$18, young adults
would rather buy a used CD for a little over half that price ($8-$11).  It is even more
attractive if they can get in-store purchasing credit by selling their own CDs to the store.

Mojo Music will offer popular new releases and used CDs.  We will have a attractive CD
buying program that will reward customers for spending money in the store. In addition to
new CDs in the store, a customer will be able to order any CD that is currently issued.  We
will have that CD in the store within three days.

Affordable blank CD/DVD recording media is another important key in bringing our target
customers into the store. Young adults between 17-25 years of age are the largest group
purchasing CD and DVD recorders.  There is no store that sells recording media within a 10
mile radius of the university.

Similarly, there is no video/DVD rental store next to campus.  The closest rental store is four
miles off campus. Due to the drop in price for DVD players, many students own DVD/CD
players, so the preferred format for movies is DVD.  This is not true for the larger community
with still prefers video cassette. 

Mojo Music will sell blank recording media and rent movies in DVD format.
1.1 Objectives

 To become the first place our target customers will go to sell and buy CDs.

 To create a strong DVD rental business.
 To increase blank media sales by 20% each year.

1.2 Mission

Mojo Music's mission is to offer our target customers:

 The best quality popular used CDs at affordable prices.

 The most popular new CDs at the lowest prices.
 The best recording media at affordable prices.
 A large selection of DVD rentals.

1.3 Keys to Success

The Keys to Success for Mojo Music are the following:

 Keep the money paid for used CDs in the store.

 Offer a quality selection of used CDs.
 Offer popular new CDs at a discounted price.
 Offer popular DVDs for rental.
 Offer recording media at a discounted price.

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Company Summary
Mojo Music offers popular new CDs, used CDs, DVD rentals, and CD/DVD recording
media.  The target customers for the store are the 23,000 students of the State University. 
The store is located one half block from the major entrance to the university.  The student
group represents a unique music buying and DVD rental group that is not being served by the
area's existing CD stores or video rental outlets.

2.1 Start-up Summary

The start-up cost of Mojo Music will consist primarily of inventory and display equipment.
Karl Payne will invest $50,000.  In addition to securing a $100,000 SBA loan, Karl has also
obtained an investment of $100,000 from a silent partner.

Start-up
Requirements
Start-up Expenses
Legal $1,000
Stationery etc. $0
Brochures $0
Consultants $0
Insurance $0
Rent $4,000
Inventory $120,000
Expensed Equipment $20,000
Display Equipment $6,000
Other $0
Total Start-up Expenses $151,000
Start-up Assets
Cash Required $49,000
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $50,000
Total Assets $99,000
Total Requirements $250,000

Start-up Funding
Start-up Expenses to Fund $151,000
Start-up Assets to Fund $99,000
Total Funding Required $250,000
Assets
Non-cash Assets from Start-up $50,000
Cash Requirements from Start-up $49,000
Additional Cash Raised $0
Cash Balance on Starting Date $49,000
Total Assets $99,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $100,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $100,000
Capital
Planned Investment
Karl Payne $50,000
Investor 2 $100,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $150,000
Loss at Start-up (Start-up Expenses) ($151,000)
Total Capital ($1,000)
Total Capital and Liabilities $99,000
Total Funding $250,000

2.2 Company Ownership

The store owner is Karl Payne who has worked in CD stores for over ten years.  Most
recently, he was the store manager for CD Warehouse for seven years supervising a staff 10.

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Products
Mojo Music offers popular new CDs, used CDs, DVD rentals, and CD/DVD recording
media.  The primary focus will be to satisfy the music/DVD needs of the target customers.

 New CDs: CDs that are popular with our target group.

 Used CDs: CDs that are in good condition and that have a reasonable chance of being
purchased.
 DVD rentals: Movies that are popular with our target customers.
 CD/DVD recording media: Provide the best quality for the best price.

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Market Analysis Summary
It is estimated that the university student community spends over $75 million with local
businesses each year.  Approximately 50% of these sales are for entertainment including
music and movies.   The university's commercial/retail area borders the east side of the
campus and it is the main entrance onto campus.  Each day, thousands of students shop and
eat on Taylor Street before, after, and between classes.

Currently, if a student wanted to purchase a used CD, he/she would have to take a ten minute
drive to reach the only used CD store in town.  Similarly, he/she would also have to drive to
reach the closest video rental store to the campus community.

Mojo Music offers the student the ability to buy a CD or rent a DVD during the day while on
campus.

4.1 Market Segmentation

Mojo Music will focus on three significant customer groups:

 Used CD buyer/seller:  The shelf life for music is very short with young adults. 
What was popular three months ago can quickly become boring.  The music industry
is aware of this trend and is constantly releasing the next great hit to satisfy this
hunger for the new.  But what does the buyer do with old CDs that are no longer
being rotating into the CD player? Mojo Music will be uniquely designed to attract
and retain this important customer group.

 CD/DVD recording media buyer: This customer group is very significant. They
have already embraced the technology that gives them the freedom to create their own
CDs and DVDs.  The purchase/sell turnaround on a CD/DVD is very quick with this
group. They will be a great source for used popular CDs and DVDs.  Mojo Music will
set up an in-house credit system that will bring this customer group into the store.

 DVD renters: As stated before, the student population represents a unique group of
DVD users.  Many manufacturers now make cheap CD/DVD players that are targeted
at young adults.  So DVD rentals are much higher with this customer group than the
population as a whole.  Mojo Music's location is perfect to capture the walk-in
business for DVD rentals.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Used CD Buyer/Seller 15% 10,000 11,500 13,225 15,209 17,490 15.00%
CD/DVD Recording Media
10% 4,000 4,400 4,840 5,324 5,856 10.00%
Buyer
DVD Renters 15% 10,000 11,500 13,225 15,209 17,490 15.00%
Other 0% 0 0 0 0 0 0.00%
Total 14.21% 24,000 27,400 31,290 35,742 40,836 14.21%

4.2 Target Market Segment Strategy

The advancement of CD recording equipment, Internet technology, and new recording

formats like MP3, has turned young adults into a new type of music and movie consumer. 
This trend has already depressed CD sales nationwide and many CD stores have gone out of
business in last five years.

To be successful, a store must respond to the market opportunity the target consumer is
providing. Though the game has changed, there is still tremendous opportunity if a CD store
can read the market needs and trends correctly.

The student population that Mojo Music is targeting is very comfortable with the newest
technology and has easy access to CD/DVD recording equipment. This creates a new
expectation in the consumer's mind concerning what is an affordable price for music.  Most
college-aged adults have reported in numerous industry polls that the price of new
CDs should be lower.  This search for a lower price led to the explosion of MP3 on the
Internet. Consequently, CD recording media has increased in sales.

Quality used CDs fill the niche that this concern creates by offering a lower price for popular
music.

Another area where the college-age consumers is leading the market is in the use of DVDs. 
At most video rental shops, DVDs are small subsection of available rentals. Currently, these
shops primarily serve consumers who prefer video cassettes. Though this trend is changing,
DVD owners find the selection limited.
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Strategy and Implementation Summary

Mojo Music will be heavily promoting the store.  We will use the student daily paper to
advertise a $2 off per CD coupon.  In addition, we will have a drawing for five CD/DVD
players each week.  We will continue the drawings for the first eight weeks of the store's
operation.

5.1 Competitive Edge

Mojo Music's competitive edge is:

 Location: Mojo Music is on Taylor Street, one half block from the entrance to the
university.  The student foot traffic on Taylor Street is very strong. The closest used
CD store to the university area is a ten minute drive.

 Quality used CDs: With the average price for a new CD at $16-$18, young adults
would rather buy a used CD for a little over half that price ($8-$11).  It is even more
attractive if they can get in-store purchasing credit by selling their own CDs to the
store.

 CD/DVD recording media: Young adults between 17-25 years of age are the largest
group purchasing CD and DVD recorders.  There is no store that sells recording
media within a 10 mile radius of the university.  

 DVD rentals: The closest rental store is four miles off campus. Due to the drop in
price for DVD players, many students own DVD/CD players, so their reasonable
format for movies are DVD. 

5.2 Sales Strategy

The key to Mojo Music's sales strategy is to get the sellers of used CDs to spend their money
in the store. To accomplish this goal, we will offer the seller two options for their CDs: cash
and in-store credit. In-store credit will be 20% more than cash.  This can be used to buy CDs
or CD/DVD recording media.  In-store credit can also be used to rent DVDs.

5.2.1 Sales Forecast

The following is the sales forecast for three years.

Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
New CDs 18,400 20,000 23,000
Used CDs 33,500 38,000 41,000
CD/DVD Recording Media 15,100 18,000 21,000
DVD Rentals 28,100 30,000 33,000
Other 0 0 0
Total Unit Sales 95,100 106,000 118,000
Unit Prices Year 1 Year 2 Year 3
New CDs $16.00 $16.00 $16.00
Used CDs $10.00 $10.00 $10.00
CD/DVD Recording Media $10.00 $10.00 $10.00
DVD Rentals $3.00 $3.00 $3.00
Other $0.00 $0.00 $0.00
Sales
New CDs $294,400 $320,000 $368,000
Used CDs $335,000 $380,000 $410,000
CD/DVD Recording Media $151,000 $180,000 $210,000
DVD Rentals $84,300 $90,000 $99,000
Other $0 $0 $0
Total Sales $864,700 $970,000 $1,087,000
Direct Unit Costs Year 1 Year 2 Year 3
New CDs $11.00 $11.00 $11.00
Used CDs $5.00 $5.00 $5.00
CD/DVD Recording Media $4.00 $4.00 $4.00
DVD Rentals $1.00 $1.00 $1.00
Other $0.00 $0.00 $0.00
Direct Cost of Sales
New CDs $202,400 $220,000 $253,000
Used CDs $167,500 $190,000 $205,000
CD/DVD Recording Media $60,400 $72,000 $84,000
DVD Rentals $28,100 $30,000 $33,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $458,400 $512,000 $575,000

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Management Summary
Karl Payne is the owner/manager of Mojo Music.  Karl has worked for over 15 years in
record/CD stores. As a student at State University, Karl worked at The Record Factory, a
successful downtown record store, in the late 80's. After graduating in 1989 with a BA in
english, Karl went on to managed two record/CD stores; the Palace (89-93) and the CD
Warehouse.  Karl is a excellent staff supervisor and will do very well in managing the staff of
Mojo Music.

6.1 Personnel Plan

Mojo Music will have the following staff members:

 Manager.
 Assistant manager.
 Four customer assistants.

Personnel Plan
Year 1 Year 2 Year 3
Manager $36,000 $40,000 $45,000
Assistant Manager $30,000 $33,000 $37,000
Customer Assistants $72,000 $75,000 $80,000
Other $0 $0 $0
Total People 6 6 6
Total Payroll $138,000 $148,000 $162,000

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