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More Than Horses Feasibility Parts I and II Lydia Genner Marshall Custer Chompreeya Baiphowongse Overview The Opportunity: There is a shortfall of space in the Boulder area due to high commercial real estate prices and the lack in underdeveloped land. This creates a lack of affordable space in which resident and traveling artists can rehearse and perform. Additionally, there is no convenient outlet where artists can converge and interact with each other – feeding their psychological need for re-affirmation and collaboration while creating a creative space and community comprised of artists from different backgrounds and abilities. Our Purpose: To address this opportunity by establishing a multidisciplinary membership based arts co-operative that seeks to cultivate a sense of community and creativity in providing affordable access to work, rehearsal, and display space for Boulder‟s performing and visual artists. Market Size and Growth Of 129 million employable Americans, 2.5 million consider themselves artists. Source: 2000 US Census In Boulder: 200-300 People are actively and consistently attempting to participate in the shared gallery and home gallery tours Over 1,000 general public attend these tours annually with the main thrust coming in the Fall Home showings. At least 150 young emerging visual artists, that are not part of gallery showings. At least 500 non-professional (hobbyist) musicians Usually between 20-35 years of age ~20 unique postings per day seeking Boulder musicians Source: craigslist survey and personal interaction in the musician community 20 dance companies in Boulder with ~10 dancers per company Dance genres range from modern to ballet and tap to traditional native dances, with a growing trend towards modern dance Approximately 50 undergraduate dance majors and 13 graduate dance degree candidates at CU Assumption: There will always be a thriving arts community, since artistic outlet is more a function of personal need rather than that of economic fluctuation. Market Trends Theater and Dance: Movement towards more non-traditional venues and genres Ex. Shakespeare in the Park, Frequent Flyers (aerial modern dance) Smaller, but more collaborative short term „pick-up‟ groups Less reliance on classical repertoire and more focus on innovative material Ex. Colorado Ballet‟s spring performance of Where the Wild Things Are Public performance exhibitions gaining in popularity Ex. Success of “365 Plays in 365 Days” and the Boulder Fringe Festival Visual Arts: Musical Arts: Rise in collaborative showings with a Through the rise of sites such as common theme vs. traditional single myspace and craigslist, musicians have artist showings become much more collaborative and Ex. “Pretty Baby” photo exhibit, BMOCA less willing to commit totally to one trending away from single artists showing musical project Trend towards more installation art Technology to create and distribute Often requires multidisciplinary skills and music has lead to an explosion in the the help of various artists to create and number of self-proclaimed musicians assemble Generational Trends 60‟s Children “baby boomer” were the first generation to massively rebel against the values of the previous generation; they married later, began careers later, spent early 20‟s pursuing self interest and generally began the early adulthood characteristics we still see today. Late baby boomers exhibited a slight return to more traditional values; more career oriented. Gen X’ers: Further pursuit of self interests during their early 20‟s; considered lazy with a lack of optimism. Little trust in traditional values. Gen Y: The EcoBoom, current generation coming of age. Largest demographic since the baby boom. Often a second round of children for baby boomers as such the these children are often raised in financially sound environment. EcoBoomers can afford the luxury of leisure and value self-fulfillment. Comfortable with technology, optimistic, accepting and highly interested in other cultures. Conclusion: Large Population of EcoBoom generation have views in line with the goals of More Than Horses giving us a broad base of potential members across the country. Artist Segmentation Professional Artists – Aspiring Artists – Emerging Artists – Making a living from their art Semi-professionals Young, artistic socialites (Age range: 35+) (Age range: ~25-40) (Age range: ~16-35) They are the gate They are seriously They have often just keepers that control attempting to make a living started their “life on their recognition of new artists from their artistic output own” – recent grads They have their own They often end up as They are just beginning highly guarded network teachers the exploration of their artistic tendencies They enjoy helping and They have less interest in inspiring young artists, social collaboration, yet They are very yet do not want to be more interest in actual impressionable and highly burdened with over networking for the benefit inspired by group involvement. of their career interaction Participate in Master Deep desire to interact Classes, Music Camps, Want a sense of Foundations for the Arts community Current Market Theater and Dance: Dance studios – Cater to professional and aspiring artists Churches and community rooms – Cater to all artists CU and Naropa dance facilities – Cater to all, emphasis on emerging artists Visual Arts: Arts Galleries – Cater to professional and aspiring artists Art work studios, CU and Naropa facilities, Boulder Co-Rec – Cater to aspiring and emerging artists, mainly through class offerings Music Venues and Resources: Fox Theater, Boulder Theater – Cater to professional artists Churches and community rooms – Cater to professional and aspiring artists Co-op Market, Trilogy, various small venues – Cater to aspiring artists CU student union, rehearsal spaces, mom‟s garage – Cater to emerging artists Value Chain – What needs can we address Professional Artists – Aspiring Artists – Emerging Artists – Often primary need is Primary need is work Primary need is for short term space exposure to tastemakers affordable work space Recording rehearsal (professional artists) and Performance prep the public Strong secondary need is Meeting places for a sense of community Secondary need is for Environment for Secondary need is space collaboration psychological fulfillment Work space and storage Desire feedback from Desire to give back to Teaching lessons (group peers arts community and individual) Reconnect with roots Further need is for help in Wish to inspire and be Further need to develop facilitating performances inspired by next their network through and exhibitions generation of artists interaction with Establishing in-roads professional artists and with gallery‟s and professional showcase/ performance spaces performance organizations Threats Inability to establish ourselves as a credible institution in the artistic community Inability to differentiate ourselves from existing art service organizations Competing with free space Ex. Churches, community space, and university resources Not financially feasible Is it possible at a low enough rate to attract a base of membership, given Boulder high real estate prices? Customization costs of individual spaces for each discipline Are we attempting to cater to too many groups? Unwillingness of member artists to participate in creating the desired community environment Possibility that we could attract members that wish to operate independently Risk of substitution with private rehearsal and specialized spaces Market Concentration Deferring market saturations for different services: Performance Space : Marginally to adequately addressed – professional acts do not lack space to present a production, though it is more difficult for less established performers to find space Shortfalls correspond with performance weeks (ex. late summer - Boulder Fringe Festival, early spring – university/high school recitals, holiday season performances – Nutcracker Suite Ballet) Gallery Space : Large number or galleries in the boulder area that cater primarily to professional with limited access for aspiring artists We consider this portion of the market bordering on saturation Little to no gallery space allocated to emerging artists General Work Space : Woefully under addressed All interview point towards a dire need for general work space, regardless of artistic discipline or ability Community Involvement and Other Observations: Currently, there is no organization committed to fostering multidisciplinary interaction between artists Little to no availability for multidisciplinary artists to practice more than one art form in one space Degree of Stability Key Assumption: For the foreseeable future it seems that Boulder will have a strong and thriving artistic community. Boulder is a creative environment with a long history of attracting creative individuals. This creates a constant inflow of new artists at all levels of ability. Effects on Stability: Artists are transient by nature, however this transience tends to equate to a constant, yet dynamic, artistic population Leads to the possibility of franchising the organization to other “artistic” cities (ex. Minneapolis, Austin, Portland, Seattle, San Francisco, Chicago, and New York) where membership can transfer as members move Boulder has a reputation for embracing and supporting the arts Barriers to Entry High Initial Investment: Price of real estate in Boulder is high and climbing (ex. $561/sq. ft. for downtown Boulder space) Importance of location for convenience and image leads to need to place facility near center of Boulder Customization of facility would be very expensive High build out costs for sound proofing, kilns, potter wheels, photography equipment, art material disposal and other environmental issues Real estate and build out cost lead to possible difficultly in meeting competitors price on space rental Possible Reluctance of Investors: Traditional investors may be hesitant to fund this type of business Not a traditional business start-up (i.e. no new technology, etc) Return on investment will unlikely be as high as other investment opportunities given the nature of our intended pursuit Solution: Approach professional artists as potential angel investors Government Regulation: Compliance with 501c3 requirements for non-profit recognition and accreditation Possible upside in the availability of grants as funding; however grant funding tends to go towards large scale “arts centers” vs. small arts co-ops and initiatives. We have a better chance of receiving grants with a larger scope of services and artists, demonstrating a larger impact on our community Degree of Rivalry The community of Boulder is known for its friendly nature. It has a reputation for openness to new partnerships in the arts world. This is a result of over saturation of the number of artists in the community and not enough outlets to meet their needs. Approach to be taken: Focus on community and partnership; not rivalry Arts communities don‟t like competition; they embrace cooperation Aggressive pursuit of establishing our image as a leader of multidisciplinary arts in the Boulder community For future consideration: Higher propensity towards rivalry exists in larger cities (franchising consideration) Arts communities in other locations are territorial due to the nature of their funding (ex. Hull House in Chicago: primary provider of amateur arts services) Competitors Organization Name Defining Factors Dairy Center for the Arts Foot traffic of 300 people per day (students, teachers, artists) Provide supplemental art‟s education (children‟s workshops) 2 theaters, 3 galleries, 1 performance space, conference rooms, classrooms, (40,000 sq. feet) Space available at 60% discount from regular market Mgmt Team: 46 member Board of Directors (investors & funding orgs), Staff of 12 Churches and Free 107 Churches/Social Spaces (Knights of Columbus)/Wedding Spaces in Boulder area Spaces 30 large churches offer free community spaces Social spaces and wedding spaces charge a fee for rental Seasonal demand – during recital and university performance periods. Galleries BMOCA – caters to professional clientele, has one rental space for performances/business meetings/private parties Rembrandt Yard – caters to professional and aspiring professionals; has 6 studio spaces in the basement for full time use Blink, Smith Kline, Art & Soul: professional clientele with gallery space only Boulder Arts Co-op Competitors (cont.) Organization Name Defining Factors Fire Station #2: Boulder Co-op for pottery hobbyists Pottery Lab Club is over 50 years old, 1784 sq. ft facilities Supported by the Boulder parks and recreation department – facing funding cuts Average class costs: $150-$185 (2 classes) RMCMA Group and Individual children‟s lessons (work closely w/ CU) (Rocky Mountain Individual lessons $20-$23/ half hour Center for Music and Arts) Annual registration fee of $20/individual or $25/family Performance and rehearsal space rental: Main Hall $60-$70/hour, Recital Hall $30-$45/hour Building hours vary according to teaching and availability Mgmt Team: 8 member Board of Directors, Administration Staff of 7 Mgmt Characteristics: Art boards are typically comprised of individuals with a vested interest in the organization and/or affluent members of the community looking to promote the arts through their personal involvement Galleries: Single owners and groups of artists interested in showing their own work and promoting similar art forms and styles to that matching the gallery‟s image Basis of Comparison Basis of Comparison – how we compete Quality of our services Facility Spaces must be appropriately lit for arts area – no sun/hard light damage Acoustically accurate and non-tiring to the ear: “quiet” Facilities must be secure, but accessible Implement lockers/closets or lock away drawers/desks in large group use rooms – protect instruments and artwork Artists want to keep supplies available and secure in close proximity to their work space Storage areas/building must be humidity and temperature controlled for the protection of artwork and instruments Parking space and loading dock for ease of loading equipment Traveling professional artists need quick access to facilities Aspiring artists often transports their equipment and displays for outside showings and performances Community Encourage artistic exchange through multi-use areas, gathering rooms, and multidisciplinary showings/events Control of the Market Price Will be dictated by the willingness to pay by the target market Will artists be willing to give up ~$50/month for a “home base” Apparent target market does not possess high amounts of disposable income, but are willing to pay to support and pursue their creative endeavors Price on value added Addressing an unfulfilled need for space Addressing psychological need for community Promoting career advancement through classes and networking Cost Space and renovation are main driver Degree of renovation needed to adequately support desired services necessitate facility purchase not rental. Reduction could come through donations and grants Leverage strong interest in advancing the arts community to help fund initial investment and sustain the organization. Successful professional artists are often looking for opportunities to support artistic endeavors (i.e. potential angel investors) Market Fragmentation Many galleries/spaces are highly specialized and not in direct competition with one another Excess demand for our services, not excess capacity Attributed to excessive cost of space in Boulder area and larger cities in general Conclusion Boulder has a large and diverse artistic community with needs that are unsatisfactorily met at this time. In particular, we believe there is a large enough segment of emerging artists that are almost completely ignored by current arts organizations and facilities to warrant the establishment of More Than Horses. We see a tremendous opportunity in addressing the needs of emerging artists while simultaneously serving the needs of professional and aspiring artists. The next step will be to fully identify how we can meet these needs and if it is possible to do so in a sustainable way. Currently, the biggest hurdle to overcome appears to be the price of real estate in Boulder. More Than Horses Venture Analysis Feasibility Parts III Lydia Genner Marshall Custer Chompreeya Baiphowongse Market & Industry Analysis Size and Growth We assumed that there will always be a thriving arts community, since artistic outlet is more a function of personal need rather than that of economic fluctuation. 200-300 People are actively and consistently attempting to participate in the shared gallery and home gallery tours At least 150 young emerging visual artists, that are not part of gallery showings. At least 500 non-professional (hobbyist) musicians. 20 dance companies in Boulder with ~10 dancers per company. Trends All disciplines (Theater & Dance, Visual Arts, and Musical Arts) are moving out of traditional styles and becoming more creative through new innovation, technology, and advancement in communication. Large population of the current generation (a second round of children for baby boomers – EcoBoom Generation) have consistent views with the goals of More Than Horses giving us a broad base of potential members across the country. Market & Industry Analysis (cont.) Market segmentation & Value chain There are three main market segments - Professional Artists, Aspiring Artists, and Emerging Artists – across all disciplines in which each plays different role and has different interests and needs. Segments Primary need Secondary need Professional Artists Short-term space for recording, Psychological fulfillment: a rehearsal, performance desire to give back to the arts preparation, and meeting places community Aspiring Artists Exposure to professional artists Work space, storage, and and public attention classes with an additional need in networking with other segments Emerging Artists Affordable work space Sense of community with an additional need in facilitating performances and exhibitions Market & Industry Analysis (cont.) Current market Theater and Dance: Dance studios, churches and community rooms, CU and Naropa‟s dance facilities, The Dairy Visual Arts: Arts galleries, Art work studios, CU and Naropa‟s facilities, Boulder Co-Rec, Rembrandt Yard, The Dairy Music Venues/Resources: Fox Theater and Boulder Theater, churches and community rooms, co-op market, Trilogy, various small venues, RMCMA, CU student union, rehearsal spaces, and “mom‟s garage” Threats Main threats are inability to establish creditability and to differentiate services, financial feasibility, risk of substitution by free space or other private/specialized space, and unwillingness of artists to create the desirable community environment. Competitive Analysis Market Concentration Access to work and rehearsal space is woefully under addressed to marginally or adequately addressed depending upon the market segment. In addition, there is no organization committed to fostering multidisciplinary interaction between artists and currently there is little to no availability for multidisciplinary artists to practice more than one art form in a single space. Degree of Stability Boulder is a creative environment with a long history of attracting creative individuals. It has a reputation for embracing and supporting the arts, therefore, we can assume that there will always be a constant inflow of new artists at all levels of ability. Since artists are transient by nature, this trend tendse to equate to a constant, yet dynamic, artistic population. Barriers to Entry High initial investment: Price of good location and renovation of building Possible reluctance of investors : Nature of services and objectives of organization are not attractive to traditional investor, but possibility for professional artists whose objectives are more than a financial return. Government Regulation: Compliance with 501c3 requirements Competitive Analysis (cont.) Degree of Rivalry As a friendly community by nature, Boulder has a reputation for openness to new partnerships in the arts world. There are a large number of artists in this community with limited space to satisfy their needs. Rivalry is minimal as arts communities tend to encourage cooperation not competition. Competitors Main competitors are Dairy Center for the Arts, churches and free spaces, galleries, Fire Station # 2: Boulder Pottery Lab, and Rocky Mountain Center for Music and Arts. Basis of comparison Arts services offered: Storage, multi-disciplinary community interaction, work space, rehearsal space, recital/display space, master classes, and music lessons/workshops Quality of services: Temperature and humidity control, security, accessibility, sufficient parking space and loading dock, and community gathering space Competitive Analysis (cont.) Control of the market Price Depends upon willingness to pay by target markets. With the exception of professional, artists might not possess high amounts of disposable income Cost Main drivers are space and degree of renovation Market Fragmentation Specialization creates fragmentation. There is a high demand with a very limited supply of space. Conclusion We believe that establishing More Than Horses would be a good opportunity to pursue because of the size of market and the needs of all identified market segments that are not currently satisfactorily being met by existing services. However, further analysis in the next sections will help identify whether More Than Horses will be possible and sustainable. Venture Description Our Proposed Service: To create a multi-use building and community center that caters primarily to the needs of aspiring and emerging artists in the artistic disciplines of dance, music, and visual arts. We will offer affordable work, rehearsal, teaching, and storage space, as well as assistance in placing work and staging performances with partner arts galleries and venues. More Than Horses will be a 24 hour accessible facility that promotes collaboration and community in the aspiring and emerging artists segments. Further, we will reach out to professional artists by offering short term rehearsal/prep space for recording and performances as well as the opportunity to “give back” to the arts through instructing master classes, providing guidance, and possible funding support. Market Opportunity Opportunity: There is a lack of affordable space in which resident and traveling artists can rehearse and perform. In particular emerging and aspiring artists are underserved and dissatisfied with the arts offerings in Boulder. Additionally, there is no convenient outlet where artists can converge and interact with each other in an environment supportive of their work. Compelling Need: Artists, especially young artists, have a need for community interaction and acceptance of their work. These same young artists often lack the financial resources necessary to maintain a private studio or work space. Aspiring artists often face difficulty in navigating the complexities of placing and selling work in the evolving bureaucracy of gallery and performance venue businesses. Compelling Needs of Artists Type of Need Description Emotional/ Psychological Security and Peace of Mind – guaranteed safety for instruments and supplies Comfort – atheistically pleasing and welcoming environment with ample common area for artist interaction Intellectual Exploration, Artistry, Creativity, Growth, Professional Affirmation, Mentorship, Inspiration through exposure to other ideas, and friendly competition generated by self- comparison Social Ability to interact with a peer group of similar interests creates a close nit community and a sense of belonging. Economic More Than Horses space will be less expensive than the rent of other currently available options. Added flexibility in choosing from multiple payment options Servicing Needs of Artists Perceived Performance of More Than Horses Focus on Styling, Safety/Security, and Dependability of access and use Styling: Input from members and recruited artists in the development of our interiors and facility layout. Create open space within a flexible use shell facility that can be re-designed with ease on a continual basis. Safety/Security: Member equipment, work, and supplies will be covered under More Than Horses insurance policies (further adding to economic benefit for members). Facilities will be humidity and temperature controlled to protect work. Controlled access through secured membership cards, check-in, and video surveillance. Dependability: 24 Hour access to work/rehearsal spaces, common areas, and truck/car loading dock. Guaranteed available space in “ready to work condition” through planned adequate excess capacity. Quality Of Community: Gained through purposeful recruitment of desired key artists in the Boulder community through membership grants: “taste makers.” Also, through fostering relationships with professional artists. Of Facilities: Modern equipment, availability of quality supplies, sound isolation, clean, well-lit studios appropriate for each discipline. Servicing Needs of Artists Membership Fee Structure of More Than Horses Different pricing structure for per-use, monthly, or annual membership $20 per use $50 per month $500 annually Classes and Teaching Room Rental Fees $5 per hour for members $20 per hour for non-members Employment Discount Minimum of 15 hours per week = complementary membership $10 per hour compensation These fees are comparable to and provide the same access as owning own studio. (Found to be $150-$500 per month – in Boulder) Servicing Needs of Artists Access to More Than Horses Will strive to ensure that space is available for any type of artist at any time. 24 hour member access – Individual key cards and front desk check-in Ample parking available: both for member use and visitors to the facility Loading dock for equipment transport and art installation Social Reputation of More Than Horses Membership adds to the artist‟s social status within the greater arts community when associated with our organization: “Street Cred”. This creates an image of legitimacy for aspiring and emerging artists. As a member of More Than Horsees artists will have access to more resources and more exposure to current trends within their own and other art movements. Range of Services Size, Décor and Layout Estimate a need of 12,000 square feet per 300 members Highest number of members at any given time using facilities would be ~20% Décor will be created by members through their projects and displays Open layout Common area/display area/performance area centrally located within the building Work space areas/teaching rooms/rehearsal rooms branch off of the common area Employee Qualifications No formal dress code No specific previous training Number of workers based upon number of members starting with 10 employees (2 per shift) Target Market – Consumer Market Focus is on Aspiring and Emerging Artists, with professional services and continued outreach to Established Artists Overview of Survey Results Demographic Information Even interest from males and females Between ages of 20-30 years Self-identified as aspiring or emerging artists (most likely are aspiring) Artistic Disciplines: Painting, Drawing, Sculpting, Instrumental Performance, & Dance Most interest shown in Sculpting, Painting, & Instrumental Performance Willingness to Pay 90% of respondents willing to pay $51-$75 per month for membership Remaining respondents willing to pay $101-$125 per month for membership Current Satisfaction Level All respondents are either dissatisfied or very dissatisfied with the current offering of artistic services available to them in Boulder (i.e. work/rehearsal space, performance space, display space, and their ability to collaborate with fellow artists) There is moderate satisfaction with the current offering of classes in the Boulder community All respondents expressed a strong interest in participating in More Than Horses Target Market Distribution Channels – Introduction of our Services and Establishing Image Word of Mouth Campaign Propagated through fellowship grants for key artists in the community (tastemakers) Goal: bringing in key members of the community that will attract others to use our facilities and services and add greatly to establishing our reputation Monthly Events (Parties) Goal: draw in younger aspiring and emerging artists (20-30 yrs) and build excitement about the mission Introduction to facilities and opportunity to meet and interact with prospective members (foundation for “community feel”), and try out available services at no cost Use Book of List, Publicist, Professional Channels Reaching out to Professional Artists Goal: establish relationships and build excitement about future involvement with More Than Horses. Ability to use artists names to further bolster our image and legitimacy Secure and schedule master classes in coordination with touring schedules Target Market - Business Market Forming Partner Organization Relationships: Creating mutually beneficial relationships that add to the visibility and play upon the strengths of each organization Target Organizations: Dance Companies w/ Performance Spaces Galleries w/ Display Spaces Musical Performance Venues Other Arts Organizations (The Dairy, Rembrandt Yard, Etc.) Who Makes the Decisions: Partnership decisions are made by one director in a small organization. Establishing access to decision makers is critical and decision can be made within a short period. Dance Companies/Galleries/Other Arts Org – Director is decision maker, accountable to organization members and/or board Musical Performance Venues – Booking manager is decision maker, only concern is ability to fill his space Risks: Budgets: All arts organizations are constrained by very tight budgets Response: Focus on ensuring initial joint projects are a success for partner organization Possibility of perceiving us as fundraising competition which can lead to them becoming territorial with their resources and facilities: An unwillingness to partner. Response: Focus on revenue and fundraising model that does not encroach on partner funding sources. Unique Benefits Feature Benefits Affordability Cost Saving: $50/mo vs. $200/mo studio rental Security of Facility Peace of Mind from having equipment and supplies in a secure and insured facility (indirect cost saving to the member) Community Inspiring social interaction that leads to a sense of greater creativity and exchange of ideas Master Classes Skill development through professional exposure and mentoring Accessibility Convenience and freedom to use facility on your time schedule; just as if you owned your own studio Work Environment Comfort and desire to be within the facility; inspiration (décor/styling) through surroundings Benchmarking The Dairy: More Than Horses: Targets professional and aspiring artists Target mostly aspiring and emerging artists Focus on providing performance space Focus on providing quality work/rehearsal Very high quality facilities space at an affordable price Rental rates: ~$700/week for Limited performance space theater/performance space Limited work/rehearsal space, only We wish to match or exceed The Dairy‟s level available to permanent residents (at of quality in terms of its reputation, décor, and capacity) security while additionally addressing the Established reputation and modern needs of aspiring and emerging artists such as industrial décor 24hr access, storage, work/rehearsal space, artist assistance, and affordability Sustainable Competitive Advantage (SCA) More Than Horses will seek out a Sustainable Competitive Advantage by locating its facilities in downtown Boulder and creating a reputation for bringing underrepresented and collaborative art to the public’s attention and appreciation. We will be known as the cornerstone of a tight-knit and desirable community among artists. How Will We Do This? Location: Possible location between St. Julian and former Republic of Boulder zoned by the city for “civic use” such as an Non/Low-Profit Arts Organization Limited amount of real estate available in downtown Boulder creates barrier to entry for another establishment seeking a similar location Location in downtown Boulder will create easy access for many artists along with credibility, reputation, and prestige associated with downtown location Community: Creation of a tight-knit artist community in which members feel proud to be a part Create the feeling of exclusivity through membership Underground reputation generated through write-up and placement of promotional materials in artists publications such as Ready-Made, Illiterate, Westword, etc. Currently, the artist community is fragmented by artistic discipline and small social circles. We wish to exploit the ability to unite these fragmented sub-sects into a larger group and translate this into a sustainable advantage by being the pioneers in this area; therefore generating a loyalty and “local lore” behind our organization. Resources to Create a SCA Financial Seeking Funding from Established Artists Established Artists will not usually endorse multiple organizations in a small area such as Boulder; therefore each artist we partner with will likely support More Than Horses exclusively Other Private Grants Local philanthropists: Boulder has large number of independently wealthy individuals leading to greater ease in seeking donations for the given population • Risk: Run into the possibility of encroaching upon funders of other arts organization in the Boulder area Federal, State, and Local Government Grants Greatest possibility of grants coming from Federal and Local Government (Land Grant from City of Boulder – possibility of downtown location previously described) Member Fees – Once operational, projected to offset 60% of organizational costs Possibility of Debt Financing – Using high value of building and land value as collateral for bank loans Board of Directors – Financial obligation to donate/support the organization and to use their personal network to aid in the fundraising process Resources to Create a SCA Physical Assets Own our facility through early donations, start-up grants and debt Location Purchase second hand equipment Many for-profit facilities replace equipment before the end of the equipment‟s useful life. This equipment can easily be purchased at a highly discounted rate. (ex. Fox Theater upgrades sound system every year regardless of condition of current system) Possibility of absorbing Fire Station #2 Pottery club: acquiring their equipment for free Human Member Use as labor for construction, design, and staffing of facility Bring knowledge of how to build spaces (ex. dance space design, bricking kilns, sound isolation) Social networking and member involvement from the early onset of the organization will foster the collaborative environment we wish to establish Prominent Board Members Established Artists on board that can attract attention and bring credibility to organization High visibility community members that can use network to help the organization Both are possible angel investors Intangibles Marshall and Lydia‟s experience in both non and for profit arts business spanning multiple artistic disciplines Established contacts and position with our target market of emerging and aspiring artists in the community Capabilities Key Strengths: First hand industry knowledge and experience in multiple arts disciplines – in particular dance, music and visual Access to and knowledge of navigating proper channels to contact professional artists (ex. agent listings) Ease of relating and identifying with the need of our members Service Design: our main service will be to meet the needs of our members As long as members are willing to pay a fee capable of sustaining our facilities, our services can be modified to the changing demands and preferences of members Facility design will aid in the flexibility of capabilities (ex. Common rooms can be converted to performance/gallery space) Word of Mouth Advertising Small active arts community in which we are already engaged will aid in member recruitment Transient nature of community will disseminate our reputation to locations across the country and facilitate expansion when appropriate Our Barriers to Entry Real Estate in Boulder and High Initial Investment: Price of real estate in Boulder is high and climbing (ex. $561/sq. ft. for downtown Boulder space) Importance of location for convenience and image leads to need to place facility near center of Boulder Real estate and build out cost lead to possible difficulty in maintaining an affordable membership fee structure and as such we may not be able attract our target market Limited space to build in downtown Boulder Customization of facility would be very expensive Build out costs for sound proofing, kilns, potter wheels, art material disposal, and other environmental issues Competition for Fundraising Dollars: Saturation of non-profits in Boulder area Arts funding is historically extremely volatile and funding often directly competes against current “giving trends” (ex. Environment, Natural Disaster, and Medical Research) Government Regulation: Difficulty in gaining designation and maintaining compliance as a 501c3 non-profit organization Trend in reduction of government arts funding (ex. NEA budget cuts) Leads to higher competition for already difficult to attain arts grants Cost of Membership and Ability to Pay: Target market does not usually have disposable or reliable income Expecting emerging artists to make a monthly payment might be a reach Members can be expected to be loyal to our idea and vision, but that may not necessarily translate to payment Barriers to Entry – We can Establish First to Establish Cohesive Community and Reputation : Offer fellowships to key artists in community in an effort to bring them and their peer group into our organization Limited number of Boulder artists from which a future competitor could draw from (i.e. Population of Boulder may barely be large enough to support More Than Horses, and less likely to support additional organizations of a similar nature) Establish unique artist endorsements Professional artists usually only lend their name to a limited number of organizations In a community as small as Boulder, highly unlikely one artists would support multiple organizations Location If we can secure downtown location (lot between St. Julian and the former Boulder Republic) we will inhabit one of the last undeveloped downtown Boulder locations. Currently the only open location zoned for “civic use”. Key Risks Funding – Insufficient start-up funding 24 months from land acquisition to building occupation: start-up funding must carry organization through this phase Number of Members Large number of members may be required to fund ongoing operations and achieve break - even Velocity of Membership If we do not attract enough members in a timely manner More Than Horses could easily be overcome by its start-up financial burden Donations will be harder to attract with a low capacity slow or non-growing membership Swing in Economy Will not affect member base much, but will have a dramatic effect on the availability of grants and donations Poor Location of Facility Direct effect on our ability to establish our desired reputation and attract our targeted members Tax Law Changes Effect our status as a non/for-profit business Additional swings in cost of compliance with tax code Financial Projection Assumptions: 250 members in Year 1 paying an average of $50/mo fees based on customer survey 20% growth for Year 2, 30% for Year 3 Minimal marketing cost, mostly comprised of fellowship grants used to attract new artists Operating loss must be made up through grants and donations Labor and Utilities based on 10 employees at $10/hr, 20 days a month and operating a 24 hour facility No variable cost, break even is the number of members required to fully fund More Than Horses through membership revenue Start-up cost based on locating 12,000 sq. ft. facility in lot between St. Julian and Boulder Republic More Detail in Appendix Conclusion There is a compelling need for affordable space in the Boulder emerging and aspiring arts community. Our survey results show universal dissatisfaction with the current availability and associated price with work/rehearsal space in Boulder and a genuine interest in the other services More Than Horses wishes to provide. Further, no current Boulder art organizations seek to provide the range of services to a multidisciplinary population of artists. We believe we can create a sustainable competitive advantage by being the first to establish a recognizable, cohesive, and tight-knit young artistic community in Boulder. We further wish to create a sustainable advantage by locating ourselves in vacant lot between St. Julian and the former Boulder Republic. Upon review of the financials we show a need for 800+ members to break-even in Year 1, and 1500+ members by Year 3 paying an average of $50/mo. If we increase membership fees to $75/mo (a number not supported by our customer survey) we would require 550+ members to break even in Year 1 (increasing members thereafter). With an assumed capacity of 300 members using a 12,000 sq. ft facility it is impossible to fully fund More Than Horses solely on membership revenue. This fact will require More Than Horses to raise money through donations and grants in order to cover its operational losses. This fundraising would be in addition to the $6.44 million required to start-up the facility in the downtown location. Additionally, the artistic population of Boulder is highly unlikely to support a member base of more than 400 individuals for an organization similar to More Than Horses, Based on the above we believe More Than Horses, as currently conceived, is financially infeasible. Recommendations Possibilities for Feasibility: Land grant from City of Boulder to reduce start-up costs Large angel investments from professional artists “winning the lottery” Given the amount of money necessary to break even, we consider the possibility of raising enough donations/grants/investments to be very slim Location change to more affordable real estate This will negatively affect our ability to attract members and image creation Investigate large arts cities (Chicago, New York, San Francisco, Minneapolis, Austin, Portland) Cheaper real estate in blighted areas (popular with our target market) Larger population of artists from which to draw membership Greater visibility through exposure to larger population
"Than Horses - Deming Startup"