Business Planning for New Stations

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Business Planning for New Stations

• Dennis Hamilton and Evran Kavlak
• April 1, 2009
• NFCB Conference Portland, OR

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About PRC

• PRCs mission secure and expand public radio in
  communities nationwide. Projects completed
  already have secured public radio programming for
  nearly 33M people.
• Goal Create greater program choices for in-depth
  information, unbiased news, diverse music, and
  cultural programming.
• Nonprofit organization supported by grants from
  Ford Foundation, Surdna Foundation, and others.
• Leading advisor in planning, securing and
  financing new public radio channels.
• www.publicradiocapital.org

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• PRC provides
• Business modeling and planning
• Station assessments
• Station appraisals
• Brokerage representation
• Acquisition services
• Financial advisory services

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Business Plans 101

• What are business models/plans? Why bother?
• Who should be involved? Whens the best time to
  do it?
• Where do you start?
• How do you complete it?
• How do you evaluate it?
• What else is needed besides the business model?
• How should it be presented?
• Where is the beef? Aka Lines of Revenue

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What are business models and business plans?

• Financial and communication tool
• Structure for deciding how the station will be
  operated.
• Road map to tell others how you expect to get
  there and what you expect the results to be.
• Benchmark to monitor performance.
• Flexible tool that allows you to factor in actual
  results and forecast future results.
• Clarify objectives first, then develop busienss
  models to achieve those objectives (modify as
  needed)

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Why bother?

• Realistically assess financial viability of
  various options.
• Identify resources needed to succeed.
• Identify time needed to get there.
• Allows the organization to look out into the
  future and plan changes.

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Who should be involved?

• Key players for your new station possibly
  partners too
• People are more likely to support an initiative
  when they are involved from the beginning.
• Build a sense of ownership and vested interest in
  your success.

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When is a good time to create a business model?

• When you get your construction permit!
• As part of regular strategic planning
• When you have not achieved a prior year budget
  evaluate changes needed to improve performance.
• When you want to do anything big, complex, or
  long range.

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Where do you start? Start with what you know
or is readily available.

• Talk to other stations who have undertaken
  similar projects to learn from their experience
• Did they get the results they expected in the
  time period they expected?
• Were there items they didnt take into account
  that they wish they would have?
• Identify benchmarks (expected operating costs,
  reasonable income expectations)

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Figure out what you dont know.

• List elements you want to model
• Estimate numbers of listeners, members and
  underwriters.
• Number of staff required.
• Program acquisition costs
• Capital expenditures for new signal, equipment,
  etc
• Financing costs
• Others? Document assumptions!

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How do you complete the business model?
Quantify the Benefits (short-run)
Listeners

• Benefits
• Membership
• Major gifts
• Underwriters
• Other

• Listener Sensitive Income
• membership as of listeners x average s
• underwriting spots x rate
• major donors x average gift

• Other Income
• CPB Grants
• Other revenue sources

Benchmark Analysis
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How do you complete the business model?
Quantify the Costs (short-run)

• Costs
• Personnel
• Programming costs
• Administrative
• Development
• Investment in Capital Assets
• External Financing
• Engineer/legal/utilities

Benchmark Analysis
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How do you complete the business model?
Modeling (long-run)

• Growth
• Assumptions
• growth
• listeners and members
• Expenses
• etc.

• Other Factors
• Competition
• Government Support
• Institutional Support
• Inflation

Benchmark Analysis
Assessment of Existing Station
Cost Benefits of the Strategic Decision
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• How do you evaluate the business model?
• Assess financial outcomes
• Feasibility
• Timing
• Public Service potential
• Compliance with the mission statement
• Organizational readiness
• (Is the organization ready for this?)
• Sensitivity analysis

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• What else is needed besides the business model?
• A narrative including an executive summary
• Implementation Plan that outlines the necessary
  steps to achieve the goals in the plan
• By department
• Measurable goals (eg by July 200X we will
  attract X from local donors)
• Timing
• Once implemented, progress must be carefully
  monitored and adjustments made in the model/plan
  for actual results.

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How should the business plan be presented?

• Audience can be Management, Stakeholders, The
  Board, Banks or other lenders (foundations).
• Summarize the initiative, business justification,
  expected results (good or bad), time to
  implement, and social and financial impact.
• Discuss the sensitivity of the analysis, the
  imperatives, the back-up plan.
• Utilize graphics to quickly illustrate the
  expected outcomes.

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Wheres the beef? Aka Lines of Revenue

• Grants
• Listener Support
• Underwriting
• Major Gifts
• CPB

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Keys to Success

• Listeners! Lots of them!
• Listener loyalty
• Compelling Appeal
• Proof that people are listening!
• A compelling case

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Grants

• Research
• What does the foundation fund?
• Do they have any radio giving history?
• What is their history of giving?
• More research
• Giving history?
• Whos the contact?
• Whats their grant timetable?

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Grants

• Case development
• Grant officer interview
• Develop a relationship
• One, two, three, go!
• Then wait and wait and wait!
• Follow-up, reporting, next phase

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Listener Support

• Audience! And more audience!
• Compelling case!
• Relationship/community building
• Development Exchange, Inc.
• http//www.deiworksite.org/
• Theres an art to it. Dont waste time trying to
  invent it.
• Software

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Underwriting

• Audience, lots of audience!
• Proof that they are listening, when and for how
  long.
• Sales kit
• Availability placement
• Rules!
• Software

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Major Gifts

• All about the relationship
• Cultivation and care and feeding
• Long term project, long term return
• Dont be afraid to ask, but dont ask too soon
• Be confident, passionate, and able to demonstrate
  long term viability

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Corporation for Public Broadcasting

• http//www.cpb.org/stations/