Posted by nana saina Posted on 10:59 PM
I was quite amazed when browsing the web the other day to find someone advertising an entertainment agency for sale and asking for bids on it, curious I decided to take a closer look. I also found some sites also selling entertainment agencies, this time with asking prices, and what the supposed turnover for those companies was.
I have been in the entertainment industry for over 31 years, and acting as CEO of an entertainment agency since the year 2000, and what I read astonished even myself. My aim in this article to deal primarily with the first site I mentioned although I will not reveal its name.
The person advertising the site made it appear that anyone can run a successful agency, and that you really don't need any skill, and that you can use it to make lots of money. These are the main points of the sales pitch that I wish to comment on.
Firstly not everyone can run a successful entertainment agency, it is more than just finding a few acts to add to your books and then selling their services. To be successful requires building relationships with acts, clients and venues; it requires building trust and that can only happen with time. A successful agency needs a good variety of acts to offer, as each clients needs are different, and each event is bespoke, no two are the same. Experience is the key; knowledge of the industry a must, being able to offer advice that is competent to clients and acts is paramount. You cannot sell something about which you have little or no knowledge.
A good entertainment agent is a skilled individual, the same as an electrician or builder. The main skill is how to tell a good act or service from a bad one, how to get them to want you to represent them. An agent also needs to understand the best way to market a particular act, what events they are suitable for, which clients would be interested in them, you don't try and market a rock band to the cabaret club on a cruise ship full of pensioners and you wouldn't suggest a blue comedian to supply family entertainment at a holiday centre. Agents have to be skilled in separating the wheat from the chaff, they have to be good at promotion, and they have to be sales people. Trust me it is harder to sell a service than it is a product.
The third point was that it is easy money, which is a big no. Most people looking for entertainment will try many sources and often more than one agent, so you are competing with others in the industry, others with experience. Lets say that in a week a new agency gets 25 enquiries, which is an over estimate, but makes the figures easier (I am allowing an approximate 10% conversion rate from enquiry to sale). Perhaps 3 of those enquiries translate into bookings at lets say £200 per act per booking that makes a total of £600 the acts will earn, that is not the agencies money the agencies money comes via commission. Now lets say the agency charges a commission of the average 15% that equals a commission made of £90.00. Now subtract from that overheads, telephone, postage, printing, software, advertising and also time spent working on winning those 3 out of 25 enquiries, also take into account the cost spent on the enquiries that did not convert, you will probably find that after everything those 3 acts have made you a total of £50.00 after expenses. Now comes the next bit of bad news, you cannot claim any commission until after the act has done the job and been paid by the client, if one of those bookings is 6 months away then you have to wait. There is also the matter of taxation and in the UK national insurance contributions, which takes a little more from the profits.
An agent also needs to know the law in the country in which they operate, and to comply with it. But that could make god knows how many more articles in it's own right. The other thing to bear in mind if you operate in the UK is that it is illegal to charge an act a fee for registering with you, I cannot comment on if this is the case in other countries.
To clarify what I have written, entertainment agencies are not a get rich quick scheme, the good ones are managed and run by dedicated individuals who put in long hours, people who have worked hard within the industry to build themselves up to where they are now, it did not happen overnight. There is no such thing as easy money we all work for what we get nothing comes for free. It is drive and determination and a unique skill set that separates the top agencies from the rest and to get the quality acts on your books means knowing your industry.