263 - The Ups and Downs of Growing a Profitable Business with David Schwartz, Founder of Orion Entertainment

On today's episode of the podcast David Schwartz, Owner of Orion Entertainment, about his profit and loss for 2022 and how his business and finances have evolved since he started DJing professionally at 18. 

David is located in the Seattle, Washington area and has been a DJ since he was 18. While he started DJing at frat parties, he always DJ-ed and looked for opportunities on campus and for gigs with a private events focus. After graduation from the University of Washington, David found himself applying for jobs because it felt like the thing he was supposed to do. After receiving a few nos and looking at the money he'd be making and the time he'd be spending focused on the job, he decided to go full time into DJing since he had started building a client database and infrastructure for the business during college. 

While focusing on Orion Entertainment full time, David was always working other jobs to supplement his income until the business supported him fully beginning in 2018 when he did $132,966 in revenue. He had support from a few people working with him in pseudo partner-type capacities where David would book multiple gigs for other DJs in addition to himself, all under the Orion umbrella. David now works with his fiancé as the primary person in his company but is still a multi-op DJ where he has multiple DJs working with him. 

This year was the first year Orion moved everyone from contractors to employees. Right now, the company has six headlining DJs and can book up to four to five in a day during busy season. 

Looking at David's 2022 numbers (January through early December):

Revenue: $459,000

Total profit: $112,000 (after salary)

 

When it comes to hiring, it's important that you are hiring people appropriately. Too often people are hiring contractors when they legally should be employees. For example, in a lot of states if you're a photographer or a DJ you can't hire a photographer or a DJ as a contractor in your business for work on an ongoing basis, they'd need to be employees. 

David began hiring, he shares that it's a lot of upfront work including new systems and payment softwares i.e. moving from Venmo to an official payroll system. David's small business HR consultant pointed out that the people working with him were not contractors because they were using his equipment and driving his car. 

With DJs, there can be two trains of thought - you hire someone that is trained and provides all their own equipment, deal with their own clients and all you provide is the connection to the client. That is how Orion Entertainment used to do it when it worked for the time and helped the business learn how to run multiple events simultaneously but it became difficult to create a uniform brand and loyalty to that brand and now they train the DJs from brand new all the way up to a DJ/Master of Ceremonies so they are molded into an on-brand Orion DJ. DJs are provided cars to travel to their gigs because the business now has three business vehicles filled with the equipment they need. Moving from contractor to employee also required changing pay systems from percentage to hourly. 

A common objection to hiring that many wedding professionals share is that when you start your company you are the face of the business and as it grows, people want to work only with you and not the people you've hired. One thing Orion Entertainment did to help with this so that everyone was not solely requesting DJ Orion was you can either book the Essential Package which comes with headliner assignment. You give us all your music requests and we give you the DJ who is the best fit for you and your event. 

Salary: $106,000 

David pays himself $2,000 every two weeks to cover his expenses. 

Product sales: $16,500 (96% of Orion Entertainment's income is from DJ services but David estimates this 3.5% is from photo booth sales but that it needs to be double checked with his accountant because it does not feel correct). 

Marketing: $12,000 About 2.5% of revenue. David says this seems low because he spends $1,000/month on SEO services in addition to the $500 - $600/month for The Knot/Wedding Wire listing and sponsorship for events like NACE. 

Auto Expenses: $19,000 (Two of the company cars are owned by the company and one is owned by David himself). One is a branded vehicle that was paid for end of 2020. 

Bank fees: $2,300 Standard expenses

Clothing: $2,000 What DJs wear to gigs

Continuing Education: $2,000

Contractors: $4,000 David believes the discrepancy between this and sub contractors is that one covers the company's contractors that DJ and one is paying contractors who do services for the business and this year was when they moved contractors to employees so that expense does not exist for the whole year. 

Subcontractors: $19,000

Expensed asset: Anything that's considered inventory like cables, speakers, microphones, DJ controllers etc. 

Insurance: $7,000 Liability, worker's comp, etc.

Internet: $1,500

Job supplies: $19,000 Includes duct tape, batteries, dollies, anything needed for the execution of the events not directly related to DJing

Professional services: $9,000 Includes HR person, business operating services

Meals: $14,000 Includes employee meals and working meals. This was 3% of revenue which is a little high but not astronomical

Music expense: $8,500 Streaming services typically fall under the music research instead of music acquisition which is the cost of paying for specific songs that the couple requests and can be up to $50 - $100 per event. Downloading unlimited songs from record pools is about $20 - $50/month and are edited for DJs to mix more easily. David builds music costs into the expense because it's so rare that the music costs really hurts the overall income from the gig but David does reimburse his DJs if they need to buy music for an event. 

Networking: $3,000

Office furniture:  $1,000

Office supplies: $16,000

Payroll fees: $7,000

Payroll wages: $40,814

Photobooth software: $1,300

Printing: $1,800

Reimbursable Expenses: $1,400

Taxes and licenses: $24,000 Orion Entertainment is an LLC-S, an LLC taxed as an S Corp. 

Phone: $2,800 This covers David and his fiance's phones and iPad data plans 

Travel: $11,000 Any gig over two hours away requires two nights of hotel. Travel for gigs in the San Juan islands are built into the package. 

Uncategorized: $4,000

Utilities: $3,500

Website: $12,000 (upon further review it's estimated this may include the SEO person and that they are not included in marketing costs)

Other: $2,000

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In total:

Revenue: ~$460,000

Expenses: ~$300,000

Owner profit: $157,000 

Salary: $45,000 In an S corp, the lower your salary the more you save in taxes. 

Business Profit: $112,000

Profit is more than just money, it's also about work-life balance and can't be accounted for in a spreadsheet. You also want to take a look at quality of life business expenses that are things you'd pay for regardless of your business but are deductible because of your business such as certain meals or travel. 

 

Get in Touch with Our Guest

David Schwartz, Owner of Orion Entertainment

Follow Orion Entertainment on Instagram

Book Orion Entertainment on their website.

 

Shop the Orion Entertainment Apparel Store.

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