The following was written by a group of developers in the city of Monroe.
“A jazz music club in Monroe would be a tremendously profitable enterprise. At present, the nearest jazz club is over 60 miles away from Monroe; thus, our proposed club, the C Note, would have the local market all to itself. In addition, there is ample evidence of the popularity of jazz in Monroe: over 100,000 people attended Monroe’s jazz festival last summer, several well-known jazz musicians live in Monroe, and the highest-rated radio program in Monroe is ‘Jazz Nightly.’ Finally, a nationwide study indicates that the typical jazz fan spends close to $1,000 per year on jazz entertainment. We therefore predict that the C Note cannot help but make money.”
Write a response in which you discuss what questions would need to be answered in order to decide whether the prediction and the argument on which it is based are reasonable. Be sure to explain how the answers to these questions would help to evaluate the prediction.
Jazz clubs are entertainment venues, and success depends on many factors. A profitable club must have a combination of elements that suit the local audience. The writers state that over 100,000 people attended Monroe’s jazz festival last summer. Jazz festivals are an important event in the life of a city, and their success can be measured by attendance. At the height of the festival’s popularity, the number of attendees should be high. If the number of attendees drops during the festival, the promoters should take steps to give the festival better attendance, such as increasing the ticket price. If the attendance remains high, the promoters should continue to expand the festival. Another measure of success is the amount of money a jazz club brings in. If the club is successful, the promoters should consider expanding the club, adding more seating, hiring more entertainers, and increasing the size of the staff. If the jazz club is not profitable, the promoters should consider closing the club and opening another venue in a different part of town.
The writers also suggest that Monroe is geographically isolated and would not benefit from a jazz club that is located over 60 miles away. In fact, the proximity of such a club would only be advantageous to Monroe if the club offered transportation for its patrons. If the customer base is limited to residents of Monroe, the promoters will have difficulty attracting out-of-town patrons, and the club will have trouble staying profitable.
Monroe has a high concentration of jazz musicians. If the local jazz club wants to draw these musicians to play at the club, the club must have the best sound system and the best band in the area. If the musicians live too far away to make the trip, the club will lose those musicians. A club that fails to attract and retain the musicians who live there will never succeed.
The writers believe that a jazz club in Monroe would draw jazz fans from across the country. However, a club that attempts to be a nationwide attraction has to find national advertisers and sponsors. If the club does not attract enough patrons from the Monroe area, the club will be unprofitable and will close its doors. Because the franchised clubs are located all over the country, it is unlikely that they would support a club that opened locally in Monroe. The franchised clubs may agree to sponsor the local club, but that will only happen if the local club is profitable.
The writers have predicted that the club will not lose money, and that the club will be profitable. However, they have not explained how the club will be profitable. For example, have they calculated how much it will cost to purchase or lease the facilities? How much will it cost to purchase or rent the instruments and other equipment? How much will it cost to provide food and drink for patrons? The answers to these questions will help the promoters to assess the feasibility of the venture. They will also help them to estimate the income (in dollars and cents) that the club will generate. If the promoters determine that the club will not be profitable, they can close the club or they can consider another business that will generate sufficient revenue.
The writers have answered many of the questions that a would-be investor or entrepreneur should consider when evaluating the viability of a business venture. If the promoters determine that a jazz club in Monroe is feasible, they will need to consider other questions such as whether the club will make a profit and whether the promoters have the financial resources to support the club until it becomes profitable.