Ollie Tanner has achieved what many people aspire to: he runs his own successful business and spends his time doing something he is passionate about. Ollie’s business is ‘The Alternative Drum School’ located in the small town of Cricklade in Wiltshire. He operates the business as a sole trader and is also the only person who works in the business.
After college, Ollie joined Tesco’s management programme where he stayed for 7 years. Whilst the job provided him with a decent income and gave him the opportunity to save money, he felt it was not something that he could do for the rest of his life. It was when he was at a concert by the band ‘The Prodigy’ that he had an epiphany: he wanted to spend his life making a living out of drumming. The next day he resigned from Tesco and started the process of setting up the drum school.
During his time at Tesco he had been given shares in the company which he cashed in to raise the finance needed to create his own drum studio. One of the first decisions he needed to make was where to locate the business. He settled on Cricklade for a number of reasons: firstly it was where he lived, it was also easy to access from a number of other towns therefore increasing his potential market and, finally, it was a relatively wealthy area where people have enough disposable income to afford drum lessons. Having his own studio located on Cricklade’s High Street differentiated his business from other drum teachers who typically deliver lessons in their own houses or garages. The studio, which is sound-proofed and fully-equipped, is an amazing, professional looking space which students find very motivating.
Whilst it was an exciting new opportunity, starting the business was also a huge risk as Ollie had spent all his own savings and, with no other source of income, he now had to rely on getting enough customers to pay his bills. There are many risks involved in setting up a business and these are often due to the impact of external factors which are outside the control of the entrepreneur. One example which affected the drum school was that after spending the funds to set up the studio, Ollie discovered that he needed special permission from the council. Inspectors from the council tested the sound proofing of the building as it was a residential area and if they had found problems, they could have forced him to shut the business down meaning the loss of the £20 000 he had invested. He also faces competition and not just from other drum teachers; drumming is a hobby which his students choose to spend their free time doing, therefore, he is in competition with other possible hobbies such as football clubs, ice skating, etc. A rise in popularity of any of these activities has the potential to draw customers away from his business.
The Alternative Drum School has proved to be a huge success; the business has been running for 10 years and is now fully booked, with Ollie doing between 85 and 100 lessons per week and earning an income of £60 000 pa. The growth of his business has been achieved through very cost-effective forms of promotion, the most effective of which he believes is word-of-mouth i.e. students (and their parents) who have enjoyed their lessons telling other potential customers. This word-of-mouth has also included endorsements from well-known musicians such The Baby Shambles. Other forms of promotion have included writing a lesson column in a local magazine and performing free demonstrations at the yearly Cricklade Festival.
Ollie views the Alternative Drum School as a lifestyle business which provides him with the opportunity to earn a good income doing something he is passionate about; however, he is not interested in growth and expanding by setting up a chain of drum schools. Doing this would involve having to hire staff and past experience has taught him that it is very difficult to hire people who are as passionate about the business as he is. Instead, he expands through improving his equipment so as to be able to provide a better service and keep up-to-date; for example, many of his students are into Hip Hop so he has invested into computer technology to allow students to produce the music they love.
Although Ollie loves the life of being an entrepreneur, he acknowledges that there are drawbacks such as the fact that the business is all-consuming and it is difficult to achieve a work/life balance because you never switch off: Ollie currently works 60 hours a week, which is far longer than most people work in a salaried job. There is also a large amount of pressure as you are dependent on the profits of the business which are not reliable in the same way as a regular salary. However, he feels that the benefits outweigh the disadvantages and says that the satisfaction of working for yourself is the biggest benefit. The fact that he says that he loves what he is doing and on a Monday morning looks forward to the week ahead might make many people with a regular 9 -5 job feel quite jealous.
1. Discuss the external factors which could affect the success of The Alternative Drum School.
2. Assess Ollie’s approach to promoting The Alternative Drum School.
3. Assess the barriers to entrepreneurship which might prevent other people starting up a business in the way Ollie has?
4. Assess the importance of location to the success of The Alternative Drum School.
5. To what extent is being a sole trader the most suitable legal structure for Ollie to use for his business?
1. Explain the characteristics of a sole trader business.
2. Explain two characteristics which are important for an entrepreneur such as Ollie to have in order to be successful.
3. Analyse the benefit to The Alternative Drum School of carrying out the promotional activities mentioned in the case study.
4. To what extent was putting his drum school on the High Street the most suitable location for his business?
5. Discuss the factors which might affect the success of Ollie’s business in the future.
Peter Imeson is Head of Business and Economics at Farmor’s School in Fairford.