Detailed analysis of various business sectors in Uganda

And now you too want to become a DJ?

Outide Looking In
D E Wasake [With Guest writer- May 2012]

About my guest writer:

DJ BK is one of 94.8 X FM's DJs. He DJs every weekday evening from 7pm-8pm on "The Sweet 16" mix where every night is a party. He is also one of the founding DJs of the House of DJs. You can find out more about them at: http://www.houseofdjs.co.ug/ or contact him at: thedjbk@gmail.com

About me:
 

For over 8 years I have worked with several clients in Uganda, The Bahamas and the United Kingdom in providing audit, tax, accounting and advisory services. My sector experience with clients in various sectors including entertainment enables me have good understanding of this sector. To see the full depth of my experience, Please see my profile

Article summary

Assuming you do not mind staying up late till 5.00 am and dealing with clients who shout "Gwe D.J Oli Musilu!" the estimated profitability from this sector is Shs. 6.5m per year. The initial investment is about Shs. 24m and so it takes you about 4 years to get your capital back (return on Investment).

Our "advanced thinking" tips for you to succeed in this sector include ensuring you establish a niche for yourself to separate yourself from every "Tom, Dick and Mukasa", hence making it a profession where there is opportunity for you to have significant one off functions (concerts, PA) to hopefully enable you recoup your investment faster.

A few years ago in 2002, my mother threw me into the deep end of this business. She bought DJ equipment and said there boys "go play music". I had to replace my knowledge of Kirk Franklin and Fred Hammond with Snoop Doggy Dogg, Evanescence and Ziggy Dee. She was no DJ herself and so of course didn't buy us the full set of equipment and so learning the hard way; "gwe DJ oli musilu! osobola otya oku playinga "Eggali Ekozzeko?" I set out my simple observations.

First the CONS OF COURSE

1. The sector is over saturated.

Every tom, dick and Sebanenya who thinks playing music in the night is the most sure way of getting laid wants to become a DJ… and yet they forget every mother's advice to their well brought up daughter; "Stay away from DJs!" But that's not the point. Every person I know has at least 3 DJs in their phone book(that's an exaggeration). Every mall in kampala has a DJ(that's another exaggeration) and CD burning place in the corner, yes right under the steps where you have to bend your head to speak to the owner(knowing Luganda is key here). To succeed in this sector, you must develop yourself a niche. One of the persons I know who first started working with me in my mum's company now focusses only on corporate functions. He is doing pretty well, he dropped out of his Architecture degree to pursue this. He has no regrets I believe.

2. Your family/personal life will suffer

The life of a DJ or of an owner is not necessarily a glorifying one as often you will be required to provide the entertainment into the wee hours of the morning and in many cases rural areas(I once played music in a banana plantation) and the more inebriated your patrons become, the longer they expect you to play music. A DJ is usually the first to arrive and the last to leave and as such if you are say a typical family person and are to play at a typical function which say starts at 7pm, you will be required to arrive at least 3 hours before(technical glitches can take impossibly long to fix) and you will have to leave when the last guest cannot stand up.

3. Start up capital and equipment

In order to differentiate yourself from the every Tom, Dick and Mukasa, you will need to invest in top of the range equipment. There is no compromise here as you have not incurred the wrath of a client who paid you only to give them a Microphone that cannot go beyond 100 yards and is critical at that Kwanjula. I therefore summarise the costs here of decent brands taken primarily from this site; The total cost is about Shs. 24m. and comprises of the following

  • CD player(CDJ 900): Shs 8m,
  • Mixer(behringer): 850k.
  • Flight case(road ready): 729k.
  • Amplifier (QSC): 1.7m.
  • Crossover (DBX): 810k.
  • Speakers-tops (4 pairs, Mackie): 4.4m.
  • Speakers-Bass bins(wharfdale titan): 3.6m.
  • Speaker stands(2 pairs): 490k.
  • Microphone (pair of shure wireless): 1.6m.
  • Computer system: 1.1m and cables: 450k.

These costs do not of course include the cost of the music which will be a continous expense but of course depending on your ethics will range from buying original CDS or legal downloads to bootlegs and a youtube converter programme.

I have also excluded the cost of transport as you will usually need a van or pick up. It is perhaps more cost efficient to however hire unless the vehicle is used for alternative uses during the week as most DJ gigs are over a weekend.

4. Seasonality/Long period for return on capital

As the typical DJ gig is going to be on weekends, it is subject to the seasonality factor i.e business is not daily or regular and so unless you are very successful or have a residency(ie are playing at a venue on a fixed basis) you will need to have many gigs to recover your investment (of Shs 24m) as in 3 above. Assuming a client pays you 350k per function and you have a function every 2 weeks i.e twice a month, and costs of say 150k (transport, DJ fees and generator hire), you will retain about 200k per function which works out at 400k a month and therefore an annual profit of Shs 4,800,000 per year. You will at this rate get a return on your capital in 60 months, which is about 5 years. This period can however reduce with alternative uses during the week say PA hire.

Assuming PA hire once a month at Shs 200,000 per hire and attendant costs per hire of say 60,000 (transport and DJ), the profit per function would be Shs 140,000 which works out at a profit of 1,680,000 per year.

The combined profit from the two will reduce your return on capital period to 4 years.

5. You must know your music. Alot of it.

Music is such a private passion that unless you are a mind reader it is difficult to sometimes know what people want. A successful DJ is one who can "read the crowd" and this is a combination of knowing what type of crowd you have, knowing the popular hits and also the classics and of course a mix of luck and genius. Fail at this and you have failed at the fundamentals (in addition to the 4 above). In knowing your music it goes without saying that you must know how to use your equipment well. Nothing annoys clients more than a DJ who can't mix!

6. Skills are not transferrable

How do you replace a good DJ? or replicate his skill when say you consider expansion of the business? Apprenticeship can partially solve this problem though.

AND NOW THE PROS

1. Entertainment is big business with no saturation limit

Music is a passion and as a good DJ you can command fees way in excess of the market rate. So know your music/niche and you will have the crowd eating out of your hands. Tied to this, whilst the "market" is saturated in reality there is no limit to how many DJs there can be as for almost every aspect of Ugandan life music is central.

2. Alternative uses

Good quality equipment serves as a Public Address(PA) System and with loads of seminars and conferences and the like there is a good opportunity to make money say during the week without the stress of having to play music. This should reduce the "seasonality issue" mentioned amongst the cons.

3. Cash business

This is a business which primarily deals in cash. Payment for services is often in advance and in form of cash and as such debts are generally avoided.

My guest writer weighs in

Great article. I have been DJing in Uganda for just over 2 years(May 2012) but professionally for 5. I agree with you on the need to come into the market with a niche. What do you want people to know you as? What are you famous for? What is it that makes people like you as a DJ?

Many times in Uganda we find people who believe that just because they have a large music database, and virtual DJ or PCDJ[software] on their laptop or Desktop PC, they are instantly a DJ hence our saturated industry. However, I would like to define saturated.There is a saturation of individuals with sound equipment. There is a saturation of individuals who can play music. What is not saturated is an industry of PROFESSIONALS. In Uganda you can get someone to hire for as little as Shs. 100,000 to play music at your function or as high at Shs.1.5million to entertain you. Please note this is only in DJ fees. No equipment included.

Professionals are able to recoup an investment of "24million" in a year, even less and turn that over into a 40 million plus investment. Reason being they dont just play music; they know what to do with their equipment, constantly make contacts and strategically pick jobs.
To anyone getting into the business[investor] ; If your DJ doesn't have a business mind for it, or isnt a professional. YOU WILL LOSE YOUR MONEY. Having an accolade of awards, or being known among the masses says you are popular, but does not say you have the mind to sustain and or grow a business. Charlie Lubega started from mobile disco….to the empire that is now Ange Noir…

Other DJs from his time (who shall not be named) are either retired and doing nothing, or still in the same spot….
If you are getting into this business, do your research first, know what the gaps are, see where you can come in and do better, see what to avoid, see what to take advantage of, partner with the right people to make things work. You can begin with NOTHING….just a name, outsource and build a strong brand, slowly buy equipment, and expand….or take the bigger risk, invest, and continue to grow.

SUMMARISING AND THE FINAL WORD

First the numbers On the basis of my analysis:

  • Capital investment(A): Shs 24,000,000
  • Revenue per year (Including PA hire): 10,800,000
  • Profit per year (excluding all expenses) (B) is Shs 6,480,000
  • Return on capital(years to get capital back or A/B) is 4 years
Now the basics you must get right before investing.
  • Top of the range equipment
  • A great DJ who knows his niche
  • Marketing to the right people in the various companies and hotels and venue locations.
FINAL WORD, YES OR NO?

There is an enormous market out there and the DJ who can establish a niche coupled with some good marketing so as to stand out from all the "noise" will do well and they can quickly re- coup their expenses, my guest writer infact believes that the Professional who has a business mind will be able to recoup their investment in one year!

It is however critical to invest in good equipment being played by a good DJ. Of course now you just need to go out there to find the best DJ. This site has some pointers and this newspaper article lists several names.

 

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And now the disclaimer: While I have taken steps to research this information as well as based on my experience, you should not rely on the information given here to base your investment decisions. You should seek business advice from a professional knowledgeable of your specific circumstances. I shall therefore not be held responsible for any loss you may incur when acting on this information.

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