Seeing Green: The Last Several Years Have Been Booming For Mobil DJ Business Owners. But Not Everybody Agrees on How to Spend Their Surplus

Money, money, money. Like many other business sectors enjoying their own financial high-water marks, the mobile entertainment industry has benefited greatly from America’s ongoing economic boom. So, for our first-ever “Money” issue, we decided to poll mobile DJ business owners from around the country and ask them some personally invasive questions about their profits, losses and investment strategies.

The questions went as follows:
1) What percentage of your 1999 revenue was profit?
2) How much growth did your company experience from 1998 to 1999?
3) In your market, what amount of annual revenue would be comfortable?
4) What percentage of your after-tax profit were you able to invest?
5) Where did you invest? If you invested in stocks or mutual funds, which ones did you invest in and why?

From the responses, you’ll see a full range of numbers and investment tips. Hopefully, they will be instructive to you mobile DJs looking to maximize your personal wealth and financial security. Where do you stand?

Rob Alberti, owner of six-system After Hours DJ Service, Westfield, Mass. Percentage of 1999 revenue that was profit? “25-percent. It’s hard to say as I work on the side and business expenses v. normal expenses tend to get all confused when you own your own business.”
Company growth from 1998 to 1999? “30-percent increase last year. We’re on the road to a 25-percent increase this year.” In your market, what amount of annual revenue would be comfortable? “$200,000 in gross sales is my target goal.”
How much after-tax profit did you invest? “20-percent.” Where did you invest and why? “I invested in both mutual funds (long term savings for retirement). I’ve been with the Janus family of funds for over five years now. I also started investing in the stock market this year (mainly the volatile tech stocks last year). I started following the stock market with help from a group of friends/investors. We usually meet daily to talk stocks and strategy. We don’t necessarily follow each other’s advice, but we are learning.” Paradise Mike Alexander, owner of 12-system Paradise Entertainment, Orcutt, Cal.
Percentage of 1999 revenue that was profit? “70-percent. For the two years before 1999, it was much lower, but since then we’ve paid off the equipment and Napster came online.” Company growth from 1998 to 1999? “Zero-percent. We stayed even in both gross and net.”
In your market, what amount of annual revenue would be comfortable? “$125,000.”
How much after-tax profit did you invest? “50-percent of net.”
Where did you invest and why? “We invested in two places. First we upgraded the computers for the business. In terms of stocks, I converted my life insurance from term to whole life. I also bought some stock in a small upstart company called Mini-Med. This company deals with diabetics. I invested in this mostly because my daughter is diabetic. I’ve invested in stock in a couple of local banks, which has actually split over the past couple of years, so I made out well.”

Mark Ashe, owner of 14-system Mark’s Rolling Dance Review, East Longmeadow, Mass.
Percentage of 1999 revenue that was profit? “28-percent.”
Company growth from 1998 to 1999? “23.4-percent.”
In your market, what amount of annual revenue would be comfortable? “Four million, but realistically, I’d be comfortable with $500,000.”
How much after-tax profit did you invest? “34-percent.”
Where did you invest and why? “I invest in both aggressive and moderate mutual funds. I’ve also invested in a few insurance policies as a tax shelter, under the advisement of my accountant. Apparently, you’re not taxed the same if you take money out of these insurance policies as you would if you took out of mutual funds.”

Russ Harris, owner of 10-system Show On the Road, Naperville, Ill.
Percentage of 1999 revenue that was profit? “My accountant showed me how to base my salary on profit made during the year or show a small loss for a lesser tax cut. So we then showed no profit at the end of the year.”
Company growth from 1998 to 1999? “11-percent growth.”
In your market, what amount of annual revenue would be comfortable? “$600 to $700K would be great!”
How much after-tax profit did you invest? “2.5-percent.”
Where did you invest and why? “My investments through my life insurance plan went towards a money market account on Wall Street and into various blue-chip stocks.”

Paul Beardmore, owner of six-system DJ Connection, Front Royal, Va.
Percentage of 1999 revenue that was profit? “24-percent.”
Company growth from 1998 to 1999? “11-percent.”
In your market, what amount of annual revenue would be comfortable? “$250,000.”
How much after-tax profit did you invest? “15-percent.”
Where did you invest and why? “I have a full-time job as a firefighter, and my investments are in a 457 program (an enhanced 401k). An important point to make in my situation is that my DJ business income allows me to invest the maximum amount of money – 15-percent of my business profits, allowed in a 457. This 457 program is managed by a stocks contractor. I can only choose the basic type of investments – bonds, stock market, international funds, etc. All my stuff is in the ‘growth stocks,’ which is a fairly risky investment vehicle. It also has proven to be the best vehicle for returns on the investments. I can change my funds at any time, but am never in a situation where I can pick and choose the specific stocks to invest in.”

Brian Doyle, owner of 21-system Denon & Doyle, Concord, Cal.
Percentage of 1999 revenue that was profit? “After paying for all of our staffing, including the owner’s salary, we make about a 10-percent profit for each of the past few years.”
Company growth from 1998 to 1999? “Since our inception in 1984 until 1998, we were experiencing about 10-percent in yearly growth. Last year we did 15-percent and this year we’re closer to the 20-percent mark.”
In your market, what amount of annual revenue would be comfortable? “We do just over $1 million in sales a year. Things are comfortable now. We have a great infrastructure and plan for further growth.”
How much after-tax profit did you invest? “90-percent last year. The owner draws a paycheck, so all living expenses were taken care of.”
Where did you invest and why? “We re-invested most of the profit into the company. We bought all new sound systems, etc. The remainder was put into an IRA-style SEP retirement mutual find. This year we plan to reinvest our profits in buying the building we currently lease and to extend the SEP retirement fund to our five full-time employees.”

Jose Gonzalez, owner of two-system Sonida con Elegancia Entertainment, Port Washington, N.Y.
Percentage of 1999 revenue that was profit? “In 1999 our profit per event and total ranged from 30- to 50-percent. We have a larger profit margin with our larger packages.”
Company growth from 1998 to 1999? “In 1999 we had a 14-percent increase in the number of bookings and a 21-percent increase in revenue. This was a result of restructuring our packages, which allowed our most popular package to give us a 40-percent profit margin.”
In your market, what amount of annual revenue would be comfortable? “I would love to see the $500,000 mark, which we are expected to reach by next year.”
How much after-tax profit did you invest? “After taxes, we were able to invest approximately 10-percent of profit.”
Where did you invest and why? “We invested by upgrading our sound and lighting systems as well as expanding our marketing efforts. We did not invest in stocks, market, etc., this year. For 2001, we plan to invest in retirement funds and hopefully money market or stocks.”

Chuck Lehnhard, owner of single system Spectrum Mobile DJ, Santa Rosa, Cal.
Percentage of 1999 revenue that was profit? “55-percent. As a single-system operator, expenses stay pretty close to the same each year.”
Company growth from 1998 to 1999? “10-percent. I’ve been DJing full time for the past 16 years. It’s hard to grow much as a single-system operator. All you can hope for is to keep as many Fridays and Saturdays busy as possible. It helps that I also do a lot of schools for Friday nights. I have stayed busy and happy for a long while now.”
In your market, what amount of annual revenue would be comfortable? “The percentage of the DJ market in my area I would be happy with, and I currently have maybe 10-percent, so just a small amount more, 1- or 2-percent more I’d be happy with.”
How much after-tax profit did you invest? “I try to put back at least 10-percent from each gig. But sometimes I see a new piece of gear that I just have to have and that shoots that!”
Where did you invest and why? “I’m pretty bad with money and don’t have the guts to do the stock market. I have an IRA and a savings account. May not be the best, but safest.”

Mad Joe Martin, owner of single-system Mad Martin Productions, Wichita Falls, Tex.
Percentage of 1999 revenue that was profit? “45-percent.”
Company growth from 1998 to 1999? “In the two-year period, we experienced 16-percent growth. We try to increase the revenue approximately 8- to 10-percent annually. I know some guys who do more than that, but in my market it’s a little tough to get away with that. At 8- to 10-percent we’re keeping up with inflation plus giving ourselves a 7-percent raise.”
In your market, what amount of annual revenue would be comfortable? “I would be extremely comfortable with about $1 million. And you can quote me on that.”
How much after-tax profit did you invest? “This is interesting. I love this survey. I was preaching to DJs years ago that they should put some money into an IRA and in the stock market. I let my dividends roll over and of my net profit I invested approximately 20-percent. I live very frugally and invest a lot.”
Where did you invest and why? I own AOL, Amazon...I felt like they certainly had the potential to be good growth stocks. However, I would have much rather jumped in on them three or four years ago...I am in for the long haul and I think most investors need to take that mindset. If you’re going to jump from stock to stock and company to company I think you’ll end up losing the game, probably. If you’re looking for the quick buck, your chances of making it are less than if you’re in for the long haul. Those two I mentioned are just a few. I also invest in Dell, McDonald’s hamburgers, a little Internet company called CIDco, Southwestern Bell telephone. The list goes on. I also invest Fidelity mutual funds. I don’t think you’re going to find too many DJs as into investing as I am – of course there are others, but not a lot. A lot of DJs live for today and forget about tomorrow. “The most important thing – and these are common sense rules that most investors practice – you have to pay yourself first, before anybody. And you save for the long haul, park your money in the stock market and forget about it. Don’t worry about it. Retire young and retire rich. I would say for inexperienced investors, investing in mutual funds is the way to go. Now, that does create problems because there’s probably 10,000 to 15,000 firms out there, but if you talk to enough people – and I religiously read and think that everyone should read Money magazine, which offers all sorts of information but they get into the stock market and mutual funds. I have been with several mutual fund companies over the past 20 years but the majority of my investments have been made through Fidelity Investments, a very large and well-known firm here in the U.S. They’ve got probably 100 different funds, from mild to wild.”

Rod Randall, owner of four-system Buckeye Sounds, Columbus, Ohio
Percentage of 1999 revenue that was profit? “For 1999, our percentage was just a bit over 22-percent. It’s been pretty much the same the last few years.”
Company growth from 1998 to 1999? “We had a 32-percent increase in our business from ’98 to ’99. I would expect even a higher increase for ’99 to ’00!”
In your market, what amount of annual revenue would be comfortable? “I wanted to get to $100,000. Earlier in the year, I didn’t think I would be able to reach that amount this year (2000). Now it looks as though I will easily be reaching that mark. I want to be able to do at least that much every year.”
How much after-tax profit did you invest? “I was able to put in 30-percent of my after-tax profit into my investments. That would include an IRA, Keogh and an investment account. I have myself set up to invest the max every year into my Keogh.”
Where did you invest and why? “Every year, I invest the max into my IRA, which is $2,000. I then max out my Keogh program. I have also been putting money into a non-retirement account. “I have been putting all my funds into Fidelity mutual funds. The vast majority of my funds have been in the high-tech fields. I invested in the ‘highest risk’ funds that I could find. These are the very volatile ‘sector funds.’ During 1999, these funds did very well. In fact, I doubled my money in ’99, and I continue to invest the same way; most of my money is going into the high-tech mutual funds. However, the funds are not doing very well in 2000. As of today, I simply hope not to lose money this year. But if I do, I won’t be too concerned based on the past few years’ performance of these funds.”

Mike Sabatini, owner of six-system Music Machine, LaSalle, Ill.
Percentage of 1999 revenue that was profit? “15-percent.”
Company growth from 1998 to 1999? “2.2-percent growth, due to lack of employees. We’re capable of sustaining six systems but only have enough staff to operate five. This year we’ll experience an even lesser growth, again due to lack of employees.”
In your market, what amount of annual revenue would be comfortable? “I’d be comfortable with $205,000 to $210,000 per year.”
How much after-tax profit did you invest? “100-percent.”
Where did you invest and why? “Equipment upgrades, personnel training and income tax. I also invested in mutual funds favoring tech stocks...I’m able to draw $40,000 a year from this.”

Mike Walter, owner of 18-system Elite Entertainment, Eatontown, N.J.
Percentage of 1999 revenue that was profit? “My personal income rose 22-percent in 1999 from the previous year, while I performed at eight fewer parties, and this year my income is climbing at a similar rate. If I keep this up I’m gonna make $30,000 someday!”
Company growth from 1998 to 1999? “We grew in two ways from ’98 to ’99. The number of parties we performed at went from 1,036 in ’98 to 1,293 in ’99 (25-percent growth) and our average ticket rose from $650 to $715. So overall that’s 37-percent growth in gross, but we all know gross means nothing because my expenses went up as well. “I want to make one point here about tracking growth. This year (2000) has been a banner year for everyone involved in the wedding business and everyone I know is breaking their own personal records. I am watching 2001 very closely and am happy that right now we are running even with this year. I would be happy with that. This year (2000) was such a spike in numbers due to the popularity of the year and the millennium and all that. If I can match this year’s numbers next year, and not slide back any, I’d be thrilled. So far I am doing that and that makes me sleep very well at night.”
In your market, what amount of annual revenue would be comfortable? “I’ve always wanted to hit $1 million in gross sales and we are close this year and should break it next year.”
How much after-tax profit did you invest? “Probably about 8-percent.”
Where did you invest and why? “I am conservative when it comes to investments so I don’t have a sexy answer here. Just do mutual funds. “I am buying a building next year for my business to run in and I’ve always considered real estate to be a good investment. I can picture myself years from now owning a strip mall which houses Elite and also a photography studio and video and favor shop and dress shop and charging ‘em all enough rent to have enough cash flow to finally take a day off.”

Carl Williams, owner/operator of DJ Connoisseur Enterprises, Orlando, Fla.
Percentage of 1999 revenue that was profit? N.A.
Company growth from 1998 to 1999? N.A.
In your market, what amount of annual revenue would be comfortable? “For my market, in Orlando, I’d be comfortable with $100,000. At 144 parties per year, that works out to be about an average of $495 - $695 per party.
How much after-tax profit did you invest? “Between 10- and 15-percent.”
Where did you invest and why? “My philosophy is to first, pay expenses, second, to invest, third, to save and then fourth, to have fun with my money. I credit my success to being extremely organized and knowing exactly where each penny is going. Every week I personally track expenses and income. After expenses are taken care of, I send money from my personal and business accounts to my mutual fund – Oppenheimer’s Main Street Growth and Income Fund Class B. Mutual funds are diverse and the stocks for this particular fund are high risk, low risk, high growth and low growth. Some of the stocks in this fund are also invested into national and international public companies. It’s a good fund for me because it’s designed for long-term financial security. It’s for when I retire. “The key to investing is to be consistent putting money in the fund every time you have money left over after your expenses. I try to contribute more than the recommended $50 per month to the fund. After I take care of that, I send any other money off to my credit union savings account for emergencies or unexpected expenses. My dad, an accountant and financial advisor, helped me get started with investing.”

Gary Titus, owner of two-system DJ Gary Titus, Canton, Mass.
What percentage of your 1999 revenue was profit? “60-percent.”
Company growth from 1998 to 1999? “I raised my prices and lowered the amount of jobs I was taking each week. I now have Sundays off to spend with my family. My wife took more work, so overall, despite the 10-percent decrease in work I took, my wife’s work grew 10-percent, so we experienced an overall 5-percent increase.”
In your market, what amount of annual revenue would be comfortable? “$80,000.”
How much after-tax profit did you invest? “All of it – mostly in a new house. We moved off of a main road into a neighborhood where the kids can play out front. The rest I invested into stocks and bonds.”
Where did you invest and why? “I have mutual finds through work, so I take care of that through my day job. I was picking tech stocks this year and didn’t do that well on them. Mutual funds I do better with. I have a diversified portfolio. Very diversified. “My advice to anyone investing is to research. I can’t stress that enough. Someone can give you a stock tip, but it’s up to you to make the decision. You can’t blame anyone for your mistakes. That’s the first lesson you learn. I keep a 10-percent stop-loss on my stocks. This means that every time I buy, I put in an order to automatically sell should the stock hit at 10-percent below what I bought it for. So I never want to lose more than 10-percent. Most people tell you to do it at 7- or 8-percent, but I do 10-percent. They say cut your losses right away, don’t wait for the stock to go back up, because if a stock goes down 50-percent, you’ve got to remember that the stock needs to bounce back 100-percent for you to make your profit back. I’ve done alright with the money I put in. The best I’ve ever done with stocks is with my own company’s stocks, my day job. It’s Intervoice Bright, a manufacturer of computers for credit card companies and banks. We do a lot of wireless stuff and overseas. It’s based out of Dallas, a fairly large company. So I let it ride up and then I take my profits and let it ride up again and do the same thing. I don’t do day trading, I do monthly trading. “With my mutual funds, I just put them where they go and don’t touch them. I have a combination of Fidelity, Putnam and AG Edwards.”