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Redmoon for Hire:Make a spectacle of your event with Redmoon!

BUSINESS PLAN

”Redmoon’s creativity turns ordinary events into magical evenings!”—Janet Carl Smith, Deputy Commissioner, Chicago Department of Cultural Affairs

preparedApril 25, 2005

forThe Partnership on Nonprofit Ventures

Third Annual National Business Plan Competition for Nonprofit Organizations

April 25, 2005Redmoon for Hire: Make a spectacle of your event with Redmoon!

Redmoon for HireBUSINESS PLAN

TABLE OF CONTENTS

Executive Summary.................................................................................................................................................1

Description of Business............................................................................................................................................3

Industry and Market Analysis...................................................................................................................................8

Marketing Plan.......................................................................................................................................................18

Management Plan..................................................................................................................................................21

Operations Plan......................................................................................................................................................23

Financial Plan.........................................................................................................................................................31

Risk Assessment and Contingency Plan................................................................................................................34

Attachments

LIST OF PHOTOGRAPHS

Table Lady (brochure insert)....................................................................................................................................4Stilted Server............................................................................................................................................................6Clown Chefs...........................................................................................................................................................134th of July Parade....................................................................................................................................................13Interactive Spectacle Entertainment.......................................................................................................................17Millennium Park Illumination...................................................................................................................................22Stilters at the Field Museum...................................................................................................................................22Lanterns for Chicago Botanic Gardens..................................................................................................................28Lanterns on Chicago River during Sink. Sank. Sunk…..........................................................................................28Wine Bicycle...........................................................................................................................................................29Hamster Wheel Pyrotechnic Spectacle..................................................................................................................33Competitor's Walk Around Buffet...........................................................................................................................36Redmoon for Hire's Table Lady..............................................................................................................................36Conceptual Ideas for Pedaling Percolator..............................................................................................................37

All photography by Sean Williams of Ethos Creative unless credited otherwise.

April 25, 2005Redmoon for Hire: Make a spectacle of your event with Redmoon! Page 1

Executive Summary

Description of Business: Redmoon for HireRedmoon Theater makes stunningly original theater art that is accessible to all. Since 1989, Redmoon has won widespread acclaim for creating innovative theatrical events and large-scale public spectacles. Attracting as many as 12,000 people in a single weekend, these events are powered by ingenious mechanical devices, intricate sets, robust physical action, live music, and inventive forms of mask and puppetry. As an integral part of its mission, Redmoon provides programming for free or low ticket prices. To avoid over-dependence on contributed income, Redmoon’s board and management team have developed Redmoon for Hire as a source of new earned revenue.

Redmoon for Hire offers high-end, customized party entertainment for corporate events, conventions, private parties, nonprofit benefits and civic celebrations. Redmoon for Hire’s value proposition is that it uses Redmoon’s signature aesthetic to make ordinary events extraordinary. Redmoon applies its core competency of transforming public spaces into places of celebration to provide unique, high quality, experiential entertainment for high-end events at a mid-range price point. Guests always experience the unexpected and the amazing at Redmoon for Hire events. Popular party offerings include: Table Ladies (performers in the center of 6’ diameter tables who display appetizers on their “skirts”); Wine Bikes (whimsical human-powered machines serving wine), and elaborate, customized spectacles involving characters, mechanical objects, live music, and pyrotechnics, designed to match a client’s theme or convey its message in a memorable, unique way. Redmoon for Hire:

Is mission-consistent and extends the theater’s brand without diluting it. Provides an increasing, reliable source of earned income with earned revenue, increasing by 12% to 21%

each of the next five years. Exposes Redmoon’s aesthetic and performers to wider audiences. Engages new donors and generates additional major donations to the parent organization. Feeds Redmoon’s core artistic programming and vice versa through the creation of new artistic elements. Provides new creative and performance opportunities and additional work for artists.

Industry and Market AnalysisRedmoon for Hire is positioned as a niche offering within the rapidly growing events entertainment industry. The industry includes a broad range of events entertainment that include small musical groups, “name” acts, other performance groups, sporting events, and team-building workshops. Market research and customer interviews indicate that target customers are seeking entertainment that can be aligned with their event’s theme, is unique or carries a “wow” factor and is creative, interactive, and surprising. With Redmoon’s expertise in creating site-specific spectacle theater, Redmoon has unique competencies in creating engaging special events that both serve the goals of the client and also generate a significant “wow” factor, a desirable combination offered by few competitors, especially at Redmoon’s mid-range price point of $5,000 to $50,000.

Redmoon for Hire targets five market segments that have demonstrated demand for unique event entertainment (in priority order, based on market size and potential and sales efficiencies): corporate events with a national audience, local corporate events, private social parties, nonprofit organizations, and civic institutions.

Marketing PlanDuring 2004, Redmoon for Hire sold 24 events, with fees ranging from $2,500 to $34,000. Total revenue was $150,950. Demand is strong. Redmoon increased sales by 155% in 2004 simply by assigning half of a staff member’s time and a $6,500 marketing budget to the enterprise. Events are sold directly to clients and through intermediaries such as production companies and event planners, who serve multiple end clients and can provide a means for Redmoon for Hire to create business-to-business sales efficiencies and access a larger number of potential clients. Communications and sales strategies include the development of eye-catching marketing materials, sales calls, referrals, in-person presentations with intermediaries, and participation in industry meetings, as well as a publicity and promotions plans targeting industry and business publications.


Redmoon’s marketing strategy is to maximize sales and profit margin through: A high quality niche service that combines the “wow” factor and the interactivity that clients desire An attractive mid-range price for a high-quality, interactive product, customizable based on the client’s

willingness to pay and on actual costs to produce the event A two-pronged sales and delivery strategy: 1) direct sales to clients and 2) increased focus on efficiencies of

selling to event planner intermediaries who have multiple clients A marketing plan that targets repeat and referral business

ManagementRedmoon is well staffed with experienced, capable employees and board members to execute this business plan. Of Redmoon’s 17 employees, three have MBAs, and among Redmoon’s 18 board members, three are venture capitalists and one is a high-end event producer. Artistic staff has a combined 35+ years of experience creating award-winning, original work in the Redmoon style. New personnel are added based on need for increased capacity in sales and production.

Events are categorized by the event budget size, level of customization, and the prestige of event client or guests. This categorization determines which members of the artistic and production staff participate in the event creation (e.g., the greater the customization or the larger the event, the more senior the artistic staff). Artistic staff's participation is optimized to ensure the artistic quality of all events and to provide the opportunity to engage creatively with the larger events without becoming burdened by a high volume of small events.

OperationsThe steps to selling and delivering a typical Redmoon for Hire event start with client prospecting, cultivation, following leads, and fielding inquiries. After an initial screening by the business manager, the event is categorized (as described above) and artistic staff meets with the client to understand the event’s themes and goals and to conceive the event. The business manager finalizes contracts; production staff prepares and executes the event; and the team follows up with the client and internally evaluates the success of the event to drive continuous improvement. Quality control is ensured by staffing all events with a trained event director on-site, rigorous post-event evaluation, and routine maintenance of inventory.

R&D is a continuous process at Redmoon for Hire, and because of the uniqueness of the objects and mechanical devices, new products must be introduced on a regular cycle. Client feedback and brainstorming drive new product development. Additionally, some clients may pay a premium to have a Redmoon for Hire object debut at their event, and then that object is available later to other events. Additionally, the Redmoon for Hire venture and the core theatrical work of the theater are designed to feed each other artistically – oftentimes concepts are workshopped in one and then translated to the other.

FinancialIn fiscal year 2005, Redmoon for Hire accounts for approximately 18% of the income and 17% of the expense of Redmoon Theater’s $1.6 million budget, thus boosting earned income to supplement Redmoon’s mission-driven foregone ticket revenue. Forecasting through 2009, revenue is projected to increase 12% to 21% per year while expenses are projected to increase at slower rates.

Redmoon for Hire’s financial model is characterized by front-loaded object development costs and a high variable to fixed cost ratio, which protects the venture against sales variability. Redmoon for Hire has been initially capitalized by the parent organization and by two foundation grants.

Risk Assessment and ContingencySome key risk factors include: economic forces, imitators, and loss of organizational focus. However the venture was launched during an economic downturn and has already experienced growth of 155% in the first year. Imitators exist, but Redmoon's artistic capabilities, established brand recognition, and client relationships provide significant barriers to entry. New products are continuously introduced to stay ahead of competitors. To preserve organizational focus, Redmoon is hiring dedicated staff for the venture to 1) increase the capacity to perform more hired events and 2) create a designated events staff that protects the core artistic and production staff from involvement in anything but the largest and most customized events.


Description of Business: Redmoon for HireFrom adaptations of classic texts to site-specific performances, parades and ritual celebrations, Redmoon Theater makes stunningly original theater art that is accessible to all. Since 1989, Redmoon has been transforming public spaces with its award-winning, visionary performances. One of Chicago's most creative and exciting theater companies, Redmoon tells timeless stories through a vivid collage of robust physical performance, masks, puppets, ingenious mechanical objects, handcrafted artwork by hundreds of community members, and live music.

Redmoon Theater's mission is to create theatrical spectacles that transform streets, stages and architectural landmarks into places of public celebration utilizing an original language capable of speaking across cultural, ethnic and generational boundaries.

Redmoon has received wide critical acclaim:

"To describe in words the physical appeal of the show…would be to diminish its delights."—The New York Times

"Anyone in doubt about the power of art to galvanize a community and create a miraculous, peaceable kingdom would have been transformed into a believer…"—Chicago Sun-Times

With its unique vision of civic spectacle, Redmoon pushes the boundaries of theater, creating a distinctive style capable of speaking to an ethically and culturally diverse audience. In the Neighborhood Arts Programs, Redmoon fuses art making with community making using a unique visual language. Redmoon’s 2004 season included three major productions, Cyrano, Sink. Sank. Sunk…, and Winter Pageant that together with numerous one-off appearances reached over 100,000 people. Currently Redmoon employs a professional staff of 17 full- and part-time artists and administrators, with an annual budget of $1.6 million.

As an integral part of its mission, to engage a broad and diverse audience, Redmoon provides programming for free or low price. For example, Redmoon’s 2004 outdoor spectacle, Sink. Sank. Sunk…, was completely free of charge to the public and drew over 12,000 in one weekend to a public park in Chicago’s Chinatown neighborhood. Similarly the 13th Annual Winter Pageant, Redmoon’s alternative holiday show featuring the artwork of over 450 community members played to over 5000 people with a ticket price of $10 to $15. Since Redmoon’s potential for growth in earned revenue from ticket sales is constrained by its mission, diversified revenue streams and new earned revenue sources need to be secured to avoid an overdependence on contributed income.

After analyzing several revenue generation opportunities, their market feasibility, and their consistency with the mission, Redmoon’s board and management team identified the “Redmoon for Hire: Make a spectacle of your event with Redmoon!” venture as the most viable opportunity. Redmoon for Hire offers party entertainment for corporate events, conventions, nonprofit benefits, civic celebrations, and private parties. Formalized as a business venture in 2004, Redmoon for Hire builds on party ideas and individual VIP events that Redmoon performed in previous years. Redmoon for Hire grew organically out of requests from donors and audience members for Redmoon Theater to perform at their private functions. By 1999, Redmoon was performing one or two events a year as favors to these VIPs. Realizing the potential for earned income, Redmoon for Hire began as an intentional venture in 2004. Some of Redmoon for Hire’s most popular party offerings include:

Table Ladies – performers wear hoop skirts that double as tables, displaying appetizers or promotional items. These performers delight audiences by combining graceful movement with creative food service (see Exhibit A).

Wine Bikes – whimsical human-powered creations combine various machine-like elements interacting in surprising ways. As the wheels turn, an overhead umbrella-like structure holding wine glasses twirls, and the rider pours wine for guests.

Customized Events – Redmoon creates elaborate site- and event-specific performances to match clients' themes or convey their messages. Spectacles feature up to 100 performers including stilters, fire performers, a range of puppets, masks, automata machines and large mobile set pieces, and a live band.

Redmoon for Hire was identified as the venture to pursue by Redmoon's board and staff, not only because of its ability to generate non-ticket earned revenue, but also because of other benefits. Redmoon for Hire: Is mission-consistent and extends the theater’s brand without diluting it.


Provides an increasing, reliable source of earned income with earned revenue, increasing by 12% to 21% each of the next five years.

Exposes Redmoon’s aesthetic and performers to wider audiences. Generates additional major donations to the theater as a result of introductions at Redmoon for Hire events

(some of Redmoon’s major donors first became familiar with the theater through a private event). Provides R&D and a pipeline for the creation of new artistic elements that feed Redmoon’s core artistic

programming and vice versa. Provides new creative and performance opportunities and additional work for artists.

EXHIBIT A: Sample front/back of brochure insert for Table Ladies

Redmoon’s events are classified into three levels depending on their degree of customization.

EXHIBIT B: Three Levels of CustomizationCustomization Description ExampleCustom Completely customized

event, involving multiple elements, many of which are new for that event.

BMC Software – Redmoon was hired by an event production company to provide entertainment for a multi-day incentive convention in Phoenix, AZ for 1500 sales reps of a software company. Redmoon provided customized entertainment for the welcome gala and awards ceremony including designing a customized firebox with the company’s logo surrounded by fireworks as a finale to the event. Revenue: $30,000

Semi-Custom Mixture of customized elements and “off-the-shelf” elements.

Mayor’s Halloween Ball – It is widely know that Halloween is one of Chicago Mayor Richard M. Daley’s favorite holidays. Redmoon was hired to provide entertainment for the Mayor’s private party of 500 guests including our popular Table Ladies and Stilted Servers. Redmoon also provided customized Day of the Dead skeleton characters and eerie musicians to fit the Halloween theme of the party. Revenue: $8,500

Off-the-Shelf Primarily “off-the-shelf” elements from Redmoon for Hire’s “menu.” Minimal customization.

Misericordia/Heart of Mercy Benefit – Long-time friends of Redmoon’s are involved with a local charity that is a residence for disabled adults. They hired Redmoon for their inaugural benefit at an antique store/gallery with 300 guests. Redmoon provided two Table Ladies and a Wine Bike.

Revenue: $3,500

Redmoon for Hire's value proposition is to use Redmoon’s signature aesthetic to make ordinary events extraordinary. Redmoon applies its core competency of transforming spaces into places of celebration to provide unique, high quality, experiential entertainment for high end events at a mid-range price point.

Each Redmoon for Hire event is unique, but most projects share a similar process seen in the diagram in Exhibit C below and in more detail in Exhibits Q and R, in the Operations Plan.


Exhibit C: Process for typical event

At the beginning of 2004, the existing Redmoon staff was reorganized to devote a 50% FTE salaried position to the venture, and marketing expenses were budgeted to produce new collateral (see enclosed brochure and DVD). During 2004, Redmoon for Hire sold 24 events, with fees ranging from $2,500 to $34,000 for a total revenue of $150,950.

Also in 2004, Redmoon began to establish clear delineations between the theater and the venture which will continue to be clarified as the venture grows. A key delineation is the distinction between artistry and functionality. While Redmoon Theater’s product is purely artistic in nature, Redmoon for Hire combines artistry with functionality. There is also demand for purely functional output, but Redmoon does not provide this service. The delineation is illustrated in Exhibit D, Continuum of Services.

EXHIBIT D: Continuum of Services

Redmoon understands the importance of separating the two parts of the organization to avoid competing for resources and drawing attention away from the theatrical mission of Redmoon. The two parts complement each other in that the same artists and objects used for Redmoon for Hire are also used for the theater and vice versa. However in 2005, Redmoon hired its first dedicated staff for the venture, an Enterprise Production Manager, and Redmoon is continuing to delineate staff, finances and board resources for the venture. As the venture grows, Redmoon will continue to add dedicated production, artistic and sales staff. Separate internal financial statements are compiled for Redmoon for Hire, and Redmoon has established a board committee dedicated to non-ticket earned income to oversee the venture.

Drawing from Redmoon for Hire's experience to date, the venture has identified the following strategies for prioritizing event opportunities: Semi-customized events are most profitable because the client pays a premium for selected customized

elements which are combined with the off-the-shelf elements requiring minimal production effort and expense. Performing a fewer number of larger events is more efficient because the up-front sales staff effort is minimized.


More sophisticated clients (e.g., corporate events with intermediary event planners) are more profitable because they are familiar with the market and have mechanisms for being efficient. These clients are easier to work with and require substantially less hand-holding, resulting in increased efficiencies for Redmoon.

Repeat and referral business is a key to maintaining high margins, since new client acquisition is substantially more expensive than retaining existing clients. Intermediaries such as event planners, caterers, venues, etc. are targeted for this repeat and referral business.

Redmoon for Hire: Silted Server

The venture’s goals and objectives are: To support the theatrical mission of Redmoon by directing profits back to the nonprofit theatrical work. To provide high quality, creative entertainment, and party environments for public and private events thrown by

other entities, organizations, individuals, and corporations. To expose new audiences and potential donors to Redmoon’s work and aesthetic and expose Redmoon’s artists

to new creative and performance opportunities.


EXHIBIT E: Performance MilestonesSome of the benchmarks and milestones by which the success of the venture will be measured include:

BENCHMARK MEASUREMENT 2004 ACTUALS 2009 PROJECTIONS Ability to generate surplus

revenue to support theatrical and community mission

Total net income generated (to be used to support Redmoon’s core artistic and community programming)

$(29,191) $47,034

Efficiency of sales and event creation

Ability to create strategic partnerships to reduce cost of sales

Number of repeat/referral clients versus new clients

# of higher priced events

17% of events were sold via partner “intermediaries”

38% were repeat clients, plus 42% were referrals

2 high priced events

35-65% of events are sold via partner “intermediaries”

at least 50% of clients are repeats/referrals

8 high priced events (national audience)

Quality of event entertainment

Client feedback Number of repeat/referral

clients

strong positive feedback 38% were repeat clients,

plus 42% were referrals

strong positive feedback at least 50% of clients are

repeats/referrals Ability to maintain quality

mission-oriented programming in core theatrical work

Staff and board assessment

Audience feedback (anecdotal and surveyed), press reviews

staff and board believe core programming is serving mission

enthusiastic audience surveys and positive reviews in major local newspapers

staff and board know that core programming is serving mission

increased enthusiastic audience surveys and positive reviews in national publications

Ability to employ artists more consistently

Number of artists employed and income received

115 artists earned an average of over $425 each

200-300 artists earn an average of $600-$900 each

Social Benefits of Redmoon for HireRedmoon for Hire benefits not only Redmoon Theater but also provides positive social benefits. The venture enables Redmoon to support its extensive arts and community programming in several ways: Redmoon for Hire directs profits back to Redmoon Theater’s nonprofit artistic work (projected to be $47,034 in

2009). In this way, the venture underwrites the attendance of diverse audiences at spectacle theater events. For example, in 2004, 12,311 people saw Redmoon Theater’s outdoor spectacle for free (at a ticket price of $15, this is a $184,665 value). Redmoon’s spectacle audiences represent a diversified socioeconomic range, with roughly as many people coming from households earning less than $34,000 (29%) as there are from households earning $50-74,000 (21%) and from those earning more than $100,000 (24%).

The venture also supports Redmoon Theater’s educational programs such as Dramagirls (which engages adolescent girls in an intensive exploration of creativity and leadership) and the Redmoon School Partnership Program (where artists work with educators at a public elementary school to create a multi-disciplinary arts program).

Redmoon for Hire employs a large number of artists, designers and builders: in 2003, Redmoon for Hire employed 85 artists at an average of $300/person (a total of $25,603 gross income). In 2004, Redmoon for Hire employed 115 artists at an average of $425/person (a total of $49,022). As the venture grows, more artists will be employed and the pay scale is projected to increase as well.

Redmoon for Hire also exposes Redmoon’s aesthetic and brand to new audiences and to new potential donors, thus increasing the financial and popular support for the parent organization. Roughly 8% of the audience at Redmoon Theater’s 2004 outdoor spectacle had been to a recent Redmoon for Hire event.

Redmoon for Hire also provides subsidies, through its event pricing, to other nonprofit organizations, allowing them to raise more money for their own mission-related causes. In 2003 and 2004, Redmoon for Hire donated the equivalent of $15,750 of services to other nonprofits, primarily by providing reduced-fee entertainment at their benefits.


Industry and Market AnalysisThe industry within which Redmoon for Hire operates can be broadly defined as special events. The special events industry incorporates widely divergent activities from black-tie fundraisers to corporate meetings and conventions to employee incentive or motivational events. Customers in these arenas meet their needs through a variety of activities such as hiring a string quartet, participating in an Outward Bound-type activity, or attending a sporting event. These events require a variety of vendors to service them from event planners and moderators/facilitators to caterers and florists to lighting and sound companies.

Redmoon for Hire is a niche player in the special events entertainment market: the venture serves the market that demands that their events feature high-end, unique, interactive entertainment that will break through the clutter of events thrown by their peers or competitors and will be remembered by guests long after the event itself. With Redmoon’s expertise, developed through its core artistic programming of creating site-specific spectacle theater, Redmoon has unique competencies in creating special events that both serve the goals of the client and also carry a significant “wow” factor. With competencies developed from the experience of its parent organization, Redmoon Theater, Redmoon for Hire has deep core knowledge about how space and the public work together to create a successful, fun event. Audiences and guests always experience the unexpected and the amazing at Redmoon for Hire special events.

Redmoon for Hire's market is segmented into two categories: 1) the local Chicagoland market of events thrown by nonprofit organizations, civic institutions, weddings/other private parties, and locally-based corporate events, and 2) a national market in which the primary segment is corporate events and to a lesser degree private social parties. The national market includes events held in Chicago that draw audiences from across the country. Chicago has a large convention industry that draws this type of national audience. Events are sold in two ways: directly and, more importantly for Redmoon’s strategy, through business-to-business channels such as independent event planners, “in-house” event planners at major venues, production companies and other intermediaries.

EXHIBIT F: Market SegmentsSEGMENT REACH SALES CHANNEL SAMPLE CLIENT LIST

Nonprofit Organizations

local primary: direct salessecondary: event planners

AIDS Care, Field Museum, Lincoln Park Zoo, Museum of Contemporary Art, University of Chicago Lab Schools

Civic Institutions local primary: direct sales City of Chicago Mayor’s Office of Special Events, Evanston Fourth of July Association, Hammond Indiana Parks Department

Weddings/ Other Private Social Parties

local and national

primary: direct salessecondary: event planners

Herman/Harriman Wedding, Taslitz Bat Mitzvah,Skalski 70th Birthday

Corporate Events

local and national

primary: event planners, caterers, venues, production companies

secondary: direct sales

Intermediaries: Blue Plate Catering, Jam Productions, Jack Morton, J. Walter Thompson

Direct Clients: BMC Software, Disney, Futrex Trading, Kraft Foods, Mayer Brown Rowe & Maw

Redmoon’s experience indicates strong market demand from all four sectors for the services of Redmoon for Hire. Redmoon was able to increase sales by 155% – from $59,300 in 2003 to $150,950 in 2004 – simply by assigning half of a staff member’s time and a $6,500 marketing budget to the enterprise. Market research and customer interviews indicate that this market niche – unique, visually and aesthetically surprising, high quality, creative event entertainment – is growing rapidly. Or as one client describes it, “alternative performance techniques (puppets, non-realistic interpretation, etc) are just in their infancy.”1 These alternative elements are commonly used in Redmoon's work.

EXHIBIT G: Market Potential and Redmoon for Hire (Refer to Attachments Ia and Ib for a list of actual events conducted in 2003 and 2004.)

MARKET SEGMENTS REDMOON PAST EXPERIENCE(2003 and 2004 actual events)

SEGMENT POTENTIAL # Events $ Income Avg $/EventNonprofit There are approximately 10,000 nonprofits in Illinois who spend $574

million on fundraising and special events.2 Conservatively, 1% are 10 $45,200* $4,520*

1 Fort, Keith, Fort Productions, client interview, December 2004.


Organizations estimated to have budgets of sufficient size to hire high-end entertainment like Redmoon. They spend an average $500 to $50,000 on event entertainment for galas, benefits, grand openings.

Civic Institutions Parks and recreation spending for the State of Illinois in 2001 was $28 billion.3 Most of the 600 suburbs in Chicagoland program events via their parks/recreation departments. These communities spend an estimated $1,000 to $100,000 annually on event entertainment.

7 $23,250 $3,321

Weddings/ Other Private Social Parties**

The U.S. wedding industry is $60 billion annually, and the average wedding costs $22,000.4 Considering that Chicago is approximately 2.5% of the U.S. population, this results in $1.5 billion being spent on weddings in Chicagoland. If 10% of wedding expenses are entertainment, this is a $150 million market in Chicago.

7 $72,000 $10,286

Corporate Events – local

The meeting and event industry is a $102.3 billion market. An average corporate meeting budget is $5.3 million, and average association and society planner budgets are $3.1 million for 20045 of which 5% to 60% is spent on entertainment. Using a conservative 15% estimate results in a $15 billion plus market for corporate entertainment.

9 $49,800 $5,533

Corporate Events – national

1 $20,000value: $30,000***

$20,000($30,000***)

TOTAL 34 $210,250 $6,184* Redmoon for Hire occasionally subsidizes fees paid by nonprofit organizations based on alignment with its parent company, Redmoon Theater’s mission as well as opportunities for exposure to important Chicago donors and political figures. In 2003 and 2004, Redmoon received $29,450 in cash payments from nonprofit organizations and subsidized $15,750 in fees for these organizations.** Wedding industry is used as a proxy for other private party markets. *** Actual value of corporate event was $30,000. Redmoon unnecessarily underbid the price of this event – client has said that it would have paid $30,000 – and as a result Redmoon experienced a reduced margin for this event. Redmoon for Hire now incorporates these learnings into its current national corporate events pricing strategy.

Prioritization of Market Segments In addition to reviewing the size of each target market segment of Redmoon for Hire, further analysis was conducted to create a relative prioritization among these target segments. The segments were plotted on a 2x2 matrix whose dimensions are size of event (calculated as average income per event) and average margin for the segment (see Exhibit H1 below). The size of the bubbles in the matrix correspond to the number of events that Redmoon for Hire has sold and is an indicator of Redmoon’s experience with that segment. The 2x2 matrix as well as the prioritization analysis (Exhibit H2) that follows has enabled Redmoon to determine the strongest market segment potential and to create a prioritization hierarchy that guides its sales strategy.

EXHIBIT H1: 2x2 Prioritization Chart

EXHIBIT H2: Prioritization AnalysisSEGMENT DESCRIPTION ANALYSIS ASSESS-

MENTCorporate Events – national

Highest margin and largest potential. Includes corporate events held outside of Chicago as well as conventions and events for corporations headquartered in Chicago region but attracting event

Intermediaries are seeking unique and creative ideas to offer clients, and Redmoon for Hire's unique entertainment offerings can help them close the deal with clients.

Sophisticated and knowledgeable clients who work efficiently.

Potential for multi-day/multi-location events which have higher margins.

High – highest potential, especially for semi-customized events.

2 Donor’s Forum of Chicago, “Portrait of the nonprofit sector in Illinois,” May 28, 2003, Figure 9 dated 2001, Page 8.3 U.S. Census Bureau, “Summary of State and Local Government Finances by Level of Government: 2001.”4 Navratil, Wendy, Chicago Tribune, “Wedded blitz: Michigan Avenue caters to all things nuptial with a 2-day toast to brides,” June 20, 2004, Section 13, Page 1.5 Meeting Professionals International, “Larger budgets, more international travel signal healthy meeting industry performance in 2004,” January 13, 2004.


guests from national branches/offices.

Event guests have rarely experienced Redmoon for Hire previously, which allows Redmoon to offer semi-customized (highest margin) events with “off-the-shelf” items and still have the effective event impact and surprise.

Chicago has a large convention/meeting/association industry and is a frequent destination for some of largest trade shows.

Redmoon has least experience serving this segment but can gain experience quickly (3-4 $30,000+ events in pipeline for 2005).

Provides excellent opportunity for Redmoon to develop new event offerings (R&D) and to market test them.

Corporate Events – local

Larger events, on average, with strong margins.

Increasing awareness in Chicagoland especially to intermediaries who do multiple events.

Less risky than national corporate events, because generally smaller, so less influenced by economy.

Exposes Redmoon for Hire's parent organization, Redmoon Theater, to new potential audience members and to new potential donors.

Provides good opportunity for Redmoon to develop new event offerings (R&D) and to market test them.

High – good margin and help modulate risks from national clients

Weddings/ Other Private Social Parties

Wide range of parties from weddings to bar/bat mitzvahs to milestone anniversaries/ birthdays, but some can be low margin.

Easy to find, low-margin parties; already receive many unsolicited inquiries.

Need to position Redmoon for Hire as upscale offering to maintain margin.

High-end parties strongly demand unique events to one-up each other.

Exposes Redmoon for Hire's parent organization, Redmoon Theater, to new potential audience members and to new potential donors.

Medium/ High – target high-end parties

Nonprofit Organizations

Nonprofit segment is large: highest percentage of cold call inquiries to hire Redmoon come from this segment, but segment has few resources and is very price sensitive.

Smaller events on average, because of client’s need to make money on event.

Exposes Redmoon for Hire's parent organization, Redmoon Theater, to new potential audience members and to new potential donors, as well as potential private party clients for Redmoon for Hire.

High awareness of Redmoon because operate in same sector; easy to reach.

Low sophistication of clients results in need for significant hand-holding.

Often high visibility events with significant press coverage

Redmoon for Hire subsidizes some event fees.

Medium – provides steady income in smaller amounts

Civic Institutions Relatively few entities, and nature of events (outdoor, elaborate processions/ ceremonies, large numbers of performers and crew) result in lower margin events.

Segment serves both Redmoon’s artistic mission of transforming public spaces into places of celebration and Redmoon for Hire's goal of generating income.

To public, appears to be part of Redmoon’s core artistic programming.

Desire to demonstrate civic pride by hiring locally limits segment potential.

Often high visibility events with significant press coverage and participation by political figures.

Provides excellent opportunity for Redmoon to develop new event offerings (R&D) and to market test them.

Low – but assists with fulfilling artistic and community/ civic mission

From the prioritization analysis, the following prioritization becomes clear: corporate events and private social events have the highest potential. Specifically, the ranking is:

1a. Corporate Events – National


1b. Corporate Events – Local2. Weddings/Other Private Social Parties3. Nonprofit Segment4. Civic Institutions

Customer Needs, Wants, and BehaviorsWithin these target segments Redmoon for Hire assessed customers’ needs, wants, and behaviors through survey data. Redmoon for Hire conducted a 16-question survey of approximately 300 past clients and existing events contacts to determine their needs, wants, and behaviors (see Attachment II for client survey and tabulated data). Sixteen of the surveys were returned (response rate > 5%). While the sample size was small, the results were nevertheless useful. Generally the respondents seem to mirror the industry as represented by an annual survey conducted by Special Events Magazine, particularly in terms of the number of events planned each year and the amount spent on events per year. According to Special Events Magazine, the number of events is projected to increase.6 In general, Redmoon’s current clients throw smaller events (in terms of dollars) than the industry average, so a growth priority is for Redmoon to seek out clients with larger events.

Redmoon for Hire’s survey respondents closely mirror the industry’s needs citing uniqueness and creativity above price when hiring event entertainment as displayed in the following continuum, Exhibit I.

EXHIBIT I: What factors do you weigh when hiring entertainment vendors? (Redmoon market survey, n=14)

Market research and literature review demonstrate that customers in this sector are seeking events aligned with their theme or aesthetic, as well as events that are unique, creative, and affordable.

EXHIBIT J: Industry Wants and NeedsIndustry Demands Redmoon for Hire’s ResponseAlignment with Theme/Aesthetic“…making the most of the client's money means matching speaker or performer to client message, as well as negotiating with entertainers to deliver more-focused entertainment.”7

“The success of my events is judged by whether the client’s message is successfully communicated.”8

The Arlington Million (akin to the Kentucky Derby of the Arlington Racecourse) contracted Redmoon for Hire to provide entertainment and create the party environment for their VIP party, themed as “Red Hot Jazz” and “Lucky 13” (since the event was on Friday the 13th). Table Ladies and Stilted Servers were decked out in sultry red costumes; the number 13, horseshoes and other lucky icons were incorporated into the décor; and the overall feel of the event suggested horseracing with the sophisticated, sexy edge that the client thought was essential to the success of their party.

Uniqueness“…finding a distinctive niche is crucial to survival. ‘The future right now tends to point towards a continued demand for specialty items that are unique and different and create

Redmoon for Hire events have a built-in “wow” factor. Redmoon for Hire provides a range of customizable offerings. The smaller clients (<$7,500) are provided with easily adapted

6 Hurley, Lisa, Special Events Magazine, "Making the Customer Connection," February 1, 2004, Page 1.7 Garber, Natasha, Special Events Magazine, "On with the Show," July 1, 2003, Page 7.8 Kaufman, Mark, CTM Productions, client interview, April 11, 2005.


individuality for each event,’ notes Barry Reynolds, general manager of Denver-based Butler Rents.”9

“Consider the success of private events, and try to deliver a similar high value and specific information to meet the needs of a vertical audience. Avoid the cookie-cutter approach.”10

off-the-shelf products like the Table Ladies. The larger clients (>$20,000) are provided completely customized events.

For example, one large client recently threw a donor dinner at Chicago’s new Millennium Park. Because the event was in November, the guests were indoors behind a glass wall, but wanted to be able to look out on the park. Redmoon was tasked with activating the outdoor space. Redmoon designed a human-powered hamster wheel that radiated near-range pyrotechnics combined with amplified music inside. The 10-minute pyrotechnic spectacle was a completely unique exclamation point to the end of the donors' evening.

Creativity of Vendor“…in the entertainment sector, many professionals see the current state of affairs as an opportunity for creative solutions. Increasingly, event entertainment providers and producers are turning to custom shows, interactive programs and scaled-down celebrity performances to meet clients' needs.”7

Redmoon for Hire events are customized to match clients' needs. For example, Ryerson Woods is a forest preserve north of Chicago that wanted to launch its summer programming with a unique event to attract family audiences to the woods. Redmoon’s artistic staff designed a lantern-making workshop for 200 children and their parents. The workshop ended at dusk as Redmoon’s “lamplighters” carrying oversized lanterns constructed by Redmoon’s artists led a procession through the woods accompanied by Redmoon’s band.

Affordable"What's hot right now are things that are affordable."7

“Plus, [Sam Trego of San Diego-based Imagination Entertainment] says, Imagination's Broadway- and cirque-style shows are a great bet for beating the high cost of celebrity entertainment. ‘If you can spend $10,000 to $65,000 instead of $350,000 and you have a cast of 23 people…and the cast is singing and dancing and flying over your table, that's a huge perceived value.’"7

Redmoon for Hire events are primarily offered at this mid-range price point of $5,000 to $50,000. The size of the offerings varies from a pairing of several objects (2-3 Table Ladies with 2-3 Stilted Servers and a Wine Bike) to casts of 50-100 performers.

Interviews with four representative event planners have also uncovered that interactivity – the extent to which the event entertainment is designed to engage and interact directly with event guests – is a key factor. Event planners identified that up to 80% of their clients are requesting interactive entertainment that creates a unique experience in which guests can actively participate.

…the grouping of multiple smaller, interactive acts is part of a growing trend: "A lot of my clients are saying, 'Bring it out into the room. Let [guests] touch it, let them feel it, let them experience it for themselves.'"7

As a niche provider specializing in creative, interactive entertainment, Redmoon for Hire provides event planners with the means to meet the needs of their clients. The park district of Glenview (a Chicago suburb) which has repeatedly hired Redmoon to perform in their 4th of July parade raves, “Everyone watching Redmoon in our parade was impressed with their colorful costumes and enthusiasm. I mean, they didn’t just march and take up space—they got everyone involved!”

Redmoon for Hire performers are specially trained to interact with audience members. Some of Redmoon’s most popular costumed characters are the “Camera Crew” who perform a red carpet welcome greeting for guests as they are dropped off at a valet/taxi stand. They snap Polaroid photos while the band plays a welcome fanfare. Other interactive offerings include a crew of boisterous gibberish-speaking clown chefs that move through the party interrupting guests’ conversations; graceful stilt walkers; parade elements that can be used in actual parades and/or at private parties (and can be customized to different moods and event themes – ephemeral candlelit parades or outrageous and energetic character parades); and the food service performers such as the Table Ladies and the Stilted Servers.

9 Hurley, Lisa, Special Events Magazine, "Making the Customer Connection," February 1, 2004, Page 1.10 Meeting News, "All rules are out for 21st century expos," November 18, 2002, Vol. 26, No. 17; Page 1.


Redmoon for Hire: Clown Chefs Redmoon for Hire: 4th of July Parade

Additional Needs of IntermediariesRedmoon recognizes that intermediaries’ needs for uniqueness can have different motivations than end clients’ needs. Intermediaries frequently offer Redmoon as part of a package they are selling to an end client. They earn their clients’ respect by recommending offerings like Redmoon for Hire that the end client has never seen before – this enables them to make the sale more easily. Offering a unique product like Redmoon helps them win business from competitors who are offering less differentiated products and ultimately results in closing business. These intermediaries also mark up Redmoon’s fee 5% to 15% before passing it along to the clients resulting in a direct financial benefit from the relationship. One survey respondent describes the relationship this way:

7 Garber, Natasha, Special Events Magazine, "On with the Show," July 1, 2003, Page 7.

How entertainers create a unique, memorable and successful event when working as a team [is important]. We are always looking for that unique piece of décor, entertainment or an overall concept that we can add to a proposal to be the WOW factor and close a deal. We like to work with vendors that give us something different than they give everyone else, and we always look for loyalty from the people we work with on a regular basis.—Jodi Wolf, President, Paulette Wolf Events and Entertainment

The uniqueness of an event entertainment provider like Redmoon for Hire enables these intermediaries to pitch and close sales.

Most clients have more limited budgets now than they did 10 years ago. Acts must have name value or be exceedingly unique to justify travel, lodging, per diem costs. Unique is the key word – they must provide something that cannot be sourced locally or in a nearby metro market.—Keith Fort, President, Fort Production Management Inc.

COMPETITIVE ANALYSISAs mentioned above, competitors to Redmoon for Hire can vary widely from motivational speakers to participatory exercises. However as the survey results indicate, most clients who consider Redmoon typically hire some type of performance/entertainment vendor as opposed to participating in sporting or Outward Bound type events (see continuum, Exhibit K below). Also, industry and survey evidence demonstrates that the market for event entertainment, especially those offering unique products and services (a “wow” factor) is growing. Thus, Redmoon for Hire defines its primary competitors as other performance/entertainment vendors.

EXHIBIT K: What types of vendors do you typically hire for these events? (n=14)


As a niche player, Redmoon for Hire competes on its ability to provide unique, creative entertainment (a “wow” factor) while simultaneously creating a highly interactive event experience for guests – all offered at a mid-range price point. Redmoon’s competitive research has revealed competitors that offer a range of entertainment based in music, dance, or circus arts (see Exhibit L below).

Competitors operating within the creative entertainment sphere are exemplified by, at one end of the pricing spectrum, a local Chicago company, Midnight Circus, which provides individual circus artists (jugglers, unicyclists, etc.) starting at $150 per hour. At the other end of the spectrum is Cirque du Soleil whose events start at $55,000 to $75,000 (with travel, accommodations, local production, etc. extra) for a 25 to 30-minute off-the-shelf performance, or solo "name" acts than run as high as $1 million in performance fees alone. Unlike these competitors, Redmoon’s events are unique and highly customized and are offered at a mid-range price point of $5,000 to $50,000. The other mid-range competitors like AntiGravity, Mass Ensemble, or Project Bandaloop specifically offer music or aerial-oriented performance (see Exhibit L below).

EXHIBIT L: Selected List of Entertainment Competitors or SubstitutesNAME SCOPE PRODUCT PRICE TYPE

general background/ dancing music

Local jazz combos, string quartets, dance bands, cover bands, etc.

$500 to $4,000 for 3-12 piece ensemble/band per evening

Music only

Midnight Circus Local Circus acrobatics, aerial dance, live music, and character work

Starts at $100 to $500/hour

Circus arts

Actors Gymnasium/Silver Guy Entertainment

Local Aerial performance: trapeze, lyra, juggling, silks, Spanish web, teeter board, highwire, low wire

Wandering characters - strolling on stilts, unicycles, globes, contortionists

Specialty is customizing to your event (your theme, your colors, etc.)

Costumed characters $150/hr with 2 hr minimum.Silks with aerial truss $500 for solo performer, $800 for duo (volume discounts available)

Aerial and circus arts

Redmink(by David Mink)

Local Themed costumed characters Fees range $300 to $450 for 2-3 hours per character

Commercial

Jellyeye Drum Theater

Local Drum-dance ensemble. Typical performance is 6-8 people for 20-40 minutes

$2,500 for typical performance

Percussion

Redmoon for Hire Local and National

Unique, creative spectacle entertainment that provides highly interactive event experience for guests: characters, band, integrated atmospheric entertainment, food service performers, etc. Entirely customizable.

$5,000 to $50,000 Interactive spectacle entertainment

AntiGravity National NYC-based aerial performance company combining athletics, gymnastics and dance

$20,000 to $30,000 for a 6-7 minute aerial act plus expenses

Aerial performance

Mass Ensemble International “World’s largest stringed instruments” and kinetic performances

$25,000 for cast of 6-7 musicians plus expenses

Music performance

Project Bandaloop International Choreography inspired by the possibilities of climbing and repelling, blend of dance, sport, ritual, and environmental awareness

Fees start at $25,000 to $35,000 per performance plus expenses

Aerial performance

Nationally/ internationally known "name" acts

National/International

Examples: Sheryl Crow, Bette Midler, Elton John

$70,000 to $1 million Popular musicians as the "main event"

Blue Man Group National emailed response “Due to the large number of proposals we receive, we are unable to contact you unless your event presents an appropriate opportunity for our organization.”

N/A Performance art

Cirque du Soleil International Typical would be 25-30 minute performance of 2-3 acrobatic acts plus some costumed characters. Would include 9 people, 2 of which are technical (rest of crew must be provided locally)

Starts at $55,000 to $75,000 excludes airfare, hotel, per diem, local production

Circus arts

Exhibits M1, M2 and M3 illustrate Redmoon for Hire’s position relative to competitors. Redmoon is much higher on the experiential interactivity scale than others at same price point (Exhibit M1). Similarly, Redmoon is competitive on the "wow" factor and also faces competitors in its price range (Exhibit M2). However, Redmoon stands alone in terms of the level of uniqueness coupled with the level of interactivity (Exhibit M3).

EXHIBIT M: Graphs of Redmoon for Hire versus Competitors

None of the competitors, at any price range, offers a “wow” factor like Redmoon’s spectacle theatrical entertainment with the level of interactive event experience that Redmoon does. Redmoon’s aesthetic stems from the mission of transforming public spaces into places of celebration. The spectacle provides a way for the public to celebrate together. It is this core value of celebration and participation that enables Redmoon to provide truly unique entertainment.

While Redmoon is sometimes described as being similar to Cirque du Soleil or Blue Man Group, artistically Redmoon is very distinct from these commercial troupes. Redmoon does not offer circus arts (e.g., juggling) or aerial acts (e.g., trapeze). Redmoon is not commercial performance art like Blue Man Group. Nor does Redmoon provide character-driven solo performers (e.g., magicians or fortunetellers). Redmoon's entertainment is primarily atmospheric and interactive. It is fully integrated into the event, as opposed to being a separate performance attraction (like a stage show). Redmoon can integrate with and reinforce other live performers such as motivational speakers or celebrity acts. For example at one of the largest events Redmoon has done to date, Redmoon provided Table Ladies and other service characters while Elton John was the "main attraction."

Redmoon for Hire: Interactive Spectacle Entertainment

Sample testimonial from a production company client is indicative of Redmoon’s niche and competitive advantage:

“I have been involved in producing corporate events since the late 1970’s…I believe that the industry is looking for something better, something beyond the ubiquitous ‘Stomp’ or ‘Cirque’ derivatives. Redmoon provides performance elements that are intelligent, completely unique, and easily adapted and customized to my clients’ communications objectives. The creative and operations staffs at Redmoon are adept, visionary and highly professional, requiring a minimum of event staff time to organize and deploy.”—Keith Fort, President, Fort Production Management Inc.

In summary, the market niche that Redmoon for Hire owns is events seeking high quality interactive, atmospheric entertainment that carries a significantly unique and surprising “wow” factor. Offered at a mid-point price range, Redmoon for Hire is desirable compared to other higher priced options.

Marketing PlanRedmoon’s marketing strategy is to maximize sales and profit margin through: Product: Offering a high quality niche service that combines “wow” factor and the interactivity that clients desire. Price: An attractive mid-range price for a high-quality product, customizable based on the market’s willingness

to pay and on actual costs to produce the event. Distribution: A sales and delivery strategy that continues to support direct sales to clients but increasingly

focuses on efficiencies gained through working with event planner intermediaries who have multiple clients. Promotion: A marketing plan that targets repeat and referral business as more efficient and less expensive than

new client acquisition and cold calls.

Product: A niche service with high perceived valueRedmoon for Hire is positioned as a unique offering with high perceived value for clients: Redmoon for Hire events are highly memorable, transform the event experience, and offer a high level of interactivity and participation for the guests. Guests attending a Redmoon for Hire event have an “experience” that makes the evening entirely memorable and stand out from other events – guests remember the party and thus they remember the client who threw the event. The product can be completely customized to meet clients’ needs. As outlined above, the goal is to target larger events with more substantial entertainment budgets and to offer them semi-customized entertainment offerings, a combination of Redmoon’s current “stock” of entertainment options coupled with new and unique elements that match the event’s themes and experience goals.

Redmoon approaches these special events with a different philosophy than for-profit entertainment providers. Rather than acting as a talent agent when a client wants a couple of stilt walkers to hand out flyers at a store opening, Redmoon carefully orchestrates each event. Redmoon works with the client to fully integrate the entertainment into the event. This often involves participating in creative conceptualization meetings, phone consultations, and site visits in the months leading up to the party. Redmoon always provides an artistic director on-site the day of the event, to direct and ensure the artistic integrity of each event.

PriceRedmoon for Hire's pricing is a mid-range price point based on the market’s willingness to pay and Redmoon’s actual costs to deliver the services.

Both the survey conducted by Redmoon and industry research demonstrate that price is important to clients, but it is fourth in order of priority behind alignment with event’s theme, uniqueness, and creativity (see Exhibit I, continuum above). Each event is priced individually, so Redmoon can probe each client’s willingness to pay when negotiating a contract. From recent experience, Redmoon has begun to learn what the market will bear and is increasing prices accordingly. For example, a past client recently claimed that she would have been willing to pay twice as much for the value she received having Redmoon perform at her wedding, indicating an opportunity for Redmoon for Hire to increase its prices.

To accomplish this, the minimum event price increased from $3000 in 2004 to $5000 in 2005. A primary reason for increasing this minimum is the improved efficiency of larger events. Smaller events tend to have less sophisticated clients, which require a disproportionate amount of time and energy to administer. Additionally, selling one larger event is a substantial reduction in the time of sales staff versus the effort that goes into selling several smaller events.

The direct costs of events are relatively straightforward to budget. Typical categories of expenses include: performers' fees, crew labor, materials, truck rental, hospitality, and salaried staff time (direct expenses), in addition to allocated overhead (indirect expenses). Being accustomed to being resourceful with small theatrical budgets, Redmoon’s production staff is able to contain production costs while still maintaining the high quality and integrity of each event. This is accomplished while paying artists fairly, since one of the purposes of Redmoon for Hire is to employ performers and other artists more consistently and at higher wages. Increasing the scale of Redmoon for Hire will allow the fixed costs to be allocated across a wider number of events, thus beginning to provide a surplus to assist in contributing new revenue to the theater’s core artistic programming.

Targeted distribution channels to maximize efficiencyWhile the growth in direct sales to individual clients may eventually be limited by clients’ interest in making their events unique from year to year (and thus a potential interest in hiring a range of competitors or substitutes), intermediaries – who have multiple clients and who can thus continue to refer Redmoon to different clients over time

– are a highly appealing market segment. The event planner industry – the intermediaries – has grown rapidly. The trade association Meeting Professionals International reports that its membership has grown from 159 in 1972 to its current total of 19,000.11

Redmoon for Hire will continue to offer event entertainment directly to clients, but Redmoon is now focusing on intermediaries – agents such as event planners, caterers, venues, and production companies who work with multiple clients and are likely to recommend Redmoon repeatedly – as key channels to enable the venture to reach the national and local corporate market segments. Intermediaries are important target customers because each intermediary has multiple end clients who are seeking unique entertainment vendors. Targeting intermediaries creates efficiencies by consolidating marketing and sales efforts and putting the main burden (and costs) of sales on the intermediary. Often Redmoon contracts directly with the intermediary who handles the sales pitches for multiple clients and manages the project for the end client.

Survey respondents report that long-standing relationships are a key mechanism for sales and referrals. While Redmoon has some long-standing relationships and is cultivating others through sales, it is also investigating entering into formal “preferred vendor” arrangements with some intermediaries. For example, many major venues in Chicago have a list of preferred caterers that renters of the venue are obliged to use. Redmoon has contacts at venues like the Field Museum, Chicago Cultural Center, and Garfield Park Conservatory where it is investigating this type of formal arrangement to be a “preferred entertainment vendor” for events held at those venues.

Communications PlanTo date, Redmoon for Hire has a remarkably high (~50%) success rate of securing closed deals from proposals (see Exhibit O below). The key to sales, then, is getting to the pitch stage. Word-of-mouth referrals have been key, generating most of Redmoon for Hire's sales to date. This is supported by survey respondents who rated “referrals from colleagues” as the primary way they learn about entertainment vendors (see Exhibit N, continuum below).

Toward this end, Redmoon has focused sales efforts on cultivating former clients, board members’ contacts, and friends of the theater. With the increased focus on selling to intermediaries, referral efforts have been extended to event planners, production companies, caterers, and venues.

When Redmoon for Hire was formalized as a venture earlier this year, the administrative staff was reorganized to allow half of the business manager’s time to be spent on the venture. Business manager Christy Uchida is primarily responsible for all event sales and marketing initiatives as well as contracting and general administration of the venture. Uchida fields inquiries, makes presentations, assists with publicity, prepares proposals, and coordinates between client and artistic staff. Because Redmoon for Hire is a high quality, unique product, Uchida cultivates clients in many of the same ways that the theater’s development department cultivates donors. Potential clients are invited to performance openings and receptions, are sent personalized correspondence, and are treated as a high priority. These contacts are tracked in the same database as the theater’s donors to understand relationships (for example, if a client was referred by a board member).

Redmoon’s work is highly visual and can be challenging to describe in words alone. Marketing materials have been substantially upgraded to meet the expectations of the client base and to reflect Redmoon’s high event quality and unique, compelling aesthetic. With a modest marketing budget in the first year of the venture, Redmoon produced an

11 Barnes, Brooks, Wall Street Journal, "For Event Planners, the Hottest Invite Is Made of Leather: Corporate Party Throwers Win Honors for Lavish Affairs; Pink Eraser Centerpiece," April 14, 2005, Section A, Page 1.

eye-catching brochure and DVD to assist with sales (see Exhibit A and enclosed sample brochure). The collateral was designed to be customized and easily adaptable as R&D continues and new products are developed. With a packaging concept similar to a CD case, the package holds a series of cards with images, text, and client testimonials describing each of the offerings. As new elements are added, cards of the brochure can be added or updated at low cost to keep the piece current. Both the brochure and the accompanying DVD contain a multitude of representative photos and client comments, which Redmoon’s market research has identified as two of the top components upon which clients base their choices. Redmoon has a significant positive feedback from many design-minded clients who have appreciated the piece’s unique and functional design. The brochure and DVD content is also available on Redmoon’s website, which allows potential clients across the country quickly and inexpensively to see samples of Redmoon for Hire.

In order to reach intermediaries, Redmoon has been making in-person presentations at catering companies during their regular sales meetings and at vendor open houses. With additional resources in 2005, Redmoon is expanding marketing efforts to include attending industry conferences and association meetings such as Meeting Professionals International, Professional Convention Management Association, and International Special Events Society.

Redmoon also plans to target some industry and trade publications, in which survey respondents say they learn about vendors (see Exhibit N, continuum above). Redmoon has had some success getting exposure in the Chicago social media (see Attachment IIIa: Crain’s Chicago Business, April 2005; Attachment IIIb: Chicago Tribune Magazine, March 2005; Attachment IIIb: Chicago Magazine, December 2004) and is working to expand this exposure to national, especially event planning, publications, with future articles to appear in Special Events Magazine, Entertainment Design, Catering Magazine, and others.

EXHIBIT O: Marketing Goals (2004 actuals vs. 2009 targets)GOALS CONTACTS PROPOSALS MADE SALES RESULTS

2004 Actual 2009 Target 2004 Actual 2009 Target 2004 Actual 2009 Target

Calls received through word of mouth channels and referrals

Direct: 78 Intermed: 66

7575 36 35

19 events $152,200

18 events $253,900

Sales calls placed to leads Direct: 49 Intermed: 70

100100 3 12 3 events

$8,750 6 events $84,600

Marketing materials sent to leads


150150 3 18 2 events

$14,500 8 events $112,800

In-house presentations to catering companies and other intermediaries

Intermed: 36 503 5

0 events $0

2 events $28,200

Participation in vendor open houses


50150 2 10 TBD* 5 events

$70,500Additional Benchmarks and GoalsMedia coverage of Redmoon for Hire

Targeting Chicago Magazine, Chicago Social, Special Events Magazine, Entertainment Design, Catering Magazine, Crain’s Chicago Business, Chicago Tribune Magazine, North Shore Magazine, Martha Stewart Living, Modern Bride and others

“Preferred” entertainment vendor relationships

Building on existing relationships with the Field Museum, Convention and Tourism Bureau, Chicago Cultural Center, Navy Pier, Garfield Park Conservatory, and others

* Closed sale in 2005.

Management PlanRedmoon is well staffed with experienced, capable employees and board members to execute this business plan. Of Redmoon’s 17 employees, three have MBAs, an unusually high number per capita for an arts organization. Among Redmoon’s 18 board members, three are venture capitalists and one is a high-end event producer. These people along with other key staff form a strategic team to make Redmoon for Hire an institutional priority. (See attached biographies and resumes, Attachment IV.)

Redmoon for Hire is operated as part of the nonprofit theater and is managed as a department within Redmoon Theater’s nonprofit, 501(c)(3) structure. Nonprofit theaters have a unique parallel structure that Redmoon for Hire also follows (see Attachment V, Organizational Chart). Redmoon is organized following this parallel structure by having both an Artistic Director, Jim Lasko, and a Managing Director, Gillian Darlow, who co-lead the organization and manage the art and the administration, respectively. Since the venture draws on so many of the theater’s existing strengths, it is most efficient for staff to have responsibilities both in the venture and in the theater. For example, Business Manager Christy Uchida has primary sales and business development responsibilities for the venture and also handles financial management for the theater. Similarly, Kristin Randall Burrello oversees all production aspects of the venture and also provides key artistic leadership for the theater. Together Uchida and Burrello mirror the partnership between Darlow and Lasko in providing business and artistic management of the venture. Additional details of the venture’s management, staffing, and responsibilities can be found in the Operations Plan.

Business Manager Christy Uchida, in collaboration with Managing Director Gillian Darlow, co-lead the Redmoon for Hire venture. Uchida does the day-to-day sales and operations with Darlow providing leadership and oversight. Uchida’s background includes a combined seven years of management consulting and performing arts management experience, with an MBA from the Kellogg School of Management at Northwestern University. Darlow received her MBA from Stanford Graduate School of Business, and prior experience includes 14 years of strategy and business development with nonprofit organizations including Chicago’s Field Museum and Actors Theatre of Louisville.

All income generation at Redmoon is championed by Board Treasurer Frank Blair. With over 35 years of experience, Blair has operated his own venture capital firm since 1983. He holds degrees from Yale and Harvard Universities. Additional board members, Larry Carter and Peter Szollosi also contribute their significant expertise in venture capital and event management, respectively. These three, along with other board members, serve on Redmoon’s Earned Income Committee whose charter is to identify sources of earned income in addition to Redmoon’s ticket sales. Because Redmoon Theater’s capacity to earn revenue through ticket sales is limited on the upper end by its mission of providing free and low cost programming, the Board charged the Earned Income Committee with identifying alternative earned revenue streams that can diversity Redmoon’s revenue and avoid over-dependence on earned income. Redmoon for Hire was selected as having the most market potential and greatest alignment with Redmoon’s assets and theatrical mission. The Earned Income Committee provides the governance and oversight to ensure that the venture is fulfilling its purpose of contributing as much income to the theater a possible without distracting the organization from its artistic mission.

Redmoon’s artistic staff is also closely involved in the venture. Each event is categorized by the level of customization requested by the client as well as the event’s overall budget size and the importance of the client to Redmoon for Hire and/or Redmoon Theater, the parent organization (see Exhibit P below). Events are conceived and directed by either Artistic Director Jim Lasko, Associate Artistic Director Frank Maugeri, or a contracted Redmoon director, depending on the categorization assessment according to the above variables. Events are produced by Kristin Randall Burrello, Associate Artistic Director who oversees the production staff. Together Lasko, Maugeri and Burrello, who have a combined 35+ years of experience creating award-winning, original work in the Redmoon style, are the core artistic leaders both of the theater and the venture. They provide the artistic vision and the history in order to understand how the theater’s and the venture’s missions intertwine and strengthen each other.

EXHIBIT P: Management Matrix of Redmoon for Hire EventsKey variables determining staffing level Management staffingLevel of Customization

Fee Range Prestige of clients or guests

Artistic Direction Production Management

Fully customized $20,000 or above

Major donor, public figure, or political figure highly significant

Jim Lasko, Redmoon Artistic Director

William Collins, Redmoon Production Manager

Semi-customized $7,500 to $20,000

Major donor, public figure, or political figure significant

Frank Maugeri, Redmoon Associate Director

Patrick Reynolds, Enterprise Production Manager

Mostly “off-the-shelf” elements

Up to $7,500 Not significant Seth Bockley, Redmoon Artistic Associate or contracted event director

Patrick Reynolds, Enterprise Production Manager

Fully Customized: Millennium Park Illumination

Off-the-shelf: Stilters at the Field Museum

Growing the venture primarily requires increasing capacity, as opposed to increasing skills. Because the venture is so closely aligned with Redmoon’s mission, the organization currently possesses most of the skills necessary to successfully run the venture: vision and attention to bottom line is provided by board members and the managing director; sales skills are similar to fundraising skills and Redmoon currently successfully fundraises 60-80% of its $1.6 million budget every year; creativity to develop new products is the core of Redmoon’s skill set, and professionalism to execute flawless events has been proven over past 16 years of critically acclaimed theatrical productions. The similarity between the venture and Redmoon's core artistic product also allows Redmoon to hire new staff for the venture at the same pay scale as existing staff.

Redmoon has been increasing capacity incrementally. For example, when the venture was formalized at the beginning of 2004, the Business Manager’s time was reallocated to allow half of this full-time position to be spent on business development. As a result, sales increased 155% (from $59,300 in 2003 to $150,950 in 2004). Now Redmoon has identified a need to increase production capacity to support this increased workload and has added an Enterprise Production Manager, Patrick Reynolds, to manage the events. Whereas before Redmoon Theater’s production manager worked both on Redmoon’s core theatrical shows and on special events, now these roles have been separated since the workload has increased and is consistent enough to require two positions with dedicated and separate responsibilities. As the sales workload increases, Redmoon anticipates adding a part-time Enterprise Sales and Events Manager in 2006. (See Exhibit S in Operations Plan.)

Operations PlanRedmoon for Hire's operations plan is designed for efficiency while meeting the individual needs of each client. Each Redmoon for Hire event is unique, but the steps to sell, produce, and deliver an event are similar and follow a typical process as outlined in Exhibit Q below.

EXHIBIT Q: Steps to produce and deliver a typical Redmoon for Hire eventSteps of Process

Activity Responsibility Sample Process for a Typical Event

Prospecting/ Cultivation

Distribute collateral, secure publicity, present to potential clients, attend industry functions, follow up on referrals, maintain communication with previous clients, invite to events, etc.

Uchida, Business Manager

Redmoon for Hire: Participation in International Special Event Society's annual conference where Redmoon provides a teaser to demonstrate its offerings, meet event planners from all over the world, and secure photo and description in ISES's quarterly "Special Events Magazine." Event planners who are local to Chicago are invited to the next Redmoon theatrical performance to continue to familiarize them with Redmoon’s aesthetic.

Inquiry Field email and phone inquiries


Corporation (end client): “My corporation is planning its 25th anniversary celebration next summer, and we’re looking for a really creative way to impress our employees and clients at the event.”Event Planner (intermediary): “I saw Redmoon, a unique entertainment vendor at the ISES conference a few months ago. I’ll get a proposal from them and arrange a meeting.”

Sales Provide sales collateral, photos and descriptions, confirm availability, quote pricing


Event Planner: “My client is planning an event on June 15th for 500 guests to include cocktails then dinner and an awards ceremony at a cool warehouse space. Our theme has an urban/industrial feel.”Redmoon Business Manager: “Redmoon can provide inventive food service like our Table Ladies, Stilted Servers, and Wine Bike for cocktails. Then our costumed characters and band can lead a procession of your guests to dinner and assist with the award presentations. I’ll send a brochure, and see the DVD on our website. Fee starts at ~$10,000, and Redmoon can also provide some creative décor for an additional $3,000-5,000.”

Artistic Conceptualization

Design event, meet with client to provide artistic consultation, conduct site visit, provide artistic options to client

Lasko, Maugeri, or Bockley lead team to design event artistically

Redmoon artistic/production staff: “This site is very urban chic, but the entrance may be difficult to find. We recommend a fire spectacle at the entrance to alert guests that they have arrived. The band can play a welcome fanfare as the characters snap Polaroids for the guests to keep. The Stilted Servers are too tall for the space, but we recommend adding some lanterns for décor to provide a cool glow during cocktails.”Redmoon Business Manager: “Revised quote: $14,000 plus $3,500 for lanterns.”

Contracting Narrow down options, provide contract terms, make payment arrangements


Event Planner: “The client loves the fire and lantern ideas, but a sound ordinance prohibits the band from welcoming guests outside." Final decision: fire spectacle at entrance; Table Ladies, Wine Bike and Lanterns during cocktails; characters and band lead guests to seated dinner and assist with awards presentation.Redmoon Business Manager: “Please sign contract for final fee of $16,000, half is due now, half is due the day of the event.” (Event planner marks up Redmoon price and passes it along with complete package to end client.)

Production Preparation

Hire artists and crew, schedule day-of activities, perform costume and object maintenance, rent

Reynolds or Collins, Production Manager

Redmoon Enterprise Production Manager: hires 5 actors as characters, 3 actors as Table Ladies and 1 for Wine Bike; coordinates with musical director to hire 5 musicians (mixture of drums and horns); ensures that Wine Bike flat tire is repaired; coordinates with the Technical Director to

truck, coordinate with venue

modify fire flare to run continuously for 30-45 minutes; arranges loading dock access at venue for 3pm.

EVENT Load in, perform, load out

Lasko, Maugeri, or Bockley as on site director; Reynolds or Collins, Prod Mgr; contracted performers and crew

Redmoon artists and crew: accept second payment check from client, unload truck, get in costume and makeup, warm up, coordinate with caterer for supplying Table Ladies and Wine Bike, perform, strike and load out

Wrap Up, Referrals, Follow Up

Perform maintenance and storage of costumes and objects

Reynolds or Collins, Production Manager

Redmoon Enterprise Production Manager: send costumes for dry cleaning, store objects, return rental truck

Pay performers, thank client, debrief with staff


Redmoon Business Manager: phone call and written thank you: “Sounds like the event was a big success, hope you were as pleased with it as we were. Please keep Redmoon in mind for future events. Thanks for your nice note, I have passed it along to our artists and crew.”With artistic/production staff: “Client was very pleased with event and was especially thrilled with the fire spectacle. Note for next time is to figure out how to make batteries in lanterns last longer—they were fading by the end of cocktails.”

The time required for each step of this process and the intensity of Redmoon’s involvement varies depending on the size and level of customization of each event. A typical timeline is shown in Exhibit R.

EXHIBIT R: Timeline of Typical Redmoon for Hire Event

A typical event may take two to three months to plan with inquiries being made one to six months in advance of an event. Redmoon is capable of responding quickly, which is important to clients as demonstrated by over half of Redmoon’s survey respondents who said they sometimes or often have less than three months to plan an event. One industry observer adds:

“We're working on a quarter-by-quarter basis, whereas before people would have their budgets for the year. I think that kind of thinking has fueled the trend of short-term bookings and shorter lead times, and it cuts across all the markets."12

Redmoon responds to these client demands by being nimble and flexible. For example, Redmoon planned the human-hamster wheel pyrotechnic spectacle in Millennium Park, a completely customized $34,000 event, with only three weeks’ notice.

The sales and artistic conceptualization steps have the widest variation in time required. A smaller, off-the-shelf event may require only a single site visit or meeting with the client, whereas a highly customized event may involve months of planning with multiple meetings. For events requiring high artistic conceptualization, Redmoon has a practice of requiring a proposal fee after the first meeting to engage in ongoing artistic consultation. The fee is 10% of the total anticipated contract value. If the client contracts with Redmoon for the event, the proposal fee is applied

12 Chapman, Ben, Successful Meetings, "Ready for the rebound: many planners are cautiously optimistic for a better year in 2004," December 2003, Vol. 52, No. 13; Page 33.

as a deposit toward the overall event fee. If the event falls through, Redmoon keeps the proposal fee as compensation for staff time spent on artistic conceptualization.

StaffingOne of the primary ways Redmoon operationally separates the venture from the theater – in order to avoid any conflict between the venture’s demands and the artistic mission of the theater – is through staffing. In 2005, Redmoon for Hire added its first person dedicated solely to the venture (Patrick Reynolds, Enterprise Production Manager). Over time, Redmoon for Hire will continue to add staff and increase the hours of staff dedicated solely to the venture. This dedicated staff is managed by veteran Redmoon Theater staff, whose involvement will decrease over time. The new, dedicated staff is paid at lower-level salaries than the management staff resulting in increased efficiency in operating the venture. The capacity of this staff is described below and quantified in Exhibit S.

EXHIBIT S: Staffing Capacity2003

(actual)2004

(actual)2005

(current)2006 2007 2008 2009

Sales Staff # staff* minimal 0.50 0.50 0.95 1.07 1.33 1.33# events 10 24 35 36 37 38 38

Production Staff

# staff* 0.10 0.25 0.85 1.05 1.40 1.33 1.33# events 10 24 37 52 52 52 52

Artistic Director Staff

# staff* 0.10 0.50 1.50 1.50 1.50 1.50 1.50# events 10 24 49 61 61 61 61

* # staff is a combination of veteran Redmoon staff (decreasing over time) and new dedicated staff (increasing over time)

Sales Staff: Redmoon for Hire sold 2.4 times more events in 2004, and a substantial portion of the relationships and sales efforts conducted in 2004 are actually bearing fruit in 2005 because of necessary lead time. Therefore Redmoon for Hire is projected to increase number of events sold from 24 in 2004 to 35 in 2005 without increasing sales staffing. Based on actual experience, it is estimated that a full-time event salesperson is able to conduct 500 sales contacts in a year. (Sales contacts include mailing of collateral, emails, invitations to relevant Redmoon events, as well as personal contacts by phone or in-person through presentations, open houses, etc.) Because sales capacity is more limited than production and artistic capacity, the venture plans to add a half-time sales person in 2006, which will increase to full time by 2008.

Production Staff: In 2005, Redmoon for Hire hired a full-time Enterprise Production Manager (Patrick Reynolds) dedicated solely to Redmoon for Hire events. This hire protects the Redmoon Theater production manager’s (William Collins) ability to focus on the theater’s core artistic programming and its needs. Both of these production managers are overseen by Kristin Randall Burrello, a member of the core artistic staff. The dedicated Enterprise Production Manager’s capacity is estimated to be, on average, one event per week, or up to 52 events throughout the year. (Note: this is an average figure, as occasionally scheduled events fall within the same week. Reynolds was hired in April 2005, so his capacity is prorated for this year.) Depending on the mix of level of customization and event budget size, the Enterprise Production Manager's capacity will range from 26 to 52 events. For highly customized events, which require the leadership and involvement of Redmoon Theater’s production manager, the theater’s core programming schedule allows the ability for the production manager to participate in a highly customized event on average every other month, or six per year.Artistic Director Staff: As noted in Exhibit P above, the artistic director of a given event is determined primarily by the event’s level of customization. Redmoon’s artistic programming calendar allows the Artistic Director Jim Lasko the capacity to direct three large, highly customized events annually. Associate Artistic Director Frank Maugeri has the ability to direct one to two semi-customized events per month, up to a total of 15 per year. Capacity for off-the-shelf events is not similarly limited, since the artistic direction is conducted by contracted directors. However, maintaining quality control and adequately training these directors is important. Currently, two directors are being trained – Artistic Associate Vanessa Stalling, who has been a performer and teacher with Redmoon for many years, and Artistic Associate Seth Bockley who has a two-year fellowship from Theatre Communications Group to work with Redmoon full time as a directing apprentice to Jim Lasko. Additionally should volume warrant it, Redmoon could quickly draw from its close artistic community to identify additional directors for smaller projects (see layers of training in Exhibits V1 and V2).

Schedule and Seasonality

The staffing capacities described above are average capacities. Because Redmoon has staff capable of filling the same roles (e.g., Redmoon’s Production Manager is trained and able to execute the Enterprise Production Manager’s job), it is possible to have simultaneous Redmoon for Hire events. It is also possible to have simultaneous Redmoon for Hire and Redmoon Theater events since the venture's calendar complements the theater's seasonality as illustrated in Exhibit T.

EXHIBIT T: Calendar comparing seasonality of Redmoon Theater and Redmoon for HireJan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Redmoon Theater annualbenefit mainstage production outdoor

spectaclewinter show

Redmoon for Hire Nonprofit benefits benefits outdoor events benefits Private Social weddings holiday parties Corporate outdoor events holiday parties

Supply ChainRedmoon's resources are connected as represented in the following supply chain model (Exhibit U) with the artistic team providing continuous oversight to maintain quality:

InputsDesigners and Builders: The primary input required for the success of Redmoon for Hire is the artistic creativity that is Redmoon’s core competence. In addition to its key artistic staff, Redmoon contracts with hundreds of artists every year to create the ingenious objects and mechanical devices that comprise Redmoon’s signature aesthetic. See Exhibits V1 and V2 for an illustration of the layers of expertise and process of talent development. Redmoon’s core artistic team typically conceives of a design and then hires designers to refine and fully realize the object. Unlike most theaters that hire designers then pay laborers to execute the designs, Redmoon provides opportunities often for young designers to both design objects and construct them themselves. This results in greater ownership and an ongoing ability to refine designs as the objects are tested in performance. Additionally Redmoon operates a substantial intern program employing 6-12 art student interns each semester to assist with building objects.Facility and Build Shop: Redmoon operates out of an 18,500 square foot facility on the West Side of Chicago with a complete wood shop and metal shop equipped with tools and materials necessary for theatrical construction. The facility has 24-foot ceilings, which accommodate the scale and height of Redmoon’s larger objects. Redmoon is in the second year of a five-year lease that has two five-year extension options with locked-in 3% rent increases as well as the right of first refusal to purchase. Shop equipment and space is adequate to accommodate the needs of both core artistic programming and Redmoon for Hire events based on the growth projections for the next several years.

Performers: Similar to designers, Redmoon cultivates young performers (see Exhibits V1 and V2). Redmoon offers performance internships and also meets young artists through workshops, education, and community programs. Redmoon for Hire events offer an opportunity for these artists to prove themselves on a specific project, usually completed with one or two rehearsals and one evening of performance at the event, as opposed to hiring performers for 8-16 weeks for the run of a theatrical performance. Redmoon for Hire also offers more steady employment at a higher wage for some of Redmoon’s consistent performers. For example, an actor can earn $100 for a single special event that takes 4-6 hours total, whereas actors in a production earn an average of $100-$200 per week. Throughout 2004, Redmoon employed 115 different performers and crew members through Redmoon for Hire who earned an average of over $425 each.

Inventory Management and Maintenance: The unique nature of Redmoon’s events pull both from Redmoon’s distinctive performance style and from its inventive use of mechanical objects and unusual food service items (such as the Table Ladies, Stilted Servers, Wine Bike and Coffee Car). So, while Redmoon for Hire is really selling an entertainment service, it is essential that its stock of costumes, props, and objects be maintained in top condition. Regular maintenance and proper storage of these items is the responsibility of the Enterprise Production Manager in collaboration with the shop manager. At regular intervals and prior to each event, the objects are examined for signs of wear and repaired as necessary.

The useful life of many of these items is determined to be three years on average, based on 1) wear and tear from frequent usage, and 2) the need to introduce new event elements to keep the product mix fresh and exciting to potential clients. Popular items, such as the Table Ladies and other food service objects, are rebuilt, rather than phased out, due to their extreme popularity and their ability to be paired with other, new elements (new objects and/or new costuming) to create an entirely new effect and theme. See Attachment VIe for a schedule of inventory for Redmoon for Hire’s objects and costumes.

Layers of Expertise and Talent DevelopmentRedmoon for Hire has multiple layers of expertise with artists of all kinds (designers/builders, actors/directors) continually learning and increasing their ability to participate in more customized and complex events. Within each layer there is variation in skill level and artists are additionally subgrouped (e.g., there is an “A” list of stilters with the preferred combination of appearance and skill who are contacted first for events).

EXHIBIT V2: Explanation of Layers of Expertise and Talent DevelopmentLAYER WHO WHAT

1. Core Artistic Staff Artistic Director (Lasko) and Associate Artistic Directors (Burrello and Maugeri)

provide overall artistic conceptualization and direction for events

2. Dedicated Staff Enterprise staff (Reynolds and Bockley),repeat contract staff (Stalling, others)

coordinate contracted staff;direct off-the-shelf events

3. Contract Workers designers/builders,repeat performers

design and build objects conceived by core artistic staff; perform regularly for events

4. Entry Level Participants

interns, workshop participants, outreach participants

build as directed by contracted designers and staff; participate in parades; volunteer as

performers

Planning and ControlsNew Product Development – Integrated into customization of larger events: Redmoon for Hire is mindful of not over exposing its most popular objects and characters. Since clients hire Redmoon for its uniqueness and creativity, Redmoon for Hire needs to continually develop new product offerings. New product development is integrated into the economic model. Some of the largest, customized events are used to develop new objects. While some clients may pay a premium to have a Redmoon for Hire object debut at their event, the expense of most new objects is spread across multiple clients. For example at the beginning of 2005, the sales and artistic staffs met to plan the upcoming year. Multiple clients were seeking outdoor, family entertainment – two corporate clients had company picnics, and a local zoo is planning programming around the theme of bugs. Redmoon for Hire’s artistic staff developed the “Bug Brigade,” an interactive puppet performance for all ages. The Bug Brigade will meet the needs

of at least four clients during the summer of 2005. Then in 2006 the concept will be further developed and Redmoon for Hire will specifically market this new product to other zoos, park districts, botanic gardens, etc. Again, Redmoon’s culture of resourcefulness produces bottom line results for Redmoon for Hire.

Research & Development: R&D is an on-going process at Redmoon. The Redmoon for Hire venture and the core theatrical work are designed to feed each other artistically. Oftentimes concepts are workshopped in one arena and then translated to the other. For example, ethereal rice-paper lanterns that were developed for a Redmoon for Hire event, the dedication of the new Great Basin at the Chicago Botanic Gardens, were modified and hung above paddle boats which were part of Redmoon’s outdoor spectacle, Sink. Sank. Sunk…, in September 2004. Conversely, an outrageous fat man costume which was initially developed for Sink. Sank. Sunk…, has become one of Redmoon’s most popular characters to perform at Redmoon for Hire events. Redmoon’s artistic team has regular meetings where they brainstorm new concepts and expand on existing themes. For example at the end of 2004, the staff analyzed the events from the past year and recognized that the objects make a higher margin than characters and that clients really enjoyed the unique and quirky nature of service objects such as the Wine Bike. Building on the idea of the Wine Bike, the artistic staff designed a Coffee Car (“Pedaling Percolator”) which is based on a turn-of-the-century Stanley Steamer automobile where the steam that powers the engine is the same steam that powers the espresso maker. The Coffee Car will debut at a corporate event in July 2005 (see Attachment VIIb for conceptual ideas for the Pedaling Percolator).

Redmoon for Hire: Lanterns for Chicago Botanic Gardens Redmoon Theater: Lanterns on Chicago River during Sink. Sank. Sunk…

Redmoon for Hire: Wine Bicycle Photo by: Dimtre

Quality Control: In order to provide quality control, as described above, Redmoon has procedures for providing routine maintenance and rebuilding or rotating objects out of service as necessary. Similarly, Redmoon always provides an artistic director on-site the day of an event, to direct the event to ensure its artistic integrity. Redmoon's core artistic staff oversees and trains all on-site directors to realize Redmoon's aesthetic and remain true to Redmoon's branding. Continuous improvement is built into Redmoon for Hire. After each event, the Enterprise Production Manager completes a report on the success of the event and any repairs or follow up required. The Business Manager follows up with the client to thank them and solicit feedback. This client feedback and the Production Manager’s report are distributed to all Redmoon for Hire staff which meets regularly to incorporate learnings into future events. Processes are continuously reviewed, and at least once per year, or when new permanent staff is hired, the entire team meets to review Redmoon for Hire processes and procedures.

In general, the feedback Redmoon receives from clients is overwhelmingly positive. The event planner who hired Redmoon for a multi-day corporate event in Phoenix described Redmoon's professionalism this way:

"Delivering such a large theatrical component, in two large outdoor venues, was executed seamlessly by the Redmoon Theater production team. From budget management to performance space planning, to continuous on-time performances, Redmoon was flawless in their execution. One Smooth Stone could not have delivered an event of such high impact without the leadership, professional attitudes, creative fortitude and excellent team of Redmoon Theater."—Ken Haller, One Smooth Stone

Artistic guidelines also assist in maintaining control of quality. For example, Redmoon has a policy against allowing its characters to provide only service or to be transactional (e.g., to sell raffle tickets). While many of the characters are service-oriented or functional (e.g., the Table Ladies serve hors d’oeuvres), their primary purpose is performative, and serving food is a function they accomplish through their performance (see Exhibit D for the Continuum of Services). The service is a novelty (parties still require the same number of wait staff to serve hors d’oeuvres), and the performance is the real product that Redmoon for Hire provides.

By maintaining strict “rules” about how the performance elements can be implemented in an event setting – rules which are based on Redmoon’s experience of what works and what fails in such settings – Redmoon is able to maintain its high standards of performance excellence. For example, Redmoon for Hire has learned that costumed

characters need to be paired with band characters to have the desired impact. On a couple of events for budget-conscious clients, Redmoon tried to send a handful of costumed characters without band accompaniment, but they could not adequately attract guests' attentions and the artistic image suffered. Redmoon for Hire incorporates learnings into its artistic process to allow for continuous improvement.

ScaleThe initial operational steps of Redmoon for Hire are in place. The product offering is identified and priced, collateral has been produced, and the sales campaign is under way. At this stage, Redmoon needs to increase the scale of the venture to generate its targeted return on investment. The target is to focus on larger, semi-customized, national audience corporate events and to increase efficiency without sacrificing quality. As described in the Market Analysis section, targeting larger corporate events and working with production companies and other intermediaries as clients will produce greater efficiencies by reducing the cost of sales per event sold. As illustrated in Exhibit W, the total number of events does not increase much over time, however, the mix of events (more custom and fewer "off-the-shelf") changes, resulting in increased income. Increasing scale also increases Redmoon’s capacity to produce these events as experience and number of dedicated staff increases.

EXHIBIT W: Growth to Scale2003

(actual)2004

(actual)2005

(current)2006 2007 2008 2009

# custom events# semi-custom events# off-the-shelf events# of total events

04

. 6 . 10

23

. 19 . 24

37

. 25 . 35

59

. 22 . 36

611

. 20 . 37

713

. 18 . 38

815

. 16 . 39

$ income $ 59,300 $ 150,950 $ 295,250* $ 330,000* $ 384,500 $ 465,000 $ 550,000 $ expense $ 58,461 $ 180,141 $ 261,423 $ 349,080 $ 391,461 $ 446,693 $ 502,966 $ net income $ 839 $ (29,191) $ 33,827 $ (6,080) $ (3,711) $ 18,307 $ 47,034 avg income per event $ 84 $ 1,216 $ 966 $ (169) $ (100) $ 482 $ 1,206 % net income 1% -16% 13% -2% -1% 4% 9%* 2005 and 2006 include $90,000 and $25,000 respectively of restricted contributed income.

Financial PlanIn fiscal year 2005, Redmoon for Hire accounts for approximately 18% of the income and 17% of the expense of the organization’s $1.6 million budget. The venture is already achieving one goal of boosting earned income to supplement Redmoon’s mission-driven foregone ticket revenue. Healthy growth is expected over these next five years (see Exhibit X). Revenue is projected to increase 12% to 21% per year while expenses are projected to increase at mostly slower rates. This growth seems reasonable considering that Redmoon for Hire already increased income by 155% by assigning a half-time staff person to sales of the venture between 2003 and 2004.

EXHIBIT X: Key Financial Figures2003

(actual)2004

(actual)2005

(current)2006 2007 2008 2009

$ Income $ 59,300 $ 150,950 $ 295,250* $ 330,000 $ 384,500 $ 465,000 $ 550,000 $ Expense $ 58,461 $ 180,141 $ 261,423 $ 349,080 $ 391,461 $ 446,693 $ 502,966 $ Net Income $ 839 $ (29,191) $ 33,827 $ (6,080) $ (3,711) $ 18,307 $ 47,034 % Increase in Income (YOY) N/A 155% 96% 12% 17% 21% 18%% Increase in Expense (YOY) N/A 208% 45% 34% 12% 14% 13%* 2005 includes $90,000 in temporarily restricted contributed income that is released during 2005, 2006 and 2007.

Redmoon for Hire has primarily been initially capitalized by the organization’s existing resources. Additionally, Redmoon has secured two major grants for the venture. The Prince Charitable Trusts awarded Redmoon a $25,000 grant that is renewable for a second year to support earned revenue programs. This grant is primarily being used to hire Enterprise Production Manager Patrick Reynolds who started 80% FTE in April 2005, and will become full time in 2006.

Redmoon also received a prestigious two-year Theatre Communications Group (TCG) New Generations Program mentorship grant of $65,000. The TCG fellowship enabled Redmoon to hire Artistic Associate Seth Bockley full time. Bockley shifts from being a contracted director to being payrolled staff for Redmoon for Hire events. This is a prime example of Redmoon for Hire’s strategy for developing young talent to support the venture. By taking over larger and more customized events, Bockley will free the core artistic staff to focus on the theatrical mission of the theater as described in the Management and Operations Plans. Since the younger talent is paid at lower rates, salaries for the venture remain relatively stable, even as capacity increases, because as newly developed talent increases its role, less time is required of the core artistic staff. Now that production and artistic capacities have been increased, this same principle will be applied to hiring a part-time Enterprise Sales and Events Manager in 2006.

Fixed vs. Variable CostsThe majority of expenses associated with the venture are variable. Contracted labor and materials vary directly with the number and size events conducted. Artistic and production staff salaries are also somewhat variable, since their time can be allocated to other activities at Redmoon Theater depending on the amount of work required by the venture. Sales staff salaries and marketing expenses are relatively fixed costs that do not vary by number and size of event. New personnel are added based on need for increased capacity. As described in Exhibit Y, new hires increase in a step-wise fashion. New hires can also be made on a part-time basis (for example the Enterprise Sales and Events Manager is scheduled to start at 20 hours per week in 2006), which allows flexibility to increase or decrease hours based on actual sales activity. See the Risk Assessment section below for sensitivity analysis.

Fixed AssetsLike Redmoon’s core theatrical work, Redmoon for Hire offerings are typically object-based. This results in front-loaded costs – i.e., most of the costs are associated with the initial design and materials to construct the object. For example, the Stilted Servers are built of sculpted steel, which is a durable, but relatively expensive material. The five Stilted Servers cost $6500 in materials (labor was provided by salaried staff), but now they are part of Redmoon’s menu of offerings starting at $1750 for one Stilted Server per evening. Similarly the Wine Bike was a one-time cost of $3500 in direct materials and labor, and it can earn $2500-$3500 per event by itself or $1000-$2000 per event when packaged with other items. Routine maintenance is required, and occasionally entire objects need to be rebuilt. Until objects are removed from service, Redmoon for Hire sells the objects as frequently as possible. The most frequently used object in 2004 was the Table Ladies, which were used in seven events. Both objects and costumes are capitalized and depreciated, straight-line method, over a useful life of three years. See Attachment VIe for a schedule of Redmoon for Hire inventory.

Starting in 2005, Redmoon for Hire specifically began budgeting for research and development expenses. However, the venture has always recognized the importance of keeping its products fresh and has consistently set aside money in production budgets to design and build new objects. As described with developing the Bug Brigade in the Operations Plan, often the design team will pool funds from multiple events to design a new concept that can be sold to multiple clients. Alternatively, new objects and costumes are created for customized Redmoon for Hire events and then used repeatedly for subsequent semi-custom and off-the-shelf events.

ProfitabilityRedmoon for Hire invests in these object and costume assets, because it is more efficient to sell existing off-the-shelf items than to customize every event. However, because of up-front sales and marketing costs, it is more efficient to sell fewer large events than it is to sell many small events. Therefore the most profitable events are the semi-customized events which balance the efficiency of using some off-the-shelf items with the scale of selling, on average, larger events.

Financial Contribution to Redmoon TheaterA primary purpose of the venture is to support the mission of Redmoon Theater financially. The venture does this by contributing to Redmoon’s G&A and facility overhead (see Attachment VIa, Statement of Income). The venture achieves the goal of reducing dependence on contributed income by relieving pressure to support G&A and facilities from other Redmoon revenues. The venture also accomplishes this by generating objects and costumes from the Redmoon for Hire budget that are subsequently used for the theater. A third way Redmoon for Hire provides financial support is by providing cash flow for the operations as a whole.

Cash FlowCash flow for the venture is relatively straightforward (see Attachment VIe for monthly cash flow projections). Redmoon for Hire requires a 50% deposit upon signing a contract (to be conservative, in the cash flow this is

projected in the month preceding the event, although some deposits are paid many months in advance). The balance is due at the event. Redmoon for Hire has never had any uncollectible receivables. The majority of the expenses for an event occur in this two-month time frame. For unusually large events, Redmoon negotiates schedules requiring multiple payments to ensure cash is available as expenditures are made. Cash from the venture is commingled with the much larger Redmoon organization which also modulates cash flow.

National Business Plan Competition InvestmentAn investment by the National Business Plan Competition will accelerate the rate at which Redmoon for Hire becomes profitable. Investment is currently being made in artistic and production staff, so the next capacity limitation is with sales staff. Investment from the competition will be used to: Hire an Enterprise Sales and Events Manager in 2006 Continue to groom younger Redmoon artists to advance talent along the development ladder Invest in R&D of new materials and artistic products to innovate and evolve the product mix Expand sales and marketing initiatives by presenting at targeted industry conferences/trade shows and

continuing to produce fresh collateral

Redmoon for Hire: Hamster Wheel Pyrotechnic Spectacle

Risk Assessment and Contingency PlanRedmoon for Hire has been successfully operating for more than a year. As a result, early marketing, staffing, and operational risks have been identified and addressed successfully. Healthy and reasonable growth is projected to achieving profitability in 2008 and 2009.

Sensitivity AnalysisRedmoon for Hire experienced greater than 155% growth (an increase of $91,650) since dedicating 50% of one staff member’s time to sales for the venture. The soonest it seems reasonable for sales to flatten out would be 2006-2007, since Redmoon for Hire is well on its way to reaching the 2005 income goals and also has significant commitments for 2006. So if revenues were to remain flat going forward from 2006 (see Exhibit Z1 below), variable staff time would be proportionally reduced, and investment in R&D and contributions to other nonprofits would be curtailed. If revenues remained flat, fixed expenses would also be reduced and additional funding may need to be secured to capitalize the venture, and in the long run the venture may need to be reevaluated.

EXHIBIT Z1: Sensitivity Analysis – Flat Sales

2003

(actual)2004

(actual)2005

(current)2006 2007 2008 2009

Income $59,300 $150,950 $290,000* $330,000* $305,000 $305,000 $305,000Expense $58,461 $180,141 $252,535 $344,080 $344,867 $345,765 $341,164Net Income $839 $(29,191) $37,465 $(1,080) $(36,617) $(40,765) $(36,164)* 2005 and 2006 include $90,000 and $25,000 respectively of restricted contributed income.

The financial structure of this venture is that fixed costs rise in small increments based on the number of event sales and variable costs increase linearly with event sales and come to be the bulk of the costs as event sales increase. Therefore if sales exceed projections by any significant percentage, more revenue is generated toward the operations of Redmoon Theater and its core programming. If sales greatly exceed projections, the production staffing plans will be accelerated to accommodate the increased number of events. However, if sales are exceeding projections, the incremental increase in sales staffing will probably not be adjusted because the existing sales staffing is already achieving more than anticipated.

Notice that if sales double in the next two years, staffing can be accelerated to add twice as much staffing as initially planned, and the venture becomes more profitable more quickly. As explained in the Exhibit Y above, staffing increases step-wise.

EXHIBIT Z2: Sensitivity Analysis – Doubled Sales

2003

(actual)2004

(actual)2005

(current)2006 2007 2008 2009

Income $59,300 $150,950 $500,500* $635,000* $769,000 $930,000 $1,100,000 Expense $58,461 $180,141 $510,845 $688,160 $775,422 $888,385 $1,005,932 Net Income $839 ($29,191) ($10,345) ($40,160) ($3,172) $41,615 $94,068 * 2005 and 2006 include $90,000 and $25,000 respectively of restricted contributed income.

Risk Factor: Slower Sales Growth than Anticipated Growth may be slower than projections indicate.

Response: Growth enables Redmoon to hire additional staffing which then increases the venture’s ability to sell and produce more events. However, if sales growth is slower than projected, staffing increases will be similarly slowed and tied to financial milestones that allow the staffing growth to occur at the appropriate rate.

Risk Factor: Sales Fall Below Goal Missing sales targets is a potential risk. The risk increases as Redmoon for Hire pursues its strategy of targeting fewer, higher-dollar, larger events because losing any single client has a more significant impact on the venture’s bottom line.

Response: As the sensitivity analysis in Exhibit Z1 demonstrates, if Redmoon for Hire were to experience flat revenues and no growth from 2004 numbers, expenses would exceed income through 2009. Management's response to flat revenues would be to delay new staffing hires to minimize growth in fixed costs. Other expenses such as materials and direct event labor are variable costs and are directly related to the number of events and the revenue generated. Also, while Redmoon for Hire’s strategy is to build a client base of larger events, the venture is also pursuing a number of smaller events that help dilute the risk and the impact if any single client were to cancel. For 2005, no single event is projected to generate more than approximately 15% of the total income.

EXHIBIT Z3: Sensitivity Analysis – Sales Below Projections (75% of goal)

2003

(actual)2004

(actual)2005

(current)2006 2007 2008 2009

Income $59,300 $150,950 $295,250* $330,000* $288,375 $348,750 $412,500 Expense $58,461 $180,141 $255,423 $337,647 $331,261 $371,124 $421,750 Net Income $839 ($29,191) $39,827 $5,353 ($39,636) ($22,374) ($9,250)* 2005 and 2006 include $90,000 and $25,000 respectively of restricted contributed income.

Because such a large proportion of the venture’s expenses are variable, based on income from events sold, the bottom line is somewhat protected from low sales. If sales reach only 75% of goal, the Enterprise Production Manager position could be reduced (or part time) until 2006 and less time would be demanded of the artistic staff, resulting in a reduction of direct salary costs allocated to the venture. At this rate, the venture would take longer to become profitable, however, it will still be contributing the theater's G&A and facilities expenses.

It should also be noted that as of April 2005, Redmoon has already contracted or is near closing deals on over $150,000 in sales revenue for 2005. Additionally, Redmoon is already in conversations with a few large clients for 2006 and while the deals are not finalized, it appears that Redmoon will be able to secure at least two events generating more than $50,000 in 2006.

Risk Factor: Economic Forces A slowdown in the economy could negatively impact Redmoon for Hire’s sales since clients may be less likely to throw lavish parties and events when faced with economic uncertainty.

Response: Redmoon for Hire was launched during an economic downturn and nevertheless has experienced substantial growth – greater than 155% from 2003 to 2004. While the economic downturn may have officially ended, the special events market lags in recovery, and yet Redmoon has continued to excel in increasing sales. Additionally, Redmoon for Hire is tapping only a small portion of a major market, so while an economic downturn might result in increased pressure to boost sales efforts, potential clients still exist.

Redmoon’s experience and market research indicates that Redmoon for Hire’s offerings fall into what the event market considers a mid-price entertainment option. The top-price offerings include internally-known “name” acts or troupes like Cirque du Soleil and Elton John and/or events in exotic or European locations. When the economy forces larger corporate clients to economize, they then turn to more mid-priced options such as Redmoon. In 2004, one of Redmoon’s larger clients came to us in exactly this way – a planned sales incentive event to be held in Barcelona had to be relocated to Phoenix for budgetary reasons. When the event’s location became less exotic in and of itself, the event planners decided to spend their resources on unique programming and chose to hire Redmoon to create the theme and event environment.

Additionally, some survey respondents indicated that certain market segments like higher-end weddings and fundraisers are more recession-resistant. For example:

“Economic factors do not influence with higher-end weddings.” (wedding planner)

“Most events are fundraising events so they are hosted annually regardless of the economy.”(large nonprofit institution)

Risk Factor: Imitators and Barriers to Entry: Many people are and will be exposed to Redmoon for Hire through these private and public events. As a result, the unique offerings and mechanical objects are on display and can be imitated. While the costs and engineering of the mechanical objects, such as the Wine Bike and the Coffee Car, are not insignificant, they do not pose insurmountable barriers to entry, and industrious imitators could probably begin to offer similar products.

Response: Imitators are a reality. For example, a local production company already offers “walk-around buffets” (WABs), which are cheap imitations of Redmoon’s Table Ladies. In the WABs (see photos below), the performer wears a prom dress over a table with a matching skirt. Redmoon’s Table Ladies with their multiple lazy susan rings encircling the performer and their castor-type wheels that provide a smooth gliding motion, are superior in design and artistry – and are able to be customized in their costuming to a given event. Despite the existence of this direct imitator, the demand for Redmoon’s Table Ladies continues to increase, so it appears that there is enough space even in the Chicago market for both Table Ladies and WABs.

Most importantly, Redmoon’s core competence is in being endlessly creative, and Redmoon for Hire is designed to continuously innovate, with plans to introduce a minimum of 50% new products on a cycle of a maximum of two years or shorter. In this way, the event offerings and product mix benefit from Redmoon’s creative aesthetic and from continual introduction of new elements, increasing the creative barriers to entry for direct imitators. For example, see conceptual ideas below for a new Coffee Car service object ("Pedaling Percolator"). Additionally, Redmoon Theater’s strong brand recognition and reputation for innovative, interactive performance (see Exhibits M1, M2, and M3) creates a barrier to entry for local and regional competitors that gives Redmoon for Hire a strong competitive advantage over potential imitators trying to enter the market.

Competitor's Walk Around Buffet (imitator)Redmoon for Hire's Table Lady

Phot

o by

: Bria

n W

iles

Conceptual Ideas for “Pedaling Percolator”

Risk Factor: Competitors and Trends in Client Preferences The market offers potential clients a wide range of event entertainment options, from performance and thematic entertainment like Redmoon for Hire to internationally known name acts to non-performance offerings such as sporting events and Outward Bound-type team-building activities.

Response: Redmoon for Hire targets a niche market of the overall event market. Client interviews revealed that the performance and thematic entertainment market continues to grow despite continued competition from sporting events and team activities. Within the performance market, client preferences are broadening to include an emphasis on the type of unique programming offered by Redmoon. One event producer describes it this way:

What was considered "experimental" in the 1970's and early '80's is now quite mainstream indeed. Redmoon's success is partly representing this trend (there is more breadth in the popular mentality now than before). Corporate audiences are changing, as are the buyers. They are not getting younger, they're staying about the same age, but that means that today's pharma sales meeting is playing to reps that came of age in the 1990's a period that saw world music, Lollapalooza, Blue Man, Lion King, Cirque de Soleil, etc; their tastes are broader than the same group would have been in the 1990's. This bodes well for Redmoon and other groups who push the envelope… In the next 3-5 years the programming possibilities will continue to open up, to diversify and expand. Global corporations have only begun to scratch the surface of the global means of communication that are available to them; ethnic materials from around the world are beginning to be seen for the power they contain. Alternative performance techniques (puppets, non-realistic interpretation, etc) are just in their infancy…—Keith Fort, President, Fort Production Management Inc.

Additionally, interviews with potential and actual clients demonstrate that the top three factors they weigh in selecting an entertainment vendor are: alignment with the event theme or aesthetic, the uniqueness of the vendor’s product, and the creativity of the vendor (see Exhibit I in Market Analysis section). In fact, contacts at production companies have said that Redmoon’s uniqueness has been a major factor in their ability to close the deal with clients.Risk Factor: Repeat Clients Due to the uniqueness of Redmoon’s offerings, many clients may only want to engage Redmoon for Hire once or to allow several years to pass in between engagements. As a result, cost of sales could

remain high and efficiencies elusive if Redmoon must continually identify and sell to new customers.

Response: Redmoon’s strategy to build targeted relationships with intermediaries such as production companies will enable the venture to work with clients who serve multiple end-users. In this way, while an end-user may elect to hire Redmoon once every several years, Redmoon’s client can promote Redmoon to several end-users on an ongoing basis. Additionally, by working with intermediaries, Redmoon will be able to pass on more of the costs of sales and marketing onto the intermediaries themselves.

Redmoon for Hire also operates on a maximum two-year cycle regarding the introduction of new products. What this means is that every two years, Redmoon for Hire will introduce at least 50% new products and offerings to keep its product mix fresh and vital. This strategy will increase the frequency with which individual clients will be able to consider hiring Redmoon for their events, simply because the unique event in one year can be completely different than a unique event a short time later.

Risk Factor: Organizational Focus The Redmoon for Hire venture may come to compete internally with Redmoon Theater’s core artistic projects, especially in terms of the artistic staff’s time, attention and resources.

Response: The quantity of events produced by Redmoon for Hire in 2004 did create a situation in which Redmoon’s artistic and production felt overworked and drawn away from the theater’s core programming. As a result, the venture is implementing staffing changes for Redmoon for Hire designed to 1) increase the capacity to perform more hired events and 2) create a designated events staff that protects the core artistic and production staff from involvement in anything but the largest and most customized events.

An Enterprise Production Manager has been hired to produce and staff most of the events. Similarly, event directors are being groomed to artistically direct the smaller events. A ranking system has been developed whereby the categorization (based on event budget, prestige of clients/guest, and level of customization) determines the staffing for a given event. For example, a smaller, lower profile event, which is typically an event that incorporates only elements from Redmoon for Hire’s off-the-shelf menu of offerings, will be produced by the Enterprise Production Manager and creative direction will come from the contracted event director. An event with a mid-range budget requiring at least partial customization or featuring high profile guests or clients will be produced by the Enterprise Production Manager but artistic direction will be provided by Redmoon’s Associate Artistic Director (as these events require more customization and less “menu” offerings than the smaller ones). The highest profile, large-scale and usually entirely customized events will be produced by Redmoon Theater’s production manager and directed by Artistic Director Jim Lasko. Internally these top-level events are treated similarly to core programming because the level of customization allows Redmoon’s artists to try out new creative ideas. As such, they are not a distraction from core artistic programming but rather a complement to it, providing a laboratory in which to do additional creative exploration that then informs later theatrical work.

If the Redmoon for Hire venture were to grow so large that this tiered categorization system were not enough – that the success of the venture threatened to overwhelm or dominate the work of Redmoon Theater – then the venture would be spun off into a separate entity, a legally and managerially distinct subsidiary.

Risk Factor: Loss of Key Staff Artistic Director Jim Lasko or Associate Artistic Director Frank Maugeri could choose to leave Redmoon.

Response: The artistic personnel have the skills and expertise that would be the most difficult to replace; however, the tiered management structure for Redmoon for Hire protects the venture against the departure of key staff. The tiered structure incorporates a laddered approach to artistic personnel’s responsibilities, which creates a system in which personnel can be more easily replaced. As a result, Jim Lasko would be able to fill in for the departure of Frank Maugeri until a successor (most likely one of the artistic associates directing smaller events) could be moved into that role. Similarly, Maugeri could temporarily oversee smaller events if an artistic associate left the organization. If Lasko departed Redmoon, Redmoon for Hire would temporarily cease to accept fully customized events. This would have an impact on gross sales but it would not impact profitability significantly. Redmoon would shift its focus instead to the semi-customized events (currently directed by Maugeri, who can be replaced from above or below) which are the most marketable and most profitable, spreading fixed cost of sales more efficiently and incorporating some pre-developed, off the shelf artistic elements.

Additionally, the tiered artistic management structure enables the artistic personnel directing smaller, lower profile events to “apprentice” with the more experienced artists and to learn how to direct the larger, more customized events.

Risk Factor: Quality Control By limiting the participation of the top Redmoon Theater artistic personnel from the smaller events, quality control could suffer.

Response: Considerable attention is paid to the qualifications of event staff, as well as to how the quality of the event work is maintained to reflect positively on Redmoon Theater’s organizational brand. The contracted event directors will be artists who have a long history of working with Redmoon and its aesthetic and have substantial leadership capabilities. They will apprentice and train with Redmoon’s Associate Artistic Director Frank Maugeri to be able to represent Redmoon, its unique style, and its event products to the smaller event clients. They will also receive periodic reviews with Maugeri and Artistic Director Jim Lasko. Top level events will involve Lasko and Maugeri respectively and thus will reflect the quality of Redmoon’s artistry. This attention to quality control also ensures that the parent organization, Redmoon Theater, does not suffer negative reputational effects as a result of Redmoon for Hire events.

Risk Factor: Parent Organization’s Reputation Declines

Response: If Redmoon Theater’s brand or reputation were to decline, Redmoon for Hire would consider renaming the venture and spinning itself off as a separate entity with dedicated sales, artistic, and production staff. During the transition period, sales might decline somewhat as the new entity established itself and its own brand recognition, but Redmoon for Hire would respond by aggressively marketing the venture under its new name to satisfied previous clients and to new potential clients. Again, a temporary reduction in sales is not a problem due to the nature of the business with its financial structure of high variable costs and low fixed costs.

Risk Factor: Accident or Other Negative Incident Occurs During Redmoon for Hire Event Any performative interaction with the public involves increased risks of accidents or injury to performers and/or members of the public.

Response: If a serious accident occurred during a Redmoon for Hire event or during a Redmoon Theater performance, the surrounding publicity would likely result in a reduction of Redmoon for Hire event sales. The venture operates under Redmoon Theater’s general liability insurance and is sufficiently protected against claims and damages. However, future gross sales would be affected. If this were to happen, Redmoon for Hire would scale back operations and its aggressive growth strategy and operate on a smaller scale while it weathered the storm, until such time as public recollection dimmed and aggressive sales efforts could be re-launched. It would also initiate a PR campaign designed to counteract any negative effects of the accident or incident. This temporary scaling back is feasible because of the financial structure of the venture, which is based largely in variable costs that are incurred only when events are sold.

April 25, 2005Redmoon for Hire: Make a spectacle of your event with Redmoon! ATTACHMENTS

Redmoon for HireBUSINESS PLANATTACHMENTS

ATTACHMENT Ia Redmoon for Hire Events Conducted in 2004ATTACHMENT Ib Redmoon for Hire Events Conducted in 2003

ATTACHMENT II Redmoon for Hire Industry Survey with Tallied Results

ATTACHMENT IIIa Redmoon for Hire in Crain’s Chicago Business, April 2005ATTACHMENT IIIb Redmoon for Hire in Chicago Tribune Magazine, March 2005ATTACHMENT IIIc Redmoon for Hire in Chicago Magazine, December 2004

ATTACHMENT IV Redmoon for Hire Team Biographies

ATTACHMENT V Redmoon for Hire Organizational Chart

ATTACHMENT VIa Redmoon for Hire Statement of Income (annual)ATTACHMENT VIb Redmoon for Hire Statement of Position (annual)ATTACHMENT VIc Redmoon for Hire Statement of Cash Flows (annual)ATTACHMENT VId Redmoon for Hire Financial Statements (monthly)ATTACHMENT VIe Redmoon for Hire Fixed Assets Inventory


ATTACHMENT Ia – Redmoon for Hire Events Conducted in 2004

DATE CLIENT OCCASION LOCATION SEGMENT

01/17/0404/03/04 Field Museum Biodiversity Festival Stanley Hall Nonprofit

02/21/04 AIDS Care Annual Ball Westin Hotel Nonprofit

03/06/04 Calian Family Mardi Gras Party home in Evanston Private/Social

04/10/04 Lasko Family 70th Birthday Highland Park Club Private/Social

04/16/04 University of Illinois at Chicago Workshop and Parade UIC Campus Nonprofit

05/21/0405/23/04 One Smooth Stone/BMC Software Sales Convention Phoenix, AZ Corporate –

National Aud

05/29/04 Chizever/Carter Wedding Wedding Racquet Club Private/Social

06/09/04 Mayer Brown Rowe & Maw Summer Assoc. Party MCA Corporate - Local

06/13/04 Ryerson Woods Workshop and Parade Deerfield Nonprofit

07/04/04 Evanston 4th of July Association 4th of July Parade Evanston Civic

07/04/04 Village of Niles 4th of July Parade Niles Civic

07/05/04 Glenview Park District 4th of July Parade Glenview Civic

07/24/04 Jam Productions Donor Opening Millennium Park Corporate - Local

07/25/04 Ivan Carlson / Kehe Foods Party and Parade Lincoln Park Zoo Corporate - Local

08/13/04 Arlington Park Racecourse Arlington Million Metropolis Ballroom Corporate - Local

08/18/04 Crate and Barrel CB2 Launch Party CB2 store Corporate - Local

08/21/04 Crate and Barrel CB2 Flyering North & Halsted Corporate - Local

09/18/04 Roscoe Village Chamber Audubon Fundraiser Roscoe Village Nonprofit

10/23/04 Misericordia Heart of Mercy Benefit Architect. Artifacts Nonprofit

10/29/04 Department of Cultural Affairs Mayor Halloween Ball Cultural Center Private/Social

10/29/04 Department of Aviation Halloween Parade O’Hare Airport Civic

11/18/04 CircEsteem Annual Benefit Redmoon Central Nonprofit

11/22/04 Millennium Park Donor Event Millennium Park Private/Social


ATTACHMENT Ib – Redmoon for Hire Events Conducted in 2003

DATE CLIENT OCCASION LOCATION SEGMENT

02/27/03 Laboratory School Laboratory High School ArtsFest University of Chicago Nonprofit

06/09/03 PBI Media PBI Award Ceremony Cultural Center Corporate - Local

07/04/03 Evanston 4th of July Association 4th of July Parade Evanston, IL Civic

07/04/03 Glenview Park District 4th of July Parade Glenview, IL Civic

08/09/03 Hammond Parade Summer festival of public art galleries Hammond, IN Civic

08/29/03 Disney Creative Entertainment "Brother Bear" Treatment Anaheim, CA Corporate -

Local

10/17/03 Blair Family 60th Birthday Racquet Club Private/Social

10/18/03 Field Museum Harvest Festival Field Museum Nonprofit

10/30/03 Department of Cultural Affairs Mayor’s Halloween Ball Cultural Center Private/Social

12/02/03 Jam Productions Cocktail Party Union Station Corporate - Local


ATTACHMENT IIRedmoon for Hire

Industry Survey WITH TALLIED RESULTSMake a spectacle of your event with Redmoon!

I am a (select one): # of respondents Catering Company 1 Production Company 0 Event Planner 3 Civic Institution 3 Non-Profit Organization 7 Individual 1 Corporation 2 Other (specify) 1 (publication)

Where are you located: ____________ (city, state)Chicago, IL 11Northbrook, IL 1Deerfield, IL 1Evanston, IL 1Lincolnwood, IL 1Chicago, IL and Los Angeles, CA 1

Please answer the following questions with respect to the events/parties you throw annually.1. How many events do you throw annually?

1 – 10 611 – 20 121 – 50 550 – 500 0500+ 2

2. What types of events are these?“Annual Benefit, Seminars, Awards”“Store openings, charity events”“Fourth of July Parade, civic organization social events”“Visual and performing arts programs, films, lectures, family events, occasional fundraisers”“Social, weddings, corporate functions, foundation events”“Most are corporate business meetings & related special events… Some are public oriented…

Nature of the work varies from project to project, and from client to client.”“Canoe race, river clean up, river summit, and student congress”“Weddings”“Variety of events from concerts, galas, athletic and holiday”“… fundraising events...donor/member celebrations…public events”“Live music, luncheons, award breakfasts”“Corporate events”“Events for advertisers, for vendors and general marketing and brand building”“Cultivation events and fundraisers”“Corporate events, charity galas, private events, product launches and grand openings”


3. What is your annual budget for events? How does your spending fluctuate with the economy?“$100,000 / DNK”“No set budget…”“$25,000”“As the economy impacts the City budget and fundraising opportunities, our budget is affected”“$160,000; this year corporate funding is down”“Depends on the client and the type of event”“Annual contracting responsibility is probably somewhere around a million dollars. Largest year

in memory was about 10 million in subcontracting and fees & expenses. Smallest year in memory was about $200K.”

“Varies year to year and is based upon grants and sponsorships”“Approx $60,000. Economic factors do not influence with higher-end weddings”“Most events are fundraising events so they are hosted annually regardless of the economy.”“I estimate that we spend over $500,000 ...”“$100,000; budget decided by City Hall; spending varies by budget cuts and unexpected

expenses”“Based on companies’ budgets”“Our budget is determined by ad sales, partner budgets and whimsy. It fluctuates wildly.”“Varies”“$50,000 - $1 million. The economy has affected spending, but each event is its own unique

case.”

4. What percentage of your budget do you typically spend on entertainment/atmosphere/decor (excluding production costs)?

# of respondents0 – 10% 411 – 20% 221 – 30% 3…70 – 80% 281 – 90% 091 – 100% 2Varies 1

5. What types of entertainment vendors do you typically hire (rank order 1-5, where 1 is most often, only including those you use):

Meana. Performing Arts

i. Live background/dance music (jazz trio, string quartet, local band) 1.933ii. Other (specify) 2.333

iii. Atmospheric entertainment 2.545b. Gambling/Raffles/Auctions 2.600

i. Nationally/internationally-known “name” acts 2.625ii. Recorded music/dancing (DJ, Karaoke) 3.222

iii. Stage show (at your location) 3.333iv. Solo performers (magicians, fortunetellers, caricaturists, etc.) 3.600v. Attend performance as a group 4.167

c. Group or Team-Building Activity (teambuilding/Outward Bound-type activity, arcade/Whirlyball-type activity, taking classes/learning new skills as a group) 4.667

d. Sporting Events 5.000


6. Which entertainment vendors do you typically hire? (preferably names, or at least types of vendors)“Different virtually every time, mostly dance and music.”“Live bands; DJs”“Popular local bands, marching bands from the Midwest”“Musicians, visual artists, dance companies, theater companies, speakers”“Musicians, interactive entertainers”“Redmoon, Redmink, various Cirque rip-offs (Le Cirque, et al.), Imagination Entertainment,

major talent agencies (William Morris, ICM, CAA, et al.), local talent agencies (regional based)”

“Full orchestras such as The Don Cagen Orchestra, Stanley Paul Orchestra, Big City Swing”“We typically hire musicians to perform during reception events. We also hire children’s

entertainers on a regular basis.”“We hire storytellers, musicians, magicians, actors. The biggest acts we book are musicians for a

summer concert series.”“Local musicians and children’s dance groups, multicultural groups”“Entertainment companies” “We often base our events around our Goodwill Ambassadors (Lawrence Fishburn, Indie.Arie,

Lang Lang). However, we recently did a cross-marketed event the Hubbard Street Dance, where their dancer provided the talent for the event. That event was at Hubbard. We hope for more opportunities to do these types of events in the future.”

“It depends on the city and the client, but for entertainment we use Jellyeye Drum Theater, Cirque du Soleil performers, Mass Ensemble, Project Bandaloop, Anti-Gravity and a ton of local bands and incidental entertainment”

7. What factors do you weigh when hiring entertainment vendors? (rank order 1-5, where 1 is highest priority):

Meana. Alignment with event theme/aesthetic 1.929b. Uniqueness 2.000

“This is very important to me personally but less so to my clients”c. Creativity of vendor 2.100d. Price 2.308

“Undeniably a factor… but not my first criteria.”e. Personal recommendation/contact 2.667f. Previous work with vendor 3.000g. Level of vendor’s experience 3.700h. Flexibility/customizability 3.778i. Geographic location 4.750j. Vendor’s previous client list 4.800k. Other (specify)

“artistic excellence”

8. How do you learn about entertainment vendors? (rank order 1-5, where 1 is most often, only including those you use):

Meana. Referrals from colleagues 1.800b. Long-standing relationships 1.917c. Industry associations/publications 3.111d. Vendor open houses/tastings 3.111e. Websites (which ones?) 3.250

“I use various search engines and keywords, but seldom rely upon a single website for recommendations”


f. Other (specify) “presenting conferences”“musicians contact us”“press, public opinion, experience”

9. How do you make contact with entertainment vendors?# of Respondents

Phone 10Email 6Relationships and networking 3Other

“Sometimes I go see a show and then determine whether this could be adapted to a project”

10. Do you repeatedly hire the same entertainment vendors?

Yes 4No 1Sometimes 6

“It depends on the client and what they are looking for”

a. How often do you use the same entertainment vendors within 1 year? Never 21 – 3 times 4More than 3 times 2

b. How often do you use the same entertainment vendors within 2 years? Never 11 – 3 times 7More than 3 times 2

c. How often do you use the same entertainment vendors within 5 years? Never 01 – 3 times 4More than 3 times 3

11. Do you have formal or informal relationships with “preferred” entertainment vendors? Yes 10No 5

Who are they and how were they established? “We have many relationships with performing and visual artists, as well as organizations, which

have been formed over the years through presenting their work and collaborating with them”

“Based upon past experience, price, reliability and presentation”“We do have relationships with entertainment vendors, primarily based on the fact of having

proper insurance and abiding by our policies. As a venue with a living collection, this is very important.”

“Established by performances at various events”“Meeting house; game show people”“Goodwill ambassadors [Lawrence Fishburn, Indie.Arie, Lang Lang] are contacted through our

national office in NYC”“We are very loyal when we find a vendor we enjoy working with and someone who gets the

level of quality and creativity we bring to our events.”


12. How important is geography when hiring entertainment vendors?Not important 6Somewhat 2Important

must be local 3budget driven 4

13. How far in advance do you typically plan your events?0 – 3 months 93 – 6 months 26 – 12 months 112 months + 2

14. Who are your competitors? (preferably names, or at least types of competitors)“None directly”“Other civic groups”“Other Chicago arts presenters might be considered our competition, but we don’t see it that way.

We probably face more competition from TV, Hollywood movies and sports!” “Upscale catering companies”“Most of my competitors are staffers at my client firms”“None”“Engaging Events, Mane Events”“As a free urban zoo we do not have direct competition. However, entertainment dollars are

spent at other museums in the city.”“No one competes with us, except for maybe the Field Museum, the Shedd Aquarium, Brookfield

Zoo, the Historical Society, the Art Institute, the Museum of Science and Industry”“Other airports based on passenger comments and industry awards”“All event planners”“Any regional non-profit who focus on children and/or humanitarian issues”“Because we are in so many different markets within the industry, we find that we have

competition in each of our market segments, but no one who provides all of the services that we do. For corporate events, we usually bid against Party Planners West, Extraordinary Events, Jack Morton & Williams Gerard. For social events, it could be GM Productions or Bruce Southworth and for booking name talent, it would be JAM Productions.”

15. Are there any other aspects to hiring entertainment vendors that you would like to share with us?“How demanding they are, or not, has a great impact on working with them”“Fees are easy to quote but support costs are sometimes less tangible –but there impact on the

budget is very real and sometimes that is more of a green light / red light issue than fees, so a clearly developed set of production & hospitality requirements is essential for traveling dates, even for local dates.”

“How entertainers create a unique, memorable and successful event when working as a team”“We are always looking for that unique piece of décor, entertainment or an overall concept that

we can add to a proposal to be the WOW factor and close a deal. We like to work with vendors that give us something different than they give everyone else and we always look for loyalty from the people we work with on a regular basis.”


ATTACHMENT IV – Redmoon for Hire Team Biographies

Gillian Darlow, Managing Director (PROJECT CHAMPION), holds an M.B.A from Stanford Graduate School of Business, an M.A. in education from Stanford University and an A.B. from Harvard University. Darlow assumed the Managing Director position at Redmoon Theater in July of 2002. In her prior role as Manager of Business Development and Operations at the Field Museum, she spent three years helping establish new national parks and protected areas in South America. She has also worked in managerial roles with Actors Theatre of Louisville, Williamstown Theatre Festival, American Conservatory Theatre, and the Ensemble Theatre of Cincinnati.

Christy Uchida, Business Manager, holds an M.B.A. from the Kellogg School of Management at Northwestern University and a B.S. from Tufts University. Uchida joined Redmoon Theater in 2002, and oversees finance, human resources, and facilities. Additionally, her “Redmoon for Hire” responsibilities include sales, marketing, and strategy development. Her prior arts management experience includes three years as Director of Finance and Administration for Performing Arts Chicago and business manager for Writers’ Theatre in 2002. She previously worked for four years in strategic marketing management and environmental consulting in Boston.

Francis (Frank) Blair, Treasurer, Board of Directors, holds an M.P.A. from Harvard University’s Kennedy School of Government and a B.A. from Yale University. With over 35 years of experience, Blair has operated his own entrepreneurial venture capital firm, IEG Venture Management, Inc. since founding it in 1983. He has extensive experience with startups and business development. Previously Blair worked in the Environmental Protection Agency and as the assistant to the Secretary of the Department of Energy. He sits as a trustee on numerous nonprofit boards and has served on Redmoon’s board since 2003.

Lawrence (Larry) Carter, Board Member, holds a B.A. degree from the University of Southern California. Carter is the founder and Senior Managing Director of LSC Healthcare Partners. In his capacity as investment banker and venture capitalist, Carter has advised a broad range of clients in the healthcare industry in over 100 merger, acquisition and capital raising transactions. Prior to founding LSC Healthcare Partners, Carter was a principal at Healthcare Management Associates, a management consulting firm, and he has worked extensively in the healthcare executive recruiting industry, as well as with Arthur Andersen & Co.

Peter Szollosi, Board Member, holds a B.F.A. from Colorado State University. For the past 17 years, Szollosi has served as Creative Director for Sam Zell’s Equity Strategic Advertising and Marketing, Inc. He coordinates a world-wide team planning Zell’s events and specialty promotions including hiring talent such as Sheryl Crow, Bette Midler, and Elton John for multi-million dollar events. Szollosi’s prior work experience includes creative direction in advertising agencies and design firms. Szollosi has served on Redmoon’s board since 2000.

Jim Lasko, Artistic Director, holds an M.A. in theater from Northwestern University and a B.A. from Colorado College. Lasko has led Redmoon since 1991, and has been the principal creator of numerous original theatrical works including the award-winning productions of Cyrano, Seagull, Moby Dick, Frankenstein, The Ballad of Frankie and Johnny, Rachel’s Love, and Hunchback. Lasko has created numerous site-specific performances for Redmoon including pageants, parades, processionals, outdoor spectacles, and commissioned work. He has collaborated with Steppenwolf Theatre, Court Theatre, Bread and Puppet Theater, and Jellyeye Drum Theater.

Additional Team Supporting Redmoon for HireNAME TITLE EDUCATION RESPONSIBILITY YRS AT REDMOON /

YRS EXPERIENCEKristin Randall Burrello Assoc. Artistic Director B.A., Southern Methodist Univ. producer, director, performer 8 / 13

Frank Maugeri Assoc. Artistic Director B.A., Columbia College director, performer, designer 6 / 13Seth Bockley Artistic Associate B.A., Brown University director, performer 1 / 2

Patrick Reynolds Enterprise Production Manager B.A., University of Houston enterprise production

management 0.25 / 8

William Collins Production Manager B.F.A., DePaul University production management, stage management 1 / 1

Stephanie Kimmel Development Director M.B.A., UCLAB.A., Amherst College development, administration 1 / 13

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