Welcome to part three of “Work Like a Pro to Become a Pro,” a four part series by artist manager Budi Voogt designed to help artists work smarter on their music business so they can focus on what matters most: their music. Get tips to improve your communication in Part 2, and read on below for a few tips on getting your business in order.
When you’re an independent artist who’s busy touring, recording and writing music it can be hard to keep track of everything on the business side of things. It’s tedious work, but keeping track of your money, contacts, venues you’ve played, invoices, paperwork and more can save you time in the long run.
Here’s some practical tips to create order from all the numbers, files and papers and people.
1. Get Organized
This is super straightforward. Buy an actual folder to store files in, and a bunch of those plastic sheets that go in it. The next time you get mail, invoices and other paperwork regarding to your musical career, store it in the folder. Keep track of your receipts; if you have a budget, this will help you stick to it.
Keep lists. A lot of them.
Over time you’re going to be working with many people, and hopefully will receive a ton of support. It’s a smart move to keep track of your contacts, so you can maintain your relationships, and immediately have their information at hand should you need to connect.
The basic stuff you should track are: venues you’ve played at, bookings and fees, blogs whom are supporting you, people who have purchased your music and merchandise, and your expenses. You can use a spreadsheet software tool, such as Microsoft Excel or iWork Numbers, create lists for all of these and update them regularly.
Don’t forget to research and expand your venue and blog lists, so that you can easily pitch new stuff or available dates there.
2. Start a Business
If you’re generating reasonable revenue as a musician, it might be wise to start a business. There are likely tax benefits to be gained, even if you’re just earning a little (say $2500+ a year). If you’re a solo operation, a sole proprietorship could be a good idea.
Do some research into tax advantages of local small businesses, and call your chamber of commerce or small business administration. Operating as a business also makes you much more credible towards the outside world. Rest assured, all bigger musicians have business entities.
DISCLAIMER: I’m not a business or a tax professional, so this is just a suggestion. And as you’ll see in my later points, it’s always a good idea to refer to a professional when it comes to the details of legal and financial decisions.
3. Manage Your Money
You should separate the money you make from music, from your personal cash. That way you can better keep track of it, and actually reinvest it into doing things related to music.
All too often I encounter artists who don’t do this, and that end up spending all their performance fees on clothes and booze. Then when the question arises of ‘how are we going to pay for the studio?’ or other stuff, they realize they’ve spent it all.
If you have a business set up, it makes sense to open a business bank account. If you don’t, and aren’t in a position to yet, open a new personal bank account, and wire all the music money there. Keep it divided, and see it grow. Then spend it on stuff that actually contributes to your development.
Use invoices, don’t take cash
A big step towards professionalizing is to not take cash for your payments. Get it wired, clean, and well organized.
Send promoters invoices for your artist fees, and make sure they pay before you actually perform. If you have the separate bank account set up, make sure the money goes there. If you have a booking agent, he should take care of this for you.
This way you’ll have more leverage to make sure you’ll actually get paid, and at the same time it’ll help divide the music income from your personal stash. And again, people take receiving an invoice much more serious, than they do pressing cash money into your hands.
4. Get An Accountant
When you’re regularly playing shows, making some decent money, and are at a point when starting a business entity and getting a separate bank account makes sense, then it’s time to look for an accountant.
In the past, I have tried doing the administration of many of my acts myself, and even they have tried. We’ve used online book keeping software, offline Excel spread sheets, but it was all very time consuming – and not exactly successful.
When we finally decided to hire an accountant, we were delighted. Within a year, he had saved us more on tax payments and benefits, than he actually cost us. And, we didn’t have to spend all that time and effort doing it ourselves anymore.
Ideally you’d find an accountant who is specialized in working with musicians. Ask around in your network, and see if you can get a recommendation. That way you know he’s a solid chap too.
5. Find a Lawyer
Hopefully, a time will come when you’re going to sign a record deal. Or a distribution deal. Or some other deal.
You probably have no legal background, and will need to have someone with reasonable expertise, to give you an insightful opinion on contracts.
In the best scenario, you should find an entertainment lawyer with expertise in the music business. This’ll cost you quite some money though, as fees can range between $50-250 an hour. In the case of a really big deal that needs to be reviewed, or when you’re making good money, then go for this option.
If that’s no option for you, browse your network for people with any legal expertise. Can be law students, people at record labels or distributors, and sometimes even promoters. They will probably share their insights with you for free, or little.
When you’ve got all these covered, you’ll start seeing order in everything you do. And might have just officially become an entrepreneur. A music entrepreneur at that. Good job!
This article is written by Budi Voogt, who runs Heroic Recordings and manages artists. He writes about the music industry and marketing on his blog, and has just released his first book ‘The Soundcloud Bible’. Stay tuned for Part III, which covers how to effectively deal with administrative responsibilities. Follow Budi at @HeroicRecordings on Twitter!