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Music is a Business

One of the most overlooked elements in music is the business aspect of it. I don’t care how talented you are or how cutting edge your band’s sound is, you aren’t going to get anywhere professionally if your business sense doesn’t match your musical talents. So all of you antisocial people who sit in your room and practice all day, listen up!

RULE 1) Music is a 50/50 game!

50% – Technical proficiency, Song writing, Stage performance

50% – Promotion, Marketing, Networking, Accounting

RULE 2) General Business Knowledge

If you don’t know anything about managing your finances, business, investing, marketing, accounting, etc…. then you have some SERIOUS home work to do!!! Get your butt over to your local public library and pay some ridiculously low fee for a library card. Now start learning.

What, you don’t like to read? Too bad, cry me a river! You better learn to enjoy reading because your future as a musician depends on it. The bottom line is that if you don’t make the effort in your life to constantly be learning, then you are never going to surpass your current state. If you wake up every morning and think “I’m totally ignorant,” then you are setting yourself up to learn something that day.

What I’m saying is get off your lazy butt and go do something productive. If you don’t know anything about business, you better start leaning. The more you know about money, finance, marketing, advertising, networking, and sales, the better off you are. Remember that happiness in life is NOT ABOUT MONEY, it is about doing what you really love to do. But, if you want to perform, write, record, or do something with music for a living you better realize immediately that if you want to put food on your table, you’ve got to know something about money and business.

RULE 3) Start your own business!!!

Disclaimer: I am NOT a lawyer. People interested in taking my advice should meet with professional counsel (it will be the best money you ever spend). What I am though is someone who does run several businesses and has experience dealing with this subject matter. Some of this will only apply to citizens of the USA. I am not familiar with foreign business and tax systems. It is your job to seek professional counsel and find out what will work in your particular scenario.

One of the biggest mistakes people make in music is that they do not incorporate. Why would you want to do this? Well, two reasons actually. The first is asset protection and the second is tax advantages of doing so. Let’s take a look at each in depth.

Asset Protection (Talk to a lawyer to get more info on this and how to incorporate)

When you start a business, you create an entity, which is like a person. That entity has it’s own assets (assets are things you own: car, equipment, money, etc..) and pay it’s own taxes. The nice thing about having an entity like an LLC (Limited Liability Corporation) is that if you get sued, the party that is suing you can only attack your entity’s assets.

Example: John has a wife, 2 kids, 2 cars, and a nice house. He plays in a band. His band is set up as a member managed LLC. John’s band gets sued for canceling a gig after a dispute with a club owner. John looses the court case and has to pay $10,000 to the club owner for breach of contract. At the current time, John the band is broke and since they are incorporated, they can not take his house, cars, or other personal assets as collateral. Imagine how angry his wife would be if John lost his wife’s car because his band lost a court case. The only thing that the person who is suing can claim against is any assets the band may own (drum sticks, cell phones, guitar strings, money from gigs, etc..).

Tax Advantages (Seek out an accountant’s advice for details on how to maximize deductions)

The United States Government is very generous towards small businesses because they drive the US economy. People who run legitimate businesses get huge tax benefits. Along with that comes a lot of responsibility however. You MUST be able to do accounting (or pay someone to) and pay your taxes on time. One thing that I find funny is that a lot of people complain about a few measly increases in gas prices, and yet they are too lazy to spend the time to take all the possible deductions with their business. This cost people THOUSANDS of dollars each year. Don’t be lazy, keep your books up to date, and most importantly take all the deductions you are entitled to. Now I’m going to break down how deductions work in simple math for people that have no idea how a tax deduction works.

Scenario: You make $40,000 in one year being a musician. Your expenses are $18,500 for that year. This includes things like guitar strings, food, travel, entertainment, etc. (see accountant). In the first set of numbers, this is how you are taxed if you don’t have a business. In the second set you can see that you make nearly $6,500 more because you incorporated and were able to deduct your expenses. You can clearly see that purchasing assets pre tax is equivalent to having a discount on everything you buy at the rate you are being taxed. Nothing beats buying that new guitar 15-40% cheaper than your friend got his!

The rule:

You work for someone else:

– You get your paycheck.

– Taxes are deducted before it gets in your hands

– You purchase things with what is left

You run a business

– You get your paycheck

– You purchase things

– You pay taxes only on what is left

– In some situations if you have a loss, it carries over to offset other income! (see accountant)

You Don’t Have an LLC

You Run an LLC

Gross
Earned

$40,000

Gross
Earned

$40,000

Taxes 35%

$14,000


Expenses

$18,500

After
Tax Cash

$26,000

After
Tax Cash

$21,500


Expenses

18,500

Taxes

35%

7,525

What’s
Left

$7,500

What’s
Left

$13,975

Not
Having a Business Costs You:

$6,475

The best way to incorporate is to talk to a lawyer and an accountant. A professional will help you set yourself up and help you keep things running. Not doing this can have SERIOUS repercussions legally, as you will be held liable by the IRS for any accounting mistakes you make.

RULE 4) Networking

It isn’t who you are, it is who you know. The more people you network with, the better off you are. You never know when you will need someone’s contact. A few tips for networking are:

-Invest in some business cards. Have your Name (or band), website, phone #, and anything else important on it. You can spend a small sum of money and get hundreds of these things!

-Talk to as many people as you can. In school you got in trouble for opening your mouth and talking when you should have been. In the real world it is your job to talk to as many people as you can get. Run your mouth, you will be surprised who listens. Think of it like sales, networking is a numbers game. The more people you talk to, the better chance you have at finding that one person that can really help your cause.

– Never prejudge. You’d be amazed at how connected some people are. Someone you may think is an idiot, or weird looking, could be exactly the person you need to talk to. Again, just go out there and run your mouth. The more people you meet, the better off you will be.

– Make a database of your contacts. A simple program like Microsoft Excel can make your life very easy. Take the time to file your contacts. Again, you never know who you will need! 10 minutes a week goes a long way over several years.

RULE 5) Promotion, Promotion, Promotion

Promotion is the most important thing other than networking. I can’t tell you how many good bands that I know personally that will never go anywhere because they just don’t try. They “think” they are trying, but they are really not! Some people think that if they just get together, jam, and play a few local bars, that they will get huge. It doesn’t work like that! Sorry! The only reason that you aren’t succeeding is because of you. If something isn’t working, maybe you need to take a look at what you are doing and make some changes. Hold yourself accountable!!

My band spends just as much time promoting as we do recording, practicing, and touring. I even booked a successful headlining South American tour with the help of some promoters. If you want things to happen, you have to make them happen yourself. It goes with out saying that some people do get lucky though. But, reality is that no one is going to spoon feed you and change your diapers. This isn’t the 80’s anymore where you could just go to Los Angeles, play clubs, and get huge. This is the age of the internet. The playing field has been leveled. He who works the hardest takes over the world.

Good places to promote your music:

– Internet

– At your live shows (jump off stage immediately after you finish playing and sell CDs!!!)

– Hand out promos at other band’s shows

– Go to major music festivals and just start talking to everyone you can. Hang stuff out, network, sell CDs, and make it happen!

– College and local radio stations

– Post fliers (usually not very effective. More of a name recognition thing)

The bottom line is that the more effort and work you put into getting your name out there, the more momentum you will get, and the faster you will grow in popularity. You have to have the mentality that in any group of 100 people, only a few will like your music. It is your job to go through every person in that group to find the few who do.

Would you run 25 miles if I gave you a million dollars at the end? Even if you broke your ankle running, lost your wallet, didn’t have any food, and it was raining really hard outside? I bet you would. Well, at least I would. The point is that you can not QUIT when things get tough. It is always the last person standing that takes home the prize.

Summary

Music is all about being a salesman, a promoter, an entrepreneur, a song writer, a performer, and excellent at networking. The more hats you can wear, the more effective you will be. When creating a band it is imperative to have a strategy that gets everyone involved on a high level. My band, Dark Shift, is a well oiled business machine because we apply these principles. Everyone has there specialties, and we all back each other up as well as compliment each other’s talents. The goal for any band should be to have a synergy. This means that the whole thing together is greater than the sum of the parts.

I wish you all luck in your music careers! The more we work together to help each other out, the better off we all will be.

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