Starting Your Own Music Business - By Jeffrey P. Fisher
You have a better chance of starting your own music business than trying to land a job in the industry. Whether you decide to start a label, put together a band, begin a recording studio, or any number of music industry gigs, follow these basic steps before you take the plunge.
Make plans for the short- and long-term. These plans should be specific with clear goals and ways to evaluate them. One crucial aspect of planning is to determine the resources that you need such as people, things, a place from which to work, money, and more.
Who is your competition and what are their strengths and weaknesses? Finding out useful information about your competitors can be one of the most difficult tasks. It is important that you know a little about what others are doing as it helps you in competitive bid situations. What makes you different from that competition? Direct on the heels of the above question, you need to know (and promote) what makes you unique from others who do similar work.
To whom will you sell your music products and services? What specific people or businesses are candidates for what you offer? What are their specific characteristics? This information helps you focus your promotions effectively. Also, ask yourself how you will promote yourself? What particular promotional strategies will you employ — letters, advertising, publicity, sales calls, Internet, and so forth? The ONLY way to ensure your success in today’s music world is to master ruthless self-promotion. First, to find new customers and convince them to buy what you sell and second, to keep your existing buyers and, more importantly, get them to buy again (and again). Focus your promotions on reaching the greatest number of people who want what you sell. Determine the best way to contact them, including by what means and when. Launch your promotions. Make sales. Use your initial success to get more business. Follow this basic plan throughout your music business career. Because the minute you stop promoting is the minute your sales plunge and it all goes away.
Set up the business. Decide on the legal structure of your business. Determine your start-up costs if they apply to you. These costs would be the initial money you would need to open the doors such as gear, furniture, professional services, business forms, deposits, licenses, and so forth. You don’t need a huge infusion of cash to get started unless you are starting entirely from scratch. Chances are you already have some things in place and you just need some start-up money to take care of some legal and promotional matters. Also, find out what it is going to cost to stay in business. Often called overhead these costs might include rent, utilities, promotional expenses, professional dues, taxes, supplies, insurance, loan payments, etc.
Take care of the money issue. Start a business checking account. Deposit all your music income into that account. Pay all your business related expenses using checks drawn on that same account. Alternately, use a credit card just for the business. Use the card for business purchases only and pay it off on time from the business checking account. Setup a basic bookkeeping system that lets you record your income and expenses in such a way that makes tax preparation and monitoring your financial situation easier. Also, make sure you fully understand all the tax consequences and how they affect you. You have to make regular tax payments along with the usual year-end tax preparation. Meet with your tax adviser or accountant to make sure you handle this issue satisfactorily.
Protect yourself. There are several types of insurance that you must have such as health insurance and property insurance. You may elect to have life insurance, disability insurance, and liability insurance. Talk with your insurance agent to determine what coverage is right for your particular situation.
Attend to legal business matters. If you plan to operate your business using a name other than your legal name, you will need to file a fictitious name statement or doing-business-as (dba) with your local government. Contact your local municipality for the specific requirements. You may also need to secure a tax ID for your business. In most cases, your social security number is all you need. A corporations would need its own tax ID. Also, states with a sales tax may require a separate sales tax ID number. Contact your state’s department of commerce and industry. Find out and be sure to meet the specific regulations that pertain to operating in your town. You may need to obtain a business license from your local municipality. Also, there may be other regulations that affect your business. Go to your local clerk’s office and ask them what you need to do to start a business from your home. And if you have employees, make sure you know and follow all the regulations that pertain to them.
Because this list is far from complete, use it only for the basics when planning your start-up. Consult with business professionals and/or do some additional research to make sure your music business venture is a success.