LETS TALK MONEY
RAISING MONEY FOR YOUR BAND
All Bands and especially new groups need to raise money for dozens of different projects such as recording time, band merchandise, better equipment, promotional materials, etc
So where do you start? I guess everyone knows it takes some money to make money, it also takes organization to keep track of your money, budgets to get some control of where your money goes, and some creative idea's to keep a cash flow, especially in the start up of a new group. This is a problem that all musicians seem to face at one point or another. If you are currently facing a financial crisis as a band, it's time to get out pen and paper and make a few lists and see what you can do to change this. Sometimes you have to make decisions based on bottom-line financial thinking and not just on your passion for music. If you are lucky enough to have parents, a spouse or a day job to help you make ends meet, great, but for the rest of us, it's decision time.
Here are some basics to Handling and Making More Money
1. BUDGET - Get one and stick with it! While a career plan is key to musical success a financial plan is just as important to ensure monetary success. And be sure to set aside at least a small portion of your earnings for savings (savings for your future, your retirement, your education, your vacation,) whatever. Head to your local office supply store for planning workbooks or budget sheets to use. Or head to your favorite search engine and type in, "budget planning" for hundreds of sites with articles, free downloads, tips, e-books and other resources to help with your budget setup and tracking. 2. PLAN AHEAD - Make sure to plan for emergencies and the unexpected, like an auto break down or equipment malfunction. Even if you can only set aside $50 or so each monthly, place it in an account and earmark it for this "Miscellaneous" fund. Then when things go wrong, and they will - nothing's perfect in life - you'll be better prepared to deal with the unexpected. 3. NON-MONTHLY ITEMS - Work out a monthly payment for items that you don't pay monthly and set this up in your regular monthly budget. For example, for items like insurance on equipment, quarterly payments and annual bills such as band merchandise, etc. take the amounts and determine what they would be monthly. Then list the items on your budget log and pull these amounts aside, saving them in your account for those purposes. This way, when the bills hit, you won't be caught off guard and have to scrounge for the money. 4. PAY YOURSELF FIRST. Take 10 percent of what you make and save it. Trust me, You will not regret doing this over time it adds up. Be prepared to at some point build a team consisting of an accountant, lawyer, manager, financial planner, etc. to help you with legal requirements associated with your earnings and to provide financial advice as you need it. Turn $100 into a Million Dollars When I talk to a new artist or band I am considering for management, I always ask the bands goals and where they see themselves in two years from now. Most often the answer is they wish to be signed to a major label making millions of dollars and touring the world. This is a very ambitious goal to say the least, and there's nothing wrong with wanting success as an artist, but we all know success doesn't not come easy and for many not at all. Success is tough to achieve when people don't have much money to start with. Most bands I know have little more than a dream to start with and some artistic creativity. I have been pondering this dilemma and have come to a logical conclusion, which has tremendous potential for those who can grasp the simplicity of this concept. |
Let's debunk and clarify a few issues: First It does not take much money to make money. Secondly, It is true that you can make more money selling products than performing. Why? Because your income potential with performing is limited to your ability to deliver quantity entertainment per-hour and there are only so many hours you can perform in a day, week, etc. Whereas; a product can be produced and delivered at nearly infinite levels depending on consumer demand and production capacity. It is also true that millionaires have a superior perspective on how to make money over the common person and this can be proved true by the fact that not everybody is a millionaire. So how does a millionaire make millions? By investing money into things and ideas that "make money"… Millionaires want a return on their investments and ROI is the KEY to success. The problem for most people who dream of making a million dollars is how to get from zero, or nearly zero dollars to a million—that's where the mental grid-lock happens. People can't figure it out and give up, as I was contemplating this issue it dawned on me that making a million dollars, with no inertia, is way to complex and basically an unachievable goal, and that is why most people cannot achieve it. Then the idea to simplify the process hit me. The way to make a million bucks is by starting with one hundred dollars. The KEY is ROI. The key is to smart small and apply one rule of thumb to whatever you do and here's the formula that will allow you to take $100.00 and turn it into a million: Whatever you invest in with your money, double your profits when you sell it. if its T shirts, CD's, etc. It is that simple. Knowing this, then you must buy/invest into something (anything) for the lowest possible price with your initial $100.00 so that when you sell it, you recover your initial investment, cover all your costs associated with selling the product, and after the dust settles, you have $200.00. Then, repeat the process. It's kind of like the "double a penny everyday for 30 days" angle where at the end of 30 days, you have a million dollars… only this is more practical because you are exchanging a product for money rather than just doubling pennies without a source for pennies. Let me say it again: Invest $100.00 into any product so that when you sell it, it is priced to recover all your costs and doubles your money. Then, repeat the process. That product could be anything from A to Z. The key is buying low, selling high and doubling your initial investment. If you can't double the investment under this theory, don't invest. Let's look at the math: $100-initial investment. $200-first ROI $400-second ROI $800-third ROI $1600-fourth $3200-fifth $6400-sixth $12 800-seventh $25600-eight $51200-ninth $102400-tenth $204800-eleventh (1/4 million) $409600-twelfth (1/2 million) $819200-thirteenth (nearly a million) $1638400-fourteenth (nearly 2 million) Instead of thinking about "making a million dollars" change your thinking to "doubling your money" on everything you invest in and start small. In fact, starting with $50.00 only adds one additional step to making a million dollars. Don't have $50.00? Start with $25.00, you get the point. I have pondered this and here is a truth: If you can't implement this simple, logical plan to make a million dollars, the chances are extremely high that you will never become a millionaire. Why? Because if you can't do the little things first, you will never get the big things done. Start with whatever you have to invest and double your ROI. Starting out with small investments and building as you go also helps to reduce your risk of loosing a lot of money on a bad financial decision. Start to think in terms of combining a number of smaller money-raising concepts into one sizable river of cash.You can't always bat a hundred, but stay on track and keep working your way up. Be sure to ask yourself two key questions, 1. Who has your money in their pockets? 2. How are you going to get it into your pocket? Another thing that needs to be talked about is when people claim to have a great idea, but have no clue how to implement it. "First, if all you've done is come up with a great idea—for example, "a new car that's fast, elegant, and gas free"—but you can't implement it, then you have nothing. In this case, don't waste anyone's time until you've found other people who can do the engineering." I find both of these points to be very applicable to the music business. As a band, you have to determine who has money in their pockets to buy your recordings, merchandise, or pay to see you play, and you have to figure out how to compel them to fork it over to you. This is where your playing gigs, building a solid fan base, and maintaining a web site and mailing list come into play. Perhaps if your band can afford it, you might think about giving out CD Demo's in areas near your upcoming gigs. You can get them for about 75 cents each. Shop around for deals. These are bulk CDs that come without a jacket, though you can have info on them. Plain, paper sleeves run about 10 cents each. If you have a computer available you can print sleeves yourself. Demos are great grass roots promotional tools. You can bring them into a non-traditional outlets that fans of your music may shop in, or places they frequent like skate shops, surf shops, motorcycle dealers, clubs, pool halls, radio stations, colleges, and clothing stores. Be creative. You can give CDs away to promote that you're playing and your music. It will quickly get your bands name and music on the local scene. Many record stores may be willing to give them out. When trying to raise money or attract investors It helps to be in as many places as possible. Exposure can attract fans with money! Some people put ads in biz publications, like the Billboard, the Wall Street Journal or Crain's. If you get interest from someone, you must have some ammo to convince them that your music is worth investing in. Before you go to anyone for money, enhance your profile. Do the ground work to make it look like you've got something besides good music. Getting publicity can encourage a potential investor to touch their checkbook. Getting written up can look more impressive than a nice CD. You should be doing everything you can to get into publications, no matter what your goal. It shows that people are paying attention. If you're not ready to get press, you're probably not ready for an investor. People want to invest in something attractive. Clips give them something to hold and share with others who may be involved. Keep reminding yourself and your band members, "A press kit without press isn't impressive." Here is a summary of some general income and expense categories that may factor into your business/budgeting forecasts. As you can see there are very few sources of income from music, and inevitably the expenses you incur must come from those income sources. So, this is a quick wake-up call to financial planning. Whatever you can raise is what you have to work with, and there is never enough money to promote and market music so careful financial and execution is key to your long term success. In general, to establish yourself as a professional artist…expenses for all the categories listed below will be much higher than whatever you are thinking they may be.) As you look over the income sources remember that outside of some live performance fees, and sales of your music and merchandise (like T-shirts, etc) most of the income sources take time to develop. I get questions all the time about where will the money come from to start up a label, or your own business? The answer is this. From wherever you can get it… credit, loans, sugar daddies, lottery winning, investors...whatever resources you can come up with.. Raising the funds to start your own business is your own business. Perhaps now you understand why many musicians and bands want those record deals. Major Record labels front the money to develop, market, and promote their artists. Big Record labels are businesses that understand it costs a lot of money to sell an artist's recordings, and the successful labels are well funded so that they can go out there and fight the good fight…marketing the records they have released. But in recent years even the larger labels have cut back on artist promotion and carefully watch their (ROT) return on investment.. Read this, think about and PLAN! 1) A Musician or Band's Source of Income: a) Live Performance Fees2. Expenses for a Musician or Band (Putting out their own record): a) Recording fees:CD/Tape |
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