Paying for a music career is just about the hardest part of keeping the whole thing going. Musicians, record labels, music managers, promoters, and agents all face a constant battle of completing their projects while paying the bills.
But how you get your music business funding and what you do with the money makes a big difference. Before you start digging yourself into debt, find what you need to know so that your money woes don’t shut you down.
- Know Your Sources
Where you get your money is just about the most important factor to consider. Getting a loan or an investment in your record label or other music business from a bad source can cause all kinds of problems. Problems range from high-interest rates to losing all creative control of your business.
Don’t just “take the cash” and worry about it later.
- Know the Right Approach
There are many different potential funding sources, and there is a unique approach you need to take to deal with each one. The best way to make sure you’re ready for anything is to write up a complete business plan. Writing a business plan makes you distill and focus on the essential parts of your business and its goals. The process will give you a better understanding of your place in the music industry.
You won’t get anywhere if you can’t speak knowledgeably about your project, and writing a plan will help focus your own thoughts as well. And of course, know before you approach someone for money exactly what information they will expect from you. Most lenders require a business plan before they will offer any funds.
- Know the Amount You Need
A very common mistake people make when they want a music business loan is that they think the amount of money they need is “as much as possible.” Not true. As you write a business plan, coming up with a realistic budget is part of the process. It will help you understand what it is going to take to get your product produced and to the market.
If you’re going to skip the plan, you still need to do some research into the likely costs involved. Find out how much you think you can make from a project, and how long you think it will take you to make it.
- Spending Raised Business Funds
Once you get music businesses funding you need to know how to spend your investment or loan wisely. For instance, if you want to release a record, you need to make decisions about pressing, packaging, and promotion expenses.
You can decide to go all digital and skip the pressing and packaging and you can decide to do your promotion in-house. If you decide to go for a physical pressing, then your real danger zone will be packaging. When you apply for a music business loan or another kind of funding, there are a few questions you should be able to answer:
- Who is your ideal funding source, and how can you approach them?
- How much money do you need for your project?
- How can you spend the money in a way that gives your project a good shot at being a success but that keeps costs down as much as possible?
The answers to these questions will help you figure out how to cover your costs and maybe even come out on top. If you’re unsure about the answers, it’s back to the drawing board to develop your plan a little more.