Episode 8
Building a Solid Music Business Foundation
As musicians, we can often feel at a loss with where to start when structuring our business. It can be overwhelming with the amount to know and trying to figure out what our business should look like. This episode is for the musician trying to do it smart from the start or trying to restructure an unorganized idea.
0:00:01.8 S1: Welcome to the show that explores the methods and strategies on rock and the financial side of your music business with over 40 years combined experience. Here are your host, Chris Webb and Dave Takin.
0:00:15.3 S2: Welcome to musicians tip Chartwell, we talk about musicians and money and place that we discussed the best site to lay your music business ground work and build your brand from the bottom up. I'm host Chris web, joined by my co-host, the handyman himself, Dave dancing.
0:00:32.0 S1: You're saying that because I haven't shut up about the hardwood floors that I learned with in during this pandemic, and I've lost friends because I just won't shut up about all the war wood working I'm doing and feel like riband, how I grounded everything. It's knowing Chris, I know. Do you make households yeading go over
0:00:53.9 S2: As musicians, we often feel at a loss with where to start when structuring our business, it can be overwhelming with the amount to know and trying to figure out what our business should look like this episode is for the musician trying to do the smart thing from the start or trying to restructure an unorganized idea, we try to break down and what we feel is the most important pillars to help create a foundation to shape a strong business for the long term that can be easily scalable.
0:01:22.4 S1: Today's episode is brought to by stone cottage studios to believe that music and visual heart is transcending, has no borders, represents everyone and has the ability to live the heart and soul, the believe that music has the power to unite and light, motivate and inspire stooge studios provides a venue for musicians to reach their fans through video and audio production right here in Boulder, Colorado. Check out their interview-based artist sessions, live stream events and filming and recording projects at stone cottage studios dot com. Welcome back, everybody. Each week we try to mention a new non-profit, and this week, we'd like to bring your attention to Musicians Foundation. Musicians Foundation provides aid that enables performers, educators, composers and arrangers to continue pursuing their artistic process and vision as the oldest non-profit of its kind in the United States, Musicians Foundation is dedicated to sustain musicians and their families in times of emergency, crisis or transition. Their goal is to relieve the financial burdens of musicians who qualify according to the foundation's criteria, check them out at Musicians Foundation dot org.
0:02:35.0 S2: Quote of the week, music and the music business are two different things. Erica Batu, music is spiritual, the music business is not an Morrison, so today, we wanna just note that we focus on the technical side of structuring your business, and focus on what we need to be doing to make sure that our business is set up to thrive. We will spend time and a separate episode to talk about the artist's vision within your business, this week's topics, top business priorities, specific things to musicians, and what are your main services and products that you will offer top business priorities. The one thing you need to start with is registering your business with the state that you're in, this is you're doing business as name, this will also include an address and a business ID number that will attach to your business. Usually, you can find this on your state, dot gov, your State website. After that, you'll need a tax ID number, if it's an LLC sometimes, if you've really gone overboard with your structuring, you might have a different number, otherwise it usually will be your seal security number, if it's a band, then it will be a different number that will be a group ID number.
0:03:58.5 S1: I think it's smart to keep them separate.
0:04:01.1 S2: Speaking of separate, we also wanna make sure you have a bank account that is separate from your personal finances at
0:04:08.4 S1: A dress that one enough... I mean, just for taxes at the end of the year to know what was going on and what was coming in, and if you don't have something hooked up a different kind of software that helps you with that, I mean, it was... Well, after touring did I put a separate bag and come together because I didn't know any better at the time, but man, if I can go back... And it's also a good place to keep an emergency fund, we'll talk about this in another episode too, but we do wanna make sure that everyone has more in their account than the expense is that that month is requiring, and this can overflow into what we'll call an emergency fund for other unexpected things like gigs getting canceled due to a virus, or even if you're hiring a band and you promise them X amount of money and for some reason, you get shorted, that you have to keep your work, which is something I also learned very young, probably 21 that the time that that happened to me. I thought, oh, as a band, we all take the hit, but a friend of mine was like, No, you promised me this much and I have my own business that I depend on what people say, so I had a verbal contract with you, and that really woke me up to make sure I was never in that position again, that if I make a commitment to someone and it's out of my hands, that's my job to take care of my band made by friend
0:05:52.9 S2: Invoicing software. There's a bunch out there, and there'll probably be a bunch more by the time this episode even being listened to, it's one of those things where the digital world has really offered a lot of invoicing software, and it changes often, the two that were really fond of the ones that I've had the most experience with and have found them to work well have been Fresh Books and QuickBooks... Would you use more often? Well, Fresh Books is a little more expensive. And so you gotta take it into count and it doesn't do everything that QuickBooks does. So QuickBooks is more of a one-stop shop because it also does other things that keep tracking your mileage for you, whereas it had to have separate apps that did both of those, so it didn't really add up to how much more I was spending when I used Fresh Books, but I will tell you that it's nicer, it has a lot more nicer features, you can include your contract within the invoice, has several ways to have it signed. There's stuff that you can't do with QuickBooks, so it's kind of what you need out of it.
0:07:04.7 S1: We should go into a different episode because I've only used QuickBooks, and what got me at first they're like, Oh, free for the first 30 days, so you get to test on it, but even the simplest plan, I think is 12, and like you... I can keep track of my miles just by hitting the app, and from the moment I leave my house to the moment I come back, it keeps the record of that, also I can take pictures of my receipts as I'm going, so I don't have to worry about having the paper when it comes time for tax season, I'm able to invoice and even accept payments through that simple plan, and especially with my bandmates, I can manage the 1099. Pretty awesome for me, but if you're telling me first books do what you look into that.
0:07:49.1 S2: Another not so-known thing you can do with QuickBooks is... Obviously, it's owned by Intuit, right into it. And if you file with TurboTax, which is another one of their softwares, as an entrepreneur, they give you a free year of QuickBooks is... So if you file with TurboTax, self-employed, they give you the year for free with QuickBooks, so the two kind of work together, and that's been what I've done this last year, and that's been nice, which brings up the next point of terrible tax or something of that like that helps you file your taxes and making sure that you're keeping track of that stuff through the years so that it's not out of control when it comes to the end, and this will be something else that we're gonna have a tax professional come sit in on a podcast or two, and dive into some of the ways that musicians can reduce their tax... Taxable income legally and ethically. And also, little tips and tricks on how to make sure that when it comes time for taxes, that you don't feel more nervous than you would if you were opening from Erica.
0:09:12.6 S1: I'm so glad we added that disclaimer at the end of these podcasts, especially on the one that we're gonna do about accounting
0:09:21.7 S2: Next, after that, we were talking about payments and accounts, right. So we wanna make sure that you have lots of ways to accept payment, and these are universal business rules, but musicians... We have lots of unique situations, so the more ways you have that you could be paid the better, so even though you may not use PayPal that much, 'cause you use Maven moot the time, you should still be up-signed for both as well as having... Whatever your bank transfer option is, and then of course with QuickBooks, you can accept payment directly through the software as well, so making sure that's all linked up to your separate business, having square as an option is also beneficial because not only can you take credit card right there from your phone, like QuickBooks does, but some venues or ticketed live streams will automatically deposit your payment into a square count and you have to be signed up for that, then having a website to funnel all of your other sites too is a critical part of structuring. An online music business. And although I say online music business, I really just meant the bulk of your audience will get filtered through the internet, then that's just the reality of the times, don't settle on a bad URL address, make sure it's one that reflects your brand, is memorable and is relevant, to who you are in every other part of the internet, multiple dresses is okay as well.
0:11:01.4 S2: Some people will put a URL to each song that they've released that I'll bring them back to their main website. Another good idea is if your last name is hard to spell and it's spelled differently, you can have it read the misspelling or you can buy that for something as easy as a dollar a month and have it redirect. So even David Hampton dot com redirects to Dave Tamas. Also important to set up your website, so you have all your social flow, go to that, and sometimes I see people use link tree as something that is easy to put in your website, your Spotify or Apple, iTunes, your Facebook, your Instagram. Well, you're sending all the traffic to a third party, so if you can just create that same flow on your website where they're just buttons that do the exact same thing, you're capturing all that information from each user that leaves Instagram to click that link, and they go right to your website. And now, on another episode, we'll be able to talk about how you can re-target them and also capture their email right out of the gates rather than having someone else target them and sell them whatever they want, but you own that information now, speaking of capturing...
0:12:26.2 S2: Let's just take a quick moment that if you haven't liked and subscribe to our or to podcast that you're listening to, whatever podcast platform you're listening to us on, please do so as it really helps the algorithms recognize us. Please leave a comment and let others know why this is worth listening to. Next, we're gonna dive into some specific things that are unique to musicians when setting up structure with their business, perhaps the most important thing that a musician can do to make sure they're paid is sign up for a pro or performing rights organization, examples of this or ASCAP BMI and case in the US, these groups collect publishing royalties, performance royalties from the public performance of musical works as stipulated by the US Copyright Act, these include fees paid by radio stations, businesses, restaurants, concert venues, bars, night clubs, sports are bowling alleys, mall shopping centers, amusement parks, colleges and universities, etcetera. But they're all for performing music in public places, these monies are paid to a Kami CSA for a blanket public performance license that grants the license, the business permission to allow music to be performed in their environment, this includes music over speakers and music performed by live artists, the license fees paid to ask at BMI and CSA or passed on to the Capri honors in the musical works for the song.
0:13:59.6 S2: Publisher is usually 50% songwriters. About 50%, those are pretty common splits as performance royalties for musical acts or works, we will spend more time on copyright with our special copyright expert later episode. Who are you with? I am with ASCAP in with PMI.
0:14:22.8 S1: Good.
0:14:23.0 S2: We'll have two different directions on that and we can talk about them to... What makes them different? There's also a good blog post on DIY musician at CD dot com, if you wanna look up more info on that. We can put the link in the show notes. So the last part that we saved for this episode, perhaps the most important part is to really narrow in on what services and products your business is going to offer, there's a lot of various ways that musicians focus in on specific products or services that really are their bread and butter, if there's nothing offered, you will not make a sale, performers and songwriters for hire or producers, what would you want people to know about your past production work, is that something they can easily find on your website, are there great video samples of audio samples? Does your repertoire list show all the current songs that you just learn from last year's hits are... Your price is something that you figured out ahead of time, one thing people like to see is that you're consistent with what you offer, it's good to have a set price, at least a range in which you try to stay within when it's coming down to item Ising your services, the big question, of course, is, should you post those rates on your website? And I think there's a lot of different ways.
0:15:50.2 S2: Approach this one. Dave, what do you think?
0:15:52.8 S1: I would post your rates necessarily, I think it's a great opportunity for them to reach out to you, to make contact and get to know you a little bit more, and you'll avoid... People just looking for the lowest rate, and I think that this is a good point to how you can diversify your income, because Chris has an original singer-songwriter, you also have other things that you do to make... It is, you have an awesome wedding band, and you also get hired for just yourself as a single song later where you can play your own stuff and covers, so having something like your website URL for PK, where you have everything in one place that you can send a link to someone and say, Check out my music, this is my set list, these are the songs I can't play or will learn for you if need be, and you can have one for original stuff and then one for when you play cover songs, and I agree that having your rates on there is going to cause half of your potential clients to not even reach out to you, not because it's too high, because it's too low, but because you've missed the opportunity to create a lit relationship prior to asking or stating your rates.
0:17:11.5 S1: Yeah, especially with teaching, that's definitely an opportunity to make a connection with someone rather than how much you are half an hour or an hour...
0:17:19.2 S2: Right, and even as we said, having different package rates ranges already pre-set and having that on hand, it's just a good starting point because every situation is different, even with future wedding performer, like I do, a lot of... Every situation has its own unique requests in its own unique situations with location and the equipment needed, and hours played and songs you have to learn, and so it's really hard to have a general number for all of those variables. Another important thing to have as a musician, as an independent artist, his contracts and agreements, general contracts and agreements that you can then put the unique situation of each performance and fill in the blanks, it will make your process go a lot quicker. Nothing's worse than not having a contract, if you get to your gig and find out that there's no power within 200 feet, it's your fault because you didn't have a contract that said you required power within a certain distance, these aren't complicated things or unreasonable demands, but it really does come into play that if you didn't have it in your contract, they can argue that it's not their fault.
0:18:37.1 S1: I would also have an updated W-9 ready to send out with each contract as well, nothing like someone telling you they didn't receive your W-9 when you're trying to get paid at the end of the mine, if they've paid you over 500 for the year, you're gonna want that 199, especially as an independent contractor, you want your taxes to reflect that your income is steady, especially if you might need a loan later or trying to get a car or a house or something, when you don't have that 199 to show, it just... It says, it's that steady income, it's just how much you made last here, and again.
0:19:16.0 S2: Just to reiterate how important it is to have a website, all of these things that we're talking about really would be hard to maintain if you didn't have a little real estate to call your own on the inter-webs, if somebody does wanna reach out to us on the inter-webs and let us know how we're doing, ask us a question or make a suggestion. What's the best way to do that day?
0:19:35.9 S1: I could find a set musicians Jr dot com, we'll send us an email at musicians tip jar at gmail dot com.
0:19:42.6 S2: And just again, a reminder that if you haven't taken the time, you have to subscribe and comment and let others know about this community, make sure we're getting the word out, please take a moment to do that, it really does help us out and we really do appreciate it
0:19:55.7 S1: As always, thank you for joining us. Remember, there's already enough for everyone, you just need to know how to get it until next time, in behalf of The Dave tampon and myself, Chris web, please stay safe. Stay healthy and take care of each other. You can make all the music you in, but the music business is only from making money, this this musician... Stephen, nothing on this show should be considered a specific personal or professional advice, these consultant appropriate tax legal business with an entry professional or individualized advice, individual results and not guaranteed, and all discuss strategies have the potential for property loss, those are operating on the home off of musicians, tip jar LLC exclusively, music business is also for getting screwed. And you don't know enough about it, actually.
0:20:50.5 S2: I wee.