The Musician Entrepreneur
Anatomy of an Entrepreneur
So what exactly is an entrepreneur anyway? What does this have to do with being a musician? An entrepreneur is someone who organizes (starts) and operates a business. The difference between an entrepreneur and just a manager is that there is the running of the business but also the development of the business and the inherent amount of risk involved. The entrepreneur has to run the business, develop it and find ways to generate income. Every musician is a self contained business and has to conduct business the way an entrepreneur would. First off, there's a lot of risk involved since the music business isn't an easy business and the band (the music and act) are new products that need to be introduced to the general public. There is the start up, then development, and release of product. There is management, marketing, and administration to take care of. All the time the musician is working at upgrading and refining the product (their skills and music) while trying to take care of all of the business end. The good news is that a lot of what makes up a successful entrepreneur are things that musicians are good at or have developed naturally. The bad news is that there are a couple of things that an entrepreneur does that musicians aren't trained for and are usually not equipped to do.
This is one that musicians seem to be pretty good at. After all, being a musician in itself is a huge risk; there are easier ways to make money! Part of being an entrepreneur is being able to manage risk. There is a way to manage it once you know how it works. Being able to put together proper financials is one way to manage risk since you can see on paper how much you need to survive. It also makes you put together a separate fund so that when an emergency does arise, you'll be prepared. Planning is also another part of risk management. When you've put together a plan, there should be parts in there to take care of the 'what ifs'. That means that if you go on tour, you always make sure that you have a means to get home. Just in case things go wrong and you need to cut the tour short, you have to make sure you have the means to get everyone home. Plus, by doing some risk management, you might bring to light some things that you might not have thought of that might come up in the future. By thinking about this beforehand, you will be better prepared for such circumstances. Lastly, it's important to know that there is some risk involved so that you go into each opportunity with your eyes wide open and take care of things as they arise; whether they be a tour, financing or signing contracts, there is no good reason these days not to be fully prepared.
Another big part of running a business is the administration and management side of things. There are many things that need to be taken care of in the way of contracts, paperwork and just handling of day to day affairs. It's all to easy to let this all go and not spend any time on it. It's one of those things that can get away from you and you may not notice until it's too late. Original songs need to be registered and copyrighted. Contracts need to be reviewed and negotiated. Things like insurance and legal issues need to be taken care of when touring and booking shows..
Musicians usually seem pretty good at planning certain things. Whether it's putting tracks together, putting a band together or doing a tour, musicians are used to doing these type of things. There are other types of planning that need to be taken care of too. That means deciding on if and when to get a lawyer or manager, planning the year in terms of finances, or putting together the marketing of a new CD or tour. There is planning that needs to be done at every stage of a musician's career. It's important to sit down and make some concrete plans. That means figuring out where you are and where you want to go. The plans will probably change over time but sitting down and figuring this stuff out gives you a road map and and overall idea of what you want to accomplish.
A huge part of any business endeavor is figuring out how much everything is going to cost, how you're going to make money, and how to handle that money once it's yours. This means putting together financial statements and figuring out how much you're spending, making, and how much you need. Financials include costs, income, future projections, and taxes. All of the money you spend on gear, traveling and on general day to day costs are part of running your business. They need to be assessed to see how much you're spending, what you're spending your money on, what you need to get, and what you need to cut out. The hard part for most musicians is keeping track of all of the money coming in and going out. It's important to have a separate business account at the bank for all income. This makes it a bit easier to see how much you're making because it's all in the one account. The same goes for filing documents, correspondence, and all other business related matters but it's really important for finances. It's easy to lump it all together making it hard to keep track of what came from where, etc.
Marketing is a huge part of any successful business. In most businesses, especially music, this can be the make or break issue. A lot of musicians complain about not getting famous or not getting any chances but most of the time this is because of marketing and networking. Just as much time and money must be spent on marketing as is spent on making the music. This is very important and something that a lot of musicians miss. Just releasing a great record to the general public isn't enough. Even with all of the social networks and opportunities on the internet, there must be a budget for marketing. This includes all offline marketing such as flyers, PR, etc.
Setting Up Your 'Business'
It's a good idea to set up a business name and register it. This can be your band name or the name of your publishing company or whatever. Once you've picked a name, you can register it as a sole-proprietorship or DBA (doing business as). That way when you do any financials or sign or contracts or doing any paperwork, it will all go under this name. This makes it easier to keep track of everything and keeping your financials in order.
Entrepreneur Not Management
There is a difference between a musician being a business verses an entrepreneur. An entrepreneur develops a business. They innovate from within. There is a big financial risk in the endeavor. All musicians essentially are creating something new, even if the way it's delivered isn't new.; although musicians have shown great innovation in marketing as well. The rules and industry has made a complete turn in the past decade and so innovation and figuring this stuff out has more importance than ever. Once you put all of this together it will be easier to stay organized and one step ahead of everything else. Once you get in the entrepreneur mindset, you'll start looking for more ways to market your music, reach more people, and make more money.