"This is your year!"
The new year's hype is infectious, but overall the excitement fades after a few weeks or months into the new year. Truth be told, those who prepare before the year is up make it past the New Year's hype. But for those that started after the new year, it's not too late. Take a look at the next tip:
Where Is Your Money? What's Your Budget?
How much did you spend on recording, mixing & mastering, distribution, promo, marketing, rehearsals, outfits, touring this year? Last year?
Alright, another year is about to go by, and it's time to reflect. Can you recall how much you've spent on your music career this year? Last year? How much did you spend on recording, mixing & mastering, distribution, promo, marketing, rehearsals, outfits, touring? It's time you start understanding where your money is or, better yet, where it's going.
6 Principles to Focus On:
Know Your Cost
Understanding your costs is vital for informed business decisions. For example, it helps you determine the profitability of your music operations and how to set prices and budgets. You should know what you're paying for and how much it costs. The better you understand the details of what you're paying for things, the fewer people will be able to take advantage of you and your money.
Respect Your Budget.
A budget is an estimation of your income and expenses over a certain period of time. As an artist, you should be aiming for a balanced budget, which is when your expenses don't exceed your income or earnings. Budgeting isn't something that most people are excited about. However, no matter what career path you decide to take in life, it's necessary for financial stability.
Reduce Your Expenses Without Sacrificing Quality. Just because it's cheap doesn't mean the quality is great. Also, many people believe that making more money is about raising prices; it's not. Instead, you make more money by reducing your costs to increase your profit margins.
Know How Much is Going Out And What's Coming In Track every penny that goes out and track every cent that comes in. You may leave your money obligations to an accountant, but there is no excuse for you not knowing where your money is. You're the boss, which means you should know where your hard-earned money is. No excuses.
Learn How to Calculate Your Profit
Simply calculate your profit by counting the revenue coming in and then subtracting your cost. Whatever is left is your net profit.
Total Revenue minus Expenses equals Net Profit
$ - Exp = NP
Your net profit is the amount of money left over after your expenses or costs are paid. A quick calculation is if you have been paid $2500 for a show. Your expenses for your travel costs $500. Revenue/Payment minus your cost would be $2500 - $500 for a net profit of $2000. You profited $2000. (Footnote! Make sure to follow the rule of thumb mentioned earlier: taking 25% of that profit and putting aside your tax bill when it comes due.) You don't want the IRS coming after you later on. Be smart and put it aside.
Keep Your Receipts
Since you already have to report your income to the IRS, you should be aware of what you can deduct from your tax bill. Ask your tax expert or accountant to be sure. They will ask for your receipts to ensure that the expense claimed is validated by a valid receipt with the establishment name, date, cost, and purpose. You should keep an excel sheet of your expenses and have the receipts filed away in a safe place until tax time. Or better yet, use the technology at your fingertips. Use a system like Quickbooks and/or take pictures of your receipts and email them to yourself for the expense purpose.
Continuously Think of Ways to Creatively Make Money
Now that you have your expenses under control, you should constantly think of ways to earn more money. The usual selling songs, albums, and tickets for shows aren't the only way to make money in music. As your popularity grows in other markets, perhaps you should start doing features for other artists. Creating a slogan and selling merchandise with it on it. Subscriptions for behind-the-scenes access to your upcoming projects and performances. Seeking sponsorships and endorsements from brands. Contacting independent music directors for movie soundtrack placement of your song. Advertising your songs in local commercials. Licensing of songs in other countries. Video game placements can be an option to submit to. And anything that allows you to collect royalties for work you've already done. Make sure you're allowing your fans to support you. They already want to, so let them.
I hope you take this list to heart this year and make it your most impactful one yet. This is YOUR year, as every year should be.
"You can't measure success if you have never failed. My father has taught me that if you really do want to reach your goals, you can't spend any time worrying about whether you're going to win or lose. Focus only on getting better." — Steffi Graf