You’ve likely been managing your own personal finances for years, so it might be tempting to just apply the same principles you use for your personal finances to your business. But there are important differences to consider.
For those in the music industry, the creative process—nurturing an idea and translating it into something others can hear and enjoy—is an incredible experience.
It becomes even more so when people are willing to exchange cash for the opportunity to experience your creations whenever they’d like. However, that’s also when it evolves out of being a pursuit solely for your own personal pleasure and becomes a business.
If you want to make your music career a lasting one, you’ll need to devise a blueprint by which you can conduct your business. This step-by-step guide to developing a music business plan will help you do just that.
Why You Need a Music Business Plan
The best way to conduct a journey over unfamiliar territory is with the assistance of a map. Whether your goal is to have a career as a professional musician, recording artist, producer, or music teacher, documenting the path you’ll take with a music business plan will be helpful to your cause. In a nutshell, your business plan outlines your goals, identifies the practical methods you’ll take to achieve them, and lists the resources you have and will need.
Having a business plan to follow can be the difference between noodling around with your axe in the evenings, gigging on weekends, and working a nine-to-five for the rest of your life vs. enjoying a fulfilling career doing what you really love to do. A music business plan will help you focus your efforts and give you milestones by which to measure your progress in the form of realistic, achievable, and action-based long- and short-term goals.
What’s more, you’ll come across a lot more seriously to potential clients and business partners when you can present a cohesive music business plan. This is particularly true if any aspect of your career involves raising money from investors or business loans. Talent managers, booking agents, and recording companies will also take you more seriously with a business plan in hand.
Be aware though, crafting a music business plan will take a bit of time. You’re going to need more than an afternoon to get this right. Take your time, bite it off piece-by-piece, and chew your thoughts over thoroughly.
We know creative people can sometimes have trouble enduring the tedium that producing a business plan requires — and that’s OK. Chipping away at it consistently will get you where you need to go.
Where to Start
Our first piece of advice is as old as time: know thyself.
You must gain some clarity of purpose before you can craft a useful music business plan. Who is your audience? What is your ultimate aim? Why do you want to do this? Having this understanding will make it easier for you to explain your vision to others and convey your enthusiasm, as well as establish the framework for your music business.
This step is crucial if you’ll need people to buy in to help you reach your goals.
The Main Components of a Music Business Plan
There will be some variety in the content of your music business plan depending upon whether you’re aiming to start a music school, be a producer, or work as an artist. However, the fundamental components are the same for a business plan for a music production company, a business plan for a music school or a business plan for a professional recording artist.
- Mission Statement
- Executive Summary
- Audience Analysis
- SWOT Analysis
- Marketing Plan
- Financial Considerations
Let’s look at each of these in turn.
Mission Statement: This can be as short as a couple of sentences, as long as it adequately describes who you are as an artist or a musical entrepreneur and what you’re trying to accomplish. While this might sound simple, think things through a bit before you try to draft your statement. Everything that follows here will hinge upon it.
Executive Summary: Most experts recommend saving the drafting of this part of the plan for last. It’s basically a digest of all of the other parts of the plan. Doing it last allows you to draw upon the information you’ve drafted for all of the other steps.
Simply put, the executive summary is a one-page synopsis of your plan. It should include an introduction as well as a description of your endeavors. Details regarding the funding you already have and what you’ll need in addition to a brief accounting of your plans for putting all of it into play are important too.
Audience Analysis: Here’s where you’ll demonstrate your understanding of your target audience. And yes, you will need to conduct a bit of research to learn who these people are. If you’re already performing, teaching, or producing on the side, what traits do the people who follow you have in common?
If you’re just getting started, find someone doing what you want to do, whose style and circumstances are similar to yours, and analyze their base.
What gender are most of the fans or clients? How old are they? Where do they tend to reside primarily —urban areas, rural areas, or a mix of the two? Where do they congregate online? What other artists do they favor? How and where do they buy music? Do they frequent live shows? Can you work with their preferred venues to cross promote?
Strengths, Weaknesses, Opportunities & Threats: What makes you unique? How do you stand out? What are you doing specifically or what can you provide that they’ll find nowhere else? Who’s in your corner? What’s your personal skill set? Are you located in a place that gives you a distinct advantage? In other words, what are your strengths?
On the other hand, what shortcomings will you need to address? Will you need to pull in specific expertise to make your idea fly? Perhaps you’ll need access to equipment you currently lack. Anything that prevents you from maximizing your potential should be looked upon as a weakness. It’s important to identify these early on so you can put measures in place to neutralize them.
Finally, what exploitable openings do you see in the marketplace? Perhaps your direct competitors are overlooking a key value and you see a way to provide it both efficiently and effectively. These are your opportunities.
Threats could include technological shifts, cultural changes, the emergence of new artists, competition, and new trends. You’ll also need to cite your plan for dealing with those.
Marketing Plan: How will you spread the word about your offerings? What promotions do you think will gain traction? How much will they cost? What kind of return do you anticipate in exchange for those costs? You’ll need to account for an online presence—including social media, a press kit, and publicity materials such as a logo and photography. You’ll also need to factor in promotions and fan swag if you’re planning to tour.
Finances : You’ll need to provide a detailed breakdown of your cash flow situation. How much money do you have already? How much will it cost do the things you need to do to get yourself set up right? How much money will you need from outside sources such as bank loans and investors?
A rundown of costs will demonstrate you’ve thought your endeavor through. What will you need for studio time and engineering talent if you’re proposing a recording project? You’ll also need legal help in terms of copyrighting your work and developing contracts. Trademarking your name and logo will entail costs as well.
Measuring Your Progress: At what intervals will you go over the financials to see how you’re advancing? What are the milestones by which you’ll mark your achievements?
You’ll also need a method for measuring your impact on the market in terms of the reputation you build. Social media outlets provide analytical tools to help you monitor these metrics. They can also help you get a handle on the demographics of your audience.
Above all, establishing your key performance indicators (KPIs) can help you institute the standards by which you will gauge your success. Sharing this information with others makes you accountable because they can look at your projections and see how much progress you’ve made toward achieving them.
Summarizing Your Business Plan
As we mentioned above, once you have all of these areas covered, you can then condense the information each section contains to create your executive summary. Now that you’ve seen what it takes to produce each section of the plan, you can also see why it’s best to tackle the summary last. After all, how will you know what to put in it until you’ve examined all of these other areas first?
The Importance of Multiple Income Streams
Another consideration to make is diversification. Placing all of your hopes on one application of your talents could make your ongoing success difficult to maintain. Smart entrepreneurs have several “irons in the fire” simultaneously.
In other words, you’ll want to have a number of different ways of making money in play at all times. That way, if one area slows down, you’ll have another one in play to keep you rolling until the next opportunity presents itself.
Another important consideration in your music business plan is protecting your livelihood from the consequences of unintentional accidents. General Liability insurance is key to helping you stay focused on your business. Carrying a policy also demonstrates to potential clients that you are a serious professional — whether you’re a musician, DJ, or other kind of entrepreneur in the entertainment industry.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.