5 things you can probably do that will help you weather the ups and downs
One of the most significant problems that musicians face isn’t gross revenue, but cash flow. Bands of every size struggle with maintaining consistency in an industry filled with financial ups and downs. One moment, you’re basking in the glow of a hefty royalty check…the next, you’re barely making ends meet while in the studio.
So how can you manage cash flow strategically? Is it possible to take steps to steady your business plan?
I think so, in fact, it’s a big part of what we at BriBiz try to help our clients do. I like to offer these five key insights into creating a sustainable cash flow strategy:
Don’t Live Outside of Your Means
Sure, this seems obvious – almost like advice from your Dad. But while this is important for everyone, it’s especially crucial for artists. Failure to stick with a healthy personal budget will eventually hurt the business-side of your artistic ventures. When a crisis hits at home, it can be all-too-tempting to dip into those business cash reserves, using money that could have gone to a much-needed business expense (like equipment, taxes, savings). This hurts your profits – your income – in the long run. Your business shouldn’t be your family’s “rainy day fund”—that should be taken care of within your personal family budgeting.
Additionally, when you have a healthy home budget you can approach your work with an open hand; plan well and reinvest back into your business, in turn creating more income for you and your family! By living within your means, you are freed up to create – profitably!
Want to really make this point a priority? Consider adding a layer of accountability to your strategy, even at a personal level. This can be a manager, a business manager like myself, or spouse. When you’re tempted to step outside your means, they can offer you insight and encouragement as you stick to the plan.
Consider the Ups and Downs of Cash Flow in Music
To have a healthy home budget, you need to be able to answer this question: what is my business actually worth this year? In other words, what’s a realistic expectation for your long-term income? While this can be a little hard to determine at the beginning of a career, as soon as possible, begin looking for long-term trends in measuring income versus expenses.
Don’t assume that the value of your business in January indicates what to expect in February. Remember, this is a business filled with peaks and valleys, feast or famine. Only a big-picture, long-term view can tell you what to expect. Realistically, this should include a 6-month, or even 12-month, picture of your bookings and other revenue. You don’t want to be surprised by the big payday that happens mid-way through the year, nor the drought of sales that could hit in the winter. Whatever happens, with a budget based on actuals, you’ll anticipate it, plan for it, and be ready to conquer it.
Finally, this allows for another kind of freedom: the freedom to take a step back. Every new artistic project is a major product launch – requiring vast levels of energy and investment. It’s common to need a moment (or two) to catch your breath, and can even help growth at the market. With finances set up in such a way that you’re provided space, you’ll be able to recharge and create from a place of health–not burnout.
Improve the Quality and Regularity of Your Revenue Streams.
For many musicians, tours provide much of their cash flow—from the ticket sales to the merch table. But thanks to online platforms and eCommerce, you can do better. Optimizing your online offerings can be a great way to add passive (but potent) income.
So, how strategic is your online presence? How intentional is your online marketing? Everybody has a website, but it’s less common than you’d’ think for bands to use their online presence to its fullest potential. Are you using re-marketing tactics? How often do you email your mailing list with specials or sales?
For example, we worked with one manager who committed to improving online sales for a band by ten-fold. He hustled, followed a consistent strategy, and in just three months’ time, he did it! Here’s the best part: it may be tempting to label this a fluke, right? Well, he went on to reproduce dramatic results with several more clients using a similar approach.
Now imagine that was your band. You’re on tour, and you can rest easy knowing you’re making money no matter how the show goes. Or, you’re in the studio, not making a penny from shows, but you’re still able to live off the revenues from your online efforts.
Beyond that, you can maximize your tour cash flow by carefully considering your merch table—is it designed as carefully as you would a storefront? Are you bundling products in such a way that you maximize profits and value for the buyer? Give it that level of attention to detail, and you won’t be disappointed.
Finally, as we’re looking at improving cash flow through your regular revenue streams, I encourage you to consider these questions: Do you need a band, or can you work as a singer-songwriter, hiring a band as you need one? Can you expand your writing role within a project, multiplying the royalties coming in? As you plan for a tour, what has worked to generate the most cash flow per head? Can you reproduce it in every market?
Side note: if you’re hoping that getting signed to a label will take care of all these details, you’d best rethink that strategy. Advances simply aren’t the paydays they used to be, and labels aren’t going to handle every form of marketing. It’s up to you and your team to think through the health of your business. The label won’t make you great, but they can take the great things you’re already doing and help you amplify them.
The takeaway here is to treat every source of income as its own business venture to optimize. There may be some investment or even hard work, but you’ll find the payoff worth your effort.
Expand Your Sources of Revenue
Remember those peaks and valleys I mentioned earlier? What if I told you those don’t have to be a bad thing? Let me explain. Let’s say you’re able to generate enough income through the improvement and expansion of your revenue sources that you don’t really need the feasts or “big paydays” of the music industry to survive. If you could cover your family budget through other means, then when those valleys hit, you won’t go under. And when the big paydays occur? It’s just icing on the cake! Keep your cash flow consistent, and you’ll avoid the cash flow crash that comes after the feast.
In the last section, we looked at how to improve conventional forms of revenue in a musician’s line of work. But what about outside sources of income? Here are just a few suggestions that I’ve seen work really well for other musicians and artists:
Consider a sponsorship relationship with an organization like Compassion International or World Vision. While these can add some complications to your tour plans, they are quite common and can really boost your tour income. Several Canadian artists we work with have even been helped along by government grants. While this may not be an option for everyone, there may be other, similar ways of creating extra cash without complicating what you do.
If you can, invest. Instead of renting, work towards purchasing a house – even a small one. Home ownership will save you from paying rent on an empty house while you’re out on tour. Several artists we work with rent out their home through Airbnb, or a similar platform. This is an excellent example of monetizing something you already own and helping to reduce the impact of the “feast or famine” typically associated with creative work.
Can you add other artistic ventures related to your work? Try public speaking, preaching, or something similar. Or perhaps write a book (another source of passive income in the form of royalties). How about creating a YouTube channel that you can monetize? Or a niche merch line distinct from your main brand? Not only do these provide additional income, but they also expand your personal brand awareness, without burning out your audience on your core product.
Finally, you may just want a side job, even part-time. Though “the dream” may be to work as a full-time musician, I know many artists who have found that extra income worth the balancing act with multiple jobs. They can avoid accruing debt, keeping the pressure off the business. The goal is a sustainable artistic business; we want to set you up for a marathon, not a sprint.
Setting Business & Personal Financial Goals
You may have an artistic vision for your music project. But do you have a financial vision? A business vision? Goals are imperative for forming a strategy, and a strategy will make or break your long-term success. Goals will point you in the right direction and keep you from making impulsive decisions. This kind of holistic thinking about the process will ensure that the business side of your project will never sabotage what you’re trying to do artistically.
This is really where we like to step in. As our clients determine their goals—to pay off debt, to buy a van, anything personal or professional—we’re able to provide the insight, experience, and accountability to help make that happen. And we’ve seen countless success stories from artists who found greater overall financial freedom because they developed and pursued clear and achievable business goals.
If that’s you, or if any of these seem like something you’d like to take a closer look at, don’t hesitate to reach out. I’d love to chat.