Each year, countless small-time record labels are founded, studios built, and demos published. Plenty of people set out to achieve their musical dreams, and many are content to stay within the DIY sphere. Only a select few break even, and even fewer last long enough to turn their passion into a living.
Alexis Kimbrough—founder of the music business accounting and consulting firm Growth Group—works daily with people at all levels of the independent music world, helping them navigate the financial and logistical challenges of the industry. If you’re looking for tips to help make your music career pay (or pay better), read on for some of Kimbrough’s strategies.
Don’t Hesitate to Jump In
No matter where you are in your career, whether you just played your first coffee shop gig for tips or just finished building a studio, it’s never too early or late to start being professional. In fact, since it’s now easier than ever to get started in the industry, there are fewer excuses than ever not to be. No longer do you need to schedule full recording sessions and mail out countless tapes to (maybe) get your demo heard or know how to work a record-cutting lathe to get into mastering.
According to Kimbrough, "Technology has changed everything. With limited equipment, a phone, and an internet connection, your music business now has access to nearly anyone in the music industry." The resources available are also plentiful. "There are hundreds of conferences around the world teaching music professionals how to run businesses," she says. (Kimbrough’s Growth Group offers a free "Just Do Music" course for this very purpose.)
Another common misconception is that you need a lot of money to bankroll a career or project that may never turn a profit.
"That's simply untrue," Kimbrough counters. "While you will invest in marketing, equipment, team members, etc., you won't need to be a multi-millionaire starting out to have success. … Many artists we work with have bootstrapped their entire career and are now making hundreds of thousands of dollars every year as independent artists."
Embrace Your Scene
With little effort, anybody can find a show on a Saturday night, a place to book a session or a site to download free beats. So how can you stand out in a sea of talent? "Decide your unique ability and what you can offer the industry that's new or different," offers Kimbrough.
"If you're a recording artist, maybe your style is a blend of folk and hip-hop, for example. Recording studios may be filling a need for artists in rural areas or parts of the country that are not typical music towns. Whatever it is that is your unique ability, start there in communicating that message to the public."
It’ll take some soul-searching and a little market research, but knowing what you have to offer will make marketing yourself a lot easier. If you’re an all-analog basement studio, don’t try to compete with the big commercial studio in town—just make some killer records your way and word will get around. Or, if you do experimental acapella vocal looping, don’t waste your energy trying to land the mainstage gig at a festival. Embrace your scene and make a name for yourself.
Expect to Make Some Sacrifices
Though the external barriers are lower than ever, there is still a price of admission. When asked what hardships music professionals can expect, Kimbrough speaks frankly: "The biggest sacrifice is time and effort. Becoming a music entrepreneur is not for the faint of heart. It will stretch you beyond your natural talents and abilities and you must be willing to learn new things in all areas of business, not only improving your craft."
So while it’s true that anybody with a copy of GarageBand can get in the game, it’s important to be mentally prepared to put in the work to stay in the game. Do yourself a favor and dispel any illusions of easy success and be prepared to fight an uphill battle of learning new skills on the fly, experiencing a healthy amount of rejection, and learning from your mistakes. The right mindset will do wonders to prepare you for the journey ahead.
The biggest sacrifice is time and effort. Becoming a music entrepreneur is not for the faint of heart. It will stretch you beyond your natural talents and abilities and you must be willing to learn new things in all areas of business, not only improving your craft." - Alexis Kimbrough
Even for those with a healthy attitude, however, there are obstacles. It’s no secret that musicians types would often rather jam with friends than do their bookkeeping.
"Lack of care or knowledge about how to approach money as a music professional seems to be the biggest pitfall," Kimbrough observes. "This often results in missed deadlines, overage charges, fees, fines, penalties, interest, etc."
It may not be as fun, but putting in the time doing the boring stuff will allow you to keep doing what you love longterm.
Make Records (Not Just of Music)
As soon as you can, start keeping track of your finances. Good record-keeping is the foundation for everything else, and it’ll save you major headaches down the line.
Growth Group’s blog offers a practical example: "Whether you are paying for plane tickets to cities on your tour or a hotel room in the city of your next performance, keeping record of your travel expenses is important. If you’re frequently on the road touring, how do you decide if you’re on target with your tour budget or which cities cost the most to visit without great records?"
Besides the benefits of analyzing your data, the real payoff will come at tax time in the form of deductions. In addition to the obvious travel, equipment, and recording costs, there are plenty of expenses that you may not even know you can deduct. Office supplies, meals (while traveling), Wi-Fi, ATM fees, and trade magazine subscriptions are just a handful of items on Growth Group’s list of "100 Things Music Creators Can Deduct on Taxes."
The best and easiest way to keep records is with an accounting software like Quickbooks or Xero, but at the very least, start hanging on to your work-related receipts, and keep a spreadsheet of your income and expenses. There are even apps which can catalogue receipts simply by taking a picture. Having this data will let you see what’s working and what’s not and will save you a lot of fumbling around in the dark.
Automate or Outsource Your Money Tasks
The less time and energy you spend on the money stuff, the more you’ll be able to do what you do best. This could mean getting a mix done faster, writing a new song, or working on album art for your next release.
"From a financial perspective, I recommend automating as much of the money tasks as possible," Kimbrough suggests. "This will free up your time and energy so that you're not overwhelmed when it comes to keeping your finance in order."
Spend a few hours setting up automatic payments for your insurance, credit cards, software subscriptions, or whatever else you pay monthly or quarterly. You’ll never have to worry about missing another payment, and you’ll have the time and mental resources to put toward your craft.
From a financial perspective, I recommend automating as much of the money tasks as possible. This will free up your time and energy so that you're not overwhelmed when it comes to keeping your finance in order." - Alexis Kimbrough
Another big step you can take is to outsource whatever tasks you can’t automate to professionals. If you can afford it, hiring an accountant, assistant, or even a manager will free up a ton of time and take stress off of you.
"I took this approach this year in my business," Kimbrough told her Growth Group clients in a newsletter. "I've hired a tax team that is working on personal returns while I'm dedicating more time to growing the business in other areas."
Follow this advice, and you’ll have peace of mind knowing a professional is handling things for you—and, in most cases, saving you money and helping you get better gigs. Remember, any fees related to your work are tax-deductible.
Protect Yourself and Your Assets
It’s a lot more fun to buy a new guitar or travel to another city to record, but insurance is one investment nobody should skip. One major accident, theft, or error could throw the career you’ve built into jeopardy—unless you’re covered.
"This is another reason to keep receipts," Kimbrough says. "The more info you give your insurance company, the more likely your claim will get paid (and faster, hopefully)."
The seven types of coverage Growth Group recommends are long term disability, health, life, equipment, car, travel, and homeowner’s or renter’s insurance. Many of these can be bundled together for a lower rate. Studios and venues will also need liability insurance in case an accident happens on the property or if a client decides to sue.
For many, the end goal is to quit their day job and do music full-time. However, health care costs can be a major obstacle to self-employment. Kimbrough advises planning ahead: "I recommend getting a healthcare quote from the healthcare marketplace ahead of your quit date. This will ensure you have budgeted the right amount to cover your medical needs. Also, make sure the coverage you choose mirrors what you currently have at your job so you don't miss any major necessities."
Pay Yourself, Even If You Can’t Pay Much
All of this effort may not feel worth it if you’re not seeing any returns, and it can be discouraging. Especially in your first year, when you’re investing a lot of money and the gigs aren’t flooding in yet, it can feel like you’re moving backwards. That’s why it’s important to set aside some of your income just for yourself.
No matter how little or much you earn, 10 percent is what you should keep, but you can add more. And don’t spend more than the other 90 percent that is left."
Growth Group’s "Pay Yourself First" blog post breaks it down: "No matter how little or much you earn, 10 percent is what you should keep, but you can add more. And don’t spend more than the other 90 percent that is left. With the rest, you pay charitable giving, food, entertainment, and even taxes. You’re more than welcome to pay yourself more than 10 percent, but make that the minimum."
As your revenue grows, so will that 10 percent. For a healthy business, this can be your "paycheck," but even when you’re barely scraping by, you’ll be able to say you make money from what you do. A little kickback can do a lot for your morale, and it’ll be extremely satisfying to watch that monthly cut grow as your business expands.