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Succeeding
in Music
Part I: Does a Musician Need a Business Plan?
by John Stiernberg |
Frequently, musicians plunge into the music business with strong instrumental
or vocal chops and a lot of ambition, but without a business plan.
Too often the results are disappointment and burnout rather than artistic
and financial success.
Can business problems be anticipated and prevented? Can musicians
learn from the business world and apply lessons without selling out?
The answer to both questions is yes! Whether you are already making
all or part of your living from music, here is some fundamental advice
for constructing or updating your business plan.
Why have a business plan?
You may have heard the expression “Fail to plan, plan to fail.”
Most businesses, music or otherwise, do not have written business
plans. You may have revenue, checkbooks, and even a budget, but if
you don’t have a complete business plan, you are at greater
risk of failing.
Here are seven compelling reasons to construct a written plan:
1. It’s a road map. A plan helps define the best route to your
goals and objectives.
2. It’s a measuring stick. A plan includes financial and non-financial
objectives and measurement criteria so you can track your progress
along the way.
3. It’s an opportunity management tool. A plan articulates what
your business focus is and how to conduct business. This allows you
to identify viable opportunities and avoid options that do not make
sense for you.
4. It lowers stress. When you have a plan, you spend less time and
energy worrying about whether you are doing the right thing. Your
plan helps keep you focused, grounded, and calm.
5. It’s a catalyst for your best work. A business plan is like
a song arrangement, set list, or lesson plan. It assures that everyone
is playing in the same key and performing the material in the right
order – without compromising inspiration or creativity.
6. It’s a competitive asset. Relatively few musicians have plans.
When you do, you have an automatic edge on the rest of the field.
This helps boost your confidence as you build your competitive position
in the market.
7. It’s essential for securing financing. At some point, you
are likely to need cash above and beyond your revenue from gigs for
new instruments, recording equipment, computers, or business development.
Your business plan helps you anticipate cash needs.
What’s in a business plan?
A business plan is a written system of documents that puts your business
and the market environment in context over the course of the next
several years. It describes: 1) what you are going to do, 2) how you
are going to do it, and, 3) what the consequences are.
As a general rule, the main text will run 15 to 20 pages. In addition,
a plan includes financial schedules and supplemental material included
in reference sections or appendices. The value of brevity is simple:
If your plan is too long, few people will actually read and use the
document.
Here is a brief description of the contents of each of five main sections
or “chapters.”
Chapter 1:
Description of your company, business, and industry. This is
where you talk about the music industry and your role in it.
Chapter 2:
Description of products and services. This is where you describe what
you do in detail, plus the features, benefits, and advantages of your
product vs. the competition. “Products” are what you get
paid for. Examples of products include:
• Singer or Performer: repertoire, stage show, records, merchandise
• Songwriter, Composer, Arranger: original compositions, arrangements,
songbooks, cuts on records, record sales
• Music Teacher: lessons, original teaching materials
Chapter 3:
Market overview and marketing strategy. This is where you describe
the size and growth of target market segments, the competitive environment,
your promotional strategy, product distribution channels, types of
performance venues, your sales force, and target audience. The marketing
section is a “plan within a plan,” and is the most important
section of the whole document.
Chapter 4: Management
and organizational overview. This section describes your business
experience, history, and personnel needs. This is the place to identify
key people, their job functions, and credentials. In addition to yourself,
comment here on agents, managers, accountants, lawyers, publicists,
or other service providers who round out your team. Future organizational
needs include people who will be added to the business as it grows.
Chapter 5: Financial
summary. This section includes dollar projections for sales revenue,
expenses, sources and uses of working capital (cash) over a three
year period. These are summarized briefly in the text of the plan,
and shown in full detail in spreadsheets in the appendix.
Good business plans also include an Executive Summary. This is a one
or two page document that includes the essence of the whole business
plan. Executive summaries are helpful when seeking financing, especially
when many people are reviewing the plan.
Why Bother?
What if you are a successful musician now? Why bother with a business
plan? You may be a great singer, instrumentalist, songwriter, music
teacher, recording engineer, or promoter – but not necessarily
a great businessperson. You may find running your business is tedious
or even scary. That’s okay, but it does not take away the need
for a business plan.
Here are three key points:
1. Double the planning time and cut the implementation time in half.
This is a tried-and-true rule of time management. It’s easier
and less costly to do the planning on paper than to learn by trial
and error. This points to the value of constructing your business
plan early in the game.
2. The biggest challenge is competing for attention. We are continually
bombarded with information, which points to the importance of the
marketing section of your business plan. You need to have a plan to
stand out from the crowd.
3. Someone has to handle the business. If not you, find someone who
will. This points to the value of identifying your strengths and weaknesses
and building your team as your business grows.
The Payoff
Constructing a business plan is essential for long term success. Your
business plan will guide you and help you prevent mistakes and disappointment.
Once you are implementing your business plan, you’ll find that
you are spending more time making music, bringing entertainment to
new audiences, and making a good living doing something you love.
From this musician’s standpoint, it’s worth the effort!John
Stiernberg is principal consultant with Stiernberg Consulting, a Sherman
Oaks, CA-based business development firm. He is co-founder of the
acclaimed Business Chops workshop series and of Succeeding In Music,
a multimedia publisher of business education tools for music industry
professionals. John has worked in music and sound for over 25 years
and has served as business analyst and consultant since 1993. He is
a member of IBMA, NARAS, the Folk Alliance, and the American Federation
of Musicians (Local 47).
John's book, Succeeding In Music: A Business Handbook for Performers,
Songwriters, Agents, Managers, and Promoters, is published by
Backbeat Books. For details, visit www.succeedinginmusic.net
or e-mail John at askjohn@succeedinginmusic.net.
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