Artist Entrepreneurship: How to Write a Business Plan for Your New Band or Record Company
This article explains why and when artists or musicians might choose to write a formal business plan. The article details the sections of a business plan and what each section includes. Methodologies are presented for business plan writing designed to help anyone starting a music-related business, a band, or launching a career as an artist in the music industry.
In this article you will find advice on the following elements of a business plan for your band or new record company:
- Cover Page, Name and Logo
- Executive Summary
- Foundations of the Business
- Define Market, Products and Services
- Management and Organizational Structure
- Marketing and Sales
- Financial Information
- Conclusion and Sources
When and Why Should You Write a Business Plan?
When should an artist write a business plan? Do you need a business plan for your band? What is in a business plan? These are questions which come up frequently when talking to musicians starting their careers. While the answers may not always be clear cut or definitive, it’s at least worthwhile to look at what goes into a business plan, and why it might be a good idea to express your music business idea in the form of a written business plan. There is no single answer that will apply to everyone, so the best you can do is to look carefully at all the components and make the decision that seems right for you.
When starting a band, launching yourself as an artist, or embarking on an entrepreneurial journey with your idea for a music company, it should seem obvious that music is a business and we need to approach it that way. Since many young people especially haven’t yet acquired any real working knowledge of business, it can be daunting to consider all that goes into starting a business. Some young people cause themselves unnecessary delay and could even damage their careers by resisting learning about business. We need to face our demons and look them squarely in the eye. The reality is that there is no magic bullet; no guardian angel is about to swoop down from the heavens to take you under wing and handle all your business for you. This is a time to be proactive and to get active in learning all you can about how business works.
Writing a business plan is a great way to learn some very important things about yourself and your music. What motivates you to want to be in music? What are the things you are good at? What are the things you need help with? Where do you want to be in three years, in five or in ten years? What are your likes and dislikes? What resources do you have or can you get? Do you need investors or partners to start your business? How will you stay in control of your business and career? What is the market for your music? These are just a few of the many questions you will be forced to think deeply about and provide answers for when going through the business planning process.
There are many traits of musicians which lend themselves to entrepreneurship. Creativity, determination, discipline, collaboration, time management, and the ability to analyze complex patterns are just a few. All business is challenging, and the music business is no different in this way. Throughout history, artists and musicians have found ways to earn a living from their art and applied themselves to solving the problems of marketing and selling their music. While the skills, knowledge, and techniques crucial to success as a music artist are distinct from what is required to create the music, artists have often found that their creative skills have uniquely prepared them to start and run their own music businesses.
It’s worth thinking deeply about your own unique skills and experience and how those might lend themselves to launching and running your music career. Keeping in mind that the business of music is business, and learning solid business principles will better position you for success. The artist as entrepreneur has some important advantages. Writing your business plan can be a great place to start exploring these advantages while looking at the potential obstacles. You will need to take inventory of your own skills, look for areas you can improve, and find resources to move forward with your business idea. It should be an incredible and fun journey.
Business Plan Guide: Sections of the Plan
So you’ve decided that it’s time to create your business plan — terrific. There are many reasons to do this, from seeking investment partners or just to get organized. You will want to look carefully at the market conditions and identify your prospects. You might be focused on selling or licensing your music to businesses (B2B) or to consumers (fans; B2C). Or maybe even both. Avoid overthinking things here; I would recommend that you think of the business plan document as nothing more or less than the expression of your ideas for your music business success and how to achieve your goals.
There are some good templates available, but not every section of every plan document will apply to a music venture. That’s okay, as you should only use what applies and seems useful. As you consider the options available to you it might help to have guidance from someone more experienced in the art of writing business plans. Fortunately, that help is readily available. You can visit the U.S. Small Business Association website to find a free business plan template, and they also a great program called S.C.O.R.E. which is the acronym for the Service Corps Of Retired Executives where you can be assigned a free mentor to help you write your plan.
Next, I’ll outline the eight sections of the business plan and describe some of the content for each. You can use this as a guide to help you write your own business plan. Please note that the order of creating the sections is usually not the order of presentation. For example, most people write their executive summary last, and it’s a good idea to start with the marketing section so you have some ideas about your target market already while you are working on the other sections. Let’s dive right in.
Avoid overthinking things here; I would recommend that you think of the business plan document as nothing more or less than the expression of your ideas for your music business success and how to achieve your goals.
Section 1: Cover Page, Name and Logo
On the cover page, you should have your business name prominently displayed, along with the logo. You could also include a promotional photograph, especially if you are an artist. The image, logo, and fonts used should be carefully selected to create the impression and vibe you want. A metal band’s page will probably make a different impression than a Classical Violinist’s. People respond viscerally to images, so think carefully about the image you want to project. Your image identity should resonate with your target audience and your name should stick in their memory.
You should have an additional paragraph (or several short paragraphs) explaining why you chose the name, the significance or special meaning it has, how it influences your business, and what you want it to convey about your products or services to potential customers (or fans). You could also include information about the colors chosen, the logo design, and why you chose the name and images.
Section 2: Executive Summary
Remember that you will do this part last after you have written the rest of your plan. The executive summary is the preview of your product and determines the first impression the reader will get of your business. It is important to write it very clearly and to use professional language. It is your “sales pitch” and is designed to quickly introduce the reader to your business idea and plan. It should be no more than one page in length and cover the following points to sum up for the reader what your business is all about.
Start with the name and location of your business, and then describe the mission of the business. Next, describe the products or services you will sell, and who your ideal customers are. Include the name and a short bio for each owner of the business, with special emphasis on any aspects of their background that would support your success. Then describe how your business will stand out from the competition. (This is called your “differentiation strategy.”) Finally, provide a brief overview of the future prospects for your business and for the overall industry.
Section 3: Foundations of the Business
This section will be quite a bit longer than the previous two. Start with a brief description of what your business does, no longer than one or two sentences. This is like your “elevator pitch.” Describe the idea as clearly and briefly as possible. Then add a few sentences about the history of the company, your inspiration, and how you came upon the idea. You might mention competitors if they gave you the idea, or talk about the moment you realized your business idea could succeed. Try to write in a way that is clear and compelling, and will engage your reader.
Share the long term vision for your company and then include your formal mission statement. The vision should include not only where you are now, but what you see as the future of your company, maybe in 5 years from now. The mission statement describes what your company does, why you do it, how you get it done, and who you do it for. Use descriptive terminology that projects the image for your company in a way you feel proud of.
At this point, lay out the specific objectives for the business, what exactly you will provide, change, create, provide, fix, or improve for your customers. Explain the important reasons why your customers will choose you, your product or your service. What will customers get from your company? Write about some specific financial goals you will achieve with the business in the first year or years, and how you will achieve those goals. Describe the revenue you will get from selling your products on a weekly, monthly, and annual basis, how many you will sell at what price, and to how many customers. This is just a rough summary; you will give more details in the financial section of your plan which comes later. You might want to include a chart or graph here to illustrate your goals.
Next, briefly discuss the key leadership roles and how the business is organized. You will write about this in more detail later, but for now describe the form of business ownership (partnership, sole proprietor, LLC, non-profit, corporation) and why this form makes sense in relation to tax and liability issues your business will face. You should also mention the key skills the founders bring to the organization, including yourself.
This may also be a good place to mention any plans you have for social entrepreneurship, how you will give back to the community, improve people’s lives, volunteer time or money to charitable causes, or show respect to your neighbors and community. Mention the values that your business will hold dear.
Section 4: Define Market, Products and Services
This part of the plan will also be lengthy, as you must describe not only your products and services in detail but also why they are competitive within your general and target markets. Start by describing the specific market your business will be in. Do research by reading articles, visiting websites and blogs, talking to others in the industry, and observing other businesses and their customers. Make sure you have a good understanding of your industry before writing your description. Consider the current state of the music industry and future trends. Take geographical location into account, as well as local regulations or laws that impact the market.
Try as best as you can to describe the demand for your product or service in the market, and the niche you will be initially targeting. Include some details about the demographics of your prospects (age, location, lifestyle, income, education, ethnicity, etc.) and also their psychographics (what they care about, what motivates their behavior, why they will want your product). It’s a good idea to use some footnotes in this section to show where you got your information and lend extra credibility to your claims.
Describe your top selling products and services, how much you sell them for (unit cost) and how you deliver it to the customer. If you are giving concerts for example, you can describe the experience for the fans, ticket price, how many tickets you will sell at each show, and how many shows you will do weekly, monthly, or annually. Compare your product or service to your main competitors. Be specific, using the competitors’ names, and write about what you will do better than them. You could also do a SWOT analysis, analyzing your brand’s strengths, weaknesses, opportunities, and threats.
Section 5: Management and Organizational Structure
Although you may have previously mentioned your partners in the executive summary, this is the place to include more information on how the business will be organized, who are the key players in the organization, and what experience and skills they will bring to your operation. You could talk about each position in turn, mentioning the responsibilities of the person in the role. If you don’t know their names yet, you can just mention the job title and the qualifications for the role. It might help to draw an organizational chart, showing the different areas and reporting structure.
Consider writing about your leadership philosophy and why it is a good fit for the kind of business you are in. You can discuss your management and employment policies, whether you will use outside vendors, compensation for employees, benefits like health insurance, your legal and accounting needs, transportation, purchasing, and critical business systems or software you will use. Even though you might be just starting out as only yourself, look ahead at what the company might look like as it grows. Some famous artists have large teams to work with them on tours, marketing, writing, or other aspects of their business. These people need to be organized into teams. The overall organization of a business is crucial to success. Here, you could outline your vision for future growth of the business. Describe where you want to be in three and five years.
Make sure you mention the form of the business, whether an LLC, type of corporation, or a non-profit, and why you chose that form. How does the chosen business entity affect your taxes, your culture, and your ability to succeed? Any policies, such as customer service policies or employment manuals, should be mentioned. Finally, mention any logistical considerations, such as where you will be based, any facilities or equipment needs, storage, and communications. You might want to showcase a facility or specialized gear to prove that you are ready to compete in your market.
Your main goal with the financials is to get as accurate a picture as possible of your first years in business. There’s an art to creating these kinds of projections. You should be positive but realistic and avoid any outlandish claims. It’s okay to aim a bit high in your projections but be careful that you don’t make them based only on hope. Do the research so you can back up your financial projections.
Section 6: Marketing and Sales
Though you already described your market and showed expertise in understanding your target niche and demographic, in this section you should discuss your methods and strategies to access the market and get sales. Sales are seen as the goal of marketing, as you need sales to have revenue (income), and you need revenue to have a business. It’s important that you now get specific about your marketing mix. If you plan to use social media, name the platforms. If you will attend trade conferences, name those too. You might consider other types of marketing or advertising, such as direct mail, sponsorships, paid ads, free samples, contests, posters and flyers, and word of mouth. Describe all of your marketing strategies, and how each one will support your business and help you meet your goals. Consider how your competitors market and what they do well, or how they could improve.
Describe your sales strategy, paying attention to your pricing and sales channels. Maybe you can partner with affiliates for distribution or you have some found some unique way to get your product or service to the end user. Describe the value proposition for your customers (why they will buy) and also your unique selling points (USP). Do your best to describe your plans for marketing and sales holistically, and how the various players in the company will contribute to it. You can mention how much time and effort will be allocated to marketing and sales compared to all the other things your company must do.
Section 7: Financial Information
This is the section that artist-entrepreneurs often struggle with because we are asked to make a realistic assessment of the future. Of course, no one can see the future, but with some research, you can certainly make some projections. You are expected to talk about what it will cost to start and run your business (startup costs) for at least the first year. Be as realistic as possible and base your projections in solid research. If you need certain equipment, you can research what it costs; the same is true for other startup costs such as your marketing and production costs.
Discuss how you will acquire the needed funds for startup. Try to be as specific and organized as possible. One way to do this is to create a spreadsheet in either Excel or Google Docs. Some costs might be one-time outlays while others may be supplies you need on an ongoing basis, your rent, or other recurring expenses. Add everything up and show your first year, month by month. You should also show any revenues if you have them. When you put it all together it should give the reader a clear view of your first-year financial picture. While many businesses don’t earn money in the first year, some do. Your income and expenses projection should also take into account any taxes you will owe.
After projecting your first year month by month, the next step is to show years two and three by quarters (every three months). Some startups try to project further out, but it really isn’t needed since so much can change in a few years. Your main goal with the financials is to get as accurate a picture as possible of your first years in business. There’s an art to creating these kinds of projections. You should be positive but realistic and avoid any outlandish claims. It’s okay to aim a bit high in your projections but be careful that you don’t make them based only on hope. Do the research so you can back up your financial projections. Don’t forget to include footnotes to your references and your sources for the financial projections.
Section 8: Conclusion and Sources
In this final section, you should thank the reader for reading your plan and stress your preparedness and enthusiasm for succeeding with your business. Make it clear that you are available to answer any questions they might have and include your contact information again. On the very last page, include your footnotes and organize your sources alphabetically in a bibliography using the Modern Language Association (MLA) style. It’s a good idea to have a dozen or more sources in your bibliography to lend credibility to your plan and show readers that you’ve done your research.
As you consider whether or not you should write a business plan, or if you have decided you want to write one, you will need to study up on all the areas I have written about here. This is a brief guide on how to put a plan together; you will need to do your homework before you can write each of these sections. As a few last pointers, I would recommend that you do not assume your reader knows anything. Many new business plan writers make the mistake of being too vague, or not including enough specifics. This awakens suspicion in the mind of the reader, as they begin to wonder what else you aren’t telling them. There are cases where less is more, but this is an example of a situation where more is more. The goal is to try to answer every question a reader might have before they can ask it.
Finally, keep in mind that many interested parties may not take the time to read your plan. For this reason, most entrepreneurial business plan writers create a “sales deck” to get the key points in the plan across quickly to an audience. If you’ve ever watched the show Shark Tank you have seen how the business owner is expected to very quickly pitch their idea, and they typically use slides and images to do this in just a few minutes. You might also consider creating a sales deck to show your potential partners, whether musicians, labels, Booking Agents, Investors, Publicists, Venue or Tour Operators. They will be more likely to quickly understand your business idea this way. If your materials are well written and you can present them effectively you will be seen as being ultra-prepared and ready for success.
Ultimately, a well-written business plan will help you to define your music industry business, understand the market, define your product, outline your strategy, and create an operating plan. Additionally, your plan will help you figure out how to manage the people you will need, fulfill your administrative needs, and project financial results that will make clear how the business should perform over time. Going further, you will need to incorporate potential obstacles in your plan, and your strategies to get around them. These are the main components of a business plan, and why they need to be in place.
This content was originally published here.