I had a request recently on how to write a music business plan. Here’s the format I recommend my clients to follow. Call it a template. A music business plan gives you a sense of leadership, strategy and direction and I discussed it briefly in my free e-book, How To Design A Winning And Profitable Music Business.

If you’re still not convinced on the importance of writing a music business plan for your career, here’s a very simple analogy: If I were to ask you to come to my home in London, I’d tell you the address and point you to Google Maps to get your directions from where you’re starting out. If you didn’t have those directions and my address, it’d be very difficult to get here without the map. Your business plan acts in the same way for your music career.

Whether you are a band, solo artist, songwriter, instrumentalist, producer, manager or any other music industry individual, you need a plan to help you achieve your goals and be fulfilled. The template below will help you create one. In helping to make this template real, I’m going to use a fictitious R&B/soul artist called Tina.

Music business plans can be created in many ways, but there are four core components that I like to advise people to write up: Operations (the activities you do in your music business), Marketing (how you’ll get those activities out to more people), Financials (how you’ll spend and make money) and Action (your time-line for getting things done).

Covering these four sections creates a very simple and excellent plan for your business. If you are looking to create a business plan that will help seek investment in your music business, you may need to go to more detail like analyzing your market, understanding your infrastructure, etc, but that is not the purpose of this article.

Let’s look at the four sections mentioned in more detail.

OPERATIONS.

For this operations section, write about the activities you will do in your music business. You can break them up into these two categories: Income-generating Projects and Non-income-generating Projects. The first category includes your gig projects, music products, workshops and any teaching. Basically, things you will do that make you money.

In the second category, list down and write about everything else you will do in your music business that doesn’t make you money immediately. Things like administration, recording, band rehearsals, etc. 

The goal is to get down in this section everything your music business does. Think through every single thing you do and ensure it is written down. Take as much time as you need. As the focus of writing your music business plan is about achieving in 2009, make sure you do this:

Look at all the activities you are doing and ask yourself these three key questions:

“What from this list is not making me money and can I get rid of?”

“What from this list do I not want to continue doing in 2009?”

“What other activities do I want to instigate in my music business in 2009?”

Then edit the section properly.

Taking our fictitious artist, Tina’s income-generating projects includes a regular monthly gig at Club Sachet. She has a good relationship built up with the venue and promoter and now manages to get a good following and pay. She wants more of that but yet doesn’t have the agreement.

She also has a CD out which she sells on average 100 a month. Tina is going to get rid of her free monthly gig at the Rhythm Cafe which she feels is not helping and going to start giving vocal lessons to only five very committed students that should help her bring in an additional stream of income. 

Tina’s non-income-generating activities include her weekly open mic gig, her administration and her fortnightly booking of a room for band rehearsals. 

 

 MARKETING.

This is everyone’s least favorite section by a stretch but probably the most important. In this section, we are looking at everything you need to do to get your activities out to more people. I prefer to call marketing and sales ‘Customer Acquisition and Customer Nurturing’.  Acquisition is all about getting people to your fan funnel (concept discussed in this free e-book) and nurturing is all about building trust, training your audience, and getting people on a journey on your website.

Here’s what you need to do in this section:

• 1. Make a list of all the things you are currently doing to promote your music.

• 2. For each one, write down what you feel has worked well and what has not worked well. Be honest and it will serve you well. Don’t gloss over the results even if you enjoyed using the specific strategy.

• 3. Then going forward, decide which three key strategies you will continue to use as you go forward in the first Q1 of 2009. If you want to try new strategies, then you are welcome to add them in. I would only choose two new maximum. The key is to have 3 that work and 2 new you will test. Do more than that and you will overwhelm yourself and spread yourself too thin.

In this section, also consider the following:

POSITIONING. How are you positioning your art in the music industry? There is no space for just another pop or R&B singer. Just as there isn’t for a simple jazz musician. What is your niche or specific focus area? Become the go-to musician in that niche and you will grow and get exposed much faster. Based on your experience, skills and flexibility, you will always be able to carve out a niche for yourself.

MARKETING MIX. This is all about ensuring that the strategies you choose to pursue above are a variety that allow you to get exposure in multiple ways. Whether it is news releases, video on the internet, blogging or podcasting, flyers, networking or anything else, be sure to ensure its something that you know already works or something you’d like to try.

SALES. Be aware that getting people to know about your stuff is one thing and getting people to buy it is another thing. Sales is all about coming up with the portals, systems or methods to get people to buy your music, merchandise or other offerings whether its by distribution or at your website. Write up a section on how you intend to do this in your music business. 

Let’s look at this section from Tina’s point of view. In 2008, she has used news releases, blogging and social media to grow her profile. When she has played gigs, she used flyers to promote locally as well. She has seen that her blogging and social media is picking up and she can see it working slowly.

The news releases aren’t working effectively so she has decided that going forward, instead of posting a release once a week, she’ll post one every three weeks. That will allow her to measure the effectiveness of having an online PR account. The flyers work to bring in a small number of people but is not worth the investment so she’s going to stop doing them unless she has more funds to spare when promoting.

She wants to use video as well and so will be taking videos of all her gigs and uploading them to YouTube. She knows the effect video can have as it is visual, auditory and perhaps kinesthetic so will use that to further gain more exposure as a new strategy. 

Overall, she finds herself singing R&B and soul. It is a common niche that she’s taken space in but is not yet thinking of international work, just stuff on the East of USA so she is happy with that positioning. (I still feel that there must be a way for her to differentiate herself from others in order to make her more reachable for the general public). 

As for sales, Tina is currently selling her CD at cdbaby.com. She is not selling at her website and rather directing people to that website. She has three different pages on her website that sell the same CD and she is currently testing which one sells better so she has a better conversion rate. Tina is not so marketing savvy, which is why she sought whatever help she needed and was open to doing that.

FINANCIALS.

In this third section, we analyze and plan the financials of your music business. The key to your music business succeeding is that you try to spend less than you make all the time. It’s the same in life too, right?

Part of the financials is understanding your ongoing expenses as well as where your income will come from. The music business is usually unstable (for most musicians) as they get paid per gig or per CD sold. They have no way of creating sustainable income and so I want to address that briefly.

Firstly, though, list down all the expenses your business is going to make on a regular basis. Using my own Tabla career as an example, I pay a monthly fee for my e-mail management system. I also pay for a rehearsal room once a month. Apart from that, I have no other regular expenses. Then list down potential ad-hoc expenses for 2009. For me, this includes flyers, business cards, paying accompanists, web design for LT and much more.

Also list down your projected income, i.e. where you think income will come into your music business from and an estimate of how much. For me, I expect about £10,000 from corporate work in 2009. I also expect to record a new album and make £3,000 selling 300 CDs at £10 a piece each month, so that’s £36,000 in GROSS in the year. (Maybe £30k as I won’t sell for two months of production and pre-marketing).

Once you’ve done that, you will have a good grounding of your realistic business outcomes next year. The key is that it is REALISTIC. (I feel I can sell 300 CDs because I have the mailing list and know-how to do so. If you don’t realistically believe you can shift 300 a month, don’t put that figure in).

Unfortunately, I can’t guarantee that I will shift 300 CDs a month until I set up and there is still a few months till I launch the album. You may probably be in the same space too. For that reason, you’ll need to find a way to create a project that allows you some regular income on a regular basis and that you are aware of it. Whether it’s locking-in to a regular gig at a venue and creating several projects like that or deciding to teach and having a few regular students to make you money, think about how you can do this for your music business.

Let’s look at Tina’s financial plan now. Tina’s expenses include a monthly fee for the e-mail management system she uses - $49/month. She also pays for the rehearsal room twice a month totaling $50. She pays for her news release service at $80/month. That’s a total of $179 per month in ongoing expenses. She also adds another $100 for miscellaneous stuff.

Her income looks like this: 100 CDs a month at $7 a piece gives her $700. Her regular gig at Club Sachet gives her $200 a month. That’s a total of $900 a month in income. Other income could come in from time to time such as corporate gigs or workshops but she has not accounted for that possibility yet. She is also looking to take on five vocal students for which she will charge $80 per student for four hours. Multiply by five and it gives her $400 for her coaching. So based on the above, with five students, she’s making $1300 income, $279 in expenses and therefore $1021 NET per month.

ACTIONS.

Probably my most favorite part of the entire planning is taking all I’ve done in the first three stages and putting them into a time-line to help you formulate a schedule for achieving your goals both for the long term (3-to-5 years) as well as the short term (6-to-12 months).

The best way to approach this is to first list down your goals for the long term and short term. Then for each goal, take the time to create a time-line to achieving it, starting from where you are today. What do you need to do to get the task achieved? Space the actions out appropriately to reach your end-goal so that you can also accommodate other goals.

Back to Tina. Tina has the following three goals for 2009:

• 1. To grow her fan base to 5,000 by 31st Dec 2009.
• 2. To get three additional regular gigs booked in by May 2009.
• 3. To be selling 150 CDs a month by May 2009 and 200 a month by Dec 2009.

Tina recognizes the value and importance of growing her mailing list before doing another recording so she’s deciding to spend 2009 focusing on that, with her bigger plan to release a new album in 2010. That may also work to her benefit if the recession really kicks in. She will continue to write and release new stuff but will not go all out with a new album production project. 

Taking one goal of hers as an example, let’s look at her goal time-line. To get three gigs by May 2009, she will shortlist 100 venues and send out a mail shot to them by 30th Nov 2008. She’ll follow up by 31st Dec 2008 with all of them and book in the first gig with as many as possible. Target bookings: 15 gigs. She will allow for a contingency period throughout January to continue following up as she knows December is always a hectic period.

By January she’ll have at least 3 gigs booked, although her target is 15. Once the first gigs are done by April 2009, she’ll sit down and try to get another gig with each of them. With some venues she will just book another gig, and with others, if she senses both parties are ready, she will ask to have some kind of verbal (or written) agreement for a monthly gig. 

This is just a simple time-line that Tina has charted for her second goal. If she focuses on getting it done, it will naturally result in a good amount of additional income for her. This is her being productive.

Do the same for your goals too.

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Remember, this is a basic template of how to construct your music business plan for the coming year and I’ve used Tina as an example. If you are seeking investment for your music business, this template is not sufficient and there are other things you should add in for which this lengthy article is not the subject of. I will cover the specifics in a future article.

Writing a music business plan is not easy and it will take time so be sure to give it the time it deserves. Do each section individually and allow yourself ample breaks so you can be creative and clear in your direction when planning. It is easy to get overwhelmed and following this plan will make it easier for you. I have consulted with many musicians on this process and it has taken an average of one month to get it down in its entirety, following many drafts.

Go ahead - start the process. You will be glad you did.

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