December 1, 2010 A Sample Music Business Plan
I just got home from a wonderful Thanksgiving dinner with my mother, sister, brother, niece and nephew in Franklin Park, New Jersey. The roads were slick from an early snow shower that turned to freezing rain. As I was driving home it dawned on me that I haven’t written a blog post (on any topic) in over a month. But tonight I suddenly found the inspiration to present…
A Sample Music Business Plan for Your Band
For those of you who haven’t read my previous posts on this topic, I’ll briefly bring you up to speed. I wrote a post on Music Think Tank Open that was transferred to the main page (an honor in my book) called How to Write a Music Business Plan. It was a bit fluffy like this one might end up and one of the MTT readers called me on it. The first comment was, “Would have been stronger with a template or sample.” I got pissed off and created a template. Thanks again Justin.
However, I never provided a sample for two reasons. One, I thought that I might loose business opportunities by providing a sample of a plan that I’ve done. People like to copy plans instead of learning the steps or hiring a business plan writer like myself. Two, because business plans as you will see in the sample below, are confidential. Half of my clients will make me sign a Non Disclosure Agreement and swear me to secrecy for good reason. Luckily for you about a year ago, one rap group from VA gave me the go ahead to publish their plan, but we’ll get to that in a moment.
My Inspiration
Every time I sit down to write another music business plan I think about all of the starving artists out there who have failed to see the value in the business planning process. There are all sorts of books out there telling people not to plan. I personally don’t understand that concept at all.
I’ve read that planning is nothing more that guessing recently. If that’s the case, I’ve been one lucky dude. I plan everything. I plan what body part I’m going to work at the gym tomorrow, what I’ll have for dinner the next day and what I’ll will wear to work on Monday. I honestly feel that I would not be as successful as I am if it weren’t for careful planning.
Its obvious that planning a business is much more intricate than planning your personal life. If running a business was as easy as having an idea and going for it, we’d all be rich. A plan not only provides you with a framework for growth, but also takes a closer look at the details of your business; ones that are typically over looked without a business plan. A CEO has to manage everything from personnel to product development and marketing to distribution and accounting. How is one supposed to conceptualize that process in their head? The answer is clear to me. You can’t.
Elements of a good plan
Whether you are planning to approach a bank or family member for financing or simply look at ways to improve your business, a good plan includes the five sections that follow.
1. Executive Summary
2. Products and Services
3. Marketing Plan
4. Management Plan
5. Financial Plan
Details on each of these plans can be found in previous posts and outlined in depth in my template, You don’t have to take my work for it however, there are tons of resources online that will tell you the same thing about business planning. Over the years I have tailored these plans to mirror the needs of the ever changing music industry. Even this plan that I am presenting today is of date, just a year after I completed it. That should tell you that a business plan should be a living and breathing part of your business and updated as your wants and needs change.
Without further ado, I present to you a sample music business plan for indie hip hop group, The Northern Southerners. Northern Southerners Business Plan Northern Southerners Financial Statements
Kevin Englishis a marketer and student of the arts, who blogs about the skills and strategies necessary to get the most of your musical career at http://eleetmusic.com or on Twitter @eleetmusic.
Reader Comments (21)
Nice piece Kevin. In the future, I see investors providing funding for well organized groups that have traction and a working business model. Terry McBride's Nettrwerk Group started a joint venture fund called Polyphonic where his company's intent is to invest in artists that are in a place where they could grow with the help of outside funding. Any band with a good team and there business in order can benefit from doing a business plan. Doing one properly provides any band's music business with an excellent road map for future growth. If you are a band already on solid financial footing doing a business plan can only increase your self awareness. Additionally, if you are serious about investor funding, most serious investors will want to see at the very least a detailed well thought out Executive Summary of your project.
David Sherbow
CEO, www.LiveMusicMachine.com
Thanks Dave. Polyphonic looks interesting. Its about time someone stepped up to the plate to take advantage of the scaling of independent musicians. I'll have to do some research on them myself.
Hey Kevin, not sure you'll remember me, but we connected back in the spring and we talked on the phone briefly about my music business plan. I'll say for the most part, the majority of what I planned for (or more so my goals) got accomplished and I'm moving on to rehashing out things for 2011 that I simply did not get to this year.
One thing I learned as I implemented my plan was that some things took longer (and more $$) than I wanted and I had to learn to be okay with that. Like my album for instance. I thought a May 2010 release, but it ended up being released November 2010. But the thing is is that it was my first one and I had no idea how it played out in reality.
I read a good book recently, "Rework", that had an interesting chapter on plans--thought I'd see what your reaction was. To summarize they say:
- plans are fantasy, there are too many factors out of your hands to predict
- start referring to your business plans as guesses
- plans let the past drive the future
- you have the most information when you're doing something, not before you've done it
- they advise not writing a long winded plan, because it mostly ends up collecting dust or being constantly rewritten
I've experienced these realities in my past life helping non-profits write strategic plans and seen the plan utterly fall apart or not even used for numerous reasons. In the music industry today, which is constantly changing, I completely agree that all the components you mention for a plan should be thought about and written down, but do you think this means musicians should write several short-term plans a year or phase them out? It probably depends on the goals of the artist.
The follow up question I have to your post is taking a plan and implementing it--how does one do it? Other than doing it, what should be in place to ensure the music business plan shows success?
I wanted to those those questions out for readers here, but my two quick answers are--A) just start doing it (how else does anything get done), and B) incorporate metrics into the plan.
Brian Franke
www.brianfranke.com
@bfrankemusic (Twitter)
www.brianfranke.com/thinkingaloud (music blog)
Hey Brian,
Of course I remember you. I'm like an elephant when it comes that kinda of thing ;-)
This post is purposely in direct contradiction to that section in ReWork for two reasons:
1.) I'm not trying to sell you a book (yet)
2.) I've personally seen businesses fail because they didn't plan
37 signals is a great company and the authors are very smart guys, but when I hear you say things like everything you PLANNED for you accomplished, it further underscores my point.
To answer your questions:
Start by reviewing your finances. If you don't have the money to record, market, distribute and promote you cannot proceed.
and...
Measurable goals is the name of the game. You have to know how many fans, shows, and digital downloads you need in order to become profitable. Otherwise your plan was created in vein.
Great hearing from you Brian. Keep up the good work!
Kevin
Kevin, I'm glad the topic of music business plans has come up, because I've been trying to wrap my head around them for a while. After reading over your post and the provided documents, I'm still very skeptical about their practicality. (I don't intend to come off as a jerk - its hard to ask critical questions online without sounding like one)
First off, it seems like the plan for Northern Southerners is basically to "do what every other aspiring band and label does." Produce albums, merchandise, and tour. To me, this all seems like stating the obvious. I don't understand how this constitutes a guiding plan.
Under what circumstances will the folks at Northern Southern ever encounter some question or situation in which they say, "hmmm, i dunno, we better check and see what the plan said", and then crack this thing open and have their answer? It all seems very substance-free.
Then there's the finance page... am I reading this wrong, or does it end stating that they're going to be $80,638 in the hole at the end of the year? Obviously companies need to incur some startup costs, but for a PLAN, this certainly seems to end on a bit of a cliffhanger! Fuirthermore, (And I have always, always wondered this), how the heck can ANYONE project music sales for a startup act? Granted, they project a year end total of only $10,700 in total sales, which I suppose is realistic... but what are those numbers based on? Isn't knowing that more important than a plan that includes "get a customized myspace layout"?
I guess I just don't see how "spend money on a publicist and promoter" equals a marketing plan.
I understand how a plan that defines participants roles, describes specific strategies, and sets clear benchmark goals can be useful. But this plan does none of that.
However, even if it did, my overarching question remains; how can ANYONE predict revenue or sales in this music industry for new products or artists? It seems to me like things either catch heat, or they don't, and it usually comes down to who is able to work their media connections best and get the most exposure.
I'm really not trying to tear this post down, I've just been told time and time again about the importance of business plans in music only to see a laundry list of very basic promotional activities, combined with seemingly imaginary financial projections. I would very much like to hear where I am missing the point.
Hey Justin,
Thanks for reading and asking some very good questions. BTW you don't come off as a jerk. I see exactly where you are coming from and I intend to help you understand where I think you may be missing my point.
You should always be skeptical of new ideas, especially when they appear from an unfamiliar author on a blog that claims to be the most relevant think tank in the new music industry today. I'm a huge skeptic myself and further more I've never been known for blowing smoke when it comes to the music business. Independents should protect their right to call, bullshit, so I'm glad you were man enough to do so. In any event, here are my arguments.
Point #1: First off, it seems like the plan for Northern Southerners is basically to "do what every other aspiring band and label does.
You're correct. It is exactly that. What is different here is that the Northern Southerners have put it on paper in order to identify the holes in it. How can you find flaws in what you propose to do without seeing all of the details out in front of you?
They have also itemized what the cost are for each basic step of the way. Sure, most (not all) artists know how it goes:
⁃ record and album, market it, promote it and distribute it
Now ask yourself, how many artists can say they have contacted all of the vendors necessary to carry out those four "obvious" steps, and project how much this "labor of love" will cost them in 2011? The Northern Southerners can.
Point #2: Under what circumstances will the folks at Northern Southern ever encounter some question or situation in which they say, "hmmm, i dunno, we better check and see what the plan said", and then crack this thing open and have their answer?
Thats a perfect segment to point #1. The Northern Southerners are often asked by investors to forecast what they are likely to spend next year. Conversely they will also have to take an educated guess about how much money they will make.
Think of a business plan as a big budget. Do you tell your banker that you are skeptical about budgeting for college, auto purchase or home loan? That you don't see the value in planning for those types of expediters? Why is a music business any different? If you say, because its "too hard" and it "either catches or it doesn't", makes me think that it is even more important to plan. Not less.
Music is emotional, I know, but businesses aren't. Remember, I didn't make these rules, I'm just presenting a way to bridge the two truths.
Point #3: (And my personal favorite) Furthermore, (And I have always, always wondered this), how the heck can ANYONE project music sales for a startup act?
How about we start with your neighborhood and say, "Who is most likely to buy my album in this town? What does my target customer look like? What do they do for fun? Where do they hang out?
Let say you come up with one market segment that is 30 year old men. What do 30 year old men do on a beautiful day like today? Watch football. So you can either come up with a catchy song about how Titans CB Cortland Finnegan got his ass beat last week and put it out on the internet too see if it "catches"
AND/or…
You can look at the City, County and State Census records to find out exactly the number of 30 year old men that live in your neck of the woods. Then you take your marketing tool(s) of choice and examine the industry standards on say, pay per clicks (if you plan to use internet promotion).
That is what this and any other good financial plan is based on. Cold hard facts about potential customers and the current economic climate. Not lofty ideas and passing thoughts about how great your music is.
Look I'm not going to elaborate any further in this comment, but please feel free to ask more question here, via email, twitter or phone. I'll leave all of my contact info at the bottom of the post.
Kev
eleetmusic[at]gmail
347-688-5383
@eleetmusic
Hey Kevin,
I finally had a chance to skim through this. As someone that has invested in, written and consumed my fair share of plans, here's my feedback:
Your plan is a fine "friend" plan. It's a plan that close friends with money to burn (in a wood stove) might invest in. However, I don't believe this is the type of plan anyone could sensibly shop to strangers (as investors). Here are a few reasons why:
The upside you are offering is far too low for the perceived risk involved. I would never put $100K into something as risky as a band unless I was going to own a significant chunk (probably far more than 20%) of the entity that controlled all the rights and IP.
You need to demonstrate that you are taking some of the significant risks off the table. Without signed rights and services agreements, there's no minimal guarantee that the songwriter or lead singer is not going to drift off to some other band/venture.
As Justin said, the plan is lacking in substance (sorry).. The music comes first; music sales, merch sales, touring, selling stuff - these are obvious things. I want to know what you are going to do to propel yourself to the moon. The 6% return is nice if you are a bank, but I want to know how I am going to end up owning a chunk of a $35M annual business two years from now! What's the unique, unusual, inventive, off-the-charts thing (strategy) that you are going to employ that's going to put you on the map and keep you on the map? (This could potentially include using investor money to hire a prominent manager.)
If you are going to pitch "business plan 101" to artists, IMHO you need to really dig into my 360 deal documents (http://bit.ly/gtGanm) to develop an understanding of how to 1) minimize risk, 2) align incentives, 3) capture all potential revenue streams, and 4) paint a picture of significant upside.
If the hardest thing in the music business is putting lyrics together with a melody to create a popular song, then the second hardest thing is finding the money you need to do everything else. In this industry, before you even write a plan to raise $10K, you better have 1) excellent songs, and 2) a believable strategy that's going to make you into a true, viable business. Cheers.
-Bruce
Strategy for a viable business. Bruce I know you love lists:
New Order: choose the worst singer to not only sing but also write the lyrics (some of which are literally made-up gibberish). Stay signed to a label that refuses, on principle, to finance PR. Invest the majority of any money made in a nightclub that loses money hand-over-fist (and don't buy the building it's in, just spend hundreds of thousands of pounds on its refurbishment). Name yourselves after Hitler's own term for the Nazi party.
Success?
Jimi Hendrix: restart your career as a black, psychedelic rock star in another country where black people are still a novelty, by supporting Gene Pitney and Engelbert Humperdinck, then return to your country of birth and try to start your new career there by supporting the Monkees. Pledge support for the soldiers in Vietnam whilst presenting yourself as an alt. culture freak (change your mind later). Perform and record the national anthem at sunrise with feedback guitar and sexually provocative hip thrusts. Die from ingesting your own vomit after building an intense mythology about your drug-taking powers.
Success?
Nirvana: oh, you can fill this one in yourself...
Success? Yes, all three, business-wise.
Now, if you'd asked the managers, the story would have an ever-so slightly different slant, right?
Ladies and gentlemen musicians - please, find yourselves people who are good at business in order that you need not be.
Ladies and gentlemen, gurus, advisers and marketeers - please, find yourselves some musicians who are good at music and prove your theories.
@Bruce
Thanks for taking the time to read and comment. I sincerely respect your judgement and expertise.
"Your plan is a fine "friend" plan."
Correct. The Northern Southerners came to me for a business plan to submit to a family friend that was already interested in investing, but wanted to see their business on paper.
"You need to demonstrate that you are taking some of the significant risks off the table."
Agreed. I'll look into this further with future plans of the sort.
"As Justin said, the plan is lacking in substance (sorry)"
Don't be sorry. This is your professional opinion. Granted, everyone isn't at the same level as you are. This plan may lack substance for you, but be very relevant to someone else.
"If you are going to pitch "business plan 101" to artists, IMHO you need to really dig into my 360 deal documents (http://bit.ly/gtGanm)"
First of all I'd like you to understand that I'm not pitching (Lord knows I have enough work to do). I'm simply sharing what I know with the people who have asked.
Please remember that this plan is a sample. Not the end all be all or a guaranteed road to success.
" I want to know what you are going to do to propel yourself to the moon."
Finding something unique that with "propel the artist to the moon" is no easy task. No one has found that thing from my knowledge. Not sure why I'm expected to include this in the plan.
In any event, the Northern Southerners 'thing" was the fact that they were able to clear a Bruce Springsteen sample for their lead single. That's a lot more than some can say.
@Tim
I'll respond to the only coherent sentences in your comment above
"Ladies and gentlemen musicians - please, find yourselves people who are good at business in order that you need not be."
Really? How much will that cost you over the course of your career? Isn't it better to know the business than to relinquish control to someone who "says" they are acting in your best interest?
"Ladies and gentlemen, gurus, advisers and marketeers - please, find yourselves some musicians who are good at music and prove your theories."
Are you "good" at music? Let's try some theories out with you.
Keep the comments coming everyone! This is how we will progress as an industry.
Cheers,
Kevin
figured that was pretty coherent... how about: these are three examples of very successful artists, none of whom, on paper, would seem to have had a viable business plan.
And as the world of pop is full of similarly successful musicians who have had chaotic careers that they couldn't have possibly planned for, I would say, though there might possibly be exceptions (and I would love to hear about them - honestly, that's the point of my comments) who started off with a business plan as opposed to a dream and a riff, basically, success from chaos is the norm and to state otherwise needs proof.
So, if you are making a solid offer to work with one of my artists, to create living proof, please mail me off-site and let's talk about it.
cheers
timothylondon@blueyonder.co.uk
Tim,
What you are referring to is the magic that happens when an artist hits the big time.
It would be foolish to think that none of this was planned. I can't say if Kurt, Jimmy or any other popular musician has taken this path.
All I can say is that they would have been better off by knowing a little bit more about their business. Just like any other business man or woman.
You don't have to believe me or trust that my "theory" works. You can keep on dreaming and believing that one day all of your musical dreams will come true. It's your choice.
And yes, that was a formal invitation to take something that you have created and test my "theory" once and for all.
Will email you offline and post the results here.
Cheers,
Kevin
Kevin,
"Finding something unique that with "propel the artist to the moon" is no easy task. No one has found that thing from my knowledge. Not sure why I'm expected to include this in the plan."
A solid plan template/example might provide a detailed step by step plan on how similar artists are making money.
Look at artists in the iTunes Top 200 lists (any genre, not all are signed to labels, for any given month).
Look at artists that are performing in venues operated by Live Nation.
Many of theses artists are making money, and not all of them are legacy artists, and not all are signed to major labels. How did they get to where they are now? What was/is (past, present, and future) their business plan? How long does it take? What are the key ingredients that are propelling success? Etc, etc.. Can this success be replicated? What did it cost to get there? And so on.. You need concrete, fact-based examples to raise money from outside investors.
@Kevin - I'm sure there have been many plans made by many artists, but the idea that they are transferable just can't be proved. Sure, we can all learn lessons from history and we can all plan hopefully, so maybe that's how we should look at your plan. I'll look forward to hearing from you.
@Bruce - as ever, intriguing me into action - I had a good look at the UK top 200, of which I found 8 artists who are apparently not signed either to decent sized labels or production companies. Some have arrived at their success by slightly more independent routes, most have a decent financial push behind them, if I took an educated guess.
Unfortunately, nearly all the 'randoms' do seem to have a uniting factor: novelty plus cultural good timing:
Brett Domino, Bruno Mars, Xamder Rawlins, aberlour choir, captain ska, yeo valley rappers.
They all have other groups and org's supporting them in various ways, because of who they are, from radio stations to the patriotic British public.
Of the other two:
Afrojack and Yolanda be Cool, you could easily put the latter in the novelty bracket, depending on your POV on Europop. Afrojack is connected to Spinnin' Records, a dance indie based in Amsterdam, so might also be discounted, although I'm not sure how big they are.
I couldn't find what we might call 'start-ups' or purely artist-run labels; even the labels apparently owned by artists tend to have deals with a bigger label or publishing company.
Of course, there might be a whole different picture in the States; with its tradition of decent-sized, locally based labels with support from large radio stations in the area, the impetus and infrastructure might be in place to facilitate smaller crews in a release. I know that certain hip hop labels have managed to do well, in the grand tradition of 'if they won't release, we'll do it ourselves' that led people like Sam Cooke, James Brown, Curtis mayfield and The Isleys to set up their own labels.
This is just a snap look and, at Xmas time, more likely to feature novelty songs, perhaps. But still, disappointing and surprising, even for digital cynic me.
"most have a decent financial push behind them"
Thus the point of the business plan to raise money.. Record label or not, it's still money + humans + an execution plan that's making it all work. One could possibly raise money if they 'plan' to hire the right humans and execute a 'plan' that has historically (at least over the last ten minutes) worked.
On a related matter, I believe it's incredibly difficult for the average investor (fan) to gauge popularity potential against competing alternatives (for investment money) in the marketplace. The means to measure this are crude at best (e.g.: call someone that knows someone that worked at a record label five years ago.).
So possibly the best plan might be not to bother with plans and just try to be the most exciting band in the world in the hope that 'money + humans + an execution plan', in other words, a label, or a production company, or a publishing or a management company take you on.
On the evidence, it's a better 'career path' than any other.
Investor = fan? It's possible, but unlikely. I know some crazy fans think they own the artist they love in some way, but buying their music doesn't make you an investor.
That's just free-market capitalist speak gone mad.
"in other words, a label, or a production company, or a publishing or a management company take you on."
Sure. Aren't they the groups that are supposed to be writing the plans? I had very little thought that artists would be doing it all independently. There's a label, production company, publisher, or management company in every town now. They are the ones usually seeking an investment.
Absolutely, although they are far and few, even in most big cities in the UK.
In the whole of Scotland (pop: 5 million) there's hardly a publisher, very few management companies, one serious, specialist PR company (although I think they may have just moved to Brighton). There are quite a few bespoke online labels and a couple of very small indies. There is one, very large promoter. The over-all music economy is tiny.
That's a small target to aim for, for most artists. Most of the one billion profit and x-billions turn-over, in other words, the business, is in London.
I'm sure it's similar in the States - with hotspots of finance like Nashville, NY and LA.
I honestly don't think the roads to travel on have altered all that much for artists, because of the internet. As you say, Bruce, you don't expect the artists to be doing it independently - apart from the very odd exception, I don't think that's happening.
Although, I would love it to be possible.
Really very useful and important news for everyone. Terry McBride's Nettrwerk Group started a joint venture fund called Polyphonic where his company's intent is to invest in artists that are in a place where they could grow with the help of outside funding. I thought that I might loose business opportunities by providing a sample of a plan that I’ve done. People like to copy plans instead of learning the steps or hiring a business plan writer like myself. I am going to subscribe to this feed also. Thanks a lot!
Business strategy
Very interesting site and articles. Really thankful for sharing. Will surely recommend this site to some friends! Regards,
Again very useful and very important for everyone. Terry McBride Nettrwerk Group started a joint investment fund intended polyphonic ring your company is to invest in artists who are in a place where they could develop with the help of external funding. I could lose business opportunities by providing a sample that I plan. People like to copy the plans instead of learning the steps or hire a business plan writer like me. I'll subscribe to this channel. Thanks!
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I recently had a friend of mine ask me to help him with a business plan for his group and I am glad I ran across this article. I had a few business courses in school so I thought I knew a little bit, at least enough to set the rough outline, but this article (as well as the comments and critiquing!) were very helpful!! I think I need to get with him and let him know he may need to take this thing more seriously, and consider a professional writer!
Thanks,
Jarrod