So you wanna be in a rock band?: Starting your own label
After youíve assembled your army of professional business alliances (which you should endeavour to continue growing throughout your career), the next step is to get your money in order. With any business, start up capital is an absolute must as there will be many expenses, both planned and unexpected, that will pop up along the way. Considering that, aspiring musicians, rarely come fully endowed with thousands of dollars in inheritance money bestowed upon them by deceased relatives (in other words, weíre usually just barely scraping by), learning how to budget and save up all of your pennies for rainy days, early on, is definitely a smart move.
Under no circumstances do you want to resort to taking out a loan from a financial institution as there are no guarantees in this industry (ie: though many will travel the path, few will succeed), and the interest rates alone are enough to solicit heart palpitations. Plus which, in all fairness, itís fairly likely that you havenít really established that great of a credit record at this point anyhow, so getting approved for a monetary advance from a bank is probably not going to happen. So, where are you going to get the goods?
Well, whether youíre in a collective, or youíre a solo performer, instead of boozing it up after gigs, I highly recommend reinvesting, at least some, if not all of the money you earn from your appearances, both performance fees and merch sales. If youíre not quite at the level at which you are getting paid for professional gigs, no problem, instead, to get things moving, each of you can contribute a nominal amount (say $10 - $20) into your startup fund on a weekly basis from the salaries you earn at your current menial jobs, and honestly, youíll be surprised how fast itíll add up. If you donít currently have a job, go out and get one, even if just at a fast food joint, youíll need a steady source of income coming in.
A third option you have is to, as we did, find an investor for your company, but be warned, this is not an easy venture. Just as when you approach a company for a potential sponsorship, you need to have something to offer them in return, and as much as I support your dreams of being a revolutionary rockstar, that sort of pitch doesnít fly with business people. Investors are interested in one thing, and one thing only: that being, to maximize their returns. Sometimes, they will have a soft spot for helping out artists, however, you will still need to have a professional pitch, a profit-sharing contract worked out, as well as a contingency plan for the worst case scenario. You also need to keep in mind that if you do choose to involve an investor with your company, that it is only fair that after profits have been attained (ie: you are no longer trying to break even on your expenses), they get paid first. After all, they were willing to sink funds into your dream when you had nothing, and if it werenít for them, you wouldnít have been able to bring your baby to life. One last note on investors: please, if you take anything away from this piece, let it be this: do NOT, and I truly mean it, do NOT involve family members. As much as they love you now (and Iím sure they do), money changes people, and relationships. Though sex has been said to be the quickest way to ruin a friendship, Iíd argue that disputes over money wreak havoc way worse than anything youíve ever seen.
The final option you have for getting together the necessary start up monies for your business is to apply, through the provincial government, for a young entrepreneurís business loan (see http://www.cybf.ca for more details), however, be aware that if your loan is approved, the government, until you have paid back the loan in full, will have authority as the primary shareholder (ie: they will own a larger percentage of your company). Additionally, similar to a bank loan, you would be expected to pay back the loaned funds, plus an agreed upon interest rate, within three to five years depending on the arrangement.
So Iím sure at this point youíre wondering, well what do I need all of this money for? Though I previously explained that there will be many expenses along the way, I agree, a more specific overview of what these expenses may entail, is necessary. Tune in next week for just that!