Working with a Budget Part 2
I want to talk about budgeting because musicians a lot of times especially if they don't have a business manager artistic people in general I know I can relate to this we aren't always the best at managing our money especially when we start seeing some real money come through and let me give you a little background on this course you know we started talking about initially setting your goals from day one what do you want to do and then building relationships and learning how to communicate from they're putting in the hard work and then as you start to sort of bring in more income as you start to be able to pay some of your bills whether you're teaching and performing or working at a music store or you're working in the industry now you're getting paid as an intern or is you know, a lower level industry professional so to speak you know you're going to start seeing more money and you're able to finally support yourself through just music and that is the goal for for our audience I think...
but I kind of wanted to get some advice from you you know, for those people who are just starting out they're just starting to see money come in do you have any tips a ce faras budgeting on dh ways tio maybe just organize your bank accounts are organized what comes in is there a specific method that you would recommend well, first, they should have went to our panel itself myself west, right. Um, it's in you're absolutely right. I mean, artistic people are not generally the kind of people that are good with money, good with planning how to spend their money. I certainly have come across exceptions to that rule, but in general, it's it's a pretty fair statement, um, it's, very important that you have a written budget, and this goes for talking, album, recording or a tour, or even for your personal life. If it's extremely important to have a written budget, not just some numbers in the back of your head that you think is going to be reality or jotting down some numbers on a napkin or something, you need to have a written, proper budget in some sort of budget program, or in it or an excel where everything is laid out in detail and your numbers are accurate and are based on contracts and quotes and historical numbers. If you're talking about a band that has little history, so, yeah, that would be my first and foremost suggestion is that a budget must be just that a really written budget that has been compiled and it's going to be monitored and followed for whatever the event is being a album, recorded or specific tour would have you that was my next question. What kind of things would you see in a budget? Like what? What specific instances that bands would encounter? Like what? What sort of things? Well, obviously, the one side ledgers, the income you're going, if we're talking about a tour, you can't get your itinerary from the book and agent and aaron a drop in that income number into your tour budget in terms of expenses that's going to get paid out of that gross income that the band is making on the road, and this goes back to an issue that we've touched upon earlier. Commissions are often the one biggest item on a budget. You've got an agent that's taking ten percent of gross revenue. You've got a manager that's taking fifteen percent of gross revenue. Uh, hopefully you have a business manager like myself who is taking five percent of your gross revenue, so and right there, that's thirty percent of your revenue going out in the form of commission shins for most bands, the next biggest items payroll your crew. Uh, if you talk about a midsize bands, you're gonna have a crew of five, six, seven people, uh, better each making door between the grands two two grand a week that is another big expense on your budget. The third biggest one is transportation you know if you're driving around in your own van that you own and transportation really isn't that much but when you're at that level when you're in a band wagon or a tour boss that expenses a significant part of your overall expenses and then the last item I'd throw out there's production and this could be the wild card you know you have bands that go out there take clutch for example they go out there they use house lights that might bring their own off aboard but they're certainly not bringing a full audio package out with them there's no staging they throw one back drop up and that's their production and that works for clutch but then you've got other bands you know like say uh avenge seven foot who you know they've got massive light show and all sorts of staging and for tours like that where it's that you know it looks big well generally looking big costs big bucks and so that would be the other area I would mention as being a big chunk off the budget is production yeah I can definitely relate to that as you know in our last headlining tour you know we sort of upped our production we had more crew um and there's a reason behind doing that I mean there's perception of being sometimes bigger than you even are and I think that's important for bands and artists understand is that you know as much as you do want to walk away from a tour with money in your pocket and you probably need to do that to pay your bills and to be able to eat well there is the it is important to invest in your career invest in yourself and it sounds like that's what when you take out more crew when you have a bigger production when you, um you know when you when you take out a larger former transportation there is a reason for it there's a lot of times it's to sort of elevate your own platform and you know, I can't even say like for for taking out a larger vehicle you know, it's like sometimes it's just a simple is when you're touring and playing as much that larger vehicle can enable you to sleep better and I guess my question are you know, are a statement to make is I think artists have to decide how important that stuff is to them and teo to their career. And I guess the question for you is, you know, when budgeting do you should artists and I know this is probably relative, but should artists you know, think about this more is what they can make in their pockets or what they should do I guess to rephrase it when is it time toe really put in money for a bigger production versus taking money home for themselves is there a time that that that changes I would think in the beginning it's probably a catch twenty two because as a young artist going out you don't really make a lot of money so every little bit counts but at the same time as a younger artists you want to be able to grow and get get bigger and build a bigger perception and brand so to speak so you want to invest more so how do you solve that? Yeah, that is the great struggle of this business and you hit a great point you want to look like you're putting on a big ship regardless of what level you're at on dh that's difficult to do without spending big bucks but it's certainly possible especially if you have a creative tour manager creative production guy working for you it is it is the very rare bands that can grow from a club to a theater to an arena act without having their production throw with them on and so as your guarantees grow unfortunately so are your expenses yeah it's tough to say which is the driver though yeah it unfortunately it's very difficult to put together a budget starting with that net profit thatyou wantto take home and then working up to well then what do we spend our money on? So this much money is left over at the end but in a sense that is almost what you have to do um you don't want teo make two hundred thousand dollars on a tour and only come home yourself with a few thousand uh so the process is a lot of back and forth a lot of give and take and that's why I end up for a lot of tours especially bigger production tours I'll end up doing ten twenty even mohr versions of a budget until we at that right mix of expenses and net profit left over at the end of the tour that the band is happy with going into the tour abandon inevitably wants is big of a cruise they can take as big of a production is is they can afford but they're not that happy with that that at the end of the tour if there's no money left over for them so it it's a lot of tweaking it's a lot of back and forth during the budgeting process to determine what's the appropriate size crew given the scope of the tools are given the scope of production what's the appropriate size production give rooms you're playing in and say what does that mean for the band at the end of the tour you my benchmark would I like to see for a touring rock? Bands such as yourself is I on the show side at least twenty percent off of the gross revenues should be left over as net profit to the band's if you're if you're netting out less than twenty percent and you're a mid level band, then you're spending too much money on whatever and then you for bands that are a little above that the larger theater fans, the small arena bands to me an acceptable profit margin as it were is something close to forty percent and if you're not net now at least forty percent, then you're spending too much money somewhere and you need to re examine maybe I don't need to personal assistance out on tour maybe we don't need you to bring the pira or wherever it's gotten crazy in the budget. Sure, now how about for artists that don't necessarily tour? Do you work with any artist that, um our songwriters or that really make their money off a publishing more so than actually getting out there? Are there any clients that you have like that? And if so long the chance for that first then we'll go from there most of my bands are in a touring realm I do have one songwriter she she does occasionally tour but predominantly she makes her money um from record sales and the licensing over compositions she she is pretty heavy in the commercial licensing world that's a completely different animal and frankly a lot easier why you here to manage and aa lot more profitable if you're the kind of person that can write jingles that other people want a license in commercials or movie soundtracks, or what have you and that's ah that's a lot easier living, then someone like yourself who has to go out there six months out of the year? Um, you know, playing one hundred hundred fifty shows, selina, I mean, I know one of our audience members in here is a songwriter, and I know you had had maybe some questions about that, but I wanted to sort of bring that up because, you know, for you, it's hard to get that going. So did you have any specific questions for mark that may pertain to what you're doing now? No, I was more just bring up the licensing has actually been a great thing for me, and I would really like to do more of it on dh I guess I always wonder about the whole dance between, like, if you're an independent musician that's, you're not on a label like, in order to get more deals, you know, for sink, is it better toe? Try to get on a label and try to get you know, this this bigger fan base? Does that help boost your ability to get a sink deal or doesn't matter at all? Like what your band statuses versus how sinkerball your music is I guess was by bob away my biggest question about that but I don't know if you could even answer that yeah, absolutely it does help a lot if you're in a band you're out there on your name is prevalence um then you are going to be more attractive for licensing options but by no means is that you know, lack of being in a band going to kill your career is a songwriter there's a lot of songwriters out there that you know, just sit at home and write songs every day and make a nice living getting those songs licensed so yeah, she answered your question yet does help but it's not a career killer if you don't do that okay, thanks sure, teacher well, I guess you know my last question before we turn it over to the audience and our in studio on light on it for any other questions for you and you kind of already answered this. But, you know, I just wanted to sort of have you reiterate possibly if you could give like I guess one big piece of advice to any artist they're trying to make it uh whether that be about attitude or relationships are actually your area of expertise is there anything in particular that you would say that can I that you would hope they could walk away from this with, you know, the one piece of advice out get to any artist that starting out and wants to make a go of this is watch your money you don't but don't be ignorance about how much money you're making or how it's being spent be involved with your money yet without that knowledge there's too many bad things that can happen it pays to be uh which isn't saying you have to deposit every check and write every check yourself, but at least be aware of what's going on with your money. I think that's a fantastic point I remember I was talking about this yesterday when I first got in tow music and I was like just playing in a band for fun and kind of getting a little bit more serious, so I was like, oh bands or cool, I could play drums I don't worry about all this other stuff, you know somebody's going to do that for me? I I was lucky enough not to really learn the hard way, but I had some great advice from people who are like no, get on that you need to make sure that you that you seriously keep track of that and watch your own money and have checks and balances that's something I've been talking about too is that you know you're you've been such a great addition to our team because you can sort of be the check excuse me you know, run the checks and balances between periphery and our record label periphery and our management company, the management company, the record label and periphery and the booking age you know? And I think at first if you can't afford to pay a business manager, you have to watch your money you have to make sure that you're that you're setting up your team and that you really yourself for managing those checks and balances so I think that it is a fantastic addition to our team and you know, I couldn't be more thankful to have you on board it's been it's been awesome? So anyway, thank you thank you for contributing to this man I think it's been very, very helpful at least for me and, you know, hopefully for the audience it's a it's a wake up call in some ways to realise look, even though you're an artist, you got to start paying attention to some of these other things your money is important, your taxes are important, they're really things you know you have to pay attention to it so you're hearing it from someone who's successful in this business and working with bands and helping them with exactly this so I wanted to turn it over before we let marco tio any questions that you guys might might have are in the audience sure, I have another quick question about licensing if that's okay um I don't know what I don't I don't know whether you have access to this information I seem that you do but say like in a hypothetical you book a national spot for one of your songs I understand that this is probably variable deal the deal but is the situation that you've basically signed over the rights to that song like in perpetuity in general or is it a finite thing? Can you use that song's still on a record or can you you know, market market it under your band's banners still even though or is it owned by that company? Is there kind of a general procedure for that everything's negotiable everything's negotiable but generally what I've seen is that licenses air or not exclusive meaning you can still use your song you know, for whatever put on an album or whatever and generally the license does have a term it's not too often I see licenses that are in perpetuity and there's probably like a do not compete with other companies of their type but maybe you could license it to another company for a different kind of thing exactly right? Yeah if you're getting a licensing from although there's undoubtedly going to be a clause saying you can't license to another automobile manufacturer but general, you are still free to license it to some completely different industry or or, you know, use it on your album a as I said or put it on a tv show are in a meeting cool. Thanks, that's. Really helpful. Thank you. Sure had ah, question. Just about general taxes. Um, you have to prepare taxes for the band as a business entity. But do you also still need to prepare taxes for each member beyond that? Yes, absolutely. And most often the business entity is what's known as ah flow through entity. Meaning that the band's company itself doesn't pay any taxes. The net profits flows through to the owner xiii the band members, they pick up their portion of that bands, companies profit on their personal tax return and pay the taxes on it on a personal level that we're not being taxed twice. Correct. Okay, correct. So absolutely you do need a prep, the band's company's tax return and then all the best and members should be final in their personal tax returns after yeah, I've learned all about that being periphery. It is fun stuff. Susan and drew, are there any questions from you guys think we are good right now? I think I have one that I have one question from caleb house holder, uh, questions for marc what are some qualities as a manager that you're looking for in a band that you would manage, um other than obviously make the band making it up money teo to pay you, uh, hardworking bands, bands that aren't too needy, you know, there's there's certain band guys that you don't need to call you five times a day and if they're paying me two hundred thousand dollars a year, sure, I'll take the call five time today, but you know, if they're paying me ten thousand over the course of the year, then you know, they shouldn't I need to call me five times a day, so yeah, hardworking you nice people and it's a lot easier to work hard for somebody when that person is in a jerk brick and, um, you know, people that you are grown up and aren't like at adolescence that need help with every life function that we all have to deal with, you know? Well, that's awesome well marked man, thank you so much for for letting your time. I know it's like the height of tax season right now, so I know how valuable your time is, and I really can't thank you enough this was this was awesome, and I really think the audience is going to get some great knowledge from you here, so it's really awesome to have you and I'll be following up with you I'm sure you got my automated email response when you sent those emails yesterday yes but I will follow up with you for sure and uh you know thank you again for having me as part of your panel at south by southwest I'm glad that you could you could make the time to do this and I'm sure we'll be doing some more stuff together in the future it'll be be awesome to do so happy to be here that after having me and anytime in the future you just give me a call cool well dio alright mark well thanks so much we'll talk to you soon all right max take care matt what a cool opportunity that wass teo be able to access his brain and just see I I like that we got to see both sides so we got to see you know what what he's looking for in a band so he's looking for or what he's looking for which I thought was a cool question and also you know just be good tio be good to your his manager and don't don't be drama obviously we're all drama we can't all be dramatic every type of musician not just hip hop so sure and also just to say you know it's also really just cool to say or to look at what we need to keep in mind so that was really this thing in a cool it was to get to go we just went into that guy's office like you and had a conversation session and yeah yeah seriously like right now is that the height of taxis yeah, the fact that he gave us this time is like he could have done a tax return during that time so serious it's it's amazing that he lent that's us and it just goes to show you the the importance of being a good person and I think what that's been a common thread for every guest and what I've been talking about is like to make it in this industry and really have lasting relationships and build I think a good team you have to be caught conscious of that no just be a good person and you know I feel just even more so it's like been reinforcement for me having such a cool team of people to go to for advice and the fact that they're willing to share with others is huge because a lot of people are the guard that kind of thing you know they were he would have charged I don't know how much he would've charged just for as a musician to sit down with him and have that twenty minute conversation he would have charges more than it would cost you to buy this course for sure absolutely I mean the stuff we're getting is seriously invaluable in these people's time are worth a lot and I just I want to make sure that if you guys can out there like go go find these people find their businesses shoot him a thank you email you know everybody that we've had on here you khun I think there's probably a list of people online if not just email creative, live and they can give you the list of people but just goto mina ls website goto go to samaria nhs website go to outer loop goto mark and just send a thank you because seriously these people have lent such amazing advice to this class and I really couldn't have done this without them and that's that that's a big thing I I know what I know from my experience, but the way that I wanted to do this class was to try to give the audience the rial people that do these jobs and their perception of the industry and what it takes and to really let people know what the difference is between a manager of business manager record label how it all works so that when you are out there and you're speaking to these people you could be more educated that's that's what it's all that valuable so I'm really happy that we were able to get everybody on here it's pretty much no no technical difficulties which is great