M U S I C A L    E N T R E P R E N E U R S H I P

BUSINESS MODEL BASIC OUTLINE

Product
Every business needs a product or service to bring to market. A product like a kite for kids or a service like cutting hair, the music business also has a product, “Music”. The same way Bill Gates, (an entrepreneur) brought his product the “Windows” operating system to the home personal computer industry. Music is the product artist (musical entrepreneurs) bring to the music industry. With out a product or service to enter into the market, you have no business.

Legal
Once you have a product, you must protect it and your business. Establishing the proper legal structure like a partnership, Limited Liability Corporation (LLC) or a Sole Proprietor are essential in securing your business and company. You must protect your businesses intellectual property, assets and product, “your music”. That’s accomplished by copyrighting each song, and sound recordings. It’s a good idea to consider Trade Marks as well. Properly protecting your business and its assets includes interviewing, selecting and securing a legal team or an attorney.

System
Every business must have a system as to how it all works. The behind the scene process that takes place before the public sees what they interpret as the easy end results of your product reaching the market. A good example of a system is air travel. Take a moment and think hard about the process (the system) that goes into effect from the time you purchase your ticket until you land at your destination, pick up your luggage and drive out the airport parking lot.

Systems apply to the music business as well. A popular example is how Berry Gordy built Motown.

Using a single $800 loan from his family Berry Gordy built “Motown Records” to an $88,000.000 business by building a system around “Artists Development!” His experience working for the “Ford” motor company gave him the idea of developing recording artists similar to how cars are manufactured on a conveyer belt. After signing them Berry Gordy placed each artist on a virtual conveyer belt.

Moving them from team to team, songwriting team to production, to recording studio then artist development onto marketing. Finally, both finished recording (product) and artist out the door into the mass market. The product went to distribution and radio stations etc, and the artist went on tour promoting and performing.

To successfully deliver your music a solid well functioning system must be created, set into place and practiced by everyone on your team or in your company.

Communication
If no one knows that your company and product exist, and if they can’t purchase your product, than you are out of business! Marketing and sales are the two components that will make or brake your music business/career. A musical entrepreneur must either posses marketing and sales skills or they must but a professional sales person and marketing company in place to implement a successful marketing and sales campaign.

Cash Flow
The ability to keep capital streaming through your music business/career is a challenge within its self. It’s a necessary block in building a firm business foundation. The crafty musical entrepreneur finds the means to raise, borrow and earn the capital needed to maintain a positive cash flow. As part of healthy cash flow, it’s imperative to place a competent accountant on your team or in your company.

Memorize and practice these five components, keeping in mind that if your business is struggling, weak or has failed, it’s probably due to one or more of these components being weak.

Al Houghton & Sonya Heller

→ Musical Entrepreneurship
→ Assets & Liabilities
→ Legal Structures
→ The 7 Myths of Marketing