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A music business plan is crucial for any music industry professional looking to launch or grow their business. It provides a snapshot of the current state of the business and lays out a clear growth plan for the next five years. This is essential for understanding where the business is at and setting achievable goals for the future.
Check out our article below to learn more about creating an awesome music business plan and get a template.
What is a Music Business Plan?
A music business plan is a comprehensive and detailed document that outlines the goals, strategies, and financial projections for a music-related business. Whether it's a record label, music production company, artist management firm, or any other music-related venture, a business plan provides a roadmap for success. It helps to attract investors, secure loans, and guide overall operations.
From market analysis and competitive research to marketing and distribution strategies, a music business plan covers every aspect of the business to ensure clarity, direction, and long-term viability. It is an essential tool for anyone looking to establish or grow a music-related business in the highly competitive and dynamic music industry.
Why is it important to have a music business plan?
A music business plan is crucial for an artist's success in the industry for several key reasons.
It serves as a blueprint for the artist's career, outlining their goals, strategies, and financial projections. This document helps attract investors by showcasing the artist's vision, potential for return on investment, and realistic plans for reaching their target audience.
A well-crafted business plan guides decision-making by providing a clear direction and framework for the artist's activities and investments. Furthermore, it defines the artist's brand, including its image, style, and target market, which is essential for standing out in the competitive music industry.
In summary, a music business plan is instrumental in attracting investors, guiding decision-making, and defining an artist's brand, making it essential for achieving success in the music industry. Therefore, having a solid and comprehensive business plan is crucial for any aspiring musician or band looking to establish a successful and sustainable career.
How to Fill Out Your Lean Music Business Plan
In this guide, we will walk you through the steps of filling out your lean music business plan, from identifying your target audience to mapping out your marketing and sales strategies.
We'll be referencing sections of the US Small Business Administration's (SBA) lean business plan template. Despite its generality, it works as a music business plan template.
Aspects of this guide relate to the traditional business plan, which we will discuss later in the article.
Business identity
A business identity helps your business specify exactly what you offer. Both the single-page lean plan and the traditional plan place importance on your identity. Let's say, for example, you're a business-owning musician who provides audio for creatives in the media industry. Here's how your identity might look:
Our business identity revolves around providing high-quality music and sound effects for TV programs, film industries, commercials production companies, video game developers, corporations, and event organizers.
Through the lean template, try to identify your business in under one paragraph. Then, using the traditional template (see below), expand on that identity. Things like your mission statement, which we visit later, are an aspect of this.
The problem you're trying to solve
All businesses are problem solvers. Record labels help musicians with distribution, while music teachers help provide the next generation of musicians with a strong foundation.
Naturally, you might wonder how this applies to musicians. Just saying "entertainment" feels a bit weak. There are bands, like Rage Against the Machine, who make music to push a movement. But if you're not part of that crowd, what do you put?
So, think about why you got into music-making in the first place. Any professional musician should think about who their music appeals to and what they want people to feel when hearing their music. You can then say your music solves that problem in a cheesy reminder that you think about more than what shows up on your financial statements.
If you don't want to get too corny, think about who your music will most appeal to. Then, you can say what your target audience is. Think of something like this:
Creating music for young men and women that will entertain them and inspire them to explore challenging topics.
This problem-solving might feel generic, but you'll know your fans and why you make music. So, stay focused on that.
Solution your business presents
Once you consider the problem your business solves, you need to state how you solve that problem. Again, this is much easier for music industry professionals who work in support roles. Music distributors solve the problem by having direct connections with other distributors, while music marketers help bands reach out to fans via multiple social media platforms.
As someone who makes music, your solution is the creation of music. So, ask yourself how the creation of your music solves this problem. Here's an example based on our situation above:
Our band writes music that delves into mental health struggles based on personal experiences and how we overcame them.
You might think that doing this as a musician feels silly, but think of it as a reminder. One of the reasons famous musicians like David Bowie and Tom Morello were so successful is focusing on how their music helps people.
Competition
Competitive market data varies depending on the territory you plan to target. For musicians and bands, this might involve bands in the local area and those in future touring locations. For musicians, the competition can also be a list of potential collaborators.
For everyone else not making music, other record labels and music production companies are just competition. Whether you can collaborate with them or not, you'll want to differentiate yourself from all the other options out there. Being another "me too" music business will make it easier to forget you.
Using the lean small business plan, you'll want to stick this to two or three sentences. Be very general, knowing you can also expand using the traditional business plan. Here's an example of a made-up Tennesse company: My Music Production & Management:
The competitive landscape for music production companies in Tennessee includes My Music Production & Management, Genre Music, and Retro Recording & Productions. My Music Production & Management offers a wide range of services, including music production, artist management, and music distribution.
Revenue streams
Revenue streams come from various sources. A business plan reminds you of those sources so you can stay focused. As a musician, your income can come from many sources. Below is an example you can use under the lean business plan:
As a musician, my income comes from paid gigs, teaching music lessons, instrument repair services, and recording sessions. To ensure financial stability and growth, I plan to diversify my income by capitalizing on these different opportunities.
Your revenue streams will differ as a record label or other kind of music business. Like musicians, your revenue streams can vary. However, as a young business, you may specialize in specific areas. You might work on creating merch or distributing digital releases.
Marketing activities
Marketing activities focus on how you plan on reaching out to different sources. For many new music businesses, this involves outreach through social media platforms. Here's an example of what you might include in your business plans:
Our marketing activities will primarily focus on building a strong online presence through social media and regional publications. We plan to utilize platforms such as Instagram, Facebook, Twitter, and TikTok to engage with our audience and share regular updates about our music and upcoming events. Additionally, we will work on developing a press kit to distribute to regional publications and media outlets to garner publicity and reach a wider audience.
Bands can create electronic press kits (EPKs) that are prebuilt for members of the media. This makes it easy for journalists and members of the media to share content about you, such as a new album release. You can also consider how much you might pay for advertising. Digital marketing activities like those above are the first choice, as this activity uses advanced targeting tools based on what people search for and their demographics.
Marketing traditionally focuses on the four Ps: product, price, place, and promotions. The first two Ps delve into your product line, which you'll learn about later. Promotions indicate the type of marketing you choose, and Place usually refers to the platforms your target audience uses.
Expenses
The lean business plan gives you a simple overview of your likely expenses, which can be detailed in your longer business plan. Part of these expenses include music taxes. Read our guide on music taxes for more details.
Expenses vary depending on the type of music business you run. You could pay to rent a studio for recording sessions, purchase recording equipment, access manufacturers, or pay for other expenses. These expenses can result in tax deductions.
Here's an example of what your expenses section might look like:
To get my music business up and running, I need to budget for several key expenses. Studio time would be required for recording and producing music, averaging around $50-$100 per hour. I'd also need to allocate funds for engineering talent, which could cost between $50-$200 per hour, depending on experience. Transportation costs for getting to and from recording studios or performance venues should be factored in, estimating around $200-$500 per month.
Legal fees for business formation are also deductible. When listing your expenses and considering deductions, ask yourself what your type of company would normally deduct. Reach out to Augur CPA if you'd like a comprehensive review.
Key roles
The key roles section provides a list of high-ranking authorities in the business and explains the responsibilities and functions those roles bring to the business. Here's an example of what that might look like in your business plan:
1. Chief Executive Officer (CEO): Responsible for overall strategic direction and leadership of the organization, making key decisions and representing the company to the public and stakeholders.
2. Human Resources Department: This department is responsible for recruiting, training, and managing employees, as well as ensuring legal compliance and promoting a positive work environment.
3. Marketing Department: Responsible for promoting the organization's products or services, conducting market research, and developing marketing strategies to attract and retain customers.
4. Finance Department: This department is responsible for managing the organization's financial resources, including budgeting, accounting, and financial reporting.
5. Operations Department: This department is responsible for overseeing the organization's day-to-day activities, optimizing processes, and ensuring efficient production and service delivery.
As a new business, you might not need all of this detail in your roles. A new business owner wears many hats, handling all of this themselves.
As your business grows and you fill roles like those above, you'll want to create an operating agreement. Operating agreements dictate the roles, holding groups responsible for their actions. This can dictate things like voting rules, which are vital when making high-risk business decisions that require more input.
Milestones
Your milestones tell readers, yourself, and business partners of the important milestones you've already taken or plan to take. Your lean business plan is a single sentence telling people what you generally plan to do. Larger business plans might look something like this:
Milestone 1: Lease Finalization
- Task: Negotiate and finalize the lease agreement for the studio space
- Deadline: by May 15th
Milestone 2: Personnel Contracts
- Task: Draft, review, and finalize contracts for hired personnel
- Deadline: by May 20th
Milestone 3: Studio Build-out and Equipment Purchase
- Task: Begin construction and build-out of the studio space, purchase necessary equipment
- Deadline: Construction to be completed by June 30th
Milestone 4: Networking and Marketing Plan Implementation
- Task: Develop and implement a networking and marketing plan to attract clients
- Deadline: Marketing plan to be in place by June 1st
Each milestone outlines specific tasks and deadlines to ensure a smooth and successful opening of a recording studio. A musician or distribution company should take a similar approach, focusing on initiatives that help them grow their business.
Filling Out Longer, Traditional Business Plans
The SBA's traditional business plan, which you can find here, is a multi-page document. It's an expanded version of the lean business plan, which you can provide upon request. When applying for business loans or bringing on business partners, this plan can help communicate your vision.
Traditional business plans might use a bit more jargon, like executive summaries and mission statements. Below, you'll learn a bit more about some of the more complex aspects of writing your detailed business plan.
Executive summary
Executive summaries summarize the main points of a business plan. The summary points include the purpose of the business, the business name, the target market, your business location, and how your business solves its target audience's problem. Here's an example you can use for inspiration:
The Executive Summary of my music business plan showcases my artist bio, mission statement, and unique selling proposition. As a musician, I bring a unique blend of classical training and modern influences, with a strong foundation in jazz, pop, and R&B. My mission is to create music that transcends genres and connects with audiences on a deeper level, aspiring to inspire and uplift through my art.
My unique selling proposition lies in my ability to blend diverse musical styles and deliver powerful, emotionally resonant performances. I have achieved recognition in local music scenes, including winning the Best New Artist award at a prominent music festival. My aspirations include reaching a global audience and collaborating with industry-leading producers to create music that leaves a lasting impact. What sets me apart from others in the industry is my unwavering dedication to authenticity and artistry, always prioritizing substance over trends.
For bands and musicians, the executive summary is a great way to showcase your passion for music. Notice the "unique selling proposition," which indicates how you plan on differentiating yourself compared to other companies.
Other companies, like music publishing companies, might focus a little less on the creative aspects of their business. An executive summary can differ slightly between companies. However, if you're new, start with the template until you get comfortable writing these plans.
Company description and mission statement
Your company description, based on the traditional plan, includes the mission statement, members, legal structure, and location of the company. It might also include the executive summary.
Here's an example of the description for a made-up company: SoundWave Entertainment:
Our company, SoundWave Entertainment, is structured as a Limited Liability Company (LLC) and has been in business for ten years. We specialize in providing top-quality live music entertainment, event production, and artist management services. Our diverse range of offerings includes wedding bands, corporate event entertainment, and music festivals. Our customer demographics range from engaged couples looking for the perfect wedding band to event planners seeking unique and memorable entertainment experiences. In the past decade, we have experienced significant growth, expanding our roster of talented artists and achieving a strong presence in the events industry. Our primary business goal is to continue providing exceptional musical experiences and to further expand our reach in the entertainment industry.
The description is simple enough, but the mission statement is arguably the most important aspect of your business plan. It's a few sentences long but shares the overall mission of your company, dictating where it goes and how it makes decisions. Mission statements are emotionally driven and connected to the morals and heart of the company's stakeholders. Here's how it might look:
At SoundWave Entertainment, we are committed to delivering unforgettable musical experiences and fostering the growth of talented artists. We strive to exceed our client's expectations by curating exceptional live entertainment and providing a platform for artists to showcase their skills. Our goal is to leave a lasting impression through the power of music, creating moments that inspire and connect people.
Market conditions and research
The traditional business plan offers a bit more room for reviewing your market conditions and researching your competition. Doing your own research helps you understand the market. Sharing your research on a business plan provides proof of your knowledge of market conditions. Here's a short example of market conditions:
The current market conditions in the music industry are characterized by several industry trends, including the shift towards streaming services, the resurgence of vinyl records, and the increasing importance of live performances for artists' revenue. Consumer behavior has also changed significantly, with more music fans opting for subscription-based streaming services over traditional album or single purchases. Key competitors in the industry include major streaming platforms like Spotify and Apple Music, as well as record labels and live event promoters.
Additional sections of your business plan include a detailed description of your customers, how your company outperforms the competition, and regulations that might impact your company.
Regarding regulations in the music industry, it helps to have a general understanding of the Digital Millennium Copyright Act (DMCA), fair use, and current communication laws. Knowledge of these laws or working with a music attorney can help you with this aspect of your business plan.
Service line and pricing structure
Your service line includes a complete list of your services and their costs. For musicians, this might include gigs, music lessons, and anything else you do to advance your career in music. It then breaks down the pricing of your services, including some potential for how that pricing can flex.
Services can vary heavily depending on your company and the services you offer. When you first start your business, you might specialize in a few areas. One milestone could be expanding to include additional features, like a record company offering email marketing services.
The service line section also includes your product lifecycle. For example, albums tend to make more money during their first year of release, and your lifecycle dictates how long you might make albums. If you go on a tour during the album, you might stop creating new albums or merchandise sales during this time.
Service line information can also include information on intellectual property rights and how your band and albums will be copyrighted. You can also work to trademark your company (or band) logo.
Marketing, sales, and growth strategy
While your marketing research section details information about the market and industry, your marketing, sales, and growth section dictates how you plan on reaching target customers. The lean plan mentioned above briefly addresses this area.
The three areas you'll want to consider are your growth strategy, how you want to communicate with customers, and how you plan on selling your products.
Let's say you plan on creating your own Shopify e-commerce store for your business, which is a huge investment. This means your growth strategy, product sales, and customer communications will wrap around this tool. If you want to start simpler, mention how you plan on talking with fans and setting up merch tables at local shows.
Here, you'll see some examples of how you could write this section:
Our music business aims to market, sell, and grow by implementing a combination of online and offline strategies. Our marketing efforts will include targeted social media campaigns, SEO optimization for our website, and collaborations with music influencers and bloggers. We will also explore opportunities for live performances, partnerships with local venues, and utilizing traditional advertisement methods.
To drive sales, we will offer unique packages for our music services, including special promotions for first-time customers and loyalty rewards for returning clients. Our pricing strategy will be competitive while still maintaining the quality of our services.
In terms of customer retention, we will focus on delivering exceptional customer service and providing personalized experiences for our clients. Our unique selling proposition lies in our ability to offer customized music solutions tailored to different occasions and preferences.
Moving forward, our plans for growth and expansion include branching out to new markets and offering additional services such as music production and event management. We will also invest in building brand loyalty and expanding our customer base through strategic partnerships and collaborations within the music industry.
Why Should I Care About A Business Plan?
A business plan is a crucial tool for any musician or music industry professional looking to advance their career in the music industry. It serves as a roadmap for your career, helping you set goals, make strategic decisions, and stay on track for success.
One of the most significant benefits of having a business plan in the music industry is its ability to attract investors. A well-thought-out plan demonstrates to potential investors that you are serious about your music career and have a clear direction for success. It outlines your financial projections, marketing strategies, and potential for growth, making it more likely for investors to see the value in supporting your music endeavors.
Additionally, a business plan guides decision-making by providing a framework for evaluating opportunities and making informed choices. It forces you to consider all aspects of your music career, from marketing and promotion to touring and merchandising, ensuring that you have a comprehensive strategy in place.
Furthermore, a business plan helps define your brand identity and outline your unique selling points, target audience, and marketing message. This is crucial in the music industry, where standing out and connecting with fans is essential for success.
To learn more about how taxes can apply to a financial plan for your business, contact Augur CPA today.
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