Know Numbers, Know Business

I don’t know my business, if I don’t know my numbers. Stacks of cash sitting in my bank account aren’t the only important numbers. I need to know about profit, do I have it and is it enough?

Profit represents what is left over after you’ve paid bills, your team (including yourself), and all of the other business expenses. $25,000 or $250,000 per year doesn’t matter, if you’re not making a profit in your music business. Losing money isn’t fun and although shelling hundreds or thousands of dollars isn’t on the “to-do list” of any music creator, too many are doing exactly that.

There are 7 numbers every music creator should know:

1. What is this year’s profit (money in – money out)?
2. How much revenue (money in) this year before expenses?
3. How much cash is available?
4. How much inventory do you have available for sale (CDs, Merch)?
5. What are your monthly recurring costs?
6. What is your earning capacity (how much do you have the ability to make)?
7. How much does your average fan or customer spend with you in a month/year?

Knowing these seven should open your eyes to not only the current profit, but also what your potential is for the immediate future.