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:
- What is this year’s profit (money in – money out)?
- How much revenue (money in) this year before expenses?
- How much cash is available?
- How much inventory do you have available for sale (CDs, Merch)?
- What are your monthly recurring costs?
- What is your earning capacity (how much do you have the ability to make)?
- 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.