#MusiciansandFinance is musicovation’s blog series exploring finance for musicians. All posts are contributed by graduate students in New England Conservatory’s Entrepreneurial Music course Finance 101: What Musicians Need to Know taught by NEC alum Jessi Rosinski.
by Sam Fribush
Over the past year I have been talking with friends–many of whom have just graduated from college–and have realized that everyone is telling the same story. First, my friends are all exceptionally talented artists and visionaries with an abundance of skill sets. Second, they are eager to work hard for something they’re passionate about. Third, that passion stems from a commitment to making a difference politically, socially or environmentally. Fourth but not least, this is their first time in the “real world”, and they have no idea how to make these aspirations a reality.
During my semester of Finance 101 through the Entrepreneurial Musicianship department at the New England Conservatory of Music, I was given several assignments that helped me to understand how I might deal with a situation very similar to the one my friends are describing. Financial solutions are not the answer to every problem. However, a basic comprehension of how to organize your resources is the key to accomplishing your goals.
To answer the question in which this post is based upon: anything is attainable if you know how to manage a budget. A budget is a way of calculating how your revenue flows in and your expenses flow out. There are many ways of building a budget, and I should mention that the most accurate way is to compile information over an extended period of time. If you know how to make a budget then you are well on your way to making an idea a reality. A detailed budget is a palpable document that gives credibility to whatever you are trying to achieve.
Let’s say you are planning to put on a concert to raise money for victims in the wake of a natural disaster. Not only can the budget make sure that you don’t lose money; it can also be used as a tool for recruiting private sponsors, musicians, venues, etc.
A budget gives you tenability. It is important to make sure that your budget is detailed and as accurate as possible. Calculate your expenses, leave room for error or unpredictable occurrences, and write down everything you can think of. This is a time for you to put your dreams on the page. Then calculate where your revenue will come from. How much guaranteed money will be coming into you or your organization’s pocket? Once you are done, it’s okay if you are in the deficit (if your expenses outweigh your revenue); this is expected. Now it’s your job to figure out how you will make up for this loss and maybe even turn this venture into a profit. If it seems like you might lose money, maybe you can cut expenses, or in some cases you might be able to turn your loss into a gain. Then you can think of your venture as an investment.
How does knowing how to manage a budget make your idea more attainable? In my opinion, the answer is simple: when you convert the hypothetical into something concrete, you are left with the full picture. This allows you to fill in the gaps and expand on the substantial. Of course, in many situations you might have to make sacrifices or cut back on your operation in order to see it through. That is something that everyone in the marketplace has to deal with at one point or another. When you think ahead in this way, there is less room for the unexpected. This means you can pay your musicians the amount you agreed upon, you can pay your venue, you can pay the catering company, and you have money left over for yourself. At the end of the day, this gives you the reputation of being professional and responsible. There are no two words more valuable in the marketplace today.