Expansion is a tricky issue.
When I consider expanding my music business, I am very careful of the budget. Many music businesses rely on getting paid after the fact. For example, many grant funds come after the project has ended. Ticket sale funds usually come after the performance, and some clients pay on the day of the performance. I always want to make sure I have the funds to cover all expected costs and any unexpected costs that can arise.
Before you expand, you need to make sure that you truly need to expand, that you have funds to sustain the expansion and that the expansion will benefit you in both the short and the long term.
When do you need to expand?
My musical business gives about 375 performances a year, but I have resisted expanding. I have resisted because the staff I have is able to manage all of these performances and because our funding stream has not increased.
Rather than expand my business, I have expanded my musician base in case I need to hire an additional musician for a double booking. I hire these musicians on a per-service basis as independent contractors. This also prepares me for expansion when I have the funding to add an employee or two.
We also have a 5-year plan that includes the addition of another musician and a part-time staff member by 2025.
In the plan is a list of what we need to make that expansion happen. I recommend having a 1-year, 5-year, and 10-year plan and revising them every year as things change with the business. Part of our 1-year plan is to stop paying rent. We are currently going through our office in preparation to move it to my house. We have been working virtually since the pandemic started, so we no longer need to have the overhead of an office.
Before you think about expanding, you need to run a budget that includes the costs of expansion.
Take into consideration everything from salary costs, administrative costs, travel, supplies, rent, utilities, and any other expense that your unique business has.
- Can you start putting away funds for the eventual expansion?
- Can you cut any costs and save those funds?
- Can you do a fundraiser to get seed money for the expansion?
When we rented space, we rented a room in one of our networking partners’ offices. This was the only way we were able to have our own office space.
You are in a creative business, so be creative about how you use your funds!
My business does many educational programs, and we always recycle things like paper towel tubes, cereal boxes, and bottle caps for these projects. This matches our mission and keeps down the cost of supplies. Are there businesses in your network that can offer you in-kind donations of space, supplies, or support? Take a close look at your budget and see what funds you can set aside for your eventual expansion.
You want to be sure that expansion is going to be successful.
Go back to those 1-year, 5-year, and 10-year plans and see if expanding now is the right thing to do. Before you take on additional overhead (such as rent and utilities), make sure you can cover costs for a full year. Before you hire new staff, make sure you can pay their salary for a full year. Consider a part-time employee to start, and make sure you have an independent contractor agreement in place with the option of becoming full-time.
Finally, ask yourself these questions:
- Will this expansion be beneficial for the organization?
- Can your staff handle the increase in work?
- Do you have a large enough audience to support more performances?
Make a list of questions like these that connect to your music business and weigh the options before you launch the expansion. Remember that you can always do a partial expansion until more funds come through.
Many music businesses dream of expanding, but you want to make sure your organization can support that expansion in every capacity. Take the time to carefully consider your needs and your budget before you commit your funds to ensure your expansion is successful.
- What are the things you need before you can explore expanding your music business?
- What is in your 5-year plan? How have you budgeted for your expansion ideas?
- How much funding do you need to expand to the size you want?