Today’s music industry is springing up like mushrooms after a rain, and forward-looking record companies are very popular. A successful record company will work hard to discover talented new talents and cover the costs of recording, post-mixing, record production, and touring various places. It will also be responsible for marketing and management work, allowing artists to establish themselves in the entertainment industry.

Set a Plan

Decide on investment projects. If you want to do well in the early days, you need to focus on one music genre and build a good company reputation. The direction in which you focus your investment is largely influenced by your personal goals. If the goal is to make money, then focus on current popular music; if it wants to be the leader of “post-avant jazzcore” in the 21st century, then the company’s positioning and actions will be very different.

Write a business plan. You need to do a business plan on many levels. First, we need to establish a brand framework: How to hunt and cultivate new talents? How does marketing work? How to deal with the record market and singing competitions? How to invest? And how to make profits and so on.

• If you are financially independent and well-funded, you may not need investors, at least for financial support. But you can also attract some investors to help you establish credibility in the market. For example, if you invest your own money in a pop music record company, but you also get investment from Paul McCartney, then your records will definitely sell well. But you can only do this if you can show Paul or other investors a clear and feasible investment plan.
• If you need financial support, write a plan that shows you are clear about rewards and risks and that you have a way to keep your business moving forward. Such a plan can be a powerful way to persuade investors to overcome concerns about risk and join in. Come to your career.

All funds required to start the project must be calculated clearly. You need to figure out everything from staples to electricity, to recording, to production, and more. When doing statistics, be sure to do it in detail: if someone is interested in investing in your company and reads your detailed financial plan, they will support you! Here are some things to consider:

• Overhead expenses: You’ll have to deal with rent, tools, taxes, and licenses, which can make up a significant portion of your business. Don’t forget your phone, internet, printer, paper, computer, business cards, and office supplies, too. You also need to consider the cost of building a website and managing it. Some expense items are paid weekly, some are paid once a month, and some are paid once every year or two. The task may seem arduous at first, but if you make a five-year plan, you will find that in the end, these costs are insignificant when you make statistics on the overall economic situation.
• Recording costs: The record company must be responsible for the recording production. In other words, you need to consider the costs of the entire recording industry chain, including the cost of the recording studio, engineer, and producer (which may be you, but you also have to be paid), mixers and recording engineers, etc.
• Market expenses: No matter how good a record is, it is nothing until it enters the market. To enter the market, you need to promote it through online advertising, magazine advertising, press conferences, official websites, etc. You also need to discuss the trademark style, packaging standards, and overall design plan with the artist and designer.
• Professional service fees: While making beautiful music, you need someone to write clear and strong employee contracts, business agreements, etc. That’s why you need to hire a qualified legal attorney who specializes in the music industry. Also, hire an accountant to ensure you don’t get calls trying to pay your taxes.

Forecast cash flow. To make a one-year, three-year, and five-year outlook plan for cash flow requires skills, understanding, and rational speculation. The plan for the first year needs to be solid: think about start-up costs first, and also think about getting some bands on the roster (and signed). Use this information to estimate costs and speculate on returns.

• For example, you can measure your plan by the performance of the band: When the band plays in the bar, is it packed? If so, they have a good track record and can achieve great results in music. If there are novice bands in the company that do not have a certain fan base, more vigorous publicity is needed to promote them.
• As you add more bands to your roster, your potential earnings increase. When making financial projections for the next three or five years, you need to decide when to bring in more bands and how to bring them in and promote them. This complicates predictions a bit: having a great band on the roster can even increase the publicity of all your bands. Likewise, if you have a band that sucks, you could screw up the company, waste money, or even go bankrupt.

Build a team. Unless you are also extremely good at sales, marketing, music, business operations, art, conversation, and other skills, and work as a lawyer part-time, it is best to develop a team. Here are some key team member skills that can help you succeed.

• Sales and Marketing: The company needs passionate professionals who can effectively promote records. Marketers also need to have good personal relationships with artists, founders of other companies, and people interested in investing in the art industry. Such people are the key to success: they are responsible for bringing in artists and promoting their work. The better this person performs, the more successful the company will be.
• Production: A record producer needs to have a thorough understanding of the record recording and production process, and can help you find good engineers, mixers, and producers to take charge of the recording work.
• Contract workers: To keep costs down, at least up front, hire workers who are paid based on their workload. Such employees include graphic design, legal work, accounting work, engineers, and other employees needed at specific times.

Implementation Plan

Standardized career framework. Determine the appropriate corporate legal form for your record label so that your business has a legal basis and you can protect yourself. There are many options to choose from, and the names vary from country to country, but essentially they are all the same.

• Sole proprietorship. As the founder of a sole proprietorship, you are solely responsible for the business. A sole proprietorship is easy to open and close, and it is relatively simple to maintain. You can consult a specific advisor or friend to find out what needs to be done, and once it’s done, the business is all yours, meaning all profits and debts are yours. This form has little appeal to investors, is more risky, and in the event of bankruptcy, you need to bear all the company’s debts. If you want to build a business or want to hire employees as your company grows, this is not the best way to go.
• Limited Liability Company (LLC). For small businesses, the limited company form is great. This kind of company can continue to hire employees and has protection against personal liability for debts so that if the company fails, it will not be fully responsible for the debts. At the same time, it is relatively easy for such companies to control finance, law, and tax. But if you are looking for investors or want to start an international business, this option is not good.
• Corporation. If you want to become bigger and stronger, or you want to seek investors, or you are someone who likes to standardize the company model, you can choose this model. Like a limited company, individuals are protected from debt when the company fails. You can issue shares, and raise capital, and there’s plenty of legal precedent for this corporate form. The terms of this form of business are strict, and accountants and lawyers have to deal with all kinds of tax, expense, reporting, and form issues. If you are a laid-back person, this kind of business is not suitable for you…unless you want to speed up the pace of entrepreneurship!

Bring in artists. Once you have a plan, the business is up and running, the license is obtained, the work is produced, and recognized by others, and (hopefully) even investment funds are obtained, you can gradually develop and expand the company!

Look around for artists and listen carefully to their songs. Observe the audience’s reaction to the singer. If they light up and become captivated as soon as they hear the song, then you’ve found the right person!

• Walk up to the band and chat with them. Ask them who they are, when they formed the band, if they have released any music, what their plans are, etc.
• Ask them if they contract with other companies, this is more important. As a viewer, it’s okay to ask, but if you want to start a record label, you have to find out if they have a contract!

Meet with members of the media. There are already many writers in the city who can help you with your promotional work, but to recruit them, you must first get to know them. You can look for such people in local newspapers, and local music blogs, contact them, have lunch, or invite them to visit the recording studio to maintain long-term contact with them.

Meet the engineers. Go to local recording studios. Some recording studios are very luxurious and high-end. Most of them have one or two rooms for recording, equipped with various equipment. While the equipment is important, the singer’s voice is even more important.

• Meet some music engineers and ask them how they record, how to contact bands, what worries them, etc. If you have a great rapper in the future, his songs will sell well, but the recording engineer or mixer you find hates rap music, you will realize the importance of finding the right engineer. You can ask the engineer to play a favorite clip you’ve made and listen carefully to see what it sounds like.
• To be on the safe side, ask them for a CD or other game you can play at home. (Although this is rare) Music produced in a million-level recording studio may not play well on a home player.

Visit a music record store. No matter how big the record store is, it sells records. Once you get to know the store owner well, he might be happy to sell your records. Maybe the record store you’re looking for is a small one, but when you’re just starting in your career, any record store, no matter how small, can help you.

Meet some agents. Music agents are people who keep up with music trends and grasp music trends. Bands that sign with an agent have a certain degree of legitimacy because such a band is professional enough to be qualified to hire an agent.

• If your company is good enough to managers and product promoters, the next time your band says “Hey, we’re ready to record,” they’ll be like “Sure, it’s time!”

Make Persistent Efforts

Build a brand. Once you’re in charge of the company’s business operations, you can develop and maintain the label’s brand aesthetic. Create a logo, use them more, and make them physical and visual. For example, create an official website with the company’s trademark, as well as stationery, T-shirts, cups, and other peripheral products. You can also sign up for bands and events that align with your business vision.

• You can look for examples of successful use of DIY trademarks by Sub Pop and Matador Records to understand the brand tactics of these companies. Such companies’ business models are extremely unique, but their tactics and strategies are also richly diverse.

Create creative promotions for records. Over the past decade, the internet has dramatically changed the way music is bought, listened to and distributed, and it can get tiring if you’re still stuck with the old-fashioned promotion methods of touring, CD sales, and radio play. YouTube videos and pay-what-you-want business models are increasingly effective at maintaining brands.

• You can use some promotional tactics, such as printing a label with a download code for the remix music clip on the t-shirt (like a QR code!). Goner Records is a garage/punk record label based in Murphys. They even offer free two-meter-long record tapes to customers with “Goner” tattoos. Such customers simply walk into the store and show off their tattoos to get the tape.

Expand customer base. Sub Pop initially focused on Pacific Northwest grunge bands but later expanded to include mainstream music groups such as Iron & Wine and Fleet Foxes. After expanding their music system, they achieved great success and their customer base increased dramatically. Even if you initially focus on teen rock music, you can gradually look for ways to expand your music offerings and introduce other types of audio and video into your company.

• In the early 1990s, major record labels were more interested in unknown or “underground” types of performances. Sonic Youth is an independent band from New York, specializing in noisy rock music. Later, it was introduced by Geffen Records at a huge sum and became a unique band. It not only brought huge profits to the company but also brought great benefits to music fans. If your company starts to make a profit, consider introducing some lesser-known Clarion genres that have huge potential.

Tips

• You must have perseverance. Like any other business, starting a record label is difficult in the early stages and requires a constant commitment of energy and time. If you focus, work hard, discover the right artists, and effectively promote your company, you are not far away from success!
• Don’t stop making progress just because you have achieved something! Keep working hard to protect your rights and find better and newer artists.
• Don’t turn down any artist. Even if you don’t intend to sign a contract just yet, keep in touch!