How Accounting Transformed My Music Production Business
Listen, almost no music producer gets into the game with the intention of doing paperwork and tracking receipts. Also, almost no music producer is stable financially. This core skill has perhaps contributed to my career growth more than even my ability to make music happen. Before I started accounting for my business, I experienced roadblock after roadblock. This changed it!
You Need Leverage
If you’re a music producer you need to be able to invest in your craft… That much is a given. I’ve always done my best to do this, but over more than a decade of music production I’ve noticed that there were major obstacles. I might make the wise decision to buy new tools for my music production instead of a wasteful purchase when I had a windfall of cash. I wanted to invest in my craft more so that I could achieve success in my dream career. But I also wanted that career right then and there and found myself wasting money way too often.
So, no matter what I spent my money on it really didn’t make any difference in my overall career growth. I could buy new tools, but I was in a cycle of quick influx of cash and then being utterly broke. Yeah, I could spend whatever was leftover from my fast food paychecks and financial aid on some plugins or new keyboards, but far more often I would spend it on eating out, going to clubs, and getting high. I wanted to invest in my career, but I had no framework to manage my money which was heavily tied up in insecurity around my career.
The problem was that I couldn’t hold onto money to have leverage when the right opportunities presented themselves. If I had money, it was almost as though I had to get rid of it as quickly as possible. Money is a powerful vehicle to obtain things and I was caught up with the act of obtaining more that what I was even obtaining. Addiction played a role and this and my ability to start accounting and saving was ultimately tied up in that as well. Either way, it eventually became clear to me that by tracking what I’m doing, I could achieve results.
Isn’t Accounting Complicated?
Even after getting off of drugs and deciding that I needed to seriously manage my money if I wanted to succeed in life, I had no idea where to start. I had a very rudimentary understanding of Microsoft Excel and a semester of business classes under my belt. My initial plan was to track everything I did in Excel and then prepare my necessary financial reports for my business the same way. I had no idea the world of hurt I was in for. Soon my drawers were full of loose receipts, paper trays cluttered my desk, and my Excel workbook was an even bigger mess.
I called up a close friend of mine who is an accountant and vented my frustration. Thank God my friend suggested an alternative solution. Over a Zoom call, he showed me how he accounts in QuickBooks and the simple approach to simply tracking transactions and then watching all of the important financial reports automatically update. I was amazed.
But, I didn’t want to spend money on accounting software yet Excel was still too complicated to actually run my business on. Where I ended up settling was with the free accounting solution Wave (I am not being paid for this recommendation). While this software wasn’t quite as robust as QuickBooks, it did what I needed it to. And like I said, most music producers don’t get into music production because they love accounting. This was a plan that actually worked to transform my finances and the way I do business.
Once we found a solution that worked, the journey forward wasn’t necessarily easy, but it was simple. I kept track of EVERYWHERE I had money. At the beginning my credit and consumer scores were so bad that I couldn’t even open a bank account. But, I had some money in my PayPal accounts and started following the conventional Dave Ramsey wisdom of using envelopes to track money. I divided my cash money between savings envelopes, discretionary envelopes, investing envelopes, etc.
Not even a year into this, my business is prospering and I am the wealthiest I’ve ever been as an individual. Every month, I get to watch my wealth grow as I make simple decisions to leverage my money instead of simply spending it as it comes. Because of the buffer I have now, I can strategically deploy resources in my business to make the most of opportunities when they arrive. There are opportunities everywhere, but it can be hard to see them when stuck in a cycle of bad financial choices.
Getting my finances in order through fairly simple accounting measures has given me a confidence in business that benefits the people I work with and makes beneficial deals materialize. When an artist calls me up asking for production, I no longer have the same urgent worries about my financial situation. I’m not desperate for that quick influx of cash, and surprisingly those influxes come more often when I’m not pestering artists about money so much. Most important, I can focus on the music which is really what I always wanted.
This business is 80% on the back end and 20% in the creativity. Yet we are creatives and the back end can take producers out of our comfort zone. But this simple skill can transform everything in a producer’s business.