How to Start a Record Label

So, you love music, you love the backstage, you love the sounds of good music. But more than anything, you love the Business of Music. This will guide you through the basics of building your very own independent record label.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Business Plan
• LLC forms

1. Your first step is to formulate a business plan. You will need to include dates, possible artist additions, venues and financing options. I can not stress the importance of writing a business plan. A detailed "How to write a Business plan" will be added for your convenience.

2. Design the set up of your area. If you have artists, you will need a defined schedule for projects. If you do not have a studio, you will need to find one and request rates. Much of what you can record can be achieved from a simple home studio. Make sure you look at all options when it comes to recording.

3. Once you have your business plan, your artists project plan, and your studio options, you are ready to outline your financial projections. Your financial pages will be a blank sheet, no history, no "like industry" figures. It will be a complete blank sheet. There is good news and bad news about this sheet. Here's the bad news. There are next to no banks that will fund a loan for a business with a zero projections sheet. But here's the good news! There are a lot of personal investors who would love the opportunity to get in on the ground floor of a project like the one you are in. IF YOU HAVE AN INVESTOR YOU NEED TO KNOW THE RAMIFICATIONS!!!
   An investor will front the much needed money to start your business, making him/her the PRIMARY (read: CEO) person for this company. If you are willing to give up the leadership and direction for money, this is the direction you should go.

4. Understand the business of music is not as "fast track" as seen on TV. The business is based on finding a niche and maximizing the potential. The label is funded from the music, so all of your income will have to come from CD's, live shows, merchandise, etc. Building your success relies on your marketing skills for this area.

5. Now you have all your plans outlined, possible financing options available, and your first marketing year mapped out (in relation to your artists projects). You are now ready to meet with legal council. You don't need anything fancy, just someone who can draw up papers for you to have an LLC. This provides you with the business taxation information for legalizing all transactions you make. You should pay no more than $250.00 for this service.

6. Now, with all your planning and a new state LLC seal, you are have become an independent record label! Setting plans in motion will identify early issues with scheduling or financing (and there will be some!) But following these steps can help build a solid base for you Record label!

Tips & Warnings

• Using the library business software provides free business cards, and legal documents. Awesome resources!
• You will always get more money from live shows, except when you first start out.
• When you first start out, do free show and make money from your CD sales.
• You will become (or you may already be) good friends with your artists. Mixing friendship and business will always hurt someone, you need to keep business and personal separate or your label will self destruct.
• Be careful of venues not paying, always try to secure some money up front.
• Be careful of lawyers overcharging for services not needed.

[Azox]

on 1/9/2008 Thanks! I plan to expand each of the steps in the near future.

[Blackbear]

on 1/9/2008 WOW! Very informative article. I am quite sure this will come in handy for anyone looking to start a record label.