By Bobby Borg
If you can make money in the music business playing the music you love, you're doing well. If you can make money in the music business—learn how to hang on to it, and make it grow—you're exceptional.
Unfortunately we've all heard stories of musicians who sell millions of records, yet end up penniless. Just think of rapper M.C. Hammer, who was once reported in Forbes magazine as being worth 40 million dollars, only to end up filing for bankruptcy. If you don't want this to happen to you, the assistance of a good business manager can be essential not only to your career, but to the security of your future.
The Role of a Business Manager in Your Career
The role of a business manager is not to be confused with that of a personal manager. A personal manager is more like the CEO (Chief Executive Officer) of your company, who helps GENERATE INCOME by setting up recording deals, publishing deals, and tours. A business manager, on the other hand, is more like the CFO (Chief Financial Officer) of your company, who helps MANAGE THE INCOME from these deals once they're in place. A business manager handles all financial issues such investments, financial planning, bookkeeping, tour account services, asset administration, tax services, insurance monitoring, royalty examination, and in some cases publishing administration.
When to Hire a Business Manager
In the early stages of your career, before you've released an album or gone out on a major tour, you can usually rely on the services of a CPA (certified public accountant) to file your tax returns and provide general business advice. But once there's a substantial amount of money passing through your hands, the assistance of a business manager is necessary.
Finding a Business Manager
Finding the right business manager may be one of the most difficult processes you experience when putting together your professional team. Why? Because unlike your personal manager or attorney, THE BUSINESS MANAGER IS THE ONE PERSON YOU'RE GIVING 100% CONTROL OF YOUR MONEY! And if that doesn't sound scary enough, DID YOU KNOW THAT THERE ARE NO CREDENTIALS, LICENSING, OR EDUCATIONAL REQUIREMENTS NEEDED TO BE A BUSINESS MANAGER? There is a license that's required to give investment advice (such as the ones stock brokers have), but you'll find that most business managers don't have it—probably because they refer you to a stockbroker anyway when investing in stocks. Taking all things into consideration, the best way to go about finding a business manager is usually through personal referrals from people you already know and trust.
Qualities to Look for in a Business Manager
Once you have some business managers in mind and have scheduled some appointments, there are a few things you need to consider before deciding whom to hire:
Is the business manager a certified public accountant? Being a CPA doesn't necessarily provide you the skills to be a business manager (many great business managers aren't CPAs), but it does give you some assurance that your business manager is at least a college graduate, is board certified, and has some organizational and accounting skills. Remember, there are no qualifications needed to be a business manager, so essentially anyone with as little financial training as you can be one.
Does the business manager specialize in music? This is perhaps one of the most important questions to consider. If the business manager handles entertainment clients in only film and television, he or she may not be right for you. Your business manager must understand the complexities of touring and royalty issues.
How long has the business manager been in business? An established business management firm is one that has usually been in business for about 10 years. That's not to imply that anyone who has been in business for less than 10 years is not any good; it just means that they haven't handled as many clients and are not as experienced.
Has the business manager ever been sued before? Boy, if there were ever a heated question to end with, this one tops them all. It's sure to narrow down your choices, don't you think? Sharon Chambers of Down To Earth Business Management in Sherman Oaks, California, suggests, "Never be intimidated to ask this question to both the smaller and larger firms. It's often the smaller firms that get the bad rap for unscrupulous activity, but nine times out of 10 it's the big firms that rip you off. The reason why you rarely hear about these cases is because they settle out of the courts. You should never prescribe to the larger the firm the safer you are way of thinking."