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18th July 2008 - by Ty Cohen
  
Budgeting Your Independent Label

When calculating how to start a record label, you will need a budget. A simple way to break things down is by using categories, Income and Expense. Keep it simple because I am going to gather that most of us aren't accountants. Remember though, these are only your expected costs and profits... There will always be unexpected costs that are beyond our control so set aside some funds for these.
  
Sources of Income

1. Record Sales are number one on this list. This is you selling your actual records.

2. Digital sales & ringtones may be the wave of the future when it comes to profits. Although these profits can be small, there are at least there to be counted.

3. Broadcast Income which is income from having your recordings played on the radio, T.V. or played in public places.

4. Licensing which may come from other companies in the form of a royalty or fee.

5. Secondary Licensing which may come from having your music licensed by advertisements, video games, films etc...

6. Merchandise, Touring, Fan club, Website, Branding, and Sponsorship.

7. International broadcast and licensing income from international air play is another source of income that may be generated.

Then you will have your expenses when figuring out how to start and run an independent record label. Although you may not have some of these expenses in the beginning or in the present, there is a possibility for them in the future so plan accordingly.

Expenses

1. Your staples such as rent, utilities, business rates, telephone, computers, insurance, office equipment and supplies.

2. Staffing which you may choose to avoid in the beginning when budgets are tight.

3. Taxes

4. Publishing

5. Recording, mixing and mastering recordings

6. Producers Fees

7. Artists advances and expenses

8. Travel

9. Manufacturing costs

10. Artwork and Design for covers or other promotional items.

11.Videos

12. Radio and TV promotion

13. Press (PR)

14. Advertising and Direct Marketing promotion of your product

15. Distribution Fees and Sales Costs

No need to worry because it seems that the expenses outweigh the income. When deciding on how to start a record label and while planning your budget keep in mind that all these expenses don't come at once. Keeping fixed costs, such as rent and utilities, as low as possible will help your label deal with successful and less successful times. Also, remember that costs are often payable well in advance of the related income It may seem like a balancing act but it really is all just a matter of planning how to start and run an independent record label in the end. 

Article Source: http://www.bb-articles.com

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