Essential Financial Strategies for Touring Musicians
Income from live performances has become less reliable, but there are financial strategies for touring musicians that help turn a road trip into a profitable success. Avoid common pitfalls and learn how to maximize your earnings while on the road.
Essential Financial Strategies for Touring Musicians
by Charlie Fletcher
Going on tour is one of the great joys of being a musician. You get to play in front of folks who either know your music well or are generally receptive to hearing your songs. Touring across the country is a great way to boost your reputation and increase your following, too.
However, touring can come at a cost. Unless you’re selling out venues on a near-nightly basis, you’re probably running on a tight budget and need to make some savvy financial moves to make the tour a financial success.
Make the trip a success by planning for expenses like hotels ahead of time and keeping a clear record of expenses and fees. This will save you plenty of headaches when it’s time to file your taxes and will increase your financial resiliency should you fail to sell out at a few gigs along the way.
Key Finances
Tours come with hefty bills and strange expenses. You’ll need to take into account costs like new pics for your guitarists and window repairs when your singer decides to do a Keith Moon impression. Ideally, your record label will cover many of the normal costs (like hotel rooms and venues) as they have the financial clout to fund the tour. However, unless you happen to be selling out arenas, you still need to keep track of key financial metrics for your band.
Get the ball rolling by treating your band like a business and conducting internal auditing of your firm. An internal audit gives you a better understanding of your band’s total value and will help you keep track of unexpected expenses. A thorough audit typically includes:
- Clear Goals: Giving yourself a goal will focus your attention on particular costs and help you discover areas for improvement within your band’s finances.
- Performance Indicators: If you’re performing a financial audit, you should keep track of key performance indicators (KPIs) related to revenue and costs. This will help you spot operational inefficiencies that eat into your profits and will help you pivot towards gigs that have a higher ROI.
- Clear Documentation: Digging through piles of receipts and expenses written on napkins isn’t just unprofessional — it can undermine your financial stability. Instead, create clear documentation using software that can help you conduct an internal audit.
Taking control of your finances as an artist can save you plenty of future headaches and help you turn your tour into a financial success for the whole band. This is particularly important if you’re worried about the tour turning a profit, but don’t have a clear picture of your current costs. By taking your finances seriously, you can make some strategic calls to cut back on unnecessary costs while raising funds for key expenses that will boost your long-term profitability.
Raising Funds for a Tour
If you’re new to the idea of touring, you may struggle to raise funds for a tour. You may also find that your record label is hesitant to send you on tour if you’re a new band with a modest following, as labels tend to make risk-averse decisions. However, this doesn’t necessarily mean you can’t go on tour — you’ll just need to explore alternative ways to raise funds. You may want to use an online whiteboard where everyone in the band can collaborate on fundraising ideas without having to come into the practice space.
If you need to raise funds quickly, you may be tempted to explore lines of credit. Tapping into a line of credit can secure your band’s reliable finances for the duration of your tour, which may be extremely useful if you know that you’re going to turn a profit while touring but need to pay for certain costs upfront. Crucially, however, lines of credit have variable interest rates. This means you need to keep a close eye on how much you owe, lest incur higher borrowing costs.
You can also raise funds by selling additional items like merchandise and digital memberships. This can provide a debt-free way to raise funds quickly and aid your efforts to tour across the nation. Many of your most dedicated fans will be happy to pick up t-shirts, pins, and caps, too. This can boost the visibility of your brand and help you set aside savings to pay for hotels, gas, and travel.
Tax Considerations
Understanding the intricacies of tax deductions and expenses when touring is key if you want to make money from playing gigs across the country. Rather than risking a mistake in your accounts, work with an accountant who specializes in tax for musicians. They’ll be able to help you understand the tax implications of touring, which includes:
- Self-employed tax considerations like social security costs and medicare taxes
- State taxes may vary from venue to venue and could cause serious headaches if you fail to abide by state law
- International taxes if you take your tour abroad but still pay and file taxes in the USA
Don’t try to guess your way through a tax return for your band. Instead, find professional, specialized help or work with a record label that is willing to handle your accounts for you. This will help you avoid unexpected fees and boost your profitability.
Conclusion
Going on tour is deeply rewarding on a professional level. However, for your tour to be a success, you’ll need to make some key financial moves to minimize your costs and boost your profitability. This is key to balancing your books and will ensure that you’re able to take more tours in the future.
