Manage for Success: The Business of Music, Newsletter #48, April 2005


"Manage for Success" is a free monthly newsletter for record label executives who want to operate their companies efficiently and successfully. It's published by Keith Holzman of Solutions Unlimited, a management consultant, troubleshooter, and trusted advisor, and is based on his many years as a senior executive in the music industry.

Copyright 2005 by Keith Holzman, Solutions Unlimited. All rights reserved.


All too often I've noticed that many record label owners or music industry entrepreneurs have forgotten one very important fact. They've forgotten that they're first and foremost running a business!

They get bogged down in the minutiae of making new recordings or marketing their recent releases. Most of them love the creative activity of the recording process and spend lots of time in the studio, occasionally to the detriment of other aspects of keeping their labels alive and healthy. This concentration on the fun part of the making and selling of music may leave them little time to really run their labels as profit-making enterprises -- an all too common phenomenon.

Remember that there's an awful lot a successful label head has to do -- not just once in a while when he or she feels like it. Staying on top of the business has to be a daily activity.

And I don't mean just staying on top of daily shipments and sales numbers. It may mean checking how well spread recent releases are out in the marketplace. Are all areas where an artists is about to perform properly stocked with "product" and are posters displayed in appropriate places in each market -- especially near where an artist will be performing?

This is what I mean. Have you looked lately at both your accounts receivable and accounts payable ledgers? Are you being paid on time by your distributors or house accounts? If not, get on the phone and fix the problem.

Are you up to date with paying your own bills? Some labels pay too soon. Others pay too late. It's always best to manage your cash in such a way that you pay them when due, but not before. Your suppliers will appreciate being paid on time and will frequently offer discounts for such ready payment. And they'll remember your loyalty and fair business practices when you need to ask a favor such as getting an extra speedy turn-around of a new release, or getting some promotion materials printed in a hurry.

By the way, it doesn't hurt to take a good supplier out to lunch or dinner once in a while, and be sure to invite them to see one of your acts when there's a local performance. More important -- be sure to check that you're getting the lowest and most competitive prices possible.

One good business practice is to manufacture as few CDs as necessary to cover your immediate needs. Good inventory management protects needed cash, but ensures that you have sufficient stock on hand to cover your sales.

It frequently pays, by the way, to place a larger intial run of your printed CD components (folders or booklets and inlay or tray cards). Price breaks for bigger first runs often cost very little more than your initial needs, but allows you to have sufficient print materials on hand for two, three, or four pressing reorders, saving you from placing small, and expensive, print-re-runs.

I discussed Inventory Management in some detail in my newsletter of July 2001.

Are you getting your new releases out on time. Shipping delays can cause all kinds of problems down the line, from being late for your distributors' shipments to their accounts, to being late on the street when advertisements may be appearing. By the way, I'm not a believer in advertising anything except proven artists and releases. Advertising is usually a waste of scarce cash resources.

Are you being notified in sufficient time before an artist's option may be up for renewal? A well-planned options tickler or suspense file can save you a lot of embarrassment and keep you from losing an artist you'd like to continue working with. But you -- or someone you've delegated it to -- has to check it at regular intervals.

Are you getting the greatest potential income from your catalog and copyrights? For example, are you getting your music into television shows, feature films, and commercials? There's a lot of potential gold if you've got the right material in your catalog. I wrote about such Ancillary Income in my newsletter of February 2002


Do you need help running your label as a business? Advice on how to prepare budgets and financial projections for your company, or how to really understand a P&L or cash flow statement?  Or guidance on any aspect of running your record company? Call me to see how I may be able to solve your problem. With over four decades as a senior record industry executive, I've learned how to successfully run profit-making labels.

And if you want some more ideas on how to efficiently run your business, or if you're thinking of starting your own label, let me suggest you take a look at my book, "The Complete Guide to Starting a Record Label." It can be bought as a downloadable eBook (in Adobe Acrobat® PDF form) or as a printed, spiral-bound book. You can read the complete Table of Contents -- and download the Introduction for free -- and also order it at


How closely do you examine your monthly financial statements? I'm frequently shocked when clients tell me they either haven't received, or looked at, a profit and loss statement for the most recent month or quarter. This is one of an entrepreneur's greatest responsibilities. If you're not getting financial reports every month you should immediately find out why and see that you start getting them. Do you understand them when you do receive them? If not, get your accountant to review them with you until you thoroughly understand their import and meaning. Then act on any anomalies you may find.

Are you making a profit? If not, is it because sales are too low, or expenses too high? Make adjustments where necessary so that the label can run on an even keel. Train your bookkeeper or accountant to point out potential problems until you're able to spot them yourself.

You should also be sure that you're receiving -- and studying -- cash flow statements on a regular basis. What this can show you is whether you'll be able to have sufficient cash on hand to pay all your bills on time.

Are you doing projections and budgets for each new recording, each new marketing plan (you are doing comprehensive marketing plans!) and for each major accounting period, including extensive projections every Autumn for the following year? Instructions on preparing an annual budget appeared in the first newsletter in this series

and there's more information on budgeting in the newsletter of September 2004.

Additional advise on preparing budgets for recording, marketing, and the label as a whole, can be found in my book, "The Complete Guide to Starting a Record Label" available at

Until next month,

Keith Holzman -- Solutions Unlimited

Helping Record Labels Manage for Success.




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Copyright 2005 by Keith Holzman, Solutions Unlimited. All rights reserved.