It was Benjamin Franklin who once said “Beware of little expenses. A small leak will sink a great ship,” but it was 90’s wrestling heel Irwin R. Shyster who said (to Bam Bam Bigelow) “Tonight, I’m going to put a lien on your tattoos!” Think of me as these two great men rolled into one… in a Canadian Mountie uniform.
For those of you who are unfamiliar (let’s face it, probably ALL of you), my name is Shane Matthewson. I am the drummer extraordinaire of noise mongers KEN mode, and a Chartered Accountant from Winnipeg, Manitoba, Canada. In my travels with the band, other musicians often ask me (usually after shot-gunning beer) for practical accounting advice as it relates to being in a touring band. At infinit accounting you will get a best accounting service and expertise whenever you need. In this column, I’ll tackle some of the most common questions I have been asked, as well as give general advice I wish I had been given years ago. Think of it as small business management for touring bands. Follow insidemma for business updates.
Before we get going, I’ll explicitly state here that I’ll be taking a “crawlàwalkàrun” approach in this series. I’m going to assume if you’re taking business advice from a guy in a band, you’re probably not ________________(insert accounting thing), and you’re more________________( insert beer thing).
Knowing Your Revenue and Expenses
In conversations I’ve had with friends in touring bands, one thing that has become immediately apparent to me is that most bands don’t know what the “operating costs” of their band are. Everything from the gas mileage of their van, to amounts spent on food, all the way down to drum sticks; every dollar spent on the band, whether it’s “band money” or personal funds from the members themselves, should be recorded. Keeping receipts for expenses is important, especially for tax purposes, but particularly in order to have an accurate record of how much was spent and on what.
One of the biggest and most immediate benefits of tracking what money is spent on is that it forces you to take a critical look at where all of the bands’ money is going. If you find that you’re coming home after every tour completely broke, but notice that you’re spending 500 bucks a week on hotels, you’ll probably be trying a little harder to find people to stay with on the next tour, or at least should be.
Another benefit of tracking all band expenses, including amounts paid by band members personally, is it will give the entire band an appreciation of the costs that individual members are footing on behalf of the band. Most bands starting out just can’t afford to pay for everything using money the band has made alone. Keeping detailed records of just how much each band member has contributed can help to level the field and make things fair. Having all contributions recorded can help to avoid future headaches when no one can remember who paid for the van repairs last time, or who put the last hotel on their credit card.
If you don’t already have one, I always recommend that bands at the very least open a band bank account, and try to have as much of the band related activity going through the account as possible. This of course means someone is going to have to reconcile all of the ins and outs of the account every month. I recommend picking whichever band member did the best in 12th grade math.
Because merch sales are such a huge part of how bands survive on tour, it’s extremely important to track exactly what you’re selling in order to properly manage your inventory, thereby maximizing revenue.
Essentially, for every dollar of revenue, you’re going to want to answer the following questions:
- What was sold?
- Album? What format (CD, LP, Tape, Digital)
- T Shirt? What design, color and size
- Where was the sale made?
- City, State, Country
- When did the sale occur?
The easiest way to do this is using simple standardized merch sheets, containing every merch item for sale. The goal here is to eventually have a database of revenue information – both merch sales and door revenue, that will allow you to better plan for tour stock, and even route tours based on historic sales and door revenues.
How to record all of this info:
I can hear the musicians now: “I’m not an accountant! How am I supposed to keep track of all of this?!” You don’t need to use fancy accounting software to keep track of your bands revenues and expenses. Microsoft Excel (or other free open source spreadsheet programs) has some excellent templates for tracking project revenues and expenses, as well as inventory. Never used Excel? YouTube is packed full of tutorial videos that will show you step by step how to use virtually every excel function, from simple addition and subtraction, to pivot tables and nested IF statements.
Tracking all of this information can be a pain in the ass, but the resulting information is EXTREMELY useful. It will help with planning for future tours, as well as with managing cash, inventory and overall budgeting.
In the next column, we’ll be talking about inventory management and some of the common pitfalls and missteps many bands encounter.
KEN mode’s incredible new record, Success, is out now on Season of Mist. Consider it the audio supplement to this financial how-to column. Here’s to success in business and post-hardcore!