Starting a studio. The business side of things. Share your wisdom

AudioGeekZine

AudioGeekZine

arsehole know-it-all
Jan 1, 2008
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I'm not sure if there's any kind of resource for people trying to open a studio out there.


So share your tips and knowledge on the business side of starting a studio.

Accounting.
Business plans.
insurance.
permits.
registering a business name.
charging tax.
Overhead and the cost of business.
Loans, grants, and banks.
Income tax and not getting fucked at the end of the year. :heh:
Advertising and promotion.
Attracting Clients.
:loco:

There's a ton of stuff to know about running a studio besides how the gear works. If you make money, or intend to with your studio (of any size) you need to know this shit.


If you've got any knowledge on this stuff please share.

Oznimbus/Spectre sound, we're in the same province so your advice would really help me.
 
i'm no expert, but all i have to say is from the experience of being around my dad who's been self empolyed in various jobs, musical and non-musical for the last 50 years

Don't ever be tempted to break the law on taxes, declare absolutely everything. It's not worth the risk or the stress.

HOWEVER: you can pass off an awful lot of stuff as business expenses, all stationary you ever buy for example, any computers that are used for accounts or business communications, petrol for any journey that includes anything business related etc.......
the list goes on. Saves a lot of money on taxes while staying legal

EDIT: not sure how the tax laws work outside the UK though
 
Well I`m not a profesional but... basically I tooke all the money that I had and bought a PC (very small btw) them some other stuff there was no internet and of course too I had never read ultimatemetal forum so I learned just making mistakes I used a lot of free stuff and when I thought that I was ready I tooke my first job 2002 then I was lerned practicing and the internet come with ultimate forum with a lot of information in 2002 after that just did jobs with bands who spread de word of my work and them start to buy plugins that I needed then change all my stuff like amplifiers etc for digital and plugins I`m currently Associate with legal aspect of my country and I pretend to get more important deals for the future, to me it`s a long way but I like it. A lot of internet publicity work really good like myspace facebook etc.
 
I don't personally own a studio, but I have a friend who does. From what I know, he's been successful. The main reason he's able to stay open is because he owns all his gear and doesn't have to pay it off, and his studio partner already owns the building. In otherwords, overhead is what kills you, if you're not in heavy debt you will have an easier time running your buisness.

I work at a rehearsal studio/recording studio, and from what i can tell you about that is: diversify. We can record, mix, run a bunch of different scale band rehearsals, do TV/film shoots, and post production stuff like ADR, etc, also we do live events. We even host parties sometimes. From this i can say, do whatever you can to make money. One situation we have had trouble in is finding clients to book in the early parts of the day. Everyone wants to be there at night, usually thursday nights. So what we've been doing is finding TV people and various music/other teachers to fill in those gaps. So the long and short of it: diversify.

I think people like machinated should post in this thread about his experience. I remember him saying his recording buisness has took off.
 
Overheads will definitely kill you. Don't over-extend yourself. Don't blow all out on $50,000 of acoustic treatment if you can't recoup, and likewise don't splooge for gear that your clientele isn't worthy of. Know which price bracket you're appealing to, and model your studio off that. What people care most about is price and prior work, so the gear can take a back seat for most projects, provided you know how to get the best from little.
 
I think if we have already enough equipment, we can start to work with some band in the better place we can.
Actually I just do a promo song for free, for a pretty new band in my city. They are happy and I'll record the album this summer. I've also other 2 bands interested to work with me.
For the first works I think it's not that bad if you don't declare something....for me these are the experience to understand if you can do it as a job and if you can live with it.
When you see that all goes well, you can start to follow the rules and your regular business.
It's pretty hard to start an official studio, with taxes,etc... if you don't know for shure if there will be some work to do, you know?
For example, it's 2 years I try to record a band. I had some friend's bands but every time they change their plans...
Last year I started to buy some equipment, mics, stands, and I dediced to record a cover. I recorded a friend of mine for the drums, myself for guitars and bass, I did the master and I upload it on a myspace page. After that I spend more than 1000€ for new interface, preamps, mics, stands and cables.
This year I propose to the band I'm working now, if they wanna record a promo for free and they accepted.
If I'll start to work punctually, I'll start an official work, with taxes, rules, contracts and all these business :)
Contacts are also important: when you start to know guys from different bands you are into the scene and you start to have more probability to find a good engagement.
 
I just had to do my first invoice for a label and really got me thinking about this stuff. I really need to learn more about the business side like taxes, and licensing your business name and all that stuff that comes along with owning and operating a business. Any books or anything I should look into to learn these things?
 
I think that every state has different rules so....don't know if could be usefull
It's better to ask to a great Accountant (if it's the right name for this profession)
 
first is important make few songs/mixes/masters nice sounding for friends for free and building own sound character and own name.
 
AudioGeekZine said:
I

Business plans.
insurance.
permits.
registering a business name.
charging tax.
Overhead and the cost of business.
Loans, grants, and banks.
Click to expand...

I also live in ontario, and I have looked into a few things. also my parents own a business, I took 2 years of business studies at fleming college. I had personal business endeavors in high school and college as well ;)

1) if your make less than 10 grand profit in a year, you dont have to register as a business. This will save you the trouble of taxes, zoning and registering ( which can be trouble if things dont work out. my friend had her entire bank account put on hold by revenue canada until she provides all documentation for her business that she never profited from)

2) most car / home insurance companies offer coverage for your equipment. I just renewed my car insurance, and I spoke with my rep. about covering my gear as well. It is only about 1000 bucks a year to insure $30,000 worth of equipment.

3)If you decide to go legit, you would create a business plan. said plan outlines your costs, a breakdown of how much business you would need to stay afloat, and how much you are charging. they expect a years "projected" income and costs on paper. basically showing investors/ government that your business is realistic, and is a worthwhile investment.

I made a business plan for a studio in my high school business class, but that was awhile ago lol.

speaking from experience (my parents own a very profitably cigarrette store on a reserve) you would not spend any profit for at least a year. keep putting it back into the business. If you want a loan/grant, you have to show that you have some money saved or some kind of income during the first year or so, so you wont be spending profit.

dont expand too quickly, because you may end up taking a risk with money you cant afford to lose, and lose it! this is a big reason businesses go out of business.

but... if you dont keep your business growing, your business will die!

its tough!

also, ontario has thousands of dollars available for artsy fartsies like us that goes unused every year. apply for that shit!!!!! or you could go through ei or ontario works, but they dont give you much $$$ and they watch over your shoulder all the time and want to know everything, and restrict what you do with your business. more of a hassle than its worth is what I have heard from everyone I know that has tried to start a home business because welfare told them it was a good idea!

hope this helps. might just be telling you stuff you already know. this is what I have learned about business in ontario.
 
You must get insurance. It sucks, but it's needed. Most home insurance policies are void the moment you start running a business out of your house.

Get liability for your clients, in case a drummer walks through a glass door or something, and get fire & theft for your gear.

-0z-
 
Not sure about Canada.

Here in the US it differs a little bit from state to state. But doing the name/registering/tax-id/etc. is all pretty easy. In fact just about every city should have an Small Business Administration (SBA) branch. They offer tons of advice and when I went they even sat with me to fill out the paperwork.

They are also very helpful with writing business plans and getting loans and such. They don't help very much with taxes though.

You definitely want to do that though. So then you can claim all your expenses and you have a way to easily report income. With your Tax-ID, you can open bank accounts under the business name, get credit cards, apply for loans, etc. All the associated institutions will help with that. I recommend keeping a separate bank account and credit/debit card. Even if you have to transfer personal money around. It is just nice to have a dedicated and automated record like that.

Keep receipts for everything. You can claim shipping expenses, taxes, etc.

Business Plans aren't really necessary unless you are getting a big loan, they will be the only ones who will probably check. Any place will lease to you, you obligate to pay the money.

BUT a Business Plan will HELP YOU stay focused on your goals. It is a good way to organize and analyze your profits, expenses, etc. Just your list is a long list of things to think about. The Business Plan writes them down and gives you a reference and will help keep you focused. Advertising, gear, building maintenance, furniture, toilet paper, coffee, etc. all necessary for a successful studio. It will also lay out your record keeping, which will be important come tax time.

For taxes, you will probably have to report some quaterly or bi-annually. Especially sales tax. In some states, you have to pay sales tax even on out-of-state purchases (ie. MailOrder), so that is a bitch. Then any money you make, sales tax on top of that. I tried it myself, and it was a mess. An accountant is a bit expensive, but they can at least help you get all set up. Especially when you starting getting into depreciation and multi-use space (if you run out of your home), etc.

Oh and insurance, definitely going to need that. And most home owners insurance and stuff are null when it is used for profit. MusicPro is inexpensive, but there are lots out there.

Then just be smart, know what your clients want and don't over extend. Diversify. Word of mouth is by far the best advertising tool. With bands I find that being personable, flexible and being an active part of their creative process really helps. Not excessively but showing them that you care about their project and are willing to "go the extra mile" sort of speak can set you apart.

Customer Service is key. Follow up with your clients later. Check out their shows. Build a good base, and they will spread the word, even if you eat it price wise on the first few.

Good luck!
 
Oh... and also the Business Plan is an excellent way to see if it is worth it to go into business. This where you estimate your income vs. expenses. Estimate time on returns, evaluate competition etc.

On a studio that sort of research is a bit hard. Especially since so many studio's don't really do a lot of advertising. Also studio's I think tend to be a business of passion rather than money-making need. But it can help you make decisions on how much your overhead you can handle. Ie. the size of the space, part of town, etc. Or deciding to run out of your home. Getting partners, etc.

But as an example if studios are way overbooked, you can steal business by being available. But if studios are closing down all around you, then maybe leasing a 2500 square foot place over a plaza and retail zone wouldn't be the best idea. Maybe a 1000 square foot space in the warehouse district would be better.
 
Business plan is definitely a must, I'm working on it.

For now I'm just trying to set up a production studio in my Apt. Helping bands work on songs getting them ready to go to the studio and mixing here. Keeping the overhead really low because I may be moving in about a year.
I need this organized so I can get my taxes right next year.
 
I dont think you need to charge pst for services, so my guess is you would only charge pst on the actual product you deliver. your best bet would be to contact someone on that site via email or telephone so you can get answers to specific questions you have.this is an awesome thread by the way!
 
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