Maintaining Business Health In An Economic Downturn

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Many in the music industry are experiencing the same things right now as we all seek to grapple with the new world disorder. The economic downturn and September 11 attacks have pounded already weak sales in a music industry grappling with rampant piracy and slowing CD replacements. Gigs are drying up, distributors are 120 days out, customers are staying home, and your bills are piling up. Music groups are under pressure to make deep-seated changes to survive the times ahead and the "ripple effects" will be profound.

Most likely your business is feeling the effects of the sudden economic downturn as well. I can sense it in my clients too. People are a bit paralyzed right now and it's showing in more "cocooning" and a general reluctance to part with hard-earned cash from a paycheck that may not arrive next month.

Despite a gloomy money picture, it is crucial to keep your head out of the sand. Times like these force us to reevaluate out deepest values and desires. We have before us a golden opportunity to take a fresh look at our businesses, streamline and strengthen our operations, and put ourselves on steadier economic ground.

Here are several management tips to help guide you and your company through these turbulent times:

1. Play Doctor.

An accurate diagnosis of the cause of your business problems is essential to resolving and preventing their recurrence. Though external factors play a big role in business dynamics, in most cases, the real cause of business troubles is often internal. So the first thing you should do is take your internal pulse.

Although every small business is unique, here are the most common causes of financial difficulty:

Expenses that exceed revenues
Improper or inadequate financing
Overly rapid growth funded by debt rather than by business profit (watch
those free credit card offers!)
Poor management skills and business know-how among business owners/key
management (the #1 cause of business failures in the U.S.!)
Ineffective mechanisms for decision-making and problem-solving
Inadequate attention to marketing or an ineffective marketing program
Key customer groups experiencing a financial downturn
A poor or faulty product or service
Lack of an adequate market for a product or service
Unwillingness to look objectively at business difficulties
2. Choose Your Medicine.

The specific actions you take to stabilize your business and resolve its problems will depend on your diagnosis. Following are some possible actions to consider:

Evaluate all expenses including business-related travel or entertainment,
subscriptions, the purchase of supplies, raw materials or equipment,
insurance, the use of outside professionals, postage, phone services, etc.
to determine which can be reduced, delayed or eliminated.
Eliminate or shelve products or services that are not making money.
Evaluate the effectiveness of your marketing activities and modify as
needed.
Assess current staffing levels to determine if there are positions that
could be eliminated or consolidated without damage to your company's
effectiveness and efficiency.
Reduce staff salaries and/or benefits.
Reduce your own salary.
Cut prices. This action alone can sometimes provide the cash a business
needs to turn itself around.
Defer maintenance activities as long as possible.
Increase efforts to collect your accounts receivables. Call those who owe
you money, and press them for it. When necessary, use the services of a
collection agency.
Delay paying your accounts payable as long as possible but without
incurring additional charges or jeopardizing your standing with suppliers,
creditors, your bank, etc.
Increase the productivity of your sales staff through special incentives,
bonuses, training, etc.
Sell assets that are not needed, including equipment, gear and office
furniture.
Consider moving to less expensive space or reducing the amount of space
you are renting.
Identify new sources of cash.
Meet with your creditors, bankers and suppliers about lowering your
monthly payments, restructuring or consolidating debt, obtaining additional
credit, etc.
Talk to the IRS about working out a payment plan for any back taxes.
Improve your managerial skills and business know-how by taking classes or
attending seminars (lots of great stuff online! ).
3. Take Your Medicine.

This (when a business is in crisis) is not a time to be secretive and protective, but a time to actually open up your situation to the people who are in effect your financial partners, and to ask them for their help. When necessary, provide your creditors with cash flow and sales projections, fact sheets and documentation that will help support your case.

If you are funded by angels or family, be ruthlessly honest about your situation and what youÕre planning to do about it.

Here are some additional cash-generating possibilities to consider:

Cut expenses to the bone.
Rent out office, studio or plant space that you do not need.
When not using it, offer others the use of your equipment on a contract
basis--evenings, weekends, slow times, etc.
Keep less inventory on hand.
Identify other ways to use your assets when they are not being used by
your primary business.
Barter for services.
Make greater use of free-lancers, independent contractors, and interns .
Take advantage of your recognized expertise or skill in a certain area,
and develop a new product or service based on it that requires little or no
additional expenditure of money, additional marketing, etc.
Explore the possibility of a joint venture with a company in a similar or
complimentary business to yours. For example, combine your products or services together with
another business into one big package. You could split the profits. For example, a general business
band can team up with a catering company to offer a package of services for corporate party and
event planners. The possibilities here are endless.
If you have not already done so, consult with outside professionals, such
as representatives of SCORE (Service Corps of retired Executives, www.score.org) or your local
SCDC (Small Business Development Center (www.sba.gov/gopher/Local-Information/Small-
Business-Development-Centers/), as well as with your accountant, attorney or another reputable
professional who may be able to provide you with ideas and advice.
Some of these guidelines may seem excessive or harsh; some are simply common sense reminders. But a key ingredient to successful business management is the ability to be ruthlessly objective: to clearly see what needs to be done and to respond intelligently and creatively to the challenge.

These practical steps will hopefully lighten the load and alleviate some stress so you can continue to do the work that needs to get done.

Dig deep inside and be surprised by your own potential to work things out.

Can Film & TV Be The Kickstart Your Career Needs?

If you are an avid TV watcher or film fan, you have noticed that less and less known artists have their songs featured, or are dominating the new TV shows or movies. Instead, TV and film music supervisors have been aggressively looking for and have been actively using independent artists who release their own CDs.

It may sound a bit odd in a music industry which is dominated by major labels and a seemingly invisible group of people in the media, who try to keep you from succeeding, but its true. Over the last few years, TV and film music supervisors have taken a number of independent artists I am working with, for shows such as, HBO’s Sex In The City and The Soprano’s, NBC’s new show, The Immortal and Fox’s new show, The Street. In fact, both The Immortal and The Street are using Gerard McMann’s (a.k.a. GTomMac) music for the theme songs.

The primary interest that supervisors have in independent artists these days is mainly because of your “friends” at the major labels. Supervisors who inquire about various major artists are sent wonderful packages to entice them. Once they have decided on an artist and a piece of music, they call the label to find out how much it would cost them to use the artist’s song. Then they are usually hit with a price tag starting at $5,000 plus residual dollars for the use of 30 seconds of the song. Usually higher for more established artists.

Obviously, with the risk that a TV show may not even survive the season, supervisors are trying to cut costs whenever possible. Faced with the fact of a limited budget, many supervisors have their prayers answered by independent artists they have met at film festivals and conventions. Supervisors usually find that independent artists will accept between $1,500-$2,500 for a brief usage of their song and they are happy to provide the artists with residuals as well. So supervisors can use 2 or 3 independent artist’s songs for the minimum of what a major label wanted for 1.

Independent artists also have another advantage for supervisors. They can create new music for the film without having to get permission from a major label or having the staff at the label, delay the time sensitive process. To put it simply, major label artists are restricted in what they can do, independent artists are not.

So now that you know that this playing field is open to you, here are a few key ideas to get you started and a few things you should know...

1. Never send a TV or film supervisor a press kit. Always send him a complete Artist Profile. Supervisors are like everyone else. They will throw away a pee-che folder press kit before listening to the music. (If you don’t have an Artist Profile, contact me at www.tsamusic.com )

2. Build relationships with supervisors. Go to film conferences and TV events that supervisors would attend. Talk to everyone. The guy standing alone by the tree will probably be Hollywood’s big new director next year.

3. If you are a fan of a TV show, mail the supervisor and let him know you are a fan of the show and you have a song that you believe, will work well for the show. Write out your thoughts for what character or situation it would be best for.

4. Get a list of TV and film supervisors and their current contact information. (The Film & Television Music Guide published by Music Business Registry is an excellent one). Send the appropriate supervisors your CD and Artist Profile. Don’t go through companies or organizations that offer to “screen” your material to determine if they think its good enough “in their opinion,” to send to someone they know. It is true that supervisors often use these companies to keep the “garbage” to a minimum. However they also use these services because they can get your music for free!

5. Walk away from any deal which asks you for the exclusive rights to your songs, your publishing, for them to use your music anyway they want or however long they want and ESPECIALLY if they are NOT offering any money. Don’t be a sucker for the people who say they can get your song placed if you don’t take any money. Believe me, you will end up on a supervisor’s list of artists to call when they have no money left and they want music. Always get paid for your work! Organizations who prescreen materials for supervisors have the reputation for providing them with “free music” and that’s why they call them.

Film and TV exposure of your music can be the “kick start” your career needs to get going. Look at Elliot Smith’s career. Many of you wouldn’t even know of him if his music wasn’t in the movie, Good Will Hunting. Or the aforementioned Gerard McMann, who still sells thousands of CDs of his "Cry Little Sister" song from The Lost Boys movie.