What rock stars can teach business owners
In my role as business adviser & accountant, I’ve had the pleasure to work with a diverse range of artists – from Vance Joy to Daniel McPherson to Dave Thornton. Generally they’re refreshingly humble and a pleasure to deal with.
Like any segment of business owners, artists are all very different. Some are very financially astute, and want to be involved in important decisions; others don’t want to know about the numbers at all, and just want to focus on what they do best. As their adviser, just like with my business clients, there’s no one-size-fits-all approach: my role is to tailor advice and strategies to meet their needs and goals. Importantly, their focus will change over time as their career evolves, their personal lives change, and/or their priorities are re-aligned; recognising and adapting to their change in circumstances & needs is a critical part of being a good adviser.
Interestingly, working with them has highlighted some key lessons that I think everyone – particularly business owners – could learn from them:
- Separate your business finances from your personal affairs
- Planning is critical to success
- We all need an ‘Entourage’
Most of my entertainment clients are basically self-employed artists. The successful ones treat their career finances as a business – they plan, they invest time in managing it, and most importantly… they employ good people to manage it for them. Every business owner should do the same – treat your business separate from your personal finances. So, rather than just get what’s left over each month, you should budget to pay yourself a set wage, which forces you to find a way to fund it (just like you find a way to cover every other expense). Also, as Jason Cunningham talks about in Have your cake and sell it too, it’s critical to have that separation between your duties as a shareholder and director. Is the business giving you the return you want? Is it operating effectively?
A hit record or killer stand-up routine don’t come out of thin air – there’s a lot of hard work and planning that goes into making it all work. It’s the same for a business, or for your personal finances; planning is critical.
These artists can experience severe income and expense fluctuations – platinum album or world tour one year, followed by a quieter year or two while you write and record the next album. So planning is critical to 1) manage your income and expenses, so you have enough cash flow to survive and keep the business operating; and 2) ensure you get the best tax outcome (that is, you don’t pay any more tax than is required). Quarterly meetings and forecasting are vital to get the best outcome both now, and in the future.
A big part of planning for these artists is thinking about life after your career. It’s exactly the same for business owners – except you also have the option of one day selling your business, which is rare for an artist. The more you plan ahead, the better prepared you’ll be for any eventuality, and the closer you’ll get to achieving your end goals.
No, I’m not talking about the TV series (although that would be awesome); the most successful artists are those who have great people around them, such as a manager (who is essentially CEO of the business).
At The Practice, one of our guiding principles is to operate in your genius. We try to work together to allow each other to focus on what we’re best at, as that is when you get the best outcomes. Of course, an artist should focus on what they do best; to do that, they need a trusted team in place that takes care of the boring but important stuff. It’s no different for any business owner I meet – they have particular skills, and it’s in the best interests of the business that they get to use those skills (rather than get bogged down in admin or bookkeeping).
With the help of a manager (CEO, GM or office manager), financial controller (accountant or business adviser), assistants (or team members), and other key advisers as required (legal, finance, financial planner), the artist (or business owner) will truly be able to shine and achieve their best.
Director, The Practice