So, we understand that when you are starting out that maybe you don’t have a lot of money to invest in your own project, but there is a way to make it happen. With modern technologies, most artists can start with little overhead. Most artists already have the basic equipment for our art. People have produced an album in a living room that made the Grammy Consideration list; with the right equipment and a decent computer, art is getting much more accessible by the indie market.
Taking out a loan is a normal way to start a business, but paying back loans with interest can overload a small business, and is one of the top reasons small businesses fail. Set yourself up for success and also control your own destiny without investors trying to nudge into your art.
If you need to get additional money for studio time or a film, do it like a good business person. Get many quotes, from different sources. There are many types of investors and bank options available. We would suggest asking an investor for advice. They will be able to steer you in the right direction. Other artists that have had to get loans in the past are a great resource as well. If in doubt, ask someone you know and trust; there are plenty of people willing to give advice. I once asked an MBA student to help me with a business plan; he had to make a business plan for school, so it was work he had to do anyway, and we both gained from it. The Small Business Administration is a free resource of retired business owners that are funded by the government to advise small businesses at no cost, and are in all big cities.
Everything new in your life holds some kind of risk. You want to try to minimize it as much as possible. Never expand beyond your successful model and means. If you are doing well, don’t invest all your money and time into something else that had minimal or slow growth for you in the past. A scenario I have seen too often follows: A musician will have some success touring and selling their indie CD, then they go into the studio and invest all their money in a quality production, and their fans are claiming they have lost their edge and sound “over-produced,” and suddenly that artist is in debt over their means, and has no extra capital.
In small business, a lot of problems come from rapid over-expansion, or a company reaching too far. If your success comes from making a $2,000 CD at your house, selling CDs at $10, and driving to gigs, do not take your success and make a $20,000 CD, fly to some gigs, and try to sell CDs for $15; that will be enough to break your business model.
Incorporate every venture as an offshoot of your main business. Keep yourself and your business protected; remember a musician cannot play if their instruments are repossessed. Film studios make every film as its own venture, and then distribute it. It helps limit the businesses’ liability, and insures if one venture is not profitable, it will not take down their business as a whole. Grow logically, expand when there is room, and make sure your business is protected by being incorporated and insured. Never let your debt exceed the total value of your business, and you will be okay. A company like Apple does not go out and make 1 million iPhones unless they know they will sell them. Artists, especially my fellow filmmakers, like to go out and make a million dollar film, not knowing who their market is and which distributor will pay what for which markets
[Reprinted From: http://diymusician.cdbaby.com/]