Reinvesting--a business question for self-employed musicians (teachers, freelancers, etc.)

February 17, 2018, 2:49 PM · Just a curiosity, for those more business-wise than I:

Are there any rules of thumb or guidelines for how much you reinvest in your business vs how much you apply to yourself as a "salary"/living income? Or is it just case-by-case whatever works for you?

Sometimes I wish I'd taken that business elective in college... :)

Replies (13)

Edited: February 17, 2018, 6:49 PM · This is a very tough question to answer. FYI I do own my own music education business, and it’s going pretty well. It’s been growing ever year since I started it in 2011 and while it’s not my only source of income, I could actually just live off it if I wanted to.

I would say that yes, if you want your business to grow, you have to be willing to invest in it (often financially). You have to invest in it intelligently which is another topic altogether. For instance, a popular school asked me to advertise at their end of year concert. It would cost me 200$ for a big featured ad and it would reach a couple of hundred students/attendees. I politely declined because for 200$ , I get a month long facebook ad that reaches about 50,000 people. A jazz festival in New Jersey asked me to the same thing, for a few hundred $ I could get an ad in their festival book. It would probably reach a few hundred people, and not necessarily my target audience. On Facebook, if I spend the same amount of money, I can choose my target audience with keywords, and I would reach tens of thousands of people around the world. It has worked very well for me

So, you need to know how to invest your money in the most intelligent way. Before you find ways that work though, you might have to spend a bit of money trying different things until you find the one that works. This basically means you must be willing to lose money and accept it. I’m not gonna lie, I’ve lost about 20,000$ in bad investments that sent me into a severe depression. I invested in people to do certain jobs for me but they didn’t deliver properly, and I had to scrap the whole projects. That was 6 years ago, and I’m over it now, and am doing well, but that was my first experience with significant loss.

This is the nature of business, and you have to come to terms with it if/when it does happen. Once you learn how to invest intelligently, the more you can invest into it, the more likely you can make things grow, but no matter what there will always be some sort of risk, and it’s up to you to figure out how much is too much.

In my case, I’ve always risked amounts that wouldn’t cripple me if it didn’t pan out well. I was always able to bounce back up. Some people have risked everything they’ve got, and I’ve seen it go both ways: it worked, and now they’re in a good place; it didn’t work , and they filed for bankruptcy....

For me, the risk is too great to risk things to a point where I have to file for bankruptcy. Whenever I invest, I’m always looking at the worst case scenario, and I ask myself if I’m willing to accept this scenario.

The best general advice I can give you is to take advantage of social media (FB, Youtube, Instagram, etc...) and learn to use those tools to your advantage, and pay for their sponsored content if you have something good you want to spread.

Of course, since we’re talking about music, it goes without saying that all the money in advertisement/business growth don’t mean a thing if the music product you are offering isn’t good! So start by focusing on your music or the music product you are trying to monetize!

Another tip: Be very very very clear and specific as to what you want your business to be. For instance, in my case, I wanted to take over the world and do EVERYTHING ; I quickly realized that wasn’t a good idea, so I started by focusing on one instrument and one genre of music. I grew my network from a very small thing and eventually I expanded to another instrument (violin) and other genres, etc... Start small and specific. For instnace, if you’re trying to advertise your teaching studio, start by advertising locally. Make Youtube / Facebook videos that target a local audience before trying to go Ray Chen anc conquering the entire violin world. On the other hand, if you play as well as he does, maybe you can start by trying to conquer the world!

The whole video marketing thing is a huge topic as well and there are certain effective strategies depending on the platform. Facebook videos are important as are Youtube videos, but they don’t behave the same away and should not be used the same way.

Hope that helps!

February 19, 2018, 12:29 AM · There are no rules. You have to do what works for you. If you need to reinvest funds, do so. If you don't, then don't.

It totally depends on the type of business and your particular situation.

February 19, 2018, 7:46 AM · For 5 years one of my cello students was a 50 year old piano teacher with a studio of 50 -70 weekly students (including my grandson and his father). He invested in real estate while living in (and raising his three sons) and teaching from the two-car garage attached to a "private house" that had been divided into 3 apartments. He subsequently bought that house to add to the several rental properties he owned. In the SF Bay Area these were wise investments.

All I ever did to try to grow my small violin/cello teaching "studio" was pay (about $50/year) to list at my local music store and use their website to link to my own music-teaching website. It actually worked and give me as many students as I wanted to have, which was not very many (my main business at the time was consulting in a completely different field). I see no point in spending money to reach an audience of 50,000 people around the world unless you are going to teach on-line for money - in that case it makes perfect sense. But a good website with links to examples of your playing (well) is bound to attract.

February 19, 2018, 8:31 AM · Thanks for your responses!! I guess i am going a little different direction as i am looking more at investing in myself as a musician and teacher--building my music library, getting some coaching in my weaker areas, some continuing education in areas I'd like to grow in. The tips about advertising are very good though and will come in handy as I'm transitioning my studio from one suburb to another! I think I'm going to just keep doing what I'm doing--getting music and coaching in bits and pieces as able, and be intentional about saving for the bigger stuff :)
February 19, 2018, 8:48 AM · My advice would be not to invest anything until you developed a proper business plan and know clearly to what aspect of your plan you are contributing to. Random "investment" is called gambling.
February 19, 2018, 12:55 PM · I'm going to go ahead and assume you already have a website?
Edited: February 19, 2018, 4:38 PM · I think if you're moving your studio, then you should be coldly calculating about how many students you're going to lose and how you're going to gain them back if that's what you want to do. Depending on how you run your teaching business, and your locality, how you advertise could vary a lot. As Denis indicated you can reach a lot of people for small coin in a big hurry on Facebook but a good friend who has done this says that few of the resulting inquiries are serious. That might depend on several factors (starting with what you say in your ad).

If your studio is going to be in a building phase, then maybe this is a good opportunity to examine your teaching. What do you do well? Not so well? Do you have the materials and skill set needed to teach the way you would like to? If you're going to invest in coaching in weaker areas, then you want to be sure -- perhaps with the help of the eyes and ears of a trusted colleague -- what those weak areas actually are. I think that's what I'd do first -- if you know another violin teacher in your area (ideally someone you look up to who is not in direct competition with you) who can spend some time with you going over every aspect of your business from teaching methods to fee schedules and advertising, that could be a good investment.

And as for picking up more students, there is lots of advice to be found in Laurie's (web-searchable) archive:

http://www.violinist.com/discussion/archive/22991/

February 19, 2018, 7:45 PM · Facebook advertising is a total scam, I registered for a reach of 10,000 people, the ad went out to only about 100 people, and judging from the likes I got, some of them were gang members who potentially might rob my business so I discontinued the ad. The best advertising is having a good website and google plus account as well as this site, advertising on violinist.com to list your business, only costs $150 I think.
February 19, 2018, 8:05 PM · When you say "reinvesting in the business", but then say, "building my music library, getting some coaching in my weaker areas, some continuing education in areas I'd like to grow in" that sounds like it's not business-building so much as it is professional development.

Regardless of one's profession, professional development is something that's worth investing in, even if it doesn't necessarily have a direct measurable financial return. Becoming a better player improves your own freelance opportunities and professional reputation, and makes you a better teacher. Becoming a better teacher has payoffs for your student and again, your professional reputation. And all of these things probably improve your own job satisfaction.

Investments made in professional development have their best payoff early in one's career, I think -- or at least as early as possible. Such investments are cumulative and it's easier to learn new things when young, and you get that benefit over a longer period of time. So if you're asking if it may be worth making sacrifices in order to invest in professional development now, I think the answer could very well be yes.

Edited: February 19, 2018, 8:48 PM · Lydia's comments are, as usual, rich with insight. I know what she means when she says that "Investments made in professional development have their best payoff early in one's career." But if you want to change direction, then likely you still need it and will benefit from it.

Maybe the following example is too simplistic, but I can see improving as a violinist (so that one can teach through Book 6 instead of Book 4 as an admittedly silly example) being primarily about skill, and yes this is accomplished better when young. But if you want to shift from teaching violin to training new Suzuki teachers, that's going to require professional development but it's not something you would do right out of college, you'd need some teaching experience first. And that kind of professional development is going to be less about skill than it is about leveraging your existing skills and experience with the wisdom and vision that you've honed all along.

Likewise, you don't see fresh chemistry PhDs doing a lot of independent consulting, the "gig economy" notwithstanding. You do see folks with 25 years of experience, who have established reputations in their chosen sub-fields, doing that. Often they need some spot-training in certain areas, brushing up on regulatory stuff or learning how to write non-disclosure agreements or other simple contracts, and they buy that training in ala carte fashion.

Edited: February 19, 2018, 9:48 PM · Facebook ads are not a scam but you need to know how to use the target audience, and not only that, I specifically mentioned you have to have a clear idea of what your product is and it needs to be good... For instance, if you are an average violinist trying to advertise your lessons to the entire world , you’re likely to get a lot of strange response. If on the other hand you are Ray Chen, and you do the same ad, you’re likely to get a much more desired response.

That’s just the product itself (ie the teacher and his/her ability/credentials) , then there’s the actual advertisement itself which is an art in its own, then there’s the target audience which depends a lot on the quality/notoriety of the product. Again, it’s no simple math where you just apply one formula and everything falls into place. The priority is definitely the product, and then a website for the product, results in google, etc.... then once all those elements are in place, you can start looking at how to advertise it on social media... again there is no one right formula, and it ‘s true that it might not be for everyone, it really depends on what you are offering. The more specific the offering, the more worthwhile it might be, the more vague and general it is, the harder it might be. Hence my analogy of your average violinist (very vague and general), vs Ray Chen (well known, extremely high level) running the same ad will yield different results. Definitely invest on the product (yourself) first if you can.

That’s why I told the OP to start small and locally and try different things until she finds the one that works.

Like I said, I can now solely live off my music business if I wanted to and it took 5 years until I could grow it into something relatively stable, and it’s still growing. I owe a lot of it to understanding how to advertise, and I did not learn it in one day, it was constant trial and error (Still is).

February 20, 2018, 7:17 AM · I agree with Lydia. I was scratching my head over the concept of "reinvesting in my business" with regard to teaching lessons but that really isn't what you're talking about in this context.

Buy whatever sheet music you need, get whatever coaching you need, keep good records and deduct your business expenses on your Schedule C.

And while I don't think this applies to the OP, for those of us whose W-2 income is essentially in the same field as our Schedule C income, taxes can get pretty complicated. For example, I can't deduct the entire cost of strings from my Schedule C because I also use those for my W-2 job, so I have to prorate. Sheet music for teaching and home office expenses, however, come entirely off the Schedule C.

Now that I think of it, some kind of tax preparation class might be useful.

Edited: February 20, 2018, 9:09 AM · I keep full records of all my purchases subdivided into the categories accepted by the IRS and my sales then at the end of the year it takes my accountant about 15 min to punch in the numbers to her computer and print out my tax returns.

I reinvest a lot of my sales income in new instruments, as this is a tax right off as a legitimate business expense, take out too much personal income and your business will shrink instead of grow.

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