[00:00:00] James: to episode 161 of the Bandhive Podcast. It is time for another episode of the Bandhive podcast. My name is James Cross and I help independent artists Tour Smart. I'm here with Matt Ho of Alive in Barcelona. How are you doing today,

[00:00:13] James: Matt?

[00:00:14] Matt: James, I am doing fantastic. It is a beautiful day in Colorado. How are things over there on the east?

[00:00:19] James: I'm glad to hear that and things are gray, but also great because we have a very special guest from further East than me, Stephen Pell of Iconic over in the uk. How are you

[00:00:30] James: doing

[00:00:31] James: today, Stephen?

[00:00:31] Stephen: I'm doing great. Thanks. Yeah, it's absolutely freezing cold here today as well. And gray,

[00:00:36] James: you've sent the British weather over to Vermont. I think that's what's happening, Oh. But anyway, thank you so much for joining us. This is an episode that I've wanted to do for a long time, but I didn't have the right person to do it. And then you reached out a couple weeks ago and said, Hey, can I come on the show and talk about finance for artists?

[00:00:55] James: So immediately I said, yes, let's do it. And here we are. So thank you so much for [00:01:00] joining us.

[00:01:00] Stephen: It's a pleasure. I appreciate being invited on. I'm just excited that someone else wants to talk about finances in uh, in music. So, yeah. Thank you

[00:01:08] James: Yeah, of course. And I should preface this by, for all the artists who listen to this show, you know, this show is all about business and typically we try to keep it around, the more exciting sides of businesses. And I'm not saying accounting isn't. But before anyone goes and tunes out and says, you don't need to learn about accounting and finance, just stick around.

[00:01:27] James: This is gonna be like 45 minutes probably after the edit. And it's gonna be so worth it because you're gonna understand how to use your money more effectively and put it towards good things in your band. So to start off, Stephen, would you mind just telling us a little bit about what your background, what got you into accounting and what specifically inspired you to get into the music side of accounting?

[00:01:47] James: Because that's a very niche

[00:01:48] James: area to be.

[00:01:49] Stephen: Yeah, sure. So I'm CEO and co-founder of a an accounting business called Iconic. We support iconic creators in the music and entertainment industry.[00:02:00] And sort of around that, I've written a couple of books that help musicians and creators remove the anxiety from their finance. , it helps 'em to build better businesses.

[00:02:09] Stephen: But believe it or not, I used to be in a punk rock band in my teens, which is kind of driven me in this sort of direction. In fact, I think from about 15 years old, I was utterly convinced that I'd be a rockstar. There was nothing that was gonna get in my way. and I did that for five or six years.

[00:02:25] Stephen: we never went outside of the uk. but when I went university or college in the uk, that's where I started getting a bit, serious with it. And I think we paid about a hundred, a hundred plus shows in a year. we tour pretty.

[00:02:37] Stephen: and we knocked on loads of doors, but we, never really made it.

[00:02:41] Stephen: We had a little bit of interest from labels and booking agents and things like that. We didn't have a manager. I was doing the management side of things. I was doing the business management side of things. I was the one that was sort of negotiating the, you know, the ticket sales, the, bar splits and all of that fun stuff that you get to do.

[00:02:57] Stephen: But I loved it. I absolutely loved it. And I [00:03:00] think that's where I got the, passion from it. And I read every single book I could get my hands on. I just needed knowledge. But I felt that there was always like this glass. And I didn't feel like I had enough information, particularly around like the finance side of things.

[00:03:14] Stephen: And also I didn't have a strong enough network at the time to get to where I needed to get to. Made tons of mistakes. But that's, that was kind of my journey. Fast forward five or six years, the band, inevitably be broke up. Sort of personal reasons between band members, as things like that quite often happen.

[00:03:29] Stephen: And so I kind of needed to get a job. I just love business and I thought, Hmm, accounting, that's something that I can, perhaps do and my first thought was when I was getting into doing my training that, you know, one day, I mean this works pretty boring, but I could find my way back into the industry.

[00:03:48] Stephen: And so that's kind of where I fell. I worked for a couple of years in sort of a general boring account practice, then circled back round to working for sort of like we call like a West End accountancy firm in the uk, which. [00:04:00] looked after a lot of big artists film directors, actors, and I got my first real taste of the music industry from a very different perspective from a sort of a, a hit artist a superstar artist perspective.

[00:04:12] Stephen: And that's where I got my first taste of this service, which is big in the US but not in the uk. And it's something called business manage. five years on, we're a team of about 20 people working across the UK in the us specializing obviously in the music industry and music artists.

[00:04:26] Stephen: But I work, not just for music artists. I work with music producers, songwriters, mixed engineers most of them all at the top of their game. But having said that, when I first started Iconic six years ago, I was working with people just starting out. Those independent artists that had had the big dream, big ambition. I started with no clients, so we, I kind of have grown with a lot of these people and, and some of which are doing very well now and household names. So, that's what it's all about for me. It's that journey, and being part of the industry and doing my little bit to help people to keep on inspiring me [00:05:00] with the music that they

[00:05:00] James: That's

[00:05:01] James: fantastic. Thank you so much for sharing that. And I was gonna mention this later in the interview because a lot of artists just say, Hey, we want a manager. And they don't realize that they're different types of manager. And you already threw out one of the terms. They're business manager. So you have personal managers and business managers. Can you kind of give a little breakdown of what the difference is between the two and wine

[00:05:21] James: artists might need both.

[00:05:22] Stephen: sure. So add another one in there. So From my perspective, there's the accountant or cpa, there's a business manager, and then there's your personal manager. in your sort of financial ecosystem of advisors, they're your three. The accountant or CPA might be the person that does the high level tax advice.

[00:05:39] Stephen: You might, they might fire your taxes once a year, and help with, once a year, advisory bits and pieces, tax planning, potentially. Business Manager is a much more all-encompassing role. it's really someone that looks after your day-to-day finances, someone that's overseeing your bank accounts, managing your cashflow, chasing down money, checking your royalty statements, [00:06:00] paying bills, setting budgets, reconciling tours, chasing an agency statement And really being almost like the quarterback, the person that's sort of pulling all the strings in your finance team, and your wider business team. Then you've got your personal manager who really is more in charge of, the strategic direction of your career. They would also be more closely aligned to day to day operational issues.

[00:06:23] Stephen: And from our perspective the personal manager will be out there finding the deals, negotiating the deals, and then they will come to us and then we basically make them happen making sure the, that there's contracts being invoiced, money's collected and that ecosystem's very, very important.

[00:06:40] Stephen: So having a, a very good relationship between manager and business manager is, is absolutely essential. Because they all need to work in tandem. going back to the accountant and the business manager, we actually have the accountant CPA role wrapped within what we do. So that's quite common as well.

[00:06:55] Stephen: So we would file taxes and do tax planning that, high level strategic wealth management [00:07:00] stuff as well. But quite often particularly in the past, there would be an accountant, business manager and, and personal. Managing that sort of financial ecosystem

[00:07:08] Matt: That's all absolutely fantastic. dissected those perfectly. I think it's one of the most important things to realize. you said something there, it's just like, Maintaining the, the overall status quo and the entire ecosystem being such an important thing. I can't harp on that hard enough that money talks.

[00:07:23] Matt: when bills are not being paid on time and when managers are not being paid on time and when band members aren't getting per diems on time and you know that, that's when animosity starts to rise when friction happens. And so, like, you know, having somebody like you. on the band's team. it's just absolutely integral to succeeding in the music industry because, people are only gonna work so hard when they're not being paid on time. And that's, every industry, so it's, absolutely paramount to make sure that all of these ACEs are in their places.

[00:07:53] Matt: I love the way you said,

[00:07:54] Stephen: for sure. And I would, I would just sort of add into that, that when I'm talking to my clients for the first time [00:08:00] about a manager and business manager, those roles can be quite confusing. And sometimes where that line gets drawn is very confusing, even for the manager. because business managers and personal managers, they, they can operate in different ways.

[00:08:11] Stephen: Some managers like to be in control of the finances a bit. And some business managers have to pick up the slack from personal managers they have their organizational shortfalls, for example. we sort of see the business manager, there's that, foundation, that structure the defense in the sort of the operations of the artist.

[00:08:28] Stephen: And that then frees up the management team to be on the offensive to go and earn the money, go and get the. And those teams need to work or find a way of working very closely together in tandem, to create a successful relationship.

[00:08:41] James: The way I'm picturing it from what you describe is the personal manager is kind of the big picture ideas person. They say, yeah, this is what we're gonna do, and then it's up to you, the business manager, to get that execution in place. you're doing the nitty gritty of making sure that, hey, we're not getting screwed over on this contract.

[00:08:58] James: we're gonna actually get the [00:09:00] money that we're owed

[00:09:00] Stephen: We do sometimes get involved in, helping to negotiate on the record deals and the merch deals and things like that because there are some elements to the contracts that, we can be quite commercially leading with some of the, the stuff that we do and the, the advice that we give. So it's not just about, us creating that, organization and, and making sure that the finances are, are running smooth. There's also a lot of value added in our approach to, oh, well, hang on, we see a lot of other artists with a royalty rate that's 2% higher.

[00:09:28] Stephen: why aren't you going for that deal? Or actually, why aren't you getting paid every quarter like you have offered this artist? there's things that we can sort of bring. Because as business managers, we tend to work with more artists, a manager tends to have fewer artists on their roster just because there's more work day to day.

[00:09:46] Stephen: Whereas a business manager, we get to see a lot more deals that means that we get to offer quite a lot more value in that respect to see what other people are doing across the board.

[00:09:53] James: that's a great point to be able to have that 10,000 foot view and say, you think that's a great deal. That's not [00:10:00] that great of a deal. Now to bring this down to a much lower level the bands you mentioned that you used to work with when you were starting out.

[00:10:07] James: A lot of artists when they're launching their careers are not focused on money at all. They're focused on writing music and spending way too much on gear. What advice would you share to artists in that position so they can build up a sustainable career and, avoid the crown pitfall of spending way more money than they have on gear.

[00:10:27] Stephen: it's a great question. I would say first of all, it's really important that you do focus on your art, and getting that right. Because without that, there's no business, there's, there's nothing else. So, it is an important focus. . Otherwise there's still longevity.

[00:10:41] Stephen: But what I would say that if you are starting to think about. gear and the word expensive, that means that you are conceptualizing, how much things cost. And when you start to do that, you are actually starting to become quite financially focused, whether you think you are or not. So, you if you think, oh, I've gotta buy this expensive gear, or what do I [00:11:00] prioritize?

[00:11:00] Stephen: What do I buy? You are already thinking a bit like an accountant. You're already getting your head in the right space getting the mindset right for. But right off the bat, what I can say is, number one, the biggest issue that I saw for the bands that we kind of started working with was too much debt.

[00:11:17] Stephen: Early on, they were maxing credit cards to buy equipment. they might have been taking out loans, personal loans. They were putting perhaps too much of their own. into the project without thinking about sort of the long term effects of them keeping on going. a little bit of debt that's manageable is fine, but you've gotta be realistic because that's something that could really, catch up with you. The other thing that I kind of saw quite a lot of a, a common pitfall was not budgeting. not looking ahead.

[00:11:47] Stephen: and sort of trying to plot out what the cost might be over the course of a 12 month period or six month period. Or even looking at a particular project or thinking in terms. Start and end of projects. So, for example, the [00:12:00] way that I, I look at everything in music is everything's a project.

[00:12:03] Stephen: Everything's a start and an end. you have a period where you are touring, there's planning phase for that. And then there's a sort of an implementation phase, and then there's a sort of a wrap up, that has milestones. The same with sort of recording as well. So thinking in terms of budgets for, projects. , is something that, I would start doing even early on and getting into a good habit of, doing. It's not obviously the bill or an end all but the other sort of pitfall is not knowing what I call your expense runway is.

[00:12:30] Stephen: So of the money that you have, how long is it gonna last? how many months have you got operating in this way before you need to. , earn some more or find some other revenue streams. I would also say early on, not keeping on top of taxes. It might be that there's nothing to pay or there's nothing to owe in those early days, but you still will have an obligation in most cases, to file.

[00:12:51] Stephen: And if you bury your head in the sand with those, it might not cause a problem right away, but in five years time when the tax authorities catch up [00:13:00] with you, and particularly if you then become high profile in your career, then that's kind of noise that you just do not need, or want to have to deal with.

[00:13:08] Stephen: So just being compliant little and often and just taking care of the, sort of the tax administration things. something that we've had to tidy up more times than not when it comes to taking on, clients. And that's even the, case that, right. At the early stages of, of an artist's career, you still have a business whether you're making money or not.

[00:13:27] Stephen: In most cases. If you're incurring expenses with the intention to make money, that's the business. you need to have a handle on that and, and make sure. you're doing what everyone else has to do in this world, which is be compliant and file taxes.

[00:13:38] Matt: Yeah. One thing I would like to add to that, one of my friends in the ongoing concept said it perfectly, years and years and years ago when they were starting touring and he was focusing on taxes and everybody was saying, oh, You don't make enough money to file taxes. And he says, yeah, but I want to do this my whole life and I wanna buy a house someday.

[00:13:53] Matt: And that simple fact, you know, is just something that so many people overlook. If you want to get a loan from a bank, [00:14:00] then you need history, if you need history, that means that you need to be able to prove your taxable income.

[00:14:05] Matt: Otherwise, no lender is gonna come in and loan you money. Just like with a record label, if you're not doing the work already, no record label is gonna put their name on you.

[00:14:13] Matt: if your finances aren't in order, no bank is gonna come in and fund you. if you wanna do this for 20. . years And you don't want the tax authorities showing up on your doorstep in 20 years to knock and to take your home away. You need to be consistently paying your taxes.

[00:14:25] Matt: And, you do that by documenting them well it can be a headache because it's something that you don't do super consistently. Which I think is why a lot of business people will, will do their, taxes quarterly it's like, it's a lot easier to do things once every three months than it is to do it once every 12 months.

[00:14:39] Matt: Like you were saying with the CPA earlier, like I think that's one of the most useful, tools that you can have in your Rolodex is somebody who understands this is a full stop situation if you don't pay your taxes you're out there, you're making money, you finally get that call to come play, you know, a five, six figure show or something like that.

[00:14:55] Matt: Or you're playing on this big tour and you're gonna make a ton of. that's going to attract a lot of attention [00:15:00] from people who are like, Hey, where, where's my cut? why is it that you're not compliant in uh, areas X, Y, Z? why is it that you're now buying a hundred thousand dollars house and you know, we have no tax history on you.

[00:15:11] Matt: those are definite ways to put a real damper on your music career. keeping those ducks in a row is just, so, so.

[00:15:18] Stephen: Yeah, for sure. And it, my book, I talk about the story about this, DJ that I'd work with. changed all the names for privacy. But, he hadn't filed for two or three years. . And the tax authorities caught up with them eventually and we had to deal with the situation.

[00:15:33] Stephen: the tax authorities are number one creditor. You have to pay them. there's no way around it. But what that meant is that the cash went to the, the irs, Which meant that he couldn't fund a tour or, fund the production. So his career was put on hold for a mistake that he made two or three years ago.

[00:15:49] Stephen: and then he had the sort of covid pandemic after that. His career is pretty much, ruined from, you know, that mistake plus the pandemic and he can't get back on his feet. And obviously within music, You need that momentum, you need [00:16:00] to ride those waves.

[00:16:01] Stephen: Anything that will get in your way, you have to remove those obstacles and you have to think ahead. And taxes is just one of those monsters that you have to slay really early and just be on top of.

[00:16:10] James: absolutely. And we discussed in the uh, planning for this interview that we weren't really going to get into the minutiae of tax laws in the US versus the UK or anything like that. But one thing that I want to point out on, and you can correct me on this, Stephen, but a lot of people seem to have the idea that if you get an independent contractor payment in the US, a 10 99 payment, you don't have to report it if it's under $600.

[00:16:32] James: But really from my understanding is that the person paying you doesn't have to report it, but the person receiving the funds still has to report that income. Is that correct?

[00:16:41] Stephen: I'm not a US tax specialist. I don't wanna give any, wrong advice here I'll let you uh, speak to my, my us tax advisor on that one. . But on the 10 99 payments, you know, if you're not reporting the income, then what about, or the expense, you can't write off your expenses.

[00:16:54] Stephen: and there might be some planning opportunities when writing off your expenses and deductions. particularly if you are [00:17:00] feeling your incomes is, is not particularly high. , and you write off expenses to claim the loss losses can then be offset carried forward, which will help in, future years you might be a bit just missing out on opportunity. So, I think going back to the point of just making sure that you're following the rules, whatever they are in your jurisdiction. that's a good example of one where there could be unintended consequences.

[00:17:21] Stephen: And the other thing I say in my book is what we call in the uk Avoid the pub talk. when you're on the road, you're gonna say, oh, my accountant says this, my CPA says this. I didn't pay any tax this year cause my CPA's so great Whereas my response to that is, if you're not paying any tax, you either not making any money, which isn't great.

[00:17:39] Stephen: Or You're cheating, which isn't great. So , I try and get my clients just to reframe tax as, everyone has to pay it. There's certain things we can do to mitigate it, but. Comparing them year on year, it's like a leading performance indicator. the more tax you pay, the better you're doing great.

[00:17:56] Stephen: Celebrate, as long as you've got a strategy in place for managing it, you [00:18:00] said, every quarter, right. With our clients, we have a, system for calculating taxes every month. one of the things that we, talk about in the book is, Having a, a tax pocket account or a bank account you make sure that's fully funded every month or every quarter.

[00:18:12] Stephen: So it's very clear what you owe. And I even say set up a bank account and rename it tax authorities money. do not touch, something just to sort of make sure that you're kind of reframing it in a way that that's not your money, because at the end of the day that money is, owed to the tax authorities at, at at some point, and you might as well take it out of your bank account, avoid the confusion and not feel so bad at the end of the year when you have to pay over. Although inevitably you will be . it's just creating that mindset shift.

[00:18:38] Stephen: it's something that we can't get away from. , let's put a few hacks in place to make sure that we're managing it well. And then, celebrating the fact when we're doing well. Because tax, the percentage of profits the higher your profits, the more tax you're gonna pay.

[00:18:51] James: exactly. you've mentioned budgeting a few times. I like the idea of having a separate account for the funds that you owe to the tax [00:19:00] agency in whatever area you're in, whatever jurisdiction. Do you have a preferred budgeting app that you would recommend artists should use?

[00:19:07] Stephen: a, that's a really good question. So I still quite like, a Google doc or, excel for budgeting and projections and things like that, just because it's more flexible. , and you can do more with it. Quite a lot of banks these days have, you can create pocket accounts and things like that and, you know, they can automatically transfer money through those.

[00:19:24] Stephen: The way that I would conceptualize budgeting is look at your income, the past year and then within each of the categories, what percentage of those costs. relate to income, and then, you know, every dollar that comes in, you can say, oh, okay, well 30% of it relates to to marketing spend.

[00:19:43] Stephen: Or 10% of my income last year was on, software or consumables. And then you can kind of separate out these accounts within your account set, And then you have your, your pockets, your budgets. So every time, you know, you receive money because it's lumpy throughout the year, you start building your [00:20:00] funds within each of your, bank accounts.

[00:20:02] Stephen: And then that creates the, budget that you have to spend. It just makes it easier to visualize. . But yeah, going back to your question about budgeting software per se, I don't have any sort of recommendations from my perspective. I like something that's really flexible, like a Google sheet or, or something that's easy to roll forwards and, use formulas in and things like that.

[00:20:20] Stephen: But yeah, that's kind of would be my approach.

[00:20:23] James: well Google Sheets is an app. I would say that counts it's free. That's probably gonna be the most accessible for a lot of artists who are still pinching pennies cuz they're not at the level where they can drop, 10 to $30 a month depending on the app.

[00:20:35] Matt: there's already enough friction. So just like having something that everybody can all look at at the same time. I just the same as having a one sheet inside of your tour bus. Like when we all wake up and we can say like, oh yeah, like we're in this city, you know, loadings at this time.

[00:20:46] Matt: You know, we got a back line. We gotta do this. when you have five different people on the bus and then you have, financial advisors somewhere else you met, you have a band manager somewhere else. You have a PR company somewhere else. You have a, booking agent somewhere else. And [00:21:00] like all of these nodes essentially are all culminating in order to make a, a product and to make, you function as a business.

[00:21:08] Matt: it's very, very important to have something that's just like easily shareable that, everybody can revert back to and say like, oh yeah, right here on the Google. It says, X amount of dollars is owed and how long is our drive tomorrow? Oh, our drive tomorrow is 215 miles.

[00:21:22] Matt: So we need to make sure we have at least, you know, $50 worth of gas in the, you know, in the tank or whatever. Just having kind of all those assets at your disposal is just, that's wonderful The path to the most success is the path with the least

[00:21:35] Stephen: I think that's a really good point. And just to add to that as well, a collaboration is really, really important. financial transparency is really, really important. Even more so for bands. I work with a lot of bands and it can be a point of contention. managing the finances. And my sort of advice to band starting out, or starting to make some money is to nominate someone in the band who is the finance person.[00:22:00] [00:22:00] Stephen: the internal finance manager within the band. Obviously they don't have to be an accountant they just have to be one that's willing to take the responsibility because I can guarantee you no one else will. And you need to make sure that there's someone that's gonna be talking to the accountant, making sure that records are kept keeping things on track and reporting back to the rest of the.

[00:22:18] Stephen: band So making sure that that role is clear and then obviously using a, a collaborative tool like Google Sheets to, share that information, regularly is also really important.

[00:22:28] James: yeah.

[00:22:28] James: I think that's a great point. like you say, no one's gonna step up and. If no one is given that role, years ago, man, I can't remember if it was you or Aaron on the show, but we did an episode about dividing up roles and responsibilities, episode 14. You can take a listen to [email protected] slash 14. That's the number 14. I don't think we specifically mentioned a finance person there, and we did kind of divvy it up into, you have a manager, you have a social media person, you have a gear person.

[00:22:56] James: but you know, a finance person, that is the missing [00:23:00] piece. We should have had that in that episode, so I'm really glad you brought that up, Stephen. And when you look at the most important pieces of advice that you give to, your icon clients, your bigger clients, what pieces of advice that they execute do you wish smaller independent artists would uh, listen to and he, your advice on.

[00:23:20] Stephen: executing the basics really well, even though we work with icons, household names, people that everyone knows, We still preach the foundations, the fundamentals of getting your taxes right. Making sure you're not paying yourself too much, but just enough to make sure that you are, thriving and that you are engaged, and making sure that you build yourself a really good financial safety net, and have a strategy for. Yourself out when times are good, when there's a windfall. for me, they're the three core business management areas that we would focus on. Whereas other business managers might think about, oh, okay, well we can set up offshore companies and find ways not to pay tax and all those kind of [00:24:00] things.

[00:24:00] Stephen: we are just focused on real good business management. I was to sort of gives some advice on what our iconic clients would say they wish they'd done better. it would be, they wish that they had handle on their taxes, better. you know, all of their money would be in sort of one bank account and they'd have to sort of figure out what they owe.

[00:24:18] Stephen: And the taxes would always be a. . if taxes are a shock, and they, don't really know how much to pay themselves and they worry that they haven't got enough savings to, to see out something like a pandemic was, it was a good test of, how good our business management strategies were over the years.

[00:24:35] Stephen: It creates anxieties. It creates a serious amount of. that anxiety then can have an impact on the creative process. we had a lot of clients that, shut down, you know, we saw in the Pandemic was a great example of how people react under stress and under pressures. some people sort of that once were prolific creators did nothing for two years.

[00:24:56] Stephen: whereas others sort of came out the crazy shells and, were brilliant with it. But [00:25:00] I think having a financial stressor of anxiety around taxes, just not knowing, or understanding where they sit with the tax authorities or, or, what of their money needs to be paid over or how much they owe.

[00:25:13] Stephen: Or worried that they might have a, an audit or an inspection can create a lot of pain. and also it's that aspirational thing, like although it's a, a passion and, a, and a business, there's also, particularly for our clients, going from a sort of independent artist to an icon.

[00:25:29] Stephen: it's a journey of in many ways social elevation. you wanna buy a house, you want to then buy a bigger house or, by a private jet or I dunno what it might be. You know, when you get to that stage and part of that is important and knowing how much you can afford to pay yourself without running a business into the ground.

[00:25:45] Stephen: I mean, we've all heard the horror stories of famous artists filing for bankruptcy. I can think of just a couple off my head at the moment in the US that have just done, done something similar. So it is making sure all those parts are carefully managed this expectation set right from the start.

[00:25:59] Stephen: [00:26:00] And. we try and be very conservative in our outlook and try and play down things and always, try and think of worst case scenarios. and that's why we have a mechanism for when things do go well that we can respond to that and, and pay out.

[00:26:12] Stephen: And it, be a pleasant surprise. But it's that just feeling in control, being able to sleep at. is really hard to do. I mean, I'm a business owner myself. It's not so different from when I was in the band worrying about finances and how we were trying to get in the studio and on the road as it is to running iconic as a business.

[00:26:29] Stephen: It's all the same emotions, it's all the same anxiety, it's all the same fears, can you pay people, am I good enough? can be a real weight on, on your should. . what I'm trying to, do with iconic and also with with the book is to, create a set of principles that just put everything on autopilot.

[00:26:46] Stephen: And that can remove some of that anxiety and create a bit of security and certainty. Nothing is ever predictable. Things will jump out, but. There's things that you can do in life I think loads of stuff that you talked about on, the podcast that I've listened to [00:27:00] before are sort of, it's about creating that structure and that methodology and that foundation which enables you to put things on autopilot to free up that mental space, to be creative and, and to do what artists are great at.

[00:27:13] Stephen: the world needs more artists to be creative, just simplifying things and, and having a, a strong financial foundation will do.

[00:27:19] Stephen: that

[00:27:20] Matt: I really love what you said about, uncertainty, especially, you know, that's, the big fear that, hinders people. just the concept of walking through like a dark field, are you gonna feel more comfortable if you have a light or if you don't, I think it was.

[00:27:33] Matt: Eisenhower that said planning is invaluable, but the plan is often useless. There's something to that effect. even if you get down to the nitty gritty some figures have to change or, gear breaks down in the middle of a tour and you have these unexpected. Expenses, and hindrances really the fact that you've taken a little bit of time You've worked together. everybody, both near and far all have. A rough picture of what's going on. it makes it a lot easier for you to navigate those waters of [00:28:00] uncertainty when me as an artist has someone like you as a financial planner and being like, oh yeah, well that's okay because we had this account that's, What was already set up that says, oh, when gear breaks down on tour, and now we can pull some funds out of that so we don't have to worry about pulling funds from our gas budget or, from our tax budget or things of that nature.

[00:28:19] Matt: when you sit down and you make a plan and just having everybody all in on that conversation, that is where the most work gets done. And even if a lot of those things end up getting thrown to the. Everybody's head is already in the right space.

[00:28:30] Matt: when the boat does start to rock, everybody knows to grab an war. rather than saying what do we do? What do we do? You know, does the ship capsize? Do we all die? Are we gonna eat tomorrow? You know, can we have gas? Do we need to cancel the tour? It's like an, all these just completely irrational thoughts like flood.

[00:28:46] Matt: And it's like, oh no, like we've already planned for this. was that plan accurate? no, we couldn't have planned for, going through four wheel bearings in one tour because it turns out the rotor was actually the problem and not the wheel bearing. well, yeah, that's [00:29:00] true, but we did expect to at least have to like change two tires and that didn't happen.

[00:29:04] Matt: So we still have a little bit of surplus that we can apply to these other areas. those waters of uncertainty. that really is just like so much of the, the crippling aspect of the music industry and that fear of the uncertain and the pandemic comes in and like some people shine, some people see that chaos and say, this is our opportunity. I'm gonna record. A whole album during this time that we have down, then we see other people that it's like, the, the sheer depression of everything going on in the world caused me to buckle under the pressure. And then all of a sudden this band that was consistently like streaming really, really well all of a sudden, missed a monthly release.

[00:29:39] Matt: And then that's the slow degradation of their career. I love what you said about that, Stephen. I think that's right. nail on the head.

[00:29:46] James: Yeah. Just to add to that, Stephen, you know, we wanna talk about your book. I have one last question before you get there, mentioned Stephen paying yourself too much or not paying yourself enough. If you were to look at an artist, is there a percent range that you would give [00:30:00] as an acceptable recommended profit margin that they should aim for?

[00:30:03] Stephen: very good question. So in my book I talk about what's called a minimum viable Lifestyle. Budget. And so that's something that you, need to sort of figure out your lifestyle costs. Go through your bank stamp, line by line, figure out what you need to live a good life, to exist to function.

[00:30:21] Stephen: Maslow's hierarchy of needs, you need to create yourself a foundation to be able to build a, platform. And so that's for you personally. you need to put your own life jacket on first. But what is the very minimum amount that you can survive off?

[00:30:34] Stephen: And set that as your sort of, your, your, minimum salary. You need your, band or you need your music. business to earn, at least that to get off the ground before you can start thinking about it full time. So that's kinda like the first thing. if you're starting on the next phase.

[00:30:47] Stephen: in the book I talk about the salary cap approach. Everyone in the US knows the salary cap because it's big in, sports. in the US it's mostly to sort of create parity amongst teams. Whereas in the uk, the salary cap method is [00:31:00] used to make sure that the clubs don't go out of.

[00:31:02] Stephen: business it sets a percentage of their revenue as a maximum that they're allowed to pay in salaries. And so I borrowed that concept. And this is what we use with Iconac when we're looking at how much you should be paying out to band members or. as a percentage of your revenue.

[00:31:17] Stephen: And so what we do is we walk through the numbers with them. We start with, the income the costs and, taxes and, and make sure that we've got your, market rate salary in there. And then we have a little formula that works out what your salary cap is.

[00:31:31] Stephen: And that gives you a range with how much your business can afford to pay you without going. bust basically. what we also recommend is that you build up a reserve of, three months of your salary cap in the bank as well, because earnings as, as you said, are unpredictable and can be lumpy, you've gotta have three months of salary in, in the bank so that you can keep going because the worst anxieties you're gonna have as someone in a band is when I come back off tour, am I gonna be able to feed myself?

[00:31:56] Stephen: Have I gone off money to pay my rent? and it's a real [00:32:00] problem. But if you know that you've got three months coming back off tour, you know, you can get back, regroup, plan, go again. going back to ask your question, what percentage of your income, it depends on your business, depends on your business costs, depends on your revenue.

[00:32:11] Stephen: Because obviously if you're turning over a million, 10% of that is gonna be a much bigger number than, you know, 10% of 10 grand. So it is looking at the numbers in, in the context of, of what you can afford. but it's a really good point, and, you can't overspend.

[00:32:24] Stephen: So the point is that there's a cap on what you can be paying out. So overpaying yourself is as much of an. For, for independent artists as not paying yourself enough. And it's really important to get that balance because if you don't pay yourself what you should be worth, then that is a very quick way to lose motivation.

[00:32:42] Stephen: band members will start peeling away. they will start having families, they will start having other commitment. They will start needing to find other ways to make. So on top of sorting at your taxes, that's number two in your priority list. and working through how you set that and understanding what that number is.

[00:32:57] Stephen: And from a strategic perspective, [00:33:00] understanding what your revenue target then needs to be. Because then you can go to a manager and say, look, we've played the numbers. We know that we need to make this amount of. , Mr. Manager, you need to go and pull in some deals to help us with this, or as a band, we need to think of some commercial strategies that will help us get to this point so we can carry on doing what we're doing and thriving

[00:33:17] James: I love that answer. It's way more complex than I was hoping, but it makes total

[00:33:22] James: sense and I'm looking forward to seeing some artists in our community implement that because, you're absolutely right. An artist who's making, 10,000 a year isn't gonna have the same capabilities to pay themselves out as an artist who's making millions a year.

[00:33:36] James: That's such a, wild difference in the landscape. So I'm really glad you explained it that way. And it also makes me really excited to read your book. I it came out last week as of the time of this recording. But by the time that this episode drops, which is gonna be December 27th, I'll hopefully have finished it by then, and everyone who is listening, I'll put it in a note in the show notes of uh, what I thought of the book. But to get to [00:34:00] the point, it's titled, dream Like an Artist. Think Like an Accountant. And in the US you can get it on Amazon, it's on Kindle as of right now, at the time of recording for 99 cents. Or you can get the physical copy for about, I think $16. But Stephen, please tell us more about the book.

[00:34:14] James: I can tell people where to get it, but you're the expert on the

[00:34:17] James: book cuz you wrote it.

[00:34:18] Stephen: a lot of it touches on what we've talked about today it, and it really dives into those three areas of an easy way to manage your taxes, and the salary cap a way to set that up. So I, introduce, at the start of, of each of the sections, a story and it's actually a real life story with me. with a client and then an issue that sort of forced them into having to make a decision to do something about, their taxes, about setting their salary correctly. And then in the final chapter, it's about building that financial safety net, and then paying yourself when times are good and how to know how much to to pay yourself.

[00:34:50] Stephen: So what I try to do in the book is to kind of remove a lot of the noise, around accounting jargon. So I tend not to. Much of it in there there's some simple to [00:35:00] follow checklists with sort of how to set things up and some, some templates and things like that.

[00:35:04] Stephen: But I try and keep it really to a minimum. And it's specifically written to be, neutral. So I'm not giving any specific tax. around what you can deduct for expenses. It, it's not about that. It's about concepts. It's about managing your taxes.

[00:35:18] Stephen: It's about setting yourself the right salary and it's about creating an expense runway and, having enough set aside to write out the bad times. So it sort of boiled down to those three, concepts. there's gonna be an an audio book version coming out next month too.

[00:35:32] Stephen: speaking to my clients about it, that's the way that they want to consume it in the headphones between shows or whatever. So, that's coming out soon. But my real hope is that it kind of reduces the anxiety that paralyzes a lot of creators wherever they are in their career.

[00:35:46] Stephen: the concepts in there are actually more specifically designed to those starting out, Anyway, it's out on Amazon, get it the AM Amazon US

[00:35:53] Matt: Congratulations

[00:35:54] Matt: on that, by the way. That's awesome.

[00:35:56] Stephen: Thank you,

[00:35:57] James: my research I found an older book that was targeted [00:36:00] to the UK audience. Do you have any other books you wanna shout out as well? Or is

[00:36:02] James: it those two?

[00:36:04] Stephen: that was my first book. the UK music artist. Just a practical guide to starting a business. So that's, UK focused. they're the only, only two books the moment. But yeah, no, I'm excited for this one to come out. It's been a long time, the making actually wrote most of it during the pandemic yeah, a lot of ideas were inspired from that time talking to people. a lot of people in some very stressful states understandably in that. . it kind of prompted me to create a solution. And I was getting people that were coming to me that I couldn't, serve in iconic because we take on clients at particular stage in their career, post signing a big record deal or something.

[00:36:37] Stephen: That's when it makes sense to have a business manager. But there are still challenges for early stage artists, independent artists. That perhaps had a CPA but not a business manager, but they needed the support or some elements of support from a business manager. And that was kind of my inspiration to create something that provided infrastructure or a support, for those artists and creators.

[00:36:57] James: I think that's wonderful for you to say, Hey, this [00:37:00] community is underserved. Here's what I can do. And you're adding value to that community. So first of all, just thank you for coming on the show to talk about this. Thank you for writing the book. I'm excited to read it. I know Matt and I were talking about it before the episode, and it

[00:37:12] James: sounds like Matt's gonna read

[00:37:13] James: it too, Matt is in a

[00:37:15] Matt: I'm gonna get on that audiobook for sure. I think there's so much to be gleaned from hearing an author's voice and tone and inflection and I would go to a conference before uh, reading a book any day of the week especially if it was like a reading from the author.

[00:37:27] Matt: there's so many subtle nuances and body language and things like that, that, get missed in text. So, I'm definitely excited about the audiobook that's right up my alley.

[00:37:36] Stephen: Great. I mean, I did read it myself, , I'm not the best at reading out loud. But it, that was kind of the feedback I was getting from, my client as well. they wanna

[00:37:43] Stephen: listen to stuff.

[00:37:44] Matt: Well, it's really nice to be able to put it on inside of the van while you're traveling, and it's like all your band mates have to listen to it. So it's like whether or not you guys want to be on the same page, like we're having a financial planning meeting and Everybody, give me all of your noise canceling headphones.

[00:37:57] Matt: You know,[00:38:00] [00:38:02] James: All right. Well, Stephen, thank you again. Just one last question for you is where should people go to learn more about

[00:38:07] James: you?

[00:38:08] Stephen: So I am on Instagram Stephen Pell LinkedIn. Just type in Stephen Pell. website is iconic.com. That's icon ac.com.

[00:38:19] James: All right. Wonderful. And just to point out that, is it Stephen with a pH? Not Stephen with a V. So s t e p h e n, Pell, P E L L, on Instagram. Thank you again, Stephen for joining us. I'm really glad you're here and I hope you have an amazing holiday season. And to those of you who are listening, Merry Christmas retroactively and happy New Year in a few days.

[00:38:39] James: Thank you everyone. Have a great day.