There is constant pressure for projects to go over budget. It’s a universal truth. Undertakings always cost more than anticipated. The consequences for going over budget can be significant: requirement to take on debt, cancellation of parts of the project, loss of reputation, bankruptcy, and so on.
The article from Berklee Online, authored by Jonathan Feist, provides comprehensive insights into budgeting and financial management for musicians. It emphasizes the importance of staying within budget to avoid negative consequences like debt, project cancellation, or loss of reputation. The content is adapted from Feist’s textbook “Project Management for Musicians: Recordings, Concerts, Tours, Studios, and More,” which is used in his Berklee Online course.
- Project Financial Management in Context: The article stresses that financial management of a project should be viewed within the broader context of one’s overall business and life. This includes considering tax implications and the fact that projects often span multiple years.
- Importance of Tracking Finances and Budgeting: Keeping track of project finances and setting a budget is crucial. This not only prepares you for potential audits but also provides valuable insights for future projects. The article suggests using financial management software like QuickBooks and setting aside specific funds for projects.
- Essential Accounting Tools: The article outlines three key types of financial documents: transaction registers, summaries, and reports. Each serves a different purpose:
- Transaction Registers: These record every transaction, providing detailed financial data organized by date and category.
- Summaries: These organize transactions by account, offering a high-level view of project costs.
- Reports: These use summary data to provide an overall view of the project’s financial health, including profit/loss statements.
- Practical Examples: The article provides practical examples of how these tools can be used, such as a transaction register for a tour, showing how balances change over time. It also illustrates how summaries and reports can help in making informed decisions during a project.
- Realistic Financial Understanding: A key takeaway is the importance of having a realistic grasp of a project’s financial reality. This understanding is crucial for the viability and longevity of a musician’s career.
The article serves as a valuable resource for musicians looking to manage their project finances effectively, highlighting the need for careful planning, tracking, and understanding of financial tools.