Friday, May 29, 2009

Patience Shall Be Rewarded

There is nothing costlier than instant gratification. Once in a while, you might get lucky and have a killer deal fall in your lap just when you need it, but generally speaking, whenever you go for the quick and easy option, you're probably getting ripped off. There is now a gourmet coffee shop on every corner in most cities, but it's the most expensive way to get your java. Buying concert tickets online and having them mailed to you could cost up to $30 in extra "convenience charges" versus going directly to the venue box office to purchase them. The local pizza shop gladly offers "free delivery", but you will pay full price for that pie, and you'll have to tip the delivery guy, too.

Those are just a few trivial examples of what I'm talking about. I come from a long line of serious bargain hunters, and we can be as patient as a spider in its web, just waiting to pounce when the right opportunity comes along. Eew! Sorry, that's a creepy analogy when I read it back! But hopefully, you get my point. I'll give you a couple more examples.

Last year, I decided to buy myself a really nice keyboard and get serious about playing piano. However, being a full time bassist, I couldn't really justify the $3500 cost of a state-of-the-art new keyboard. Rather than settle for a mediocre new instrument in my price range, I just started scanning the classifieds for a bargain on a great used one. And scanning.....and scanning....and scanning some more. Real bargains don't come along every day, but I had decided on my budget (between $500-$1000), and I was willing to wait. Finally, after a few months of searching, I found exactly the keyboard that I wanted, in excellent condition, for only $800. I already had the cash on hand, and I scooped it up on the same day the ad was posted. Cha-ching! That's $2700 I saved right there.

I have lots of friends who go to new car dealers to trade in their old vehicle and pick up a new car with "no hassle, no haggle". That is the quick and easy way to buy a car. It is also the sucker's way! A dealer will be happy to make your experience quick and painless, as long as he is giving you a lowball price for your trade-in, getting the maximum price for the new car, and probably shaking you down on the financing deal as well. No matter what kind of car you're looking at, you could save thousands of dollars, often $10,000 or more, by holding out for a bargain on a good used, low mileage vehicle of the same model. But you must be willing to wait, wait, wait, and scan, scan, scan. And also be willing to walk away from a lot of deals before finding your bargain.

Be careful not to get stuck in an emergency situation where you must buy that car today because you waited until your old car died on you, or you have to run to the overpriced local music store right before your gig, because you have completely run out of drumsticks. Without a little advance planning, you won't be in a position to hold out for bargains, so plan ahead for purchases. Then sit back and wait for the opportunities to come along.

Friday, May 22, 2009

More Miscellaneous Money Saving Tips

Learn to Cook. I mean really cook great food. This may require a modest initial investment in some kitchen appliances, cookbooks, spices, and such, but it will save you a bundle in the long run if you have been eating out just because you're so sick of making macaroni and cheese. More importantly, learning to cook really fine meals is guaranteed to significantly improve your quality of life, and probably your health, too. It does take some time to prepare a good meal, but you can always make extra portions and eat the leftovers for several days. Yummy!

Periodically comparison shop for insurance. My health insurance premium went up 139% in the last 3 years! At the time I signed up for that policy, it was the best deal around. Fortunately, I'm still healthy as a horse, so I checked around and found a much better deal with another company that will save me hundreds of dollars per year without sacrificing quality of coverage. If you have serious pre-existing conditions or recent health problems, you might possibly be stuck with your current insurer, but you can and should occasionally compare deals on car insurance, rent insurance, etc. to make sure you are still getting the best deal available.

Take care of yourself! Do I even need to tell you that smoking, drinking, using drugs and lack of exercise are costly? I don't know anyone who can really afford to develop health problems these days, but we musicians especially need to improve our odds by staying fit. As with cooking, getting in shape will also yield quality of life benefits and probably improved musical performance.

Sometimes procrastination pays. In most cases, putting things off only causes bigger problems and costs you additional money, but not always. For example, the longer you can postpone doing laundry, getting the car washed, or getting a haircut, the longer it will be before you need to have it done again, right? Of course, taking this advice to the extreme would lead to bad hygiene! But the same principle also applies to getting a new car or a new guitar, so it's something to consider.

Ask for a better deal. Many Americans tend to accept whatever price they are quoted without question, when in fact most product and service fees are subject to some price negotiation. If your credit card company suddenly jacks up your interest rate, call and ask them to lower it. The worst thing that can happen is that they will say no, but it doesn't hurt to ask.

Friday, May 15, 2009

Don't Make it Personal

I was once advised to treat my money as though it belongs to somebody else, as though I have a solemn fiduciary duty to protect and preserve it for my future self. Looking back, I think that is some of the best advice I ever got. Money flows in and out of our lives like water, and perhaps because of its intangible, liquid nature, it can be easy to adopt a casual, easy-come-easy-go attitude about it. But without a constant, vigilant effort to preserve money, again just like water, it tends to evaporate.

Don't invest for personal, emotional, or sentimental reasons. If you have some money, you may be approached by friends or relatives to invest in their business ventures. They will probably be very sincere and persuasive about the prospect. It might sound exciting, and you will naturally want to help facilitate their dreams, but this is the point at which you need to remember your duty to preserve money for your own future. I recommend that you think very carefully and do a lot of thorough research before even considering such a proposition.

First of all, partnerships often end badly. You might be best friends in the beginning, starting off with the best of intentions, but sooner or later, somebody will want out of the deal. When that happens, the remaining partners have to take up the slack, figure out a way to buy out the share of the exiting partner, etc. Even if your business venture succeeds, the stress of co-owning a business can really strain relations. Sometimes, if a friend borrows money he is later unable to repay, you might wind up losing the friendship, too, simply because he is too embarrassed or ashamed to face you again.

Secondly, the failure rate of new businesses is very high. If the proposed investment is a new venture, there is a good chance that your entrepreneur friend hasn't really done all of her homework and doesn't completely know what she's getting into. If it's an existing business with a good track record there may be better odds, but why do they need your money if they are already doing so well? In any case, sinking a significant portion of your money into one business is a violation of the basic principle of investment diversification, and puts you at unnecessary risk.

When I do embark on a private business venture, I prefer to go it alone, limiting my investment to an amount that I can completely afford to lose, and knowing that if things don't work out I will only have myself to blame. For the bulk of my money, I always remember that responsibility to preserve it first, and I stick with boring, safe, impersonal types of investments.

Friday, May 8, 2009

Find a Niche

When I first came to L.A. back in the eighties, it seemed like everybody in this town was an aspiring shredder, complete with spandex, big hair, and Jackson guitar. I mean, there were more glam metal rockers here than there are Elvises in Vegas! It was a ridiculous overabundance of people all trying to get in on the pop culture fad of the moment. Of course, there wasn't nearly enough demand in the music business to accommodate the supply of rock bands in L.A. (still isn't, as a matter of fact), a state of affairs that led to the infamous "pay to play" phenomenon at Los Angeles nightclubs. We all know that when supply exceeds demand, prices fall, but did you know that when supply gets outrageously excessive, prices (i.e. musician's wages) can actually become negative? Don't let this happen to you!

How can you avoid such a fate? By finding a specialized niche. If you are trying to sound like the current Hip Hop chart toppers or American Idol winners, chances are that 1) that style will no longer be marketable by the time you master it, and 2) there are millions of other musicians aspiring to the same thing, so the competition for those gigs will be overwhelming. If, on the other hand, you devote yourself to mastering a less common or less currently popular genre of music, you may actually find it easier to get gigs and make money.

This seems ironic at first, but makes sense when one thinks about relative supply and demand. For example, when I lived in Washington, D.C., I was a member of a local Zydeco, make that the local Zydeco band! Certainly, Washington is not known as a hotbed of Cajun and Creole culture, but there were just enough Louisiana-style dancers there to generate steady demand for live Zydeco music. And when they needed a band, we were the only game in town! There was never any shortage of gigs for us.

Here in L.A., I know one band that plays Hawaiian music exclusively. To be honest, they are not the greatest master practitioners of that musical style, but they have their act all worked out, with hula dancers, leis and everything, and they work constantly making good money. I have another friend who specializes in early rock and R&B style drumming. He has deeply studied this style, owns plenty of authentic vintage drums, and has made a name for himself as the go-to guy in an often overlooked older style of music.

A geographical niche might also work for you. L.A. and New York are surfeited with professional musicians, but some smaller towns and rural areas are starving for entertainment. Once again, if you are the only game in town, you will get all the gigs! However, in smaller towns, there also is often a shortage of musicians to fill out your band, so watch out for that potential problem. Good luck, and I'd be curious to hear from you about any unusual niche gigs you have experienced.

By the way, there is yet another new free resource listing links of interest and benefit to independent musicians. Please check out Music Nomad.

Friday, May 1, 2009

Negotiation Part 2

Thanks for the helpful comments and tips contributed by readers to last week's blog entry! We have all learned some tough lessons through past negotiation experience. The important thing is to use that experience to your advantage in future deals. Here are a few more suggestions that I have on the subject:

1. Limit your own authority. You may have had the frustrating experience of bargaining with a car salesman at a dealership, and being told "I'll have to get approval from my manager for that price". This is a common ploy that is used to keep their price high. You seem to be bargaining with someone who lacks the authority to make price concessions, so you (the buyer) wind up making all of the concessions yourself. Of course, when you're buying a car, you should never tolerate this tactic. You should insist on negotiating directly with someone who has authority to agree on a price. But when you are selling your band's services to a club owner, the same kind of strategy can work to your advantage. If the client offers a fee below your asking price, you can tell him that you will need to consult with the other band members before agreeing to such a low fee, and chances increase that the busy club owner will make a concession on the spot just to get the deal closed promptly.

2. Play up your popularity. The music business is a lot like the fashion business. Everybody wants in on the latest fad, and nobody is interested in last year's products. We would all like to think that the service we offer is all about musical quality, but to a large extent, it is often about popularity, so the busiest bands often attract the best offers. If you seem to be really busy and in demand, clients will find you more appealing and also will feel like they have to compete (i.e. offer more money) to win your services. You should definitely let them know about all the great gigs you are currently involved in, but of course you must not lie. If you promise the manager that you can pack his club on a Monday night, you better be able to deliver.

3. Consider the whole package. A steady gig in hand is worth two in the bush, so consider making some price concessions in exchange for stable employment. Also, be willing to barter and cooperate to reach a deal. For example, if the venue is running on a really tight budget, you could agree to play for $10 less per band member in exchange for free meals. Some venues provide a house PA system for your use, which will save you a lot of setup time and trouble. That kind of thing may be worth making some bargaining concessions. On the other hand, if you have to schlep your own PA, lighting rig and instruments 100 miles to the club, then you should explicitly list those expenses to the club owner as justification for asking a higher price.

Every gig is different, so it is important to think all of these things through and be ready to adjust your fees to fit each circumstance. Also, if you find yourself getting so busy with work that you become stressed, then that is often a sign that it's time to raise your rates. A problem we would all love to have! :-)