The Financial Mistake That Ends More Music Careers Than Bad Music | EF EP 136

0:00 Most artists dream of that first big paycheck, but what they don't realize is that moment of success can actually destroy their career new. Artists, they start making. Decent money, getting decent shows. The pattern is always the same. Artists finally start earning real money and instead of building a foundation, they make the same devastating mistake. They'll go and buy a Rolex, or they'll go and buy a brand new car. Social media makes it even worse. Artists see flashy posts and think they need to keep up. You see another DJ. Post that they bought a Ferrari you're like Oh well. If they can do it. I should be able to but then. You don't know what happens behind the scenes, you know, did they mortgage their entire?

0:41 House to buy that Ferrari? Do they rent that Ferrari for the day? Within months, the same artists who were celebrating their success are completely lost. The DJ is like, I don't know where my money is going. I don't know how much money I have. I don't know how much I can spend on, you know, tour production. Jasmine Kwok, business manager to some of the most respected DJ's, has watched this cycle for years. Her solution? A complete mindset shift. Hobbies bleed money. But if you want to be a. Successful DJ with a career. And also have it long lasting you. Have to view it. As a business from the very beginning, in today's episode, we break down the invisible financial infrastructure that separates successful artists from those who flame out the red flags that destroy careers, and why transparency might be the most important skill an artist can develop. This is elevated frequencies.

1:33 Let's jump right into it. The first thing I want to do is actually discuss what a business manager does so that it's not confused with like ACPA or financial advisor or something like that. Yeah, absolutely. So business. Managers, we basically handle finances, the day-to-day finance. Of a DJ. So compared to ACPA, the way I like to look at that is CPA, they are your. Tax accountants. So they help save. DJs money via tax compliances and then you know, they help them with tax deduction, tax credits and just staying in compliance with the IRS so they don't come after you financial advisors, they actually think about.

2:14 The the future, so they're. Taking the money and they're helping the. DJ or. Client invest in their. Future where business. Manager where more the day-to-day we're communicating with a client on a day. To day basis we talked about. Budgeting. We talked about, you know, accounts. Receivables, payables. How much money is actually in the accounts that they can spend on operations cash? Flow, all of that. So we're kind of. Like the we are the CFO. Of a business because being a DJ now isn't just being a DJ where you. Show up to. A gig and you're like OK. That's it. Being a DJ now is your social media manager, you know.

2:55 You're out there. Creating your own brand? You're a label manager. You're out there also. Collecting. Royalties. You're a bookkeeper, so you're. All of these things. So what business manager does? What we do is basically we take that off their plate. And we handle all of that, everything related to finance. Yeah, that makes sense. So, so it's not necessarily for someone who is just starting out, has a couple gigs here and there. As for when you start to have like a lot of tentacles out and a lot of different aspects. And maybe like you're, you're paying people too, like you're paying a videographer on a regular basis, graphic designer or something like that. Exactly. It's. When finances become overwhelming and it's taking up most. Of the.

3:39 Time, most of the DJ's time or the managers time, you know, a lot of times people come to us. Because. The managers are like, I'm spending, you know, 10 hours a week chasing after invoices. And the DJ is like, I don't know where my money is going. I don't know how much money I have. I don't know how much I can spend on, you know, Torah production or. I just got this. Letter from the IRS. What am I going to do? And that's when a business manager is extremely helpful. OK, I was gonna ask that because I feel like a lot of artists will wait until something breaks or there's an emergency to say, oh, shoot, we need to bring somebody into the mix. Yeah, but when's the actual moment an artist should be thinking about bringing in a business manager? Yeah, ideally from the.

4:28 Very. Beginning. I think it's smart for artists to have a conversation with a business manager. I always encourage artists, hey, have a conversation with us. You might not be able to work with us now. It might not be the right time. But let's. Start planning for that. Have a LLC set up? Have a. Business account. Set up but a. Lot of the times DJs come to us when problems have arrived. It's almost like going to the dentist, right? You don't go to the dentist. Because. You know you're you're fine. You go to the dentist because you. Have a cavity. And we're kind of like the dentist. People come to us when there's already a problem and then we're like. OK, well you should.

5:08 Have done this, but no problem, we'll come in, you know, we'll help you. Fix the issue. Yeah, Yeah, that's a really good analogy. I have a dentist appointment next week, so yeah, I don't want to go. I don't want to go. It's a, it's a yearly or whatever biannual checkup or whatever. But yeah, everyone tries to push those things off as long as possible. And the longer you wait, the bigger the problems become. It's like a tumbleweed just gaining speed. Exactly. But if you actually go to the. Dentist on a yearly, you know. Basis just to get. Your teeth cleaned, you don't have to worry about that. And same with us if you have a conversation with us on a yearly. Basis will be, you know, we'll tell. You hey, these are the things you should look out. For.

5:51 And next year you're mentally. Prepared. Or you're prepared so that you don't have to, you know? Worry about sitting, say, in the dentist chair and be. Like, OK, you know. I have a cavity or something. How bad is? That exactly, yeah. Yeah, yeah. OK. So let's talk about like some some red flags because I just saw an article about Eric Prydz and his business manager stealing. Like I think it was more than $200,000 from him to file things he wasn't supposed to file. And I think because this world is so new for so many artists, they don't, it's easy for them to get caught up. Not just necessarily a business manager, but just a regular artist manager, whatever. So what are like the the red and green flags artists should be looking for when interviewing people who could potentially be their business manager?

6:44 Yeah, that's a great. Question I think a good business manager signs of a good business manager. It is the most basic thing but communication. When you send an e-mail to your business manager, a green flag is they respond in a timely manner. It might not be within the next 5 minutes, which is what. A lot of people expect, but within. 24. Hours. 48 hours. Depending on the issue, a green flag is when you ask a question and the business manager answers clearly and in a tone where you can understand it. Because finance finances. Can be complicated, right? So what we do is. We try to simplify everything and also I think it's important for business managers to have this transparency you shouldn't have.

7:28 To be afraid to ask. Your business manager questions especially about finances and that's something that. We have I, I haven't. Experienced myself, but you know when other clients come to us and they go, Oh my gosh, thank you so much for answering e-mail because my previous business manager never answered the e-mail or thank you for answering the question directly. Because the previous. Business manager never answered the question directly and I think the most importantly. You should be able. To have a financial statement. So we spent we. Send our clients monthly. Or quarterly? Financial statements depending which plan they're on and it shows everything. So there is that transparency that is really important. And I think also for the client themselves, they should be involved with their finances.

8:20 They don't have to know everything, but. Schedule a call with. The business manager at least once a year and go over things. Yeah. So I think. You know, in in that previous situation, it's, it can happen. It's, you know, it's not only to Eric. Pritz, but other. You know, you hear about, about Justin Bieber, all of that. But there are. Times where yeah, I also question like, is the artist having these discussions with their business manager, right. That's what I was going to ask next because I feel like a lot of artists think well and because sometimes artists blow up accidentally, right? So it comes at them so fast or or they just never thought that they would have their moments and then it and then it happens.

9:05 And so they feel like, well, financial literacy on my end isn't important. I have somebody to take care of that and I am so like anti that mindset. I read, I read textbooks because I want to be able to ask my accountant smart questions, you know, things that like he might not necessarily think of because he doesn't know my industry that intimately, like something like the Augusta rule or something like that. So why do you think it's important and what like what level of financial literacy do you think an artist should have before engaging in a business manager and hoping that they'll just take care of everything? I think it. Depends on the artists themselves, and it depends on individually.

9:51 Like how involved they should. Be but I think just knowing the basic. Of what? Profit and loss means. I. Think a lot of times when I hear a lot when I get on client calls, they're like, hey, you know, I'm making $1,000,000 this. Year. But I have no money in the bank. Like what is going on? Well. We go, hey, here's your profit loss. You're making this much, but you're also spending this much on expenses. Therefore. You don't have money, but in their mind they're just thinking profit, profit. Profit so. Some something as simple as just profit and loss. Also budgeting. That's a big one. DJs actually I. Think just people in general love to spend myself including, right Christmas around the corner.

10:34 I'm like, I love spending. Yeah, I'm like have. A credit card. I can spend money, but knowing. How to budget is. Important knowing how much money you're making and how much money you can actually spend. So I think that's. Just like the basics like that. You don't have to know about tax laws, you know that's. What Cpas are for? You don't have to know anything, anything too in depth and thinking like tax codes, like you don't have to know any of that, but do know the basic of. You have to pay your taxes every year. And we get into not heated arguments. But clients like to. Challenge us and. Go, hey, do we have to pay? Taxes and we say yes.

11:15 You have to pay. Taxes. You know the IRS will come after you. But we try to reduce the tax. Bill So just yeah, just really basic knowledge like that. And then during, you know, working with. Us I, I. Personally love to educate our clients so go. Hey. You know This is why you need to. Pay your tax bill or pay your taxes. Even though you haven't really earned anything this. Year or? You know This is why we need to create. A budget for you? Because, you know, you're spending XYZ amount, you're spending too much. So yeah, yeah, yeah, that's really important. And you said the word transparency earlier on the business manager's end. But let's talk about why transparency is important for artists because I feel like there's a lot of shame around not knowing some of these things because I mean, our school system doesn't teach it in, in, in, you know, practical application, right?

12:14 Like Johnny has 6 apples is not sufficient to, to for real life scenario. So talk about transparency on the other end. Like, has there ever been a situation where an artist just didn't disclose all the details? Maybe they were embarrassed and then like you were probably going to uncover it anyway and then it just took longer to complete something. Yeah, I think. Transparency has to be on both sides. Right for the artist, Yes there are. A lot of times where they are embarrassed and I have had artists that literally tell me like, hey, I'm embarrassed to share this. With you. And this will be, you know, 3. 4 weeks later because. They maxed. Out a credit card.

12:54 Or sometimes. They forget to. They forget to tell us that. You know, they lent a a friend in a business deal and then we're looking through their books. We're going, hey, where's this 50,000 dollars? So for us, we don't judge. We're here to. Help and. AI would love for artists to just realize that that we're. In their corner, the more transparent. They are with their finances, you know the better for us if they tell us like, hey, I don't. Know how to budget, like great, we can work on that for you. Or I'm in my 30s, I've been a DJ for, you know, 15 years, but I don't know how to.

13:36 You know I don't. Have a savings account. I'm embarrassed of that. Like how do I do that? We'll go. OK, no problem. We'll help you, you know, come up with a plan to save. Yeah. I love that. It's just like therapy or the dentist example, like you have to be honest about these things. You're never going to be able to get it to a good place. And I just hate that there's so much shame around money because like there's, you know, I'm somebody who was, and this is no fault of my parents, but I have, you know, my dad's an immigrant and my mom just never really. Her teaching skills weren't there. And that's not a discredit her. It's very hard to teach these things. And so I feel like I had no concept, no foundation of, of money knowledge for the first, you know, 10 years out of college.

14:27 And then something clicked and I was motivated when I quit my job to go full time in my own business. I was motivated to learn on my own. And there's still a bunch I don't know, but there was a lot of shame in that. Like, I felt like I was just like, I'm never going to be smart enough to understand these things. And then I just kind of took the first step and I'm like, wow, this is empowering. I feel like on the other side of shame is empowerment. Yeah, absolutely. And honestly, I'm in this. I was in the same boat. I didn't get my finances figured out until probably maybe like 10 years ago. I didn't know about Well, I did do my taxes, but I didn't know as much as I do now. I think it's. It's a. Very common problem that I think society just doesn't want to. We don't want to talk about our finances and ultimately what we want to do.

15:14 Is just educate. And empower. Like you said. DJs and go hey, you've never had a savings account? No problem. Share that with us. And then we'll come up with a plan and in a year you will have something in the savings account. And the next step is US explaining well what the savings account. What you can do is you know you can invest it, or if you want to buy a house, you know we can start planning for. That as well. So I think just financial literacy in general is just not spoken about just publicly anywhere. Yeah. And it's like, OK, so like your title is business manager, which to some people might just seem so straightforward, so analytical, but I feel like your job is probably a lot more emotional than most people would think.

15:57 Yeah. As you mentioned earlier, we're kind of like the therapist, the DJs are our clients, but a lot of times we interact with the managers as well. So a lot of times, you know, they come to us and they go, hey, can you have a conversation with so and so because they don't want to spend this amount on a production, but you know, can you have a conversation? Tell them that hey, you do have the money and it's you know, we'll. Do that. I think business manager. The title sounds really. Boring. It kind of feels like, yeah, we're just in front of our computer. Which we are. You know. Looking through excel sheet which we are but a lot of it is. Just understanding the client, the DJ themselves. Some DJs are very competent, they don't really need us, some are just.

16:46 Really requires the basics of OK, let's. Set up a business. Account. Let's set up. A bank account. For you to use so I think. Ultimately, in the end, like myself and my team, we are big fans. Of our DJs, so there is. That emotional tie, you know, when a DJ, when they release an album, you know, we share it in our group chat and we go, Oh my gosh, so and so has released an album. Everybody goes to listen. And I know for me, I live in LA, so whenever one of our client plays in LA, I'm out there, you know, watching them, going to their shows. I was going to ask that because you have a background in artist relations now in this in this, you know, era of your life, like, are you ever on site with any of your clients? Yes, yeah, all the, I don't want to say all the time, but whenever I can, I think it's important for us as business managers to be on site.

17:44 To see what actually. Happens in, you know, the DJ's office. I think it's important to understand, you know, why is the production manager asking for this? Large budget, it's like. Oh, when you're. At a show. And you see all the. Lasers. All the lights. Going off the LED screen, the. Graphics, you're like, oh, this is. Why the production manager, you know, asked for that or when a tour manager, you know, they spend like $1000 on Ubereats, you're like, well. That's ridiculous, but oh, it's because you know the the the crew has stayed late. You know, trying to get everything like break everything down and then take everything to the next next show.

18:24 It's like, yeah, they need to eat. That's why they spent $1000. But you wouldn't know that until. You're at the show. And you're experiencing it, and you go, OK, this makes sense. Wow, That's amazing that you guys do that, that that you seek to understand because a lot of things do look ridiculous on paper. Yeah, I had an experience recently where I was sharing with someone outside of the music industry, like a win, like a financial win for myself that was, you know, related to some of the things that I do. And this person is in a much different world. And they were just confused how that was even considered a win.

19:07 And I was like, OK, you just don't get it because you're like, literally in this universe over here. And the music industry is completely different. So yeah, like, very similar. How did you spend $1000 in new breeds? It's like oh, 20 people who are working like 16 hour shifts need to eat. Exactly. Yeah, yeah. So I, I really love that. OK, so let's like walk through a scenario. Let's say like an artist gets their first big check for something right? Like, and that that could mean something different to anybody. So the number doesn't matter. 20K50100, but you know, 500. What is like a mistake that you often see?

19:48 Like, like what will they do first with that money? And what would you rather have them do instead? Yeah, I think for a new. Artist that literally, you know they. They got their one hit and say. They, you know, they've hit. The first show fee of $10,000. They start making decent money getting decent shows. I think one of the first thing they. Do is they celebrate? Which is yes. I'm. All about treat yourself. You know, celebrate the wins, but don't go. Overboard. So what I've. Seen in some clients is they'll go and. Buy a Rolex. Or they'll go and buy a brand new car, which is fine but maybe not right now. You know, wait until you make $100,000 per show and what I would. Wish they would do.

20:31 Is just set money aside in a savings account or invest it because. Being a DJ, you know it's. Not everybody makes it. The career can be from 5 to 10 years and you have to think about the future. But a lot of. Times. They just get so excited about the. Present, they don't think about the future and that's one thing I wish our clients will think about. Or just DJs in general when you get your first. Paycheck set aside. Say like 10%, put it in a savings account, and then budget yourself to, you know, celebrate. But. Just say like 10% of that go go into celebrating, take your friends out, go. Buy the Rolex. If you can afford it, but don't, don't go.

21:14 Overboard. Yeah, the lifestyle creep thing is so common and living below your means is such a powerful, underrated thing. I don't know, I think his name is Ramit Sethi. I think I'm saying that, right. He has like a a series called like your rich life or something like that. Yeah. And he talks about like, define what your rich life is. If it's the cars, then have the cars be your thing. But your house might be a little bit more humble. If it's the watch is fine, but your car. And I definitely resonate with that because I've said this probably 100 times on this podcast. My Honda, my old trusty 2017 CRV has duct tape on the bumpers.

21:56 It's, it is, but she runs, it's fine. And I spend my money on, you know, nice vintage items for my house. So it's a balance. But I think there's probably, and I'm, I'm sure you've had these conversations with artists like, well, I see so and so doing something on social media like, you know, whether it's for lifestyle or for their shows, they think that they need to be in that place too. Exactly. Yeah, I think. It's a lot of time, social media, there's so much pressure. Right. It like it's that's like. You see another DJ. Post that oh they, they bought a Ferrari. You're like, Oh well. Well, if they can do it. I should be able to but. Then you don't know what happens behind the scenes, you know? Did they mortgage their? Entire house to buy that Ferrari.

22:37 Do they rent that? Ferrari for the day. And like you. Said it's it is. Live within your means. I always like to. Remind people like it's not about how much money you make, but it's about how much you spend. You can make $1,000,000 a year, but then you spend 2,000,000. You have nothing. So think about that. Actually, it's funny, a client asked me like, hey, I'm, you know, I know I'm spending. I don't know how to curb. Myself, you know. Do you have any tips? And I always, and I told them I'm like, hey, before you purchase anything, think about do I need this or do I want? This if it's. In the want, put it in your shopping cart. Leave it there for 2-3 days if you're still still. Thinking about it then OK, you know, purchase it or send us a text.

23:25 You know, ask us like, should I? Buy it. But just think about it, a lot of I and I do that with myself too. When I see something nice, I'm like, do I need it or do I want it? Yep. And then and then you realize sometimes after 2-3 days you're like, I don't want, like, I actually don't want this. Like, why did I think I wanted this? Yeah, because it's shiny and pretty. Like I, I, I completely get it. But yeah, I think. If really if. You just ask yourself. That a lot of times it stops you from purchasing and I tell myself that too. It's like I don't need that 10. Pair of shoes. Or maybe totally. Yeah. So then like there's this other argument that I get a lot on my, on my social media, specifically when I'm making business focused content. And I have like this series called Think like an Entrepreneur.

24:11 The number one comment I get is I just want to make music. I don't want to, I just love music I don't care about. And I'm like, OK, well, if it's your hobby, that's fine. But if you want to make a, if you want to pay your bills with music that is, that's great. But there's certain things that you need to do. You can't just make music. So can you help like give us a peek behind the curtain to like the invisible infrastructure that most people will never see, Like a successful artist that you've worked with, What was that invisible infrastructure in place that helped them be so successful? If it's a hobby, great. View it as a hobby. Don't think about money, just you know you hobbies bleed money but if you want to be a. Successful DJ with a career. And also have it long lasting you. Have to view it as a business.

24:59 From the very beginning you have. To go OK, I'm. Building a business. My business is being a DJ. I'm the CEO and in every, you know, successful company. There's ACEO. And a team of people. So then you have ACFO Chief Financial? Officer, we're the. Business manager, so we fit into that. Role you have a COO. Chief operating officer, and that's usually the manager. And then you have, you know, legal counsel. Don't sign anything until you run it by your entertainment lawyer. And then you have your agent who's your, you know, chief marketing officer. They're there to. Get you? Shows get you exposed.

25:41 To the rest of the world. So I think having the team in place is important, but also having the mindset that I'm running a business, I'm just not out here going to shows, you know, DJ ING and that's it. And then with that in place, I think. Everybody has their role for us. As business managers when? A DJ. Come to us. The first thing I ask is, do you have? The LLC set up. You know that will protect you if anything were to happen. There's also some. You know, tax. Tax things related to that where we can save you some money on taxes depending where they are in their career. Do you have a? Business account set up.

26:23 Because we have to. Keep your business and personal finances separate. So these are the. Basic foundations that we set up. For DJs. Yeah, I like, I like that example of the CFO like cause a lot of, you know, a lot of people who DJs start off in nine to five. So that's like a structure that they already understand and you're just rebuilding that structure within your artist career. Yeah. OK. So last question for you, where do you even find a business manager? Because that was even, you know, for me, the people that I have on my team all came from personal recommendations like my amazing CPA who I shout out all the time, you know, is a client of one of my other clients. And so personal recommendations are great, but not everybody has access to people who know people like you. So where can they go about finding a a business manager? Yeah, I think it is.

27:18 Asking around. Just like you know. It's almost. I feel like. D's when they when they look for a manager, you know, they ask their friends. Or they see. Oh, so and so has so and so as their manager, I think. Really ask people like who do you work with? I have Google before you know. Business manager Los Angeles. A lot of things pop up, but I think. Referrals are the best. Option option. Ask around, somebody will know, but once you. Get that referral. I think it's also important to ask, okay, you have so and so as your business manager. Why do you like? Working with them and ask for specific examples, don't just accept. Oh, they're good. It's like, okay, well why are they good? And.

28:00 You know there's a. Difference between somebody saying oh. They're good because they. Filed my taxes. Well, obviously everybody has to file taxes, but if they go, oh. My business manager is amazing because they answer my calls, they answer my emails. They've been able to save me a lot of money on taxes. I'm able to rely on them on everything related to finances. It's like, OK, yeah, go work with that. Person so I think a lot of times it. Is referrals a lot of? Our clients do come to us from referrals. But ask the. Questions and make sure when you talk to, you know, interview business managers, don't just go for the first one just like you. Would do with. You know any like finding a job?

28:42 You know you're hiring somebody for to be. In your company, interview as many as you can until you feel comfortable with somebody and you go, OK, I want to work with this person. Because they fit. What I'm looking for Yep, Yep. It's just like a therapist, like not all therapists are one-size-fits-all. It's the same for this role. And I love what you said about communication because everyone's communication style is different, but good communication, I feel like it's so hard to find it, especially today. And so if you find someone who responds to you in a timely manner, like for for me personally, I can overlook a lot of other things if I get somebody who's just commutative with me. So I love that you said that.

29:29 And where can people find you if they want to look you up? We're over at Iconic. So it's spelled I. CON A/C so iconic.com really simple. Love it. Well, this was such a pleasure. Thank you for all of your insight. And I'm, I love having people on the business side on this podcast because it's so important for artists to learn. Yeah. Thank you.