Christmas and New Year have been and gone and mobile DJs are left staring into an empty bank account and are hoping and praying that their mate who passed on some work, or their “agent” will come up with some cash sooner rather than later. Others will have submitted their invoices to venues and companies and they are hoping payment will be made by the due date, although many organisations often ignore these and pay when they want to [often thirty or sixty days later]Meanwhile household bills have to be paid and food provided. Running cars, vans and heating premises is a financial drain especially when a “business” is experiencing negative cash flow.
Gear For Sale
No surprise therefore that this is the time of the great DJ equipment clear-out sale. Facebook groups, Ebay and local sales sites are filling with items previously deemed to be essential, impressive, unique, the best, must have, fantastic, this that or the other. But now it has to go. They have to go. Why? The irony is that almost all other mobile DJs are in the same boat so there will be no takers or sales will be negotiated down to ridiculously low price.
What went wrong
Negative cash flow and the realisation that equipment is surplus to requirements is very much a reality check. Its a slap in the face, a wake up call. Where has all the money gone. how come there is nothing left in the kitty? If you are waking up to this reality it is time to make changes to your “business” now. I place business in inverted commas because this situation proves that your DJ activity is not being run as a business. Hobbyists are deluding themselves. Hobbyists are beginning to realise one of two things. Either they are not charging sustainable fees for their work or they are spending the profits without regard for the consequences.
What individual DJs charge is none of my business however DJs need to learn that their fee is intended to cover many different costs required to provide a sustainable service to their clients. Providing a cheap disco to a client last year may have appeared to be a good idea but not if you’re forced out of business this year.
Account for every penny.
My good friend across the pond, Jason Spencer, presented a seminar at last year’s Mobile Beat Convention. It was called Profit First. In the seminar Jasen explained how to break down every pound earned into constituent costs as a percentage of the whole. This exercise will result in you being aware of what needs to be done with the money earned. A big realisation was finding out just how much of each pound is actually your salary. How much goes on advertising, maintenance, fuel and vehicle costs, music purchasing, upgrading equipment, taxation and accounting fees? In reality many DJs do not pay themselves a salary. Theses are the DJs who see their earnings swallowed up by the costs because they are not in control and have no idea how their spending is exceeding their income. So when the income dries up, in January and February, they find themselves broke or bust.
Jason advises, “Pay yourself First!
Do the maths, allocate a percentage that is paid frequently into a separate bank account and create Paydays when you draw your wage. Do the same for Taxes. likewise for expenses, training and reinvestment. You will end up with four or five accounts. Make sure one of them is labeled PROFIT. The profit account will more than likely only represent five or ten percent of your income but keeping it protected and ring fenced will allow you to draw on that profit and use it for non business related reward. The profits are yours to enjoy. They should be used for treats like holidays, gadgets, cars, watches, quality time pursuing hobbies and other interests, the list is endless. You have worked hard and you deserve reward for what you do.
Take action now
Don’t find yourself in the January doldrums. Next year make sure you have a financial cushion to relax on. Take time off and enjoy some winter sun. Take advantage and snap up a bargain or two as others unload their equipment for a fraction of what it cost. Or better still book yourself on a training course. [not mine – i’ll be retired this time next year]. I wish you well. Happy New Year. May it prove to be a prosperous one for you.
more details about Jason and his Profithood Academy can be found here https://www.facebook.com/profithoodacademy/