Guest Blogger, Anita Katzen, CPA & Partner at Schulman Wolfson & Abruzzo LLP
To listen to Anita’s interview on the show: http://bit.ly/xnnKR4
When people think of the entertainment industry they think of the fame, privilege, perks, and financial success. What is not in the forefront are the team who help guide the entertainers such as agents, lawyers, stylists, personal assistants and business managers, to name a few. These professionals become not just business related necessities but confidants and an important part of managing fame.
Unfortunately, too often, we hear of entertainers who end up losing it all, filing for bankruptcy, and even some having no place to live. This can partly be the result of poor business management advice. Finding the right business manager is important to protect the things that are important: financial stability, planning for the future, and sustaining life while doing what you are passionate about.
In my over 25 years as a successful business manager for the day to day finances, finding the right business manager can come down to three areas: Helping you map out what is important to be financially content, helping you control your spending, and helping you save for not just the ups and downs but the future.
Here are a few things to take into consideration when looking for a great business manager:
Helping you map out what is important…
A good manager steers their clients to make their money work for them. Helping clients get a handle on purchasing what they need as opposed to what they want. It is important to find out “what are the top 5 things important to you?” The answers could range from the tangible such as clothing, travel, and entertainment to future security. The bottom line is they can always easily answer the question. My belief is they can have all they want, but they have to do away with everything else that you don’t really care about.
Helping you control spending…
It is vital to find someone who will help get control of spending, which in some cases could take years to stabilize. Many clients engage a business manager because they have found themselves in debt. Often, entertainers, especially early in their careers, spend more than they make. They don’t take into consideration the fees going out for the agent and manager; usually 10% for agents and 15% for managers. In some professions in the industry, such as models, the agent fees are sometimes 20%. After those fees they need to pay the expenses like everyone else which include taxes, personal expenses, and living expenses.
To combat with the fees, the entertainers’ mentality usually is I WANT IT NOW! Unfortunately so many don’t know what it means to do without or even just put off buying something on a whim. A good business manager will try to teach their clients the difference between wants and needs. This becomes especially important when most have an unsteady income. For example, an actor’s series ends; or musicians often have many sources of income that are unpredictable and erratic; producers and filmmakers work years on a project. Often there is not a big payday at the end of these projects. The concept of wanting it now can be particularly challenging in today’s world. We are constantly bombarded with advertisements, promotions, and tactics to show us what is available to buy, making it even harder for people who don’t have a controlled spending mentality.
Helping you plan for the future…
A good business manager pushes their clients to save money. That savings will help them carry through the tougher times, when the paychecks are not rolling in, and will help them maintain their cash flow in retirement. I always stress to my clients that you need to have your assets work for you. For example, if they have vacation homes, they could rent out when they are not using them. Entertainers who purchase many homes cannot necessarily afford to pay the overhead without receiving rental income.
A good manager is not afraid to say NO. They are there to pay the bills, make sure the entertainer is receiving their income through contracts, payroll, and residuals. They are most importantly there to make sure the entertainer is putting their money away for the future and for retirement.
I think the best example of what you are looking for can be found in this quote from my client, Melissa Archer, an actress on One Life to Live, “When I first met my business manager I didn’t know much about money except how to spend it. When someone could take me, the girl who spent money like tokens at the arcade, and put me on a budget that worked for my personality, and then saved me a ton of money, that to me is a good business manager. Someone you can trust and someone who wants you to do better”