By: Paul Egan, CFP^®

Entertainment artists often hire business managers after other team members are on board. The other team members typically include an attorney, a personal manager, a booking agent, a publisher, a record label, and a publicist. Despite being a late addition to the team, the business manager provides essential functions. The business manager acts as a CFO for the artist. In addition to keeping a complete accounting of the artist's financial activity, business managers make sure income is received, invoices are paid, tours are budgeted, insurance coverage is in place and taxes are filed.

So how do you go about choosing a business manager? What should you look for? What should you expect to pay?

Many artists rely on their personal manager to refer them to a business manager. There is nothing wrong with this, but be aware that a possible conflict of interest exists. For example, if a business manager has brought several successful clients to your personal manager, your personal manager may feel obligated to refer you to that business manager whether or not that business manager is the right fit for you. Make sure that you are comfortable with your business manager; they will know about every transaction you make.

Also, look for a business manager with experience that fits your situation. For example, an artist just starting out needs a business manager that can handle the problems that arise from tight cash flow situations. Ask other artists for references. Ask them what they like and don't like about their business manager.

Will the business manager be the person you deal with? Some business managers have structured their businesses to handle a large number of clients and may delegate your account to a staff member. Ask how many clients a business manager has; ask about their availability. You want someone who will take the time to explain things to you.

Anyone can call themselves a business manager. There is no test, license or certification necessary. This is crazy, right? You want someone who is legitimate. Make sure your business manager has been in the business for a while, ask them for references and follow up with the references. A major plus is a business manager with a professional certification that holds them to a high ethical standard, like a CPA or CFP®.

Business managers generally charge a 5% commission on gross income. Many business managers will defer commissions (work for free) until the artist can afford to pay their fees (and still eat). You want someone who is willing to take a chance on you, but do not expect them to do this forever. Usually, a business manager will only stick around for one to two years before trimming non-producing artists.

Ultimately, choosing a business manager is one of the most important things you will do for your career. If you find one who fits you and your situation, who is well qualified, and who will take time with you, then you are free to focus on your unique abilities.