24 Pros & Cons Of Starting A Record Label (2024)

Rewarding work

Starting a record label can be really rewarding work. After all, you are solving an immediate issue for your customer and you're working on something you truly care about.

Meaningful business connections

You never know who you will meet as a record label. This could be the start of an incredible business opportunity!

Daily physical activity

Record Label's typically involve a much greater degree of movement than other lines of work. Most days, you will spend your day walking, running errands for your business, and performing a multitude of tasks. This can have a positive impact on energy levels and your overall health.

Amazing perks and discounts

Working in the record label comes with its perks! As a seller for these products/services, you typically also get to enjoy industry perks and discounts.

You are your own boss!

With starting a record label, you are the one to make decisions for almost all of the operations. Calling the shots can be empowering and liberating!

Local Community

One of the best parts of starting a record label is that you can develop a local following by selling your products at craft shows, farmers' markets, or even local storefront businesses! This gives you access to additional revenue streams and loyal customers.

Higher likelihood of getting referrals

This business is all about referrals, which can be a a very impactful way to attract and retain customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.

Location is everything!

When operating a physical storefront, the location often speaks for itself and serves as it's very own marketing tool! It's important to choose a location in a high traffic area so you can spark curiosity and get people through your door!

Face to face interaction

If you are the type of individual that thrives on human interaction, then this is the business for you! With a record label, you will be hands-on with customers and or employees every day.

Simple business model

A record label has the advantage of a simple business model, which makes launching and building the business more seamless.

You get to do something you truly love

With starting a record label, you get to put your energy into something you are truly passionate about! You'll find yourself devoting as much time and energy as possible into the business to make it successful.

Easy to Learn The Business

When starting your record label, there is a ton of information readily available to you online (Facebook groups, Youtube videos, Starter Story etc). This will help you get the business started and answer any questions, doubts or concerns you may have.

Never a dull moment

With starting a record label, there is truly never a dull moment. Your job offers a lot of variety and allows you to meet interesting people from all walks of life.

Crowded Space

Competition is high when it comes to your record label, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.

Finding The Right Supplier

Most businesses in this space go the supplier/manufacturer route, which isn't a bad thing! However, finding the right supplier can take a lot of time, energy and trial/error. If done properly, this process can save you months (if not years) of time and energy. More on this below in the "finding a supplier" section.

Motivation of employees

If you plan to have a sales/content team on board, finding creative ways to motivate them can be a challenge. It's important that you're able to offer great incentives and a good work environment for your employees.

Low margins

The gross margins for your record label are typically around 43%, which can make it more challenging to incur new expenses and maintain profitability.

High employee turnover

In the record label, employee turnover is often high, which can be quite costly and time consuming for your business. It's important to try and avoid this as much as possible by offering competitive pay, benefits, and a positive work environment.

Taxes

As a record label, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.

High overhead expenses

With starting a record label, there are overhead expenses that come with selling a physical product. You will want to make sure you strategically budget for these overhead costs. We discuss this more in the startup costs section below.

You may need to charge sales tax

If you are selling your products in various states, you may be required to charge sales tax. Although this may not impact your financials specifically, it can be a headache to create a process and procedure for this. To learn more about sales tax, check out this article

Time commitment

With starting a record label, all responsibilities and decisions are in your hands. Although this is not necessarily a negative thing, work life can take over at times. This can place a strain on friends and family and add to the pressure of launching a new business.

You might struggle financially (at first)!

If you bootstrap your business or choose not to pay yourself (or pay yourself less than you were making at your corporate job), this can be financially taxing. It's important to adjust your lifestyle and set a plan for yourself so you don't find yourself in a stressful situation.

More of a challenge to run your business from home!

Running your business from the comfort of your own home is a big appeal for many entrepreneurs. With a record label, you are more likely to run your business out of your office or storefront space.