How To Go Broke Despite Your Success, The Lady Gaga Way

Lady Gaga Photo courtesy of Ama Lia (Flickr)
Image credit: ama_lia (via Flickr)

Guest Post by Jay Fleischman

She's brilliant. She's a flash in the pan. She's original. She's a hack. Say what you will, but Lady Gaga is clearly one of the most successful performers doing the rounds these days. With a blockbuster concert tour, a big deal with Google and more press coverage than anyone else, you can't deny that she's got a lot going for her.

In spite of that, her last tour left her with $5 to her name. So how did it happen?

It's simple, really – as business sage Notorious B.I.G. said, “it's like the more money we come across, the more problems we see.”

Art Is Business

You become an entertainer because you're an artist. Your core skill is in creativity, and that focus governs the way you approach life.  But once someone's willing to trade dollars for your art, it becomes a business. Given that your business is tied so closely to your art,  you've got to incorporate that into your world view.

Remember that you're going to need to keep positive cash flow in order for you to have the ability to continue to create and do what you love. Lawyers, accountants, managers and other advisors cost money, and they're necessary to keeping things in check. But when the dust settles you still need to feed yourself.

If you're spending more money than you've got coming in, there are only two solutions: either cut back on overhead or do more selling. The entertainment industry is vast, but selling more is frequently out of your control. A track fails to crack the charts, a movie doesn't open as well as was expected, a theatrical production gets poor reviews. It happens to everyone; thinking that you're immune is only going to bite you.

Cutting back on overhead can be tricky, too. There's a core group of advisors you can't do without, but there are also some things that may be considered luxuries. I'm not telling you to go back to ramen noodles, but remember how you lived before the money started coming in. Your success isn't an excuse to pay yourself back for all the foregone luxuries of bygone days, after all.

The Problem Of “Too Big, Too Soon”

You struggle for years trying to make a living. Then someone in the audience happens to know someone, and the world explodes. There's a ton of money on the table relative to what you're used to. You're giddy.

In many ways it's the same story being played out in small businesses all over. A product launches to critical acclaim. That venture capital money comes through. Either way, small becomes big – no, huge – overnight.

That's probably part of what happened to Stefani Joanne Angelina Germanotta, the 22 year-old who was propelled to success when her initial release dropped in 2008. Ever meet a 22 year-old who was well-educated in the ways of personal finance and money management?  Me neither.

If you're going to be successful in business then you need to get educated about running a business. And that's what you're doing now – you're running a business. Basic accounting, understanding a profit-and-loss statement, and managing the professionals you work with are just some of the things to keep in check. Our dear Gaga needed a crash course in running a small business at the same time she was recording videos, touring and doing the interview rounds.

Death By A Thousand Cuts

Some have derided the endless costumes used in Gaga's shows and videos, but that's a bit simplistic for my tastes. The costumes are part of the show, and without them Gaga may just be another performer trying to make a go of it. To call these luxuries is to forget how important they are to the experience Gaga is selling to her fans.

Without looking into her books I'm going to guess that it wasn't a single large purchase or even a single class of high-ticket items that sapped the money from Ms. Germanotta's bank account. More likely is that the money went on a bunch of smaller items that, when combined, amounted to a huge chunk of change.

By her own admission, Gaga didn't spend much money beyond a heart valve for her dad and a Rolls-Royce for her parents as an anniversary gift. True enough, these are big items – but nowhere near the amount of money she had.

Is this going to sink Gaga? Not at all,  unless she's comfortable joining the ranks of Toni Braxton (filed for bankruptcy not once, but twice) and devoting her time and energies to things other than her Little Monsters and creating her art.

 

Jay S. Fleischman is an admitted fan of Lady Gaga and bankruptcy lawyer. Follow him on Twitter and  LinkedIn

Whether your career is just starting, or you're more established, please give me a call  at (310) 434-4185 to learn how I can help you negotiate your best possible deal, protect yourself and realize your dreams of success and prosperity!

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