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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on November 11, 2021
Investment range
$17,950 - $216,000
Revenue potential
$100,000 - $1.3 million p.a.
Time to build
1 - 3 Months
Profit potential
$10,000- $130,000 p.a.
Industry trend
Stable
Commitment
Flexible
Important elements to think about when starting your radio station:
Owning a radio station is a lifestyle as well as a business. Educating yourself about what’s involved will help you decide if it’s right for you. Knowledge is power!
Every business has its pros and cons, which you should weigh to decide whether a radio station is a good fit for you. Here are some basic pros and cons of starting and running a radio station.
New music apps and streaming services are driving increased interest in new radio programming, such as podcasts. Podcast listeners are a marketer’s dream demographic: nearly half of US podcast listeners are under 35.((https://riverside.fm/blog/podcast-statistics))
Radio station trends include;
Challenges faced by radio stations include:
Online radio saw $940 million in revenue in 2020. These were the leading online radio stations, by average active sessions in 2021((https://www.statista.com/statistics/253260/leading-online-radio-companies-in-the-us-by-active-sessions/)):
The start-up costs for a radio station range from around $18,000 to over $200,000, according to Step By Step Research. An internet radio station is at the low end of the range.
You will need a handful of items to successfully launch a radio station. Here is a list of things to get you started.
| Startup Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits, including a frequency license | $1,500 - $2,000 | $1,750 |
| Insurance | $100 - $500 | $300 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Space lease security deposit or purchase down payment | $0 - $30,000 | $15,000 |
| Space preparation | $0 - $30,000 | $15,000 |
| Equipment including a transmitter | $15,000 - $100,000 | $57,500 |
| Control room setup | $0 - $50,000 | $25,000 |
| Total | $17,950 - $216,000 | $116,975 |
Your profit will vary depending on how large you grow your audience, which will drive your advertising revenue.
The average profit margin of a radio station is 8-10% and on-air advertisers pay somewhere between $200 and $5,000 per week, depending on listener numbers. Before you build an audience, you will likely be at the low end of both ranges. If you get 10 advertisers to spend $200 each per week and your profit margin is 10%, your annual revenue will be $100,000 and your profit will be around $10,000.
As your brand gains recognition and your audience grows, you might charge advertisers $1,000 per week. If you’re able to attract 25 regular advertisers at this price and maintain your margin at 10%, your revenue will be about $1.3 million and you will have a profit of a cool $130,000.
There are several barriers to entry for a radio station. Your biggest challenges will be:
Now that you know what’s involved in starting a radio station, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Since you have no track record in the business, you’ll need to find a way to stand out from the competition. Look at your market and see what’s popular on the radio, and what’s rare or missing from the airwaves.
If you find other radio stations that offer the genre that you want to offer, consider a concept you could develop to make your station unique.
First, determine your genre of music and how to present it. What kind of DJs will you have? What sort of podcasts might appeal to your audience? Should your content involve humor, political commentary, or something else?
Your audience is your customer, and your programming is your product. You could offer a combination of music and podcasts, talk radio plus news and hits, or some other combination. Podcast listening has exploded in recent years, so it’s a good idea to find ways to incorporate them into your programming. You want to be able to target a certain market of people.
Advertisers pay about $200 to $5,000 a week. When you start, your audience will be small, so advertisers will want to pay on the lower end of that range. As your audience grows, you can charge higher prices. Research radio stations in your area to determine the prices in your market.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be determined by your choice of content. If you choose pop music you’re likely to attract people aged 16-34. If that’s your choice, it might be best to advertise on social media platforms like Instagram and TikTok.
The advertisers you target for sales will depend on your audience, so if your audience is younger, you will target advertisers that are trying to reach that audience.
This under-35 demographic that prefers pop music is also the main podcast-listening group, as mentioned above. If you target this group, you may want to look into which podcasts they prefer. Comedy is the most popular podcast with that age group, followed by news, society, and culture.
You can launch your radio station, particularly an internet station, from home if you have space. Your startup costs will be much lower.
As your business grows, you will likely need to hire workers for various roles. You may need to rent out a studio space as well. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to radio stations.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your radio station will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a radio station. You might also try crowdfunding if you have an innovative concept.
Starting a radio station requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You will need to apply for a frequency, a radio station license, and a broadcast permit from the FCC.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you will need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your radio station as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to consider your options to choose the best plan that works for you. Once you choose your bank, you’ll need to bring your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and any other legal documentation that proves your business is registered.
Business insurance is an area that often gets overlooked yet is vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. We examine several of them below.
You may want to use radio broadcasting software such as RadioDJ, Playit Live, or ProppFrexx to automate your programming and integrate your advertising.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your radio station meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your radio station business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a radio station, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in radio stations for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in radio stations. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home-based studio, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a radio station would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Starting a radio station gives you the opportunity for a fun lifestyle with the potential to make a good living, and to grow your company into something great. Some challenges exist, but tools and resources are available to help you overcome them.
Creating a unique concept with in-demand programming like podcasts is the key, since the number of podcast listeners in the US has more than doubled in the last five years. This could also jumpstart your word-of-mouth marketing within your niche market.
Now that you have the information you need, it’s time to get started on your journey!
Popular radio stations with a large audience are very profitable. As a new radio station, you can expect to make a profit between $8,000 to over $100,000 annually.
You can start an internet radio station from home for very little money, but you will face massive competition and it will be very hard to get an audience without a marketing budget.
You should apply for your frequency at the Federal Communications Commission (FCC) website. The fee is about $2000 depending on the type of frequency you request.
Radio stations make money through advertising, sponsorships, syndication, listener support, and ancillary revenue streams.
To get more listeners, focus on creating high-quality content, targeted marketing, community engagement, interactivity, cross-promotion, online streaming, and providing listener incentives.
To brand a radio station effectively, define your target audience, develop a unique positioning, create a memorable name and logo, maintain consistent messaging and imaging, engage with your audience, promote your brand through various channels, deliver quality programming, and monitor and adapt to audience feedback and market trends.
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