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How to Start a Radio Station
Boosted by the popularity of podcasts, radio is booming. People listen while commuting and while at work, while out having fun or just relaxing at home. If you are a music and podcast lover and would enjoy developing your own programming, starting a radio station may be just the jam for you.
Starting a radio station is exciting, but challenging. You should have knowledge of the industry and all the steps involved before you dive into the business. This step-by-step guide should put you on the road to achieving your dream of owning a successful radio station.
$77,950 - $216,000
Time to build
1 - 3 Months
$104,000 - $1,040,000 p.a.
$8,320- $104,000 p.a.
Step 1: Decide if the Business Is Right for You
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!
Pros and Cons
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.
Market analyst IBISWorld values the US radio industry at $22.4 billion, expecting more than 10% growth in 2021.https://www.ibisworld.com/united-states/market-research-reports/radio-broadcasting-industry/ New music apps and streaming services are driving increased interest in new radio programming, particularly podcasts. The number of US podcast listeners has more than doubled in the past five years, from 57 million to more than 120 million, according to German data firm Statista.https://www.statista.com/statistics/786826/podcast-listeners-in-the-us/ And podcast listeners are a marketer’s dream demographic: nearly half of US podcast listeners are under 35.https://riverside.fm/blog/podcast-statistics
Country is the most popular music genre and the programming focus at 2,200 out of 15,445 US stations, according to Statista. News and talk shows are the next most popular with 2000 stations.https://www.statista.com/topics/1330/radio/#dossierKeyfigures
Online radio has seen explosive growth, with average monthly listening more than doubling since 2010 to nearly 1000 minutes per user. Online radio saw $940 million in revenue in 2020, with IHeartRadio leading the way with an average of 300,000 active listening sessions.
How much does it cost to start a radio station?
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.
|Start-up Costs||Ballpark Range||Average|
|Setting up a business name and corportation||$150 - $200||$175|
|Licenses and permits including a frequency license||$1500 - $2000||$1750|
|Insurance||$100 - $500||$300|
|Business cards and brochures||$200 - $300||$250|
|Website setup||$1,000 - $3,000||$2000|
|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|
How much can you earn from a radio station?
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 $5000 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 8%, your annual revenue will be $104,000 and your profit $8,320.
As your brand gains recognition and your audience grows, you might charge advertisers $1000 per week. If you’re able to attract 20 regular advertisers at this price and boost your margin to 10%, your revenue will be $1,040,000 and profit a cool $104,000. Not bad for a DJ!
What barriers to entry are there?
There are several barriers to entry for a radio station. Your biggest challenges will be:
- Finding a unique concept that stands out
- High startup costs
- Building an audience
Step 2: Hone Your Idea
Now that you know what’s involved in starting a radio station, you need to hone your idea in order to be able to enter a competitive market. 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?
Why? Identify an opportunity
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.
What? Determine your products or services
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.
How much should you charge for advertising?
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.
Who? Identify your target 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.
Where? Choose your business premises
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 Loopnet, Craigslist, Crexi, and Commercial Cafe.
When choosing a commercial space, you may want to follow these rules of thumb:
- Central location accessible via public transport
- Ventilated and spacious, with good natural light
- Flexible lease that can be extended as your business grows
- Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell tend to do better
- The name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords, such as “radio” or “music”, boosts SEO
- Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step business name generator
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 at a web cataloging site such as NameChk. 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. And if you’ve exhausted all your creative juices but still don’t have a business name, don’t stress! Instead, check out our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Step 4: Create a Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
- Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your services in detail.
- Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
- Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
- Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
- Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
- Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer on Fiverr to create a professional business plan for you.
Step 5: Register Your Business
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!
Choose where to register your company
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 offer real advantages when it comes to a radio station.
If you’re willing to move, you could really maximize your business!
Choose your business structure
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 four main options:
- Sole proprietorship – The most common structure for small businesses makes no legal distinction between company and owner: you get to keep all the profits, but you’re personally liable for all debts.
- Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses.
- Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
We recommend that most new business owners form an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can quickly and cheaply form an LLC using ZenBusiness’s online LLC formation service (it can take as little as 5 minutes). They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you have about the company formation process.
Step 6: Register for Taxes
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.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
- Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
- Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
- Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.
Step 8: Apply for Licenses/Permits
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 licenses 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 country governments or contact the appropriate person to learn more about your local requirements for a radio station. You could also use the SBA’s guide to identify your state’s requirements.
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. You might consider a license compliance package from a filing firm such as MyCorporation or MyCompanyWorks, or hire an attorney via Avvo or FindLaw.
Step 9: Open a Business Bank Account
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.
Step 10: Get Business Insurance
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:
- General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
- Business Property: Provides coverage for your equipment and supplies.
- Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
- Worker’s compensation: Provides compensation to employees injured on the job.
- Property: Covers your physical space, whether it is a cart, storefront, or office.
- Commercial auto: Protection for your company-owned vehicle.
- Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
- Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. 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.
You can create your own website using services like WordPress, Webflow, 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.
Essential software and tools
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.
Some of your business will come from channel surfers, nevertheless you should invest in marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, make sure you link to your social media accounts and vice versa. Social media is a particularly good way of promoting your business because you can create engaging posts that advertise your products:
- Facebook: Great platform for paid advertising, allows you to target specific demographics, like men over age 50 in the Cleveland area.
- Instagram: Same benefits as Facebook but with different target audiences.
- Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales.
- Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
- If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
You will need a handful of items to successfully launch a radio station. Here is a list of things to get you started.
- Studio mixing board
- Microphones and headphones
- Media Server and Scheduler
- Studio transmitter link, or STL
- Lightning protector, antenna, transmission line
Step 12: Build Your Team
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:
- General Manager – Scheduling, ordering, hiring and firing, etc
- DJs – Play music, interview guests, entertain the audience
- Production Assistant – Help produce programming
- Sales Lead – Sell ad time to advertisers
- Marketing Lead – Social media marketing, SEO, content creation
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 or Facebook. You can also use free classified sites like Jobs and AngelList. 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.
Step 13: Start Making Money!
Focus on USPs
Unique selling propositions, or USPs, are the unique 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.
Some signature USPs for your radio station could be:
- The best comedy podcasts and pop music
- The best [your music genre here] way to start your day
- All talk, all the time — podcast paradise
Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
- Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as calling in at a certain time of day to be the first caller.
- Signage – Put up eye-catching signage at your station and on website
- Flyering – Distribute flyers in your neighborhood and at industry events
- In-Person Sales (IPS) – Offer advertising time to local business and at trade shows.
Consider a Niche
You should consider creating a niche for yourself by specializing in a certain aspect of your industry. This could jumpstart your word-of-mouth marketing within your niche market.
Build Affiliate Relationships
Affiliate marketing is advertising in which you compensate third parties (i.e. your affiliates) in order to generate traffic to your website. You can develop long-term relationships with these affiliates and generate traffic for each other on an ongoing basis.
Wrapping It Up
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 U.S. has more than doubled in the last five years. Now that you have the information that you need, it’s time to get started on your journey!
Radio station FAQs
Radio station startup costs range from $18,000 to over $200,000. Starting an internet radio station costs much less, but your profit potential is lower. You could start an internet station to get a following, and then move to a traditional radio station after you have some traction.
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.