Many radio stations choose to specialize in a specific kind of format, such as music. The revenue model for radio stations depends on making money via advertisements, so it is important to cater your programming to the specific demographic you are trying to appeal to.
Learn how to start your own Radio Station and whether it is the right fit for you.
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Start a radio station by following these 10 steps:
- Plan your Radio Station
- Form your Radio Station into a Legal Entity
- Register your Radio Station for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Radio Station
- Get the Necessary Permits & Licenses for your Radio Station
- Get Radio Station Insurance
- Define your Radio Station Brand
- Create your Radio Station Website
- Set up your Business Phone System
We have put together this simple guide to starting your radio station. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
Luckily we have done a lot of this research for you.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Radio Station Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
What are the costs involved in opening a radio station?
The costs involved with starting a radio station depend greatly on the type of station you want. For instance, you can start an internet radio station for almost nothing by using equipment you already have—the only cost comes from the time and money spent creating programming. You can also create a low-power FM radio station for under $15,000, which includes all of the equipment you need. The problem with both of these approaches is that they are non-commercial, so you won't see a return on your investment aside from getting your material on the air.
Commercial radio stations are much more expensive, starting with the equipment. For instance, the radio transmission systems (including the Digital Capable Analog Transmitter and IBOC transmitter) cost approximately $515,000, and buying a standby generator adds a minimum of $10,000 to this cost. Radio test equipment, including Digital audio test set and laptop, is approximately $18,000. The cost to set up an on-air control room (including all equipment and labor) is appropriately $164,000, and the cost of a production control room (including audio console and editing system) is approximately $105,000. Finally, the cost for a news control room is approximately $12,000. Note that these costs do not include the cost of buying land and building facilities, both of which will vary based on region and facility size. A fuller breakdown of the individual equipment comprising these costs is provided in the links below.
Read our radio station purchasing guide to learn about the materials and equipment you'll need to start a radio station, how much to budget, and where to make purchases.
What are the ongoing expenses for a radio station?
The exact cost of ongoing expenses depends on the size of your station, your team, and how much original programming you create. One small radio station, however, can easily cost $900,000 or more a year in ongoing expenses. This includes creating programming, the cost of broadcasting, fund-raising, and paying for management and a relatively small staff.
Who is the target market?
A radio station doesn't have typical business customers so much as it has listeners. The preferred listeners are those who listen continuously and often to your station. As such, your best clients will be commuters who are on the road a lot and looking for entertainment. In a different sense, advertisers are also your clients, as you want to attract them to your station in order to make more profits.
How does a radio station make money?
While there are a handful of other ways you can eventually make money (ranging from running community events to the syndication of any of your programs that become popular), the main revenue for radio stations comes from advertisements that are broadcast throughout the day and mixed in with the daily programming.
How much can you charge customers?
The exact amount you can charge clients depends on the size of your own audience (more people tuning in means you can charge advertisers more), but a typical cost for a sixty second advertisement is an average of $50, with less popular stations charging closer to $20 and more popular ones charging $80 or even more.
How much profit can a radio station make?
The exact profit of your radio station will obviously depend on factors ranging from audience size to programming cost to the amount of advertisers. However, the most popular local radio stations in the country are able to make over $60 million in ad revenue each year. While your station is not likely to hit those numbers any time soon, this helps represent the potential of revenue via selling advertisement space—the amount you charge will only go up as your number of listeners grows while your operating expenses are relatively fixed, so a station that grows in popularity is a very good investment.
How can you make your business more profitable?
One way to make your business more profitable from the very beginning is to try to buy an existing radio station rather than build one from scratch, as this will be cheaper to start and possible cheaper to maintain. Another tip is to adjust the cost of advertising on your station as it becomes more popular. Finally, try to develop a good working relationship with various businesses so that you can design advertisements for them. This gives you a chance to charge for creating the ad as well as airing it, and it's also a chance to really impress the owner so that they become a repeat client.
Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your radio station is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a radio station. Learn more about licensing requirements in your state by visiting SBA's reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In order to play music in a business setting, permission must be acquired from the composer or license holder. Typically, it is possible to obtain a “blanket” license allowing a businesses to play music owned by a large catalog of artists and recording studios. Such licenses can be obtained from Performance Rights Organizations, such as ASCAP or BMI.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Radio Station needs and how much it will cost you by reading our guide Business Insurance for Radio Station.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a radio station
To some degree, a radio station markets itself, as new customers will still discover you by scanning for stations as they drive. For additional marketing, you can barter agreements with other stations to promote each other's programming, and you can create a social media presence as well as a professional website powered by SEO. You can also do traditional advertisements via radio, television, and newspapers, and make sure your debut is covered by local news stations.
How to keep customers coming back
In addition to the advertising methods described above, one tried and true method of advertising is to have contest giveaways that encourage listeners to tune in at certain times for key contest info. Try to have local guests on your shows that matter to your community, as this will help draw them in and keep their interest. Finally, try to have a relatively diverse array of programming, as this ensures that you have a broader appeal (though the trick is to try to stay within the broad parameters of the niche you have established for yourself).
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
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Is this Business Right For You?
Running a radio station is definitely a job for a “people person,” as you will eventually be hiring a wide variety of different personalities to work different shifts and hosts different programs, so it's important to be able to relate to a diversity of people. The job is also good for someone who is a “jack of all trades,” as running a successful radio station involves skills in management, advertising, and programming.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a radio station?
In no particular order, your daily activities will include holding meetings with different individuals and teams, interviewing prospective employees, representing your radio station within the community, and creating and editing blocks of programs while managing the station's budget.
What are some skills and experiences that will help you build a successful radio station?
Because being a radio station owner and manager means being a jack of all trades, experience in any of its key fields can help you be successful. For instance, experience in advertising will help you craft customer advertisements for clients, while experience in sales can help you find the best clients and help your team deliver the best pitches. Finally, any kind of prior experience with broadcast radio will be helpful as you begin your own station.
What is the growth potential for a radio station?
There is modest growth potential for radio stations, though these businesses may have to be a bit more streamlined than radio stations you knew growing up. For instance, future projections show stations shifting to having fewer (but better educated and trained) announcers and leaning more on broadcast technicians (something that becomes more important when you factor in non-traditional delivery methods such as online radio).
Not sure if a radio station is right for you? Try our free Business Idea Generator and find your perfect idea.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a radio station?
One good tip to jumpstart your business is to specialize in a niche that is not really provided by other stations in your area, such as offering an alternative music radio station in an area that primarily has country or pop music stations. Another is to look at smaller stations for inspiration—discovering what kinds of music and programs are a hit on college campuses can help you stay abreast of what is trending and possibly be the first to bring it to your area. Finally, hire the best broadcasters that you can afford so your business really hits the ground running.
How and when to build a team
Unlike some business ventures, the need to have programming throughout the early morning and into the late evening necessitates building a team right away. You may decide to grow that team if you are expanding your programming or simply need more sales and support staff.
Read our radio station hiring guide to learn about the different roles a radio station typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.