It seems to me that for a developing artist there are two development stages and types of relationships that make sense for bringing on management:

1. Once the artist has grown the business to the point that each member can make at least a meager living off of it. At that point they make enough to consider bringing in an outside partner to help grow it even further and that cost will be offset by the continuing growth and extra business the manager brings in.

As a very rough estimate, an artist can figure that they will net 50% of the gross income for a year.  That net will go into their pockets as personal income.  So if you have a five member band and you grossed $100,000 in a year that means the net to the members will be approximately $50,000 or $10,000 per member.  Again, this is a very rough estimate but can be helpful in thinking about things.

To explain further, I think management makes sense at this point because the artist has proven they can make a living and the extra cost of management won’t hurt as much.  It’s also a natural business milestone – moving from part-time artist to full-time – that justifies expansion considerations.  Lastly, it’s a point where the manager can make enough money to work with the artist and devote plenty of attention and resources to the project while feeling fairly compensated (an investment rather than a gamble).  In short, it’s usually a healthy point in the business development.

2. Regardless of size, even if the members are not yet making a living off the business, if you have a friend or family member who would do it for minimal compensation (a percentage of nothing is nothing) then it could make sense as well.  Most likely  this manager wouldn’t be experienced but what they lack in experience they would make up for in enthusiasm for the business (ideally).  If they didn’t have the enthusiasm and interest in the business than it wouldn’t work long term.

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Of course, there are plenty of other unique relationships that make sense for the parties involved.  However, these two seem to be the healthiest starts to many of the long term relationships I have witnessed.