Re: Getting funded by a record label
For some reason, many bands, when they've received advances--despite them being called advances, tend to look at it like, "Wow! The record company just simply gave us 200 grand because they like us! Let's go CRAZYYY!!!" Then they spend a bunch of it on new gear, new clothes, paying the bassist's gambling debts, etc. Then, they tend to believe that the record company is providing free studio time for them, so they think, "We've got our shot, we're going to make the best record we can--so it's okay if we're in the studio for 12 weeks. We want this record to be perfect!" Similar things happen buying or renting gear, hiring a crew, etc. for going on the road--they think it's money they're just being given or something.
Then they wonder why they're not getting big checks once the record starts selling, and then the reality that they've got to pay that money back dawns on them. I don't know why so many people make that mistake--I'd say that the vast majority of musicians I've encountered are fairly intelligent, but they do make that mistake.
While it would be nice to finance everything yourself, sometimes that's not that feasible--I've certainly been in bands with guys with day jobs where everyone is living check to check. There's no way we could have saved to make an album in a pro studio with a pro producer ourselves. You do need the record to sound better than you could do or afford yourself many times, and you do need decent gear, including cosmetically, and a decent look, show and crew when you go on the road.
I think the trick is more to not go overboard. You're not getting "free money". You have to keep in mind from the start that you've got to pay all that money back. So shop for the gear you need just as thriftily as if you were putting it on your own credit card. Make sure you're prepared before you go into the studio, and don't screw around at all once you get there. Even if you're doing something with a lot of overdubs and effects, you should be able to get the album done in a couple weeks if you've planned well enough beforehand. Try to make do with a smaller, maybe a bit more inexperienced crew at first, so that's not costing you a fortune (and then down the road, make sure you're loyal to and you reward the guys in the crew who busted their butts for you early on).
With distribution, by the way, the problem is not money so much as having the connections, the network that you need.