5 Minutes on Creative Entrepreneurship

When you get control over your marketing, you'll no longer be subject to the variable winds and waves of a fickel referral networks. Instead you'll gain the stability that comes from a steady stream of qualified leads. And when you have plenty of leads you get to decide which clients and projects to take on. Those might include the clients with the best creative opportunities, or the best budgets, or both.

Professional services are not sold in the same way as consumer products. Professionals sell through reputation and trust. And cold, technical digital marketing methods don't help with that kind of effort—in fact, they'd more likely hurt. So you can ignore 90% of the fast-paced, technology-driven, methods. That said it's still essential that prospective clients find out that you exist, and keep you in mind for projects when the time is right.

The time table from the first steps in forming a marketing program to the time you start enjoying its fruits can take up to eighteen months. Now it is possible to shorten this timeframe through fast decision making, and extra exertion in the preparation involved. But other aspects of a new marketing program can't be rushed. And so the sooner you start the sooner you'll get to that harvest!

In the introductory session of my new course, Marketing Mastery for Creative Entrepreneurs, I review the three essential resolutions that are necessary for any successful marketing program. Like a three legged stool, if any one of these resolutions are lacking the other two stop working, and your marketing efforts will fall flat. In fact, as I've listened to creative entrepreneurs describe their frustrations with marketing, I can always connect their past failures to missing one or more of these three essential marketing resolutions.   

Welcome to episode 100 of 5 Minutes on Creative Entrepreneurship. To mark this milestone. I'd like to let you know about a new digital course I'll soon be releasing called Marketing Mastery for Creative Entrepreneurs. And at the end of this episode, I'll have a special offer to all my podcast listeners.

Your total compensation is capped by available time, multiplied by your hourly rate, minus overhead. But what happens when you have available time, but no billable work to fill it? Downtime for the creative entrepreneur can be deadly. Every creative practice will experience gaps in their project calendars. The question is, do you have a plan to make the most of your downtime?

Creatives don't go into business to make a killing, we still want to be well compensated for the value we deliver to clients. But while making good money from our work is great, that's not the only reason we're in this business. We're drawn to creative entrepreneurship because we love the work, as well as whatever financial rewards it might deliver. But when we combine our love for the creative process with the realities of running a business, that joy can soon turn into sinking grief.

When creative entrepreneurs launch, they don't imagine massive cash infusions from investors, or of taking their company public. More often than not creatives pursue creative control, and better creative opportunities. For creatives business is more of a lifestyle choice than as a business investment. But do creatives need to be content with mere income replacement, or can creative entrepreneurship deliver higher returns?

Managing time is essential for creative entrepreneurs since our services are so often sold by time and materials. Becoming accurate in estimating is a necessary skill in this business. The only way to improve these skills is to build a data source that helps you keep a birds-eye view on project performance. But once you start building all this valuable data, how exactly do you use it? And how can you use past projects to estimate future ones, especially since no two projects are exactly the same?  

Humans have an interesting relationship to time. While the clock ticks by at a perfectly constant rate, our experience of time is highly variable. Vacations seem to fly by. But if you're laid up with a bad back, time slows to a crawl. There are similar perception-based time distortions in running your creative practice. And when your profits come from the use of your time, these business time warps can seriously distort your performance, and undermine your profits. 

When you run your own business as freelance creative, you might find it difficult to take time off. If you shut off your phone and close your laptop, there's no one else to take over. And if you charge by the hour, taking a day off means no revenue. But everyone needs to rest. So if you find it hard to take time off, let me make some suggestions to help you free yourself up for a much needed vacation.    

Creative entrepreneurs not only face external struggles, we also face the struggle within. The creative process is marked by struggle. We agonize to find that perfect solution. This angst ridden process is baked into creativity and adds an extra layer of difficulty to our form of entrepreneurship. In order to push through all these challenges, it can be helpful to remember the incredible privileges we have in our creative callings.    

There's no question that being a creative entrepreneur is not the easiest path. Going into business for yourself demands considerable effort, diligence, determination, and plain hard work. When you're just starting out you may need to hustle and grind. But that can't last forever. Eventually you need to get strategic, and find a more sustainable path.

Does your company's operating budget adequately anticipate infrequent future expenses? Planning your budget based on our known monthly expenses, doesn't prepared you for when an expensive annual software license comes due. You need to regularly set aside revenue to cover unanticipated future expenses. If not, you might end up facing a budget crunch that can crush your business.

Last time we explored the topic of creative methodologies, and how they can improve your sales and marketing. A proven methodology that focuses on solving specific problems not only boosts your sales game, but it also leads to efficiencies that enable you to increase the margins you retain from your project fees. A well-oiled methodology will make you more profitable, significantly increase client satisfaction, and improve the impact of your work.

If you've been listening to this podcast for very long you're probably acquainted with the five motifs that structure 5 Minutes on Creative Entrepreneurship: Money, Minutes, Marketing, Management, and Motivation. Well there is a sixth motif that could be added, and conveniently it also starts with the letter “M.” Your creative Methodology can be a powerful addition to your marketing and radically improve your closing rate on sales opportunities. But only if your methodology is truly unique.

Throughout history new technologies have always had beneficial, yet disruptive outcomes. The printing press put many scribes out of work. Photographic typography ended the careers of linotype operators, and digital photography has put tons of pressure on professional photographers. Today, the Internet's enabling of world wide crowdsourcing, is having similar effects on creative freelancers. How are you supposed to do battle with Upwork, and win?

The creative service business is made up of two main parts. Creativity and service. Obviously. But the path to bringing these two things together professionally is neither obvious nor simple. Providing any kind of professional service is challenging. But if you can learn the skills of excellent client service, you will reap the rewards that come from establishing trust and deepening the value of your professional creative services.

Very few creatives launch their practices planning to cash out with a big exit down the road. We get into our trade out of love for our craft, not so much for the financial rewards. But if you were planning to sell, like a typical entrepreneur, you would pay much more attention to your bottom line. And so managing your practice, as if you were going to sell it, could help you improve your profits, and would lead to other positive outcomes.

Back in episode 23 I talked about how marketing is a marathon, not a 100 yard dash. I've been thinking about that analogy recently, and I need to revise it slightly. Really marketing is more like training for a marathon than actually running one. If you want to run a marathon you would need to make a plan and stick with it. Marketing, like exercise, demands discipline. It depends on building new habits, and keeping them up for months, and years at a time.

The best approach for marketing a creative practice involves PinPoint Positioning followed by a consistent content strategy. The long-term benefits of this approach pay huge dividends to creative entrepreneurs. Of course executing on a content strategy requires a significant time investment. If you make weekly or monthly deposits into your content investment portfolio, you may want to consider some additional opportunities to diversify and extend the impact of those contributions.

Mastering the basics of marketing your creative practice can take many years. So you might not be thinking about what comes next. But when you’re ready to take your marketing to the next level—start thinking about finding speaking engagements. Speaking opportunities can be extremely powerful ways to deepen your position in your chosen market.

We all hate time-wasting intrusions of spam marketing. And so we surely don’t want to be counted among those that use such irritating methods. And yet, at a basic level, much of your marketing involves reaching out to prospects who don’t yet know you. Is there a way to approach a cold prospect and not be immediately lumped in with the spammers?  

As creatives we help our clients by producing media that they use in their marketing campaigns. In many cases their marketing channels include advertising, direct mail, and other mass media broadcast channels. When we spend so much time focusing on broad business-to-consumer marketing methods for our clients, it’s no surprise that when it comes to our own marketing, we think along the same lines. But business-to-consumer marketing tactics don’t work for creative practices.

Over the past few episodes we’ve considered growth in the light of the goal of remaining involved in creative work. While this is a common goal, it’s not a common outcome. Without a carefully planned hiring process, the path of least resistance will lead you away from creativity, requiring you to become a business manager instead. But how can you find the right people to fill your carefully designed roles?

Should your first overhead hire—and be a client facing account manager, or a market-facing account maker? If you try to economize with one person for both roles, you may end up struck in the growth gap. But that’s not the only gap you’ll face in growing your creative business. There are other points along the path that have similarly difficult obstacles, which, if you aren’t prepared to maneuver, can likewise get you stuck.

When your creative practice takes off, your inclination will be to hire other designers to lighten your load. This sets off a chain reaction. Soon you’ll find yourself consumed with managing projects more than doing creative work. And you’ll feel the pressure to keep work coming in. If you prefer creative work over business management, you’ll need to hire someone. But should it be for sales, or for client service?

Growing a business is one of life’s greatest challenges. There are millions of people, with business training, who have failed to accomplish this dream. If building and growing a business is hard for people who’s entire training was toward that end, what chance do creative entrepreneurs, without business training, have to establish a growing practice? And if we do succeed, will the demands of running a business take us away from the creative work we love?

As creatives begin to build up a client base, and demand for their work starts to grow, we inevitably face the question of what to do when we’ve tapped out our own personal time resources. Do we simply say “no” to new clients, or do we expand our capacity by hiring help? This is a pivotal decision. Because without intentionality, and careful planning, growth can quickly turn from the fulfillment of all your dreams, to your worst nightmare.

This past year has been tough on many small businesses. Certain sectors of the economy were entirely shut down. If you’ve been listening to 5 Minutes on Creative Entrepreneurship for very long you know how important PinPoint Positioning is to marketing a creative practice. But what if your industry focus was in the live entertainment space, or the travel industry, or event management? If you focused on any of these areas, this past year may very well have been your last. 

But sometimes projects are doomed from the outset, regardless of how well a creative delivers. There are bad clients out there—clients that don’t engage in good faith, who’ll use any excuse to blame creatives, just to save money. How can you avoid toxic clients? When should you run away from an opportunity as fast as you can?

Creatives work hard for their money. And not just in the studio. It takes a lot of work just to find projects in the first place. We have to build portfolios, market our work, make presentations, and write proposals. Only then do we pour ourselves out to produce our work. After all this preparation, anticipation, and energy is spent, it can be extremely frustrating to have to wait for that all important check to arrive that keeps it all going.

Being a creative entrepreneur involves making decisions, sometimes risky decisions. Wise decision making requires having good information to guide you. And one of the best sources for good information is your money. But in order to “hear” what your money has to say, you have to maintain an ongoing conversation with these numbers. One way to keep this conversation going is to do your own books, a skill and that pays dividends.

You may have a budget for your money, but what about your time? As important as financial budgeting is, I would argue that a time budget is more important. After all, you could inherit a windfall. But you can never add even one hour to your days. Both you and Bill Gates get 24 of them in a day. So managing your most valuable, non-renewable, and limited resource is an essential skill.

Among the many points of failure in business, there is one that hurts the most. The failure to accurately price our work, so that we end up taking a bath on our projects. When we underestimate our work, we are forced to either damage the client relationship by asking for more money, or—more commonly— we absorb those costs ourselves. 

When a creative has launched out on their own, they’ve entered the path of entrepreneurship. Being an entrepreneur is not for the faint of heart. Entrepreneurship involves risk. Even a simple solo-preneur freelance practice assumes all the risks associated with being in business for yourself. If you’re going to make it as an entrepreneur, you’ll have to overcome your fear and courageously face the possibility of failure.

If you’re a fine artist, or illustrator, or designer who prefers the freelance path you’re going to need to build a freelance practice. And that means running a small company, even if it’s a company of one. You think of yourself as an artist, not an entrepreneur. And so you end up being cast into the world of entrepreneurship without ever considering whether or not you’re even cut out for that path.

This week we wrap up our Shark Tank series by considering a flaw that the Sharks often point out to founders as they seek an investment—the serious challenge of customer education that can present barriers to effectively marketing their products.

It’s common for partnerships to fail. And so considering the kind of partner you’re looking for, what their buy in costs will be, and working out how you’ll handle a possible future dissolution is critical before you make a deal.

With the investor path closed, creatives sometimes look for help in the form of a business partnership. Not only can a partner provide business or marketing skills that we may be lacking, partnerships often appeal to creatives simply because of the loneliness of being a solo-prenuer—but before you go down that path you might want to think about this major decision like a Shark.   

Creative entrepreneurs can’t patent their talent. We simply have to contend with the reality that the creative marketplace will always be offering up young new talent that’s willing to work for rates that established creatives can’t match. So how will you protect your creative practice from the competition?

Keeping a careful eye on your burn rate can make the difference between managing growth on your way to success, or crashing spectacularly when you reach the end of your runway, never having gained sufficient momentum to take off.

If you have ambitions to grow your freelance practice into a small firm, or even into a larger agency, then you need to be aware of the costs associated with scaling a creative practice.    

When creatives enter into business they often fail to consider the longer-term soft-costs involved in running their businesses, which can end up dragging them under.

For creatives establishing the value of your business can be quite difficult, especially since the biggest cost center is your own time. And what’s that worth? In today’s episode we’ll consider how to calculate this critical part of the valuation equation—and some of the serious consequences that result from getting it wrong.

Equity is ultimately established through calculating the retained earnings of a company—its revenues less all the costs that were expended to produce those revenues. Investors are interested in a company’s total sales, but what they really want to know is their profit margin. This week we’ll evaluate the profit margins of a typical creative practice. 

What exactly does an investor buy, when they make a deal with a founder? They buy equity in the company, and so the value of that equity is essential to the transaction. This week we ask the question—what’s the equity of my creative business worth today?

Have you ever dreamed of being on Shark Tank? Well, those dreams will have to remain mere flights of fancy since venture capitalists don’t invest in professional service businesses—creative practices are simply not scalable enough. But what if there were a Shark Tank for creative entrepreneurs? Would you be ready to answer all their scrutinizing questions? 

Since most creatives rely on referrals, it’s critical to understand the downside. Though referrals deliver clients without any extra effort on your part, the biggest liability is the flip side of that benefit—that no effort on your part controls when you get a referral. If you decide to ride the referral train, you don’t get to choose where you end up, and if it breaks down—you can be left in the middle of nowhere.

Creative entrepreneurs frequently suffer from feast or famine cycles. Fixing the famine problem is what effective marketing is all about. But how do you fix the feast problem? Granted that’s always a better problem than the alternative, but it is still a real problem. And if you have not thought through how you might respond to an extended feast season, what may at first seem like a dream come true—could soon turn into the nightmare you never expected.  

The sober reality is that overhead tasks involved in running your business will soak up at least 40% of your time. Since that’s such a significant portion—let’s make sure that we use that time efficiently.