What keeps your creative business afloat.
This is part 1 of a series on how to manage your creative business.
My mentor looked at me in the eye and said:
“The first thing you need to know is that you are not a freelancer.”
After looking at my confused expression he continued:
“you are a business owner. You own a business of one person.”
I was in my early twenties. My idea of being an artist or designer was getting a job at an agency, or “getting discovered” by clients who’ll pay me to create illustrations or designs.
It was like diving into the sea hoping to catch fish to eat but with no idea how to catch thee…
…or where I was
…or how the tides moved
…or what kind of fish were around me
…or for how long could I realistically swim in the water without drowning of exhaustion.
I was splashing water, without a clue, without a structure.
I was acting like a freelancer.
Until my mentor woke me up.
He was no artist, but saw the value in it what I did. Most importantly, saw my value and was quick to prevent me from burnout.
If you want to stop feeling like you are swimming around in circles and want to prevent burnout, here’s the first thing you need to know:
Stop acting as a freelancer. You own a creative business and you need to know how to keep it afloat.
Just as floating in water responds to principles of physics, staying in business responds to keeping the balance of some fundamental economic factors.
First a disclaimer, I am not an economist nor a financial guru. That should be reassuring to you. You don’t need to be an expert to understand this.
I understood this a while ago, and it has kept me more than afloat for years.
Essentially, you need to be mindful about these three things and how they influence each other:
1. Costs
Also called expenses.
Why it’s important: It’s the force that pushes you down.
You measure this in $$ (or whatever currency you use in your country).
The more costs/expenses you have, the heavier you get.
If you get too heavy your business starts to sink.
2. Capacity
Also called time available.
Why it’s important: It’s the surface where you stand.
This is measured in hours.
It dictates how much you can do realistically with your business.
The more productive hours you have available, the more business you can make.
The less productive hours you have available, the more stress you accumulate.
A fun fact about capacity, you can increase it in two ways:
Increase the size of your floatie: Free up the amount of time you have available to work, become more efficient with your time, or take advantage of software and automations that can do things for you (more on this on the next Fresh Idea article)
Bring in another person with another floatie: Delegate/pay other people or companies to use their time to help you out. Just keep in mind that this one will also increase your costs.
3. Income
Also comprised by demand and market value.
Why it’s important: It’s the force that pushes you upward.
It is measured by two things: amount of people who need your service + the budget they are willing to spend.
If a lot of people need your service = blue ocean for you. You have lots of possible customers!
If the people you serve have big budgets that exceed your expenses = you’ll float easier.
Nerd out with me for a second:
Your body floats easier in the ocean because salt makes water more dense (heavier). This means, the molecules are harder to break.
In this analogy water is the income.
Having only low-budget clients is like trying to walk in clouds (water made gas)… it’s impossible. There’s not enough to sustain you.
Normal-budget clients are like floating in regular water: you can stay afloat but it does require some effort on your part.
Big-budget clients are like water with a lot of salt added. Your body just floats more easily. If you don’t have over-sized expenses, and have at least a few of these kinds of clients, keeping your creative business profitable is more doable.
To keep your business afloat:
Focus on earning more money.
Know how much you spend, on what, and how often.
Don’t spend more than you earn.
Make sure you get more clients and/or get paid more per client.
Increase your capacity, and your business will grow more.
Exceed your capacity, you’ll burnout or go out of business.
To increase your capacity: hire others or automate.
This is in essence how to stay afloat as a business. But staying afloat is not that fun and it’s also risky.
You are unprotected from the elements and other creatures lurking in the sea.
You can’t move too fast or go too far in your business.
You are at the mercy of the tides (market).
You are in survival mode.
I want you to thrive, not just survive.
In the next Fresh Idea Article I’ll share with you how to build a boat to have a more stable creative business.
Fresh Tip:
You own and manage a creative business.
Learn to keep it afloat by tracking your costs, managing your capacity, and increasing your income.
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