How to Turn Creativity into Cash
Whatever your passion, it pays to be both an innovative practitioner and a practical businessperson. Here's the creative's guide to small business basics.
Painter, potter, designer, writer, editor, 3D printer – you love your creative practice and believe the time is right to take the next step. You’re ready to ditch the day job and become a full-time self-employed creative. Congratulations!
Inevitably, your creative practice is only sustainable and financially viable in the long term if you think of it as a business. The ability to think like a businessperson is essential if you are to survive and prosper as a sole trader in the freelancer and gig economy.
Here’s our guide to taking care of the business essentials so you can spend less time worrying about the details and more time doing what you love.
Before you take the leap, set some goals so you have clarity around where you’re headed and what you want to achieve. Think about three essential criteria: Creative, Financial, and Lifestyle.
The idea of working from home in your yoga pants may be appealing, but as many have found during COVID, it can be a lonely and frustrating experience. How much time do you want to spend working in, and on, your business? What are your creative goals? How much money do you want (or need) to make?
If you’re making the transition from paid employment to being a sole trader, you may face a substantial drop in income. And with more than 60% of all small businesses failing in the first three years, this is no time for rose-coloured glasses.
Consider the personal and professional skills you will need to manage your business in areas such as client relationships and negotiation; time management and meeting deadlines; basic bookkeeping and financial management; and sales and marketing. Do you need to upskill in any of these key areas before you go out on your own?
Have a business plan
It’s important to translate your goals into a meaningful business plan. This doesn’t have to be long and complex like something you’d write at uni.
Perhaps a little more detail...
A simple two-page statement will help you focus and stay on track. You can begin with a few headings and some bullet points mapping out your vision, goals, milestones and financial forecasts.
A meaningful business plan should include these key items:
- Value Proposition – what are you really offering your clients?
- Target Market – who are the clients for your product or service?
- The Marketplace – how much competition is out there already?
- Point of Difference – how will you differentiate yourself from the competition?
- Sales & Marketing – what are your strategies for promotion? People can’t buy from you if they don’t know about you!
- Budget & Financials – how much money do you need to get established? What is the projected cash-flow (in and out) and how long can you self-fund the business? Do you have an income stream in the meantime?
Think about your business plan as a road map. You know where you want to go, you just need to have some clear directions to get you there.
Sort out the finances
Look familiar? Time to take your accounts seriously.
It’s important to begin with a good understanding of the finances. The days of turning up at tax-time with a box of faded receipts are long gone.
Try to find an accountant who understands the creative industries. Getting a professional tax return lodged is usually money well spent. But as you’ll probably only see your accountant once a year at tax time, it’s important that you understand the basics of bookkeeping.
As a freelancer or sole trader, you’ll probably have numerous clients at any one time. You need to know who owes you money and when that money is due. You also need to know how much you owe and when those bills are payable.
There are many easy-to-use accounting programs out there, such as Xero, Quickbooks, Rounded and others, or you can go with a simple spreadsheet (or even an old-school handwritten ledger) but whatever you choose, be sure it’s simple to use and easy to keep updated.
Being able to see your true financial position at a glance, on screen or on paper, is great for your peace of mind.
Remember to keep accurate records of all expenses so you can claim these deductions at tax time and do keep the receipts (paper or digital) in case you’re asked to provide them later.
Try to work on a minimum 12-month cashflow forecast so you have a good guide to your ongoing financial position.
Marketing and promotion
Whatever your creative specialisation, you’ll need to market yourself if you want to sell your work to more than your family and friends.
Marketing and promotion don’t have to cost a fortune and there are some effective low-cost ways to get your name out there:
- Maintain an online portfolio (you can use a free platform like Weebly) and ideally have an online sales facility.
- Have a strong social media presence that you can keep up to date. ArtsHub’s visual arts editor Gina Fairley says it’s best to focus on a couple of platforms and do them well.
- Write blogs or journal articles to showcase your ideas.
- Join all the relevant groups in your area – the writers’ centre, film hub, craft centre etc.
- Attend art fairs and events.
- Volunteer on projects to build your contacts, get exposure, and add to your portfolio
- Enter competitions and awards.
- Giving back can also be good promotion – donate some work to a local charity auction or take on a pro bono client.
- Do some business networking as well as creative networking – local business groups and associations can provide welcome support to sole traders.
For many creatives, accessing grants and tenders is an important source of work and income. Have a system in place to find out about these promptly and brush up your writing skills to compile winning grant applications and tender documents.
Keep it simple
We’ve all heard the adage that ‘you have to work on your business as well as in your business,’ and it’s absolutely true.
You have to take care of business. But it’s important to minimise the time you spend on housekeeping and administration and maximise the time you spend doing what you do. This means streamlining the basics and having clear, simple processes in place for the tasks you do regularly.
Depending on your business, this may be:
- Keeping social media and websites up to date.
- Sales management functions such as invoicing, packaging and shipping.
- Contracts and negotiation - a good contract protects both you and the client.
- Review the tasks you do regularly and streamline them to save you time and money.
What’s it worth?
How do you put a value on your work?
Many creatives find it difficult to put a price on what they do. It might take 20 hours of solid work to write the copy for a client’s website, but what is the client willing to pay?
There are two main ways to set your prices: the 'cost of business' model and the competitive model.
The 'cost of business' model factors in all your overheads and the amount per hour (day/week) that you want to be paid. You will then come up with a price per hour for your work, remembering to allow 30% or more for tax.
So if you need to make $90 per hour and the copy takes 20 hours to write, that’s around $1800 you need to quote for the job.
The competitive model means looking at others in the marketplace and charging a similar fee. So if other freelance writers in your area are asking $80 an hour, you adopt that as your rate. In reality, most freelancers probably use some intuitive combination of the two models.
It’s important to be realistic about your overheads and costs of sale when you set your prices. Be wary of the temptation to offer big discounts to attract clients – it can be very difficult to increase your prices later. And it’s important to set clear payment terms to keep your cash flowing in the right direction!
Manage your workload
How much is too much to have on your plate?
Yes, it’s great to get new jobs and new commissions but be sure you can manage the work.
Having a backlog of orders may seem like a good problem to have, but are those clients are going to be happy with your completion dates? If you say they can have the design by Friday, you have to be sure you can do it on time and at your usual high standard.
Be careful not to over-promise and then under-deliver in your eagerness to get work – you want to delight your clients, not disappoint them. And as we all know, ‘life happens’, so always allow yourself a margin for the unexpected.
Try setting up systems with reminders and alerts so you don’t miss meetings or deadlines. Don’t forget that managing your workload also means scheduling some ‘me’ time for mindfulness and relaxation. This helps you stay focussed and keeps you feeling inspired.
There is nothing more fulfilling than turning your passion into your profession, so always give yourself the utmost chance of success.
Originally published by our friends at Artshub Australia.
Written by Dr Diana Carroll.
Source: The Big Idea