Liliana K stall in Whistable, England

Reality: Your business now, your more profitable customers, and your cashflow

“Have you got a Business Plan?” is not a question that brings joy to the heart of early-stage creative micro-businesses. Visions of Excel spreadsheets, Word documents, and alien, small-printed jargon arise; hours, days wasted, lost in unfiled paperwork only to create more unfiled (and unread) paperwork. Sound familiar?

Many of the fashion and creative start-ups I work with don’t have a business plan (it’s all in their heads), don’t do planning (ditto), and run their business like a freelancer. And why not? That way you can focus on the day-to-day must-dos, the making/constructing/designing, and the creative energy.

But planning your direction – whether it is building a strategy, a business plan, or identifying your goals for the next year or three – can be a creative process in itself. And like everything creative, planning is developmental and organic, it isn’t set in stone and can be adapted and improved, scrapped or redone. It starts with the first steps – and that’s what this and my series of Creative Planning Basics blog posts will explore.

These posts will help you focus everything that you already know or have dreamed about your work down into some kind of visual map. This will help stop the chaotic ‘washing-machine’ thinking and instead bring some colour-coded clarity.

Save your Business Plans and Strategy Documents for the bank and investors – you will get to this when you need to – and instead just begin now with how you want your creative business, and life, to be. So, with your old-school paper, Post-It notes, pens, pencils and camera at the ready, read on…

So, decide what time period – one year, two years etc – you want to focus on. Grab different coloured Post-It notes and find some wall space, or A1 paper, and pens and pencils.

This exercise will help you identify:

  1. Where your business is now.
  2. How to divide up your creative business into different customer bases for each strand.
  3. What work to spend more time on to generate more profitable leads and relationships.
  4. And start to recognise when the income is likely to come in and when your outgoings for the work are likely to go out = cashflow.

First, think about how many different aspects to your business you may have. For example, you might be an architect that does residential, commercial and the occasional profile-raising pop-up or collaborative work. You might be a jeweller that provides setting services for trade but are now branching into your own designer collections and bespoke commissions. Or a ceramicist beginning to get interior design wall commissions. Whichever way, you will have different strands of your business, different customer bases, and, importantly, different levels of income from each.

Using your Post-It notes, pens and pencils, colour-code each strand and divide it by income. So, if you are deep down someone who dreams of having their own pottery and shop, and meanwhile is beginning to do one-off wall commissions for interior designers at 15K a pop, but also hope to sell ceramics to high-street chains, plus take part in craft fairs with jewellery, picture frames, and general knick-knacks with your surplus materials, you would give a colour for each of these. Stick each coloured set on the wall, or paper, with a different sticky for each range or piece within it – and write down everything you produce within these strands that you do, or could, sell.

By now, you know how much each of these costs to produce, and you know, I hope, how much you might be likely to sell each piece of work at from your provisional market, customer, and competitor research (more on this in another post). So by totting this all up, it will visually indicate your more profitable income stream. How many of a, b and c are you likely to sell within the next six or twelve months? What if you only sell one 15K commission but get several of high-street orders for ceramic pieces? However, what if you already have one such commission lined up but are still just at the design/thinking stage on your retailer ceramics? Assess what is realistic to you for the chosen time period, factoring in how much work or progression you can realistically make in that time.

Earlier this year, I attended an event at the British Library Business and Intellectual Property centre – The Design Trust’s ‘More Than Making: Grow Your Creative Business’ – where entrepreneur Paul Sturrock[i] outlined a very simple business approach based on Osterwalder and Pigneur’s Business Model Canvas.[ii] Part of this discussion was identifying how much you need, or would like, to live on with a salary and all costs covered – 25K, 50K, 100K? Then you break that sum down into how many of each business strand you would need to sell to reach your goal.

So, let’s say you want to live off an income of 50K for salary and costs. If your wall commission is now looking (from Post-It note heaven) like your main income stream, you could find three commissions – one for each quarter – totalling 45K, plus another 5K of ceramic orders and craft fair takings to reach 50K. This additional 5K might be ten retail orders of £500.00. That would be almost one order a month, which is perhaps not realistic for this stage of your business. So re-adjust that to five orders of £500.00, then you can push the craft fair takings seasonally around Christmas gifts (yes, you will be busy!) to pull in the remaining £2.5K.

However, is this do-able for your workload at this stage? Could you bridge the income gap initially with a part-time job, or some freelance work using your other skills? Could you also sell some of your smaller pieces on online platforms such as Etsy.com, Notonthehighstreet.com etc? Do you have local shops, boutiques and galleries that might take some pieces on sale-or-return? Do you need to live off 50K? Could you manage on less for now? This is your creative business and life, so design it how you want it to be.

And finally… take a photo(s) of your hard work – don’t worry if you need to do this exercise in stages- and file or print for future reference (and to refer to for my next blog post).

So, what this exercise has helped you with is:

Where your business is now.

Maybe you have no contacts as yet with retail buyers, but do have several conversations regarding wall commissions, one of which is definite. You may really enjoy the buzz, banter and trading with your customers at craft fairs, but this can be a lot of work and time (even if it is in front of the telly of an evening) for a potentially lower return.

How to divide up your creative business into different customer bases for each strand.

You may have clients who are hotel groups commissioning you for wall pieces, or it may be an interior design small business with high-end clients, or a bigger design group. You might be aiming to target the highly competitive nationwide high-street chains for higher volume retail ceramic sales. This means you can identify additional interior designers for further commissions, or perhaps target smaller boutique interior stores with a good clientele who are willing to pay more for distinctive ceramics. A later post will look at how you find and promote to your different customers.

What you can spend more time on (yes, you can be efficient in time management!) to generate more profitable leads and relationships.

By now, you will know that it isn’t just the product or service itself that you spend time on, but also the research, the networking and the promotion (leg work) of it. So it makes sense to spend less time and earn more!

When the income is likely to come in and when your outgoings for the work are likely to go out = cashflow.

So if you break your year down into quarters, you are then already starting to build a loose cashflow projection. Try breaking income and outgoing down further into months throughout the year. This will hopefully help you manage your finances and lessen the sting of overdraft charges.

But perhaps you really do still dream of that pottery and shop, and your business is to help you work your way towards that – maybe you don’t want to be the new darling of the retail ceramics or interior design world. Then these planning steps will help you maximise your income from less time giving more time to you to continue to do the making, creating and designing you love.

Any questions, feel free to email me on hallandco@outlook.com, or drop a comment on the blog.

Next post: Creative Planning Basics 2: Starting to research your market, your customer and your competitors. Really, it’s just chatting, and having a nosey around with a camera.


[i] Paul Sturrock – about.me/paulsturrock

[ii] Osterwalder, A, and Pigneur, Y, (2010), Business Model Canvas, John Wiley & Sons. Also, www.businessmodelgeneration.com

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s