It is most definitely January. Decorations lie forlorn in boxes, sparse pine trees litter pavements, and your tax return still awaits you… What better time to take stock, re-focus and plan for the year ahead? Business detox, anyone?
This will be the aim of my new blog series, Creative Planning – Next Steps. My new posts will be ideal for those of you who have reached the ‘where am I actually going with this?’ and ‘do I really want to/can I afford to keep doing this?’ point in the run up to and during the holidays. Or, perhaps, you are at the year two or year three stage of your business and it is time to review your sales, strengths and successes and to plan ahead. It’s time for next steps.
So where do you start? How do you know how to begin and structure a review? What should you be looking for? Then what do you do with all the info???
Creative Planning – Next Steps will guide you through: reviewing (auditing) your business from a simple format, the Business Model Canvas; getting your head around strategy and focusing the direction of your business; plus mapping out easy (yes, it is possible) distribution, marketing and social media strategies for you to take forward.
When you run a creative business and make, design or produce, this is probably where your heart is and the ‘business stuff’ takes away from your creative time. This is a hard reality to learn, and maybe leaves you slightly disillusioned. Perhaps so far you have been working in a ‘freelance’ mentality, rushing (lurching?) from project to project with not enough income or time to create? Or, perhaps, after all your very, very hard work, you’re still not seeing the financial benefits?
I suggest you need to review and streamline, then focus the business strategically to make it as profitable as you can. Ultimately, you can then hire occasional/part-time/regular staff so you can focus, once again, on creating.
Beginning your business review
In this and my next post, I will help you review and start to refine your business, step by step. I will look at key areas (building blocks) and then suggest action points to help you move forward.
Essentially, a review is where you look at your businesses’ strengths and weaknesses to see what you can make the most of and what you need to prune or cull to be profitable. Usually, this is in terms of sales i.e. which ranges or pieces are doing well, which can be quickly produced to high profit, and which are just not working well at all. Also, you can consider it in terms of customers and clients – if you offer, say, bespoke or commissions rather than products. Should you be advanced enough in your business, you might also look at it in terms of geographic markets e.g. China is slowing, but Japan and Indonesia are picking up.
Begin with the basics – your business sales and costs
First, this means digging out all your sales data. You may have already rooted through your sales receipts and invoices for your tax return. Totting up what sales come from where and how many sales for piece (or range) X, Y, and Z. Are you selling more online from your own website or more from host platforms such as notonthehighstreet.com? Are you running out of commissioned work? Which sales channels take up more of your time for less financial return, and so on…?
Are there surprises in all this paperwork – are some products and ranges not the ones that are your bestsellers after all? Perhaps there are pieces which garner media coverage but little sales; they instead drive web traffic, enquiries and social media followers? These showpieces are valuable samples to you for this purpose, but won’t sell as pieces or ranges – couture catwalk shows don’t reflect what their customers actually buy, they are there to flirt with the media and raise awareness!
At this stage it is probably helpful for you to record your sales information if you are not already doing so. The much maligned Excel spreadsheet can be set up easily, then quickly updated at the end of every month or quarter as you now – being newly organised – continue to monitor your cash-flow. Now you have it all in one place and can view it easily.
Next, as part of this process, and certainly for your tax return, you will have begun to see some idea of your costs. Possibly this is the moment of disillusion – you seem to have generated income well, but actually your costs are high: too many ranges, too many materials, too many different distribution and delivery channels, too much time spent on individual pieces that could be sold at a higher price, not enough high-paying commissioned work etc. This is not good news for profit. So undertaking a review becomes an even more important exercise – you are finding issues that need to be addressed to solve this.
When I work with my clients, and in my MA teaching, I often refer to Ostenwalder and Pigneur’s Business Model Canvas as a structure to follow and a starting point for a review. This is an excellent model for a holistic, inter-connected, all-in-one-place view of your business. And you can just pin it on the wall and scribble or stick Post-it notes on it – easy! This is from Business Model Generation, which I recommend as a bible for early-stage businesses.
This model proposes that there are nine core building blocks or areas of your business. These areas need to complement each other and all work in sync for your business to succeed and overcome its challenges. In this post, I will now take you through the Revenue Streams and Cost Structure areas, and then suggest easy action points for you to follow:
Where your income comes from, divided into different streams. So this can be from one-time customer payments, or recurring revenues from ongoing payments, or repeat custom. Here, also consider investment, if you are lucky enough to have some from either a partner, investor or even from crowd-funding or grants.
Action point: How can you secure ongoing or new funding? What relationships can you revisit? Can you dedicate time to crowd-funding or grant applications? How can you ‘up-sell’ more products to customers or ‘cross-sell’ additional products to customers? Perhaps you have existing materials that can be sold off or turned into stock, or perhaps have existing stock that can be ‘tweaked’ into new, higher priced products?
These are the costs incurred in creating your product or service and getting it to your customer to maintain good relationships with them. Overheads, materials and labour, packaging, distribution and delivery, website upkeep and hosting, commissions to other hosts stockists, promotional materials, networking events, shows and exhibitions, staffing (even interns’ expenses), taxis to and fro as you heave samples and stock for buyers and clients. Plus any returns’ costs -for products – that you incur, and telephone calls for sales enquiries or for following up on leads.
Action point: Perhaps you have excess stock (inventory) that is costing you, how can you sell this to bring in income? How can you minimise future stock and inventory so that you don’t have to pay for storage, or wait such long times for financial return? How can you streamline all your operations and resources, where can you make cuts, what can you put on hold? This can be hard-going and radical; do be sure not to cut too heavily or without planning contingencies or replacements.
So well done on starting your review and getting to grips on the financial side of your business!
Next time, in Creative Planning – Next Steps 2: Reviewing Your Business we will look at the remaining areas of the Business Model Canvas, to give you the full 360 on your business. From here, it’s easy to begin a review: you break down your business information so it isn’t overwhelming, and then visualise the problem and its solution, one step at a time…
If you have any questions after reading this, or would like me to work with you on your creative business, then feel free to email me on firstname.lastname@example.org, or drop a comment on the blog.
 Osterwalder and Pigneur’s Business Model Canvas, from their book Business Model Generation, 2010, Wiley and Sons.