Profitability & how to build a sustainable business
My Dad was a really clever business man and lecturer. So, when I started out in my own business, he was a great source of advice. Often, he’d cut through my all-consuming excitement about design-related details and ask about the numbers.
How to build a sustainable business
‘The numbers always tell you what you need to know’ he’d say. Admittedly I’d probably roll my eyes a bit. But I listened too. It was my dad who insisted I learn how to do proper cash flow projections. He got me to do a competitors review – analyse what competitors were doing well and not so well. I researched the market I was intending to target. How big was it and what particular niche would I be targeting?
Dad helped me to work out what was reasonable and achievable to set as a monthly income target. It’s important to review this monthly to ensure you don’t lose focus on this side of your business. It’s all too easy to get sucked into being busy, but lose sight of clear priorities that will actually drive your business forward and help you make a sustainable living.
Work backwards from how much you need each month
One simple way to approach it is work out how much you need each month to pay the bills etc and work backwards. How many of your products or services will you need to sell each month, less expenses, to be able to produce that amount? And is that number realistic and achievable?
Sustainable business step 1 – maximise your profits
What worked for me was to work out what I could realistically aim to bring in each month – broken down into specific targets. Then I looked at all my costs. Assessed which were worth the spend, and which weren’t. Once I’d got rid of all unjustifiable costs, I then looked into reducing all remaining costs as much as possible. So, by switching my hosting, for example, and rebuilding the site on a WordPress template that I can largely manage myself, I have saved over £200 a month.
My accountancy and book-keeping costs are around about £100 a month less than they were (see the next section for more info on how and why). I have stopped automatic renewals on apps and memberships I no longer use. It’s all too easy for these to just carry over year on year. Each one is a relatively small amount, but added together I’ve probably saved about another £70 a month, by no longer paying for things I don’t need. I have kept my monthly income targets the same, so making savings like these just mean my business is more profitable. I make more income from working the same amount of time.
I lost my dad a couple of years ago now, but I know he’d be proud that I still keep a good eye on my balance sheet, do my own simple books and have a clear handle on my outgoings and income each month. Just like he taught me. Because he was right. The numbers do tell you what you need to know.
Stay in control of the numbers
When I started out, I appointed a local accountant and book keeper to handle my accounts. It worked quite well, but the costs were high and I realised that I wasn’t as in control of the numbers as I wanted to be.
So I started to do my own, simple books. There is a lot of sophisticated software out there to help you do this, but for me, I just like to create an excel spreadsheet with simple columns for outgoings, income and expenses with formulas to calculate monthly totals and net profits. I send these, along with all my bank statements, receipts, invoices and credit card statements to my online accountants.
I have saved a lot on book-keeping and accountancy fees by doing it this way. Plus, I really do know the detail of what is coming in and going out each month.
Find a good accountant
It pays to shop around. For years I happily used Mazuma but I heard really good things about award-winning Cheap Accountancy and they offered me a great deal to move to them. They handled my last set of accounts quickly and efficiently for a lot less.
Every September sustainable business training & resources
For small, creative businesses time is often the most stretched resource. I know it is for me. So I am really interested to discover more about Dubsado, a customer relations management system (CRM) that aims to free up creative time for service based small businesses by automating everything else as much as possible. You can do so much with the software, including connecting your lead management, payment processing, accounting, contracts and forms and project management.
Louise Maidment, founder of Every September who offers Squarespace website design and training has found Dubsado so transformative for her own business that she now offers help with this too. Perfect for designers, photographers, calligraphers, stationers, event or wedding planners, florists, coaches or virtual assistants, Louise offers a full Dubsado setup service. Full details here.
Louise has also shared her Getting started with Dubsado – six steps to get going over on her blog, which talks you through the basics and how to make use of the three client free trial of the software. One handy tip: if you set up pretend clients to test your workflows, if you email the Dubsado team or live chat with them, they’ll reset your free client number so you really can take the time to get yourself set up before you commit to subscribing.
Sustainable business rule number 1: don’t give away too much for too little
The person who really helped me get over my fear of charging a fair amount for what I do was Sarah Akwisombe. I signed up for her one-to-one business mentoring package a few years ago now, and it was worth every single penny. It can be quite a solitary existence running your own small business, so I really valued being able to sound Sarah out about my upcoming relaunch and business strategy. She was brilliant at helping me push away negative self doubt and tweak my business plan towards one based on confident, realistic pricing. My natural tendency is to feel apologetic for charging anything at all!!!
Sarah encouraged me to work out what prices I’d feel happy to charge. What would make me feel I was being fairly paid for what I do. Charging too little undervalues what you offer, I came to realise. It’s all about offering real value for money. Not giving away too much for too little. Otherwise you run yourself ragged and resentment is likely to creep in. It takes confidence to charge enough for your time, so some mentoring to help with this side of things could well be time well spent.
If you’re just starting out, Sarah’s No Bull Blog School is a great place to connect with other small business owners and to get great advice and support. There is some great free content on there as well as a range of courses and masterclasses to help your business fly.
Find out about potential funding to support your sustainable business
The Crafts Council offers a Hothouse programme to support talented makers at the start of their career. It offers creative and business development opportunities and, since 2010, has helped hundreds of makers to identify what they want from their career and how to achieve it. It’s open to an maker, designer or artist making primarily in 3D.
The materials you use could be clay, metal, wood, willow, stone, paper, textile, glass, leather, gems or even new ones you have developed yourself. To apply you need to create a Crafts Council website account. Once logged in you will be able to access the Hothouse application form.
The Prince’s Trust
I’ve worked with a good number of talented young makers and creatives who were really helped by The Prince’s Trust The charity has helped over 86,000 young people (18-30 year olds) to start their own business. The Enterprise scheme offers training, support and funding. There’s access to business advisers, covering everything from business planning and marketing to sales, budgeting and tax. Before launching your new business, the Business Launch Group will help ensure that your business plan is viable and sustainable. There’s also additional start-up finance support if you need it.
If it’s workspace or training you need, and you live in the London area, Cockpit Arts is a fantastic incubator for creative businesses. There are supportive programs for start-ups taking their first steps as well as mid-career and established businesses looking for accelerated growth. Affordable studio space is available in Holborn and Deptford as part of the Incubator package and is charged by the square foot (£25.65 a month for Deptford and £31 a month for Holborn). So, for a 100ft studio in Holborn you’d be looking at £281.83 a month, including a £19.58 core services fee. I’ve attended Open Studio events here and it’s a fantastic creative space, full of wonderful makers and craftspeople. Here’s the link to Apply for a place at Cockpit Arts
The Design Trust
Another great resource I’d like to share with you is The Design Trust – an online business school for makers and creatives. run by Patricia van den Akker. Fantastic free online resources include Start your Business (which covers the basics of registering and naming your business, business plans, costing and pricing & selling online) and Grow your Business (which covers detailed business planning, creative crowdfunding, making more money, finding more and better clients). There is also a range of one-day workshops and online courses covering a wide range of creative business related subjects.
I love this great piece of advice from The Design Trust:
‘To be successful you need to be entrepreneurial as well as creative.
There’s a myth that artistic talent and business acumen can’t exist in the same head. But to become successful you do need both: creativity and entrepreneurship.
Having a good product or service is only the first step. Next you need to connect the dots between you, your work and your clients. Position yourself in the market, create your branding and packaging, and reach out and build relationships with your dream clients. It’s an ongoing work-in-progress: you need to be flexible, adaptable, able to listen and take control.
Hard work? Yes. Worth it? Definitely. Because this is is your chance to create something unique – and that doesn’t just mean the ceramics, jewellery or illustrations you sell. You’re creating something that embodies your values, that will grow and maybe outlive you. A sustainable business for you, your family and your clients and the world!’
Other useful resources
I’m sharing my 10 Steps to Creative Business Success in a series of separate posts, as well as a PDF with all the information in one place for you to download and keep at the end.
The 10 steps I’ll be covering are:
- Creative business idea number 1: website design inspiration using WordPress and Squarespace
- Creative business idea number 2: photography tips for makers
- Creative business idea number 3: don’t underestimate the power of a solid Pinterest marketing strategy
- Creative business idea number 4: the best online tools and apps to help you
- Creative business idea number 5: social media marketing, photography, storytelling and strategy
- Creative business idea number 6: profitability & how to build a sustainable business
- Creative business idea number 7: make a clear marketing strategy plan
- Creative business idea number 8: don’t be afraid to learn from mistakes
- Creative business idea number 9: the power of planning to help you build a sustainable business
- Creative business idea number 10: sometimes forget the plan and seize the moment
Photo credit: Every September Squarespace website design and training
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