Module 3 your creative business strategy
- 1. This programme has been funded with support from the European Commission Module 3 Your creative business strategy
- 2. • Getting started in your creative business (from idea to opportunity, the role of the business plan) • The role of marketing research • Working through the key sections of the business plan • Presenting your background & experience • Operating plan • Your target customer, how are you going to sell? • Pricing, costs and making a profit • Making the most of business mentoring • Some rules for success In this module we will explore:
- 3. Many ‘artist-entrepreneurs’ do not necessarily set out to start a business. Their focus is on developing their own practice. They then enter a commercial environment in order to make money to continue their artistic work. They then need to develop business & management skills to make it work.
- 4. Creative Sector in Focus
- 5. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. Getting started in YOUR CREATIVE BUSINESS From idea to opportunity The role of the business plan
- 6. In Module 1 & 2 we explored why you want to set up your creative business. We now look at and dissect your idea. Ideas are the creative lifeblood of your business. People that generate lots of ideas are good at coming up with solutions to problems. However, an idea is not an opportunity.
- 7. From Idea to Opportunity Turning an idea into an opportunity is a process. It takes time, resources and hard work. There are four elements to work through:- 1. Research the need. Does the market need your offer and most importantly, will they pay for it 2. Business Plan. The process of writing a business plan actually helps develop an idea into an opportunity. It forces you to ask and answer hard questions and explore your options. 3. Team. An idea rarely becomes an opportunity without a team. No individual has all the knowledge and skills necessary to make it happen 4. Resources. What resources will be required to turn your idea into an opportunity.
- 8. There are 3 facts that distinguish a business idea from a creative idea: • There must be a clear need for your product or service (or you must create one). This is the OPPORTUNITY. • That need must have sufficient potential to create a demand. • There should be sufficient reward within your idea to be able to support your business needs & build on it. You can work on lots of ideas at once but should focus on only one or two opportunities. When dealing with ideas it’s OK to dream. When dealing with opportunities get ready to measure, to use data.
- 9. The idea comes to life in a business plan. Operating a business where your intellectual capital is your key to success requires an approach that differs from the standard business model and business plan.
- 10. Reasons for a business plan According to statistics from the Bank of Ireland, 66% of all business start-ups will fail in their first five years. A staggering 80% of small businesses without a business plan will fail in their first 5 years Paul Fagan, Action Coach Why? • Lack of planning on behalf of business owners. • Having a well structured business plan gives you more success of survival. “ ”
- 11. Reasons for a business plan • You wouldn't build a house without creating a plan. Why would you build a business without having a similar plan? • To help you think through the whole process - the value of a business plan is not only the plan itself, but the process of writing it. • To put down on paper how much money you need to get started and how much you need to make each week • To convince yourself that it is worth doing • To show others that you have thought it through • To use with a grant authority/banks to get support • To give you targets to aim towards and measure yourself against
- 12. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. The role of market research in validating your idea
- 13. Identify a clear need for your product or service (or you must create one). Ask yourself: What does this industry need right now? What is unique about my approach? (Back to Module 1 workbook, exercise 8) For example – there are thousands of graphic designers in the marketplace, what will be special about you? It might be the potential to become an interactive media designer – going beyond graphics to add animation and digital effects. The business starts with developing your business idea (refer back to Module 1 workbook exercise 1) and that idea needs to be validated before you move forward - the role of market research
- 14. Use market research findings to convert the reader to become a supporter, a customer or an investor in your business. Start with Quantitative Research 1.1 SIZE OF THE MARKET (and market segment) Do you know the size of the market you are targeting ? e.g. Ireland - Central Statistics Office www.cso.ie Population Census and Household Budget Survey e.g. spending on clothes, technology, going out How much of your product was sold in 2016? Is the market growing and at what rate? How many competitors are there out there? Validate your idea You will be expected to be knowledgeable (and honest) about your market
- 15. All findings are factual, often numerical. Third party independently verifiable data Numbers Statistics Data Charts Is the market big enough and growing ? • Market Trends • Market Size • Market Value • Market Growth • Competitors Categories of Market Research Design Quantitative Use for Based on your own market research, not statistically valid Hearts Minds Opinions Attitudes Does anyone want it? Will they buy it ? • Attitudes • Perceptions • Opinions • Feedback • Testimonials Quantitative Use for
- 16. Where can you find this information? On-line, doing research yourself (secondary research) • Create a strong market overview - read about your niche in trade magazines / national press / consumer media but always trace back to original source. • Industry associations (e.g. Ireland - Digital Marketing Institute, Irish Exporters Association, IBEC; • Sector bodies e.g. Arts Council, Design and Crafts Council of Ireland, Enterprise Ireland • Our friend Google which can lead you to market research reports such as Mintel, Foresster EXAMPLE - Music business research yielded from desk search
- 17. 1.2 Check out the competition. Using the keywords of your business description, Google them, interrogate their websites, what is different about your approach. E.g. artisan soap makers UK
- 18. For each competitor, consider : • Year established • Size (employees, locations) • Target Customers / Sectors (typically listed on website) • Marketing & Sales approach (website news & events) • Strengths & Weaknesses • USPs Competitor Comparison Suggest visual e.g. table with columns comparing offerings on a feature by feature basis EXERCISE Why you have competitive advantage - write a strong summary paragraph
- 19. Primary Market Research - Main Techniques • Depth Interview • Focus Group • Market Research Online Communities (MROC) - LinkedIn Groups -“Listening Platforms” i.e blogs, forums etc • Questionnaires / Surveys - Online, face to face, telephone or post • Mystery Shopping • Observation
- 20. Focus Groups Planning 1. Recruit relevant participants 2. Pick convenient venue, day and time - Can be in some-one’s living room, evenings etc. 3. Facilitator is key role (someone you trust) 4. Plan topics to probe During 1. Welcome, timing, permission to record 2. Faciliator set atmosphere and tone of evening 3. Thank-you, reward Depth Interview You conduct a one to one interview asking your interviewee a set of semi- structured, probing questions usually face-to-face. You need good interpersonal and listening skills Advantages: flexibility, can collect lots of in-depth info from one person. Watch for your own interviewer bias.
- 21. Examples Of Market Research Questions How will you conduct the research? • Employ market research experts • Employ students • Do it yourself Analysis How will you analyse findings? How long will it take ? The power of questionnaires What are the key pieces of information you need? Consider the logical flow of these questions Are they yes/no answers, multiple choice or do you need more information? Use variety of styles to keep interest levels up. Start with general easy questions and move on to more sensitive ones Aesthetics Encourage Response Rates - Appeal to ego, forewarning, respond by dates, incentives, prizes, confidentiality
- 22. Free Online Research Tools Survey Monkey Basic www.surveymonkey.com Cost: Free. Enhanced plans with additional services circa €200 per annum. What It Is: An online survey and opinion poll service. How to Use It: You can creative surveys free of charge for your own audience. For a fee, you also can get feedback from your target audience via SurveyMonkey's own samples. Get the Most Out of It: Beyond the answers to survey questions, respondents may provide additional insight in their open-ended comments.
- 23. Free Online Research Tools Google Forms https://www.google.com/forms/about/ Easy-to-create surveys and forms for everyone Create custom forms for surveys and questionnaires at no cost. Gather everything in a spreadsheet and analyse data directly in Google Sheets
- 24. Mystery Shopping & Observation One of the most valuable ways to understand your market is to spend time in retailer outlets, portfolio websites and trade fairs (see Module 2) to see at first hand who your competitors are and what they are doing. • Are there many new lines being launched? • What is the brand leader doing? • Are there many promotions? • Which lines are being given most space/coverage? (These are usually the best sellers!)
- 25. Market Research Online Communities (MROC) Use social media, blogging, online forums, and any other community spaces you can find (online or off) to conduct your research. E.g. • LinkedIn Groups are great way to build credibility and make new connections that can ultimately help grow your business • Facebook groups • “Listening Platforms” i.e blogs, forums etc EXERCISE What online communities apply to your creative sector?
- 26. Research in action Many creative business owners start where they are. They make a product and actually start to sell them. This is often called proof of concept. Keep in mind that everything doesn’t have to be PERFECT before you can get going on your creative business (just almost perfect!). You’ll learn, grow and evolve and your creative business may look very different in a year or two. The key is to just start.
- 27. Constantly research to recognise opportunity? • Are you staying ahead with new modules of practice in your field? • Regularly research market trends , zeitgeist -what’s happening globally in creative and cultural / social movements which may have an impact on your work? What opportunities are out there for you to apply for: residencies, short skills development, online courses in your area of interest. Collaborative opportunities?
- 28. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. Working through the key sections of the business plan Your background and experience - writing a winning bio
- 29. Key sections in a Business Plan for a Creative Business We have looked at how you validate your idea through research and establishing why/how it will work. NEXT Your background and experience (people buy people) reflect the characteristics in Module 1 slides 10 and 11 Your operating plan (production) Your business structure Who is your target customer? How you are going to market and sell? How you are going finance the business and make a profit? • Review of all the sections • Highlight those areas where you have already got information • Highlight key areas where you need to start getting information • Set yourself a target of having the plan complete by end of course
- 30. Presenting your background and experience Write an Attention-Grabbing Professional Bio A professional bio is simply a story-based version of the information you would typically include in a CV. The format is less formal, and it gives you an opportunity to highlight some interesting facts about yourself while injecting a sense your personality. PEOPLE BUY PEOPLE. The main goals of a bio are to give the reader an accurate sense of who you are and what you do, to establish expertise and credibility, and to qualify your experience and background. All of these elements combine to develop trust in you and your brand. You will need a bio in the following ways • Post it on your website and blog • Include in your marketing materials • Provide with proposals to clients • Submit for speaking, presenting or teaching applications • Include in any professional documents you develop
- 31. Presenting your background & experience What to Include in Your Bio • Current job, business or professional experience • Publications or presentations you have completed • Professional memberships you currently hold • Awards, honours and certifications you have received • Your contact information • A photo of yourself, your educational background, what inspires you (your values – see next slide), quotes or testimonials from clients, and links to examples of your work. Create both written and video bios for impact - TOP TIPS • Make your opening attention-grabbing to draw the reader in and make them want to learn more about you. • Write it in the third person, using “he/she” instead of “I • Use a conversational voice – much easier to read • Include some personal or unique quirks and the softer side of your personality!
- 32. Word Bank to Help you Write your Bio • Achievement, Advancement, Aesthetics • Belonging ,Community ,Creativity, Curiosity • Determination, Discipline • Effective, Exciting, Financial security • Freedom, Fun, Growth, Helping others ,Honesty • Independence, Influencer, Innovation • Joy, Knowledge ,Leadership, Meaningful work, Originality • Public service , Reputation, Respect • Self-respect, Stability, Sustainability • Teamwork ,Time freedom ,Trust, Vision ,Work/Life balance
- 33. Example: IKEA Values Humbleness and willpower We respect each other, our customers and our suppliers. Using our willpower means we get things done. Daring to be different We question old solutions and, if we have a better idea, we are willing to change Constant desire for renewal Change is good. We know that adapting to customer demands with innovative solutions saves money and contributes to a better everyday life at home
- 34. Let’s look at some great bio examples http://lisacongdon.com/blog/about/ Fine artist and illustrator Lisa Congdon is best known for her colorful abstract paintings, intricate line drawings, pattern design & hand lettering. She works for clients around the world “ ”
- 35. Other great examples http://www.katebingamanburt.com/about (love her use of a gif)
- 37. Other great examples http://ekwetzel.com/about/ (written in the first person, very simple and powerful
- 39. Additional reading 9 important points to consider when writing your entrepreneur bio http://www.biotemplates.com/biograp hy-examples/how-to-write-an- entrepreneur-bio-with-sample- wording/ EXERCISE Create a new or rewrite an existing bio profile
- 40. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. Working through the key sections of the business plan Operating Plan
- 41. Operating Plan When writing the business plan, the operating plan section describes the physical necessities of your business's operation, such as your physical location, facilities, and equipment. It should also include information about materials and stock requirements and suppliers, and a description of the manufacturing or creative process. Two important factors You need to address two factors in this section:- 1. Show what you've done so far to get your business off the ground (and that you know what else needs to be done) 2. Demonstrate that you understand the manufacturing or creation process of producing your product or service e.g. a step by step example of designing and creating your product or service from start to finish
- 42. Operating Plan - Key Sections Your base/location: What type of premises are you working from, its size and location? If it's applicable, include drawings of the building, copies of lease agreements Equipment and Assets: Describe the equipment necessary its worth and cost. How will this be financed? More in Module 5. Also make a list of your assets, such as land, buildings, inventory, furniture, equipment and vehicles. Include descriptions and the worth of each asset. How will you use technology, processes, products and services to reach your goals? Production: Explain how long it takes to produce a unit and a breakdown of costs - More in Module 5. Be realistic about time - How much time will you have to work on your creative business? Feasibility: Describe any product/service testing, price testing, or prototype testing that you've done on your product or service.
- 43. Operating Plan - Other Aspects • Supply Chains - an explanation who your suppliers are and their prices, terms, and conditions. • Quality Control - an explanation of the quality control measures that you've set up or are going to establish. • What level of service do you provide ? Don't be vague; define what makes your service so extraordinary. • What roles do you and employees, collaborators or subcontractors (if any) play? • Are there are ‘risks’ involved in any part of the creation or production process ? This could be handling hazardous materials. Describe how you are/ will be properly trained in dealing with safety issues.
- 44. Operating Plan - Protect Your Intellectual Property (IP) Especially important to artists, authors, broadcasters, composers, designers, film makers, musicians, photographers, publishers, recording studios, theatre companies and other creative businesses. IP is fundamental to the way that creative businesses generate value. Intellectual property is something unique that you physically create. An idea alone is not intellectual property.
- 45. Operating Plan - Protect Your Intellectual Property (IP) Having the right type of intellectual property protection helps you to stop people stealing or copying: • the names of your products or brands • your inventions • the design or look of your products • things you write, make or produce Copyright, patents, designs and trade marks are all types of intellectual property protection. You get some types of protection automatically, others you have to apply for.
- 46. Operating Plan - Owning intellectual property (IP) You own intellectual property if you: • created it (and it meets the requirements for copyright, a patent or a design) • bought intellectual property rights from the creator or a previous owner • have a brand that could be a trade mark, eg a well-known product name Intellectual property can: • have more than one owner • belong to people or businesses • be sold or transferred
- 47. Operating Plan - Owning intellectual property (IP) Intellectual property if you’re self-employed If you’re self-employed, you usually own the intellectual property even if your work was commissioned by someone else - unless your contract with them gives them the rights. Credit, links and more information https://www.gov.uk/int ellectual-property-an- overview/what-ip-is
- 48. Typically, there are three legal forms
- 49. The most common set up for creative businesses is the sole trader - it is the easiest to start, and the least complicated to dissolve. A sole trader is a business owned and controlled by one person who takes all the decisions, responsibility and profits from the business they run. Advantages • Many of the advantages are summed up under the heading "control". • Full control over daily and strategic decision making. • Far less red tape and regulations than a Limited Company. • No staff to manage or pay. • No annual accounts to prepare as sole traders add income and expenses to their annual self-assessment tax return where you declare your annual profits and tax liability.
- 50. It's easy to set yourself up as you only need to declare to yourself you are going to be a business. Sole traders still need to properly account for all sales, expenses and profits for any income tax and liabilities on a yearly basis. The VAT rules still apply if the turnover of the business exceeds the limit set (i.e. Sales of goods €75,000 and sales of services €37,500) Ireland: You should advise Revenue when you start a business as a self-employed person/sole trader. All you need to know on http://www.revenue.ie/en/business/running/regi stering-tax.html#section2
- 51. Registering a Business Name You may decide to use your own name as the business name, but if you wish to use a separate business name you must register the name with the Companies Registration office. To register a business name, the form required is a RBN1 form (Registration of Business Name). To register online, individuals would need to set up an account online through www.cro.ie and complete and submit the form online. Fee €20 if you register the business name online. You may be part time employed in the early stages of business and paying PAYE. You may be applicable for the Artists Exemption in Ireland. http://www.revenue.ie/en/tax/it/reliefs/artists exemption.html
- 52. Disadvantages • Perception that you are "small" - it may be difficult to bid and accept larger contracts. • Full personal liability for failure. In Ireland, if your business fails, it may be more difficult to obtain social welfare. If you have been self-employed then you will be means tested before being eligible to receive Jobseekers Allowance, while if you have been an employee for a certain period, it will entitle individuals to Jobseekers Benefit for a defined term regardless of their means.
- 53. A legal entity separate from its share-holders. Directors or shareholders personal assets are not at risk in the event of a winding up or receivership. It is generally the most tax efficient business structure to use. However, the disadvantages are increased administration required of directors the cost of preparing annual accounts How to Set up A Form A1 is completed and submitted together with a constitution (Only a one document constitution if the company is a LTD company, a memorandum and articles of association for all other company types).
- 54. Company incorporation can be completed online at www.core.ie
- 55. When two or more people start a business, the result can often be a strong union that blends complementary skills, financial resources, customers and connections to help the venture succeed. But, sometimes, such relationships can sour and the business can fail. You need to decide in advance who is doing what, who is responsible for what, and how to resolve disagreements. Before entering a partnership, think carefully.
- 56. • do you completely trust your partner(s)-to-be • have all the partners sign an agreement setting out how the business is to be financed, how profits and losses are to be shared, and what will happen if one of the partners decides to leave. Failure to agree on such issues at an early stage can lead to difficulty later. Partnership Business Name must be registered. The partners in the structure operate without the benefit of limited liability thereby assuming full and total personal liability and responsibility for outstanding debts.
- 57. Other formats Social Enterprise A business that trades for a social purpose. The profit or surplus generated is usually reinvested in the company or community rather than being distributed to shareholders and owners. Their social purpose is absolutely central to what they do. Examples: Food cloud, The Nerve Centre, Derry. A Collective Where a number of organisations come together for a specific purpose. The members of the collective usually have a common interest or objective. The form of the collective can be formally defined or be a looser, informal agreement.
- 58. Download As a first step, download the Revenue’s Starting in Business guide (reference IT 48) and VAT for Small Businesses (IT 49) from its website (www.revenue.ie).
- 59. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. Working through the key sections of the business plan Your target customer and how are you going to sell and market
- 60. Who is your target customer? This section will elaborate further on who and where your customers are and how you will reach them. • Who are your customers/users? What do they need or expect? • What can you do for them that will enrich their lives and contribute to their success now and in the future? • Why should be come to you? What are the unique benefits you offer that will make their lives better?
- 61. All customers are not the same! You may have many different types of customers/users for the same product/ service. This is called Market Segmentation • One size does not fit all • Split target market into specific sub targets • As a general principle, it’s better to aim for the premium end of your market (competing on originality and quality as opposed to price)
- 62. Defining your target market All great businesses begin with knowing who your customer/user is (called buyer persona’s) by identifying specifically more about their pain points, background, demographics, wants, needs and what channels are best to reach them.
- 63. Creative customer profiling • Develop target profile of a typical customer segment/service user • Picture a particular ‘individual’ and segment based on what motivates them • Develop a deeper level of understanding of them • What do they like to do? What are their pain points ? What are they complaining about? What is their biggest challenge? What motivates them? • What are the key communication channels to reach them on & offline • Where do they go to get information? • What messages do they want to hear? • What will motivate them to pick you over others ? Then you can create appropriate messages that are specific to each target group’s profile.
- 64. Profile Factors Personal Factors Age & Occupation, Economic Circumstances, Lifestyle, Personality Psychological Factors Motivation, Beliefs & Attitudes Social Factors Family Roles & Status- consider the various roles they play and how they influence purchase decisions Cultural Factors Culture - values, beliefs, attitudes, opinions, Subculture- nationalities, religions, racial groups, geographic regions
- 65. What products or services are you offering? Did you know people don't just "buy" a product? They "buy" the concept of what that product/ service will do for them, or help them do for themselves. When I book my child on a coding course, I am buying them the experience of learning a new skill for life. People who are overweight don't join a slimming club to go to meetings. They "buy" the concept of a new, thin, happy and successful self. How can you present your offering in terms of what it can do for your user ? The phrase to remember …. WITFM (what’s in it for me)!
- 66. What products or services are you offering? Ask yourself! Am I focused on satisfying what my customers need or want? Or Am I more interested in ‘selling’ them what I do? A clever way to articulate this is through features and benefits Features - Features are descriptive, they describe what a product or service does,its dimensions and specifications Benefit - What problem does it solve for the user/ customer? What's in it for me? Translates the feature into something of value to the customer Features Tell, but Benefits Sell
- 67. Benefits translate a feature into a solution that solves a customer problem. Solving consumer problems is one of the best ways of marketing. Think in terms of results. How do we translate Features into Benefits? • By using specific language and phrases - “Which means that” - “Which allows you to” - “Therefore you can” - “Therefore you will be able to” • Doing a feature/benefit matrix - Documenting all the features and benefits of your product or service • PROOF is the final part of this exercise. Offer evidence to document fact or feature
- 68. Example People have little interest in purchasing a bed. What they want is a good night's sleep. When Apple marketed the iPod? They did not focus in its technical specification, they communicated the clear benefit to the customer
- 69. Example EXERCISE Using our template, complete a Features into Benefits exercise for your product or service
- 70. How you are going to market and sell? Depending on who your customers/ clients are you may sell your work in some of the following ways: • Showcase events, pop up shops, trade shows and exhibitions • Become an independent retailer / selling through independent retail stores, e-commerce sites, catalogues • Set up an independent or collaborative art studio open to the public
- 71. In Module 2, we looked at selling platforms for your work
- 72. Selling ART • Commercial galleries, art dealers, agents, auction house, commissions • Be awarded to create a collection, through an art foundation bursary, grant, residency, commission • Make and sell prints • Take commercial commissions • Tutor, researcher, curator, lecturer, visiting speaker Our Slash Career approach is very evident
- 73. Where will you sell your work/ earn from your work? Apply to open submission exhibition's like EV+ A, Tulca enter to expose your work to professional curators.
- 74. Music Beyond performance, earn from your work being used in advertising, TV, Film, Media, Publications. Music licensing for film and TV. Textiles Collaborations with interior designers, interior architects, public commissions.
- 75. Writer Passive income channels - app development , creating your own selling platform, write an ebook. Photography Put your photography to work on the web. Photography websites such as Shutterstock and iStockphoto can provide you with platforms to sell your photos. They may offer either a percentage or a flat fee of each photo that is sold to a site client.
- 76. Sell your own products on the internet The possibilities here are endless – you can sell just about any product or service that you like. It could be a product you have created and can manufacture on your own or it could be digital in nature (such as instructional videos).
- 77. Write an ebook. This can be a lot of work upfront, but once the ebook is created and marketed it can provide you with a passive revenue stream for years. You can either sell the ebook on your own website or offer it as an affiliate arrangement with other websites that provide content related to your ebook. App design and development Apps can be an incredibly lucrative income source. Apps make people’s lives easier. Fresh, creative ideas can win. If you can come up with something unique, you could earn well off it. Create an online guide. By providing specific information in a guide-like format, you can earn through advertising and affiliated links.
- 78. Passive income from your creative businesses Make YouTube videos This is a venture that is growing rapidly. You can create videos in just about any area that you like – music, tutorials, opinions, comedy, movie reviews – anything you want . . . then put them on YouTube. Establish your own or buy a blog Thousands of blogs are created every year, and thousands are either completely abandoned by their owners sometime afterward. If you can buy blogs with a reasonable amount of web traffic – as well as a demonstrated cash flow - it could be a perfect passive income source.
- 79. These are just ideas, you need to work out what is right for your business model. Complete this section of the business plan after completing
- 80. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. Working through the key sections of the business plan Pricing, costs and making a profit
- 81. Pricing, costs and making a profit How to set your price? Pricing is a process in which the first step is vital- establish your cost price. Without truly knowing your costs, you cannot know if you are making a profit or not. Many creative entrepreneurs mistake turnover for profit. Let’s recap Turnover is the amount of money you take into the business Profit is what is left when you have covered all your costs
- 82. Working out costs for a physical product is straightforward. A cost is the amount of expenditure which a business incurs in manufacturing a product. The three elements of cost: Materials including packaging Labour Overheads The purpose of costing Is to control cost to identify more profitable products to fix price
- 83. • Pricing your product or service is one of the most important business decisions you'll make. • You must offer your products for a price your target market is willing to pay–and one that produces a profit for your company–or you won't be in business for long! • Your pricing must takes into account your costs, the effects of competition and the customer's perception of value. • Cost is the total of the fixed and variable expenses (costs to you) to manufacture or offer your product or service. • Price is the selling price per unit customers pay for your product or service. • So, when customers ask, "How much does it cost," your answer is your price.
- 84. Pricing - what you need to be clear about 1. What is your hourly rate? Your hourly rate is very important to use for estimating purposes. You can calculate this by dividing the hours you have available to work on the particular project/ product design/artwork by your expenses plus profit. This puts a value on the time you spend doing work which can be invoiced out for. 2. How long is the project taking? Track your time over weeks/months to find out the average amount of time it actually takes to create/provide your main services that you offer. In time you will get quicker and better at what you do – you do need to know how much time you spend at a particular task to ensure that all of your work time is accounted for.
- 85. Pricing - what you need to be clear about 3. What are your competitors charging? You need to know who your competitors are as well as what they are charging. It is useful to join a network of creative services providers liaise with colleagues who will share information. 4. The market - learn by doing If you are unsuccessful securing a commission/contract/ order, ask for feedback for future learning , this constructive feedback is important for your next pricing exercise. Ask who was offered the commission/contract/ and why they were selected and if possible what their fee was.
- 86. Pricing - what you need to be clear about 5. What is your clients/customers budget range? Just ask! This is crucial to know before you process with the relationship as if you don’t have a general idea you can waste a lot of your time here with unsuccessful proposals. 6. What is the value for the client/customer? When a customer buys your creative service they expect a return – the value of your work/ service is really important to try to gauge this at the very start.
- 87. Pricing creative services “You need to take into consideration your years of skills development, your experience & talent honing your creative expertise. Your portfolio & client testimonials on previous work will support you. Your creativity has value - the way you use your imagination to solve the clients problem is another step forward. Then it is your job as part of the selling process that you will provide the best service and make the customer feel comfortable in the knowledge that you will provide something unique, creative and innovative and choose you even if your cost if higher that others”. From the designers guide to marketing and pricing by Llise Benun & Peleg Top.
- 88. The Fundamentals: Price Floors & Ceilings Think of cost as the floor–you must set prices above the floor to cover costs or you will quickly go out of business. (If you decide to set prices at or below cost it should be for a temporary purpose such as to gain market entrance.) Think of customer "perceived value" as the ceiling–this is the maximum price customers will pay based upon what the product is worth to them. Perceived value is created by an established reputation, marketing messages, packaging, sales environments, etc. An obvious and important component of perceived value is the comparison between you and your competition.
- 89. Somewhere between the floor and the ceiling is probably the right price for your product or service; a price that enables you to make a fair profit and seems fair to your customers. When you understand your cost floor and your value price ceiling, you can make an informed decision about how to price your product or service. In summary, while you must be mindful of costs in setting your prices, don't limit your thinking only to cost-based pricing. Value-based pricing makes you think about your business from the customer's perspective. If the customer doesn't perceive value worth paying for at a price that offers you a fair profit, you need to re-think your game-plan!
- 90. Pricing for Profit: Cost-Based Pricing Setting a low price on one or more products to make quick sales to support another product in development. (Some companies also employ this strategy when they need to increase cash flow.) Establishing a high price to make high profits initially. This strategy is used to recover high research and development costs or to maximize profits before competitors enter the market.
- 91. Value-Based Pricing - Establish a ‘high’ • If your product has a mystique and uniqueness that is valuable to customers, you can have the ability to charge a very high price relative to your cost. • If your target market is affluent and you are positioning your product as a "prestige" product, an especially high price could be in order. (For example, do Rolex watches cost that much more to make than other brands? The high cost, however, brings a "status" benefit to Rolex's affluent market.) • This strategy of charging "what customers are willing to pay"–even though it's high–requires alertness and a willingness to change on your part because customers & competitors might decide that you're making too much of a profit!
- 92. Pricing Strategies - Price the same as competitors This strategy is used when offering a comparable product, when prices are relatively well established or when you have no other means to set prices. Your challenge then becomes to determine how to lower your costs so you can produce a higher profit than your competitors.
- 93. Price Discrimination • The term price discrimination refers to the situation in which the exact same product or service is sold to different people at different prices. Very prevalent when costing your time as an advisor etc • What conditions are required in order for a firm to engage in PD? • There must be consumers (or market segments) with different price elasticity of demand • The firm must be able to identify these consumers (or market segments), either directly or indirectly through their revealed preference
- 94. Types of Costs Fixed: A cost not immediately affected by changes in the activity level e.g. rent of Studio/workspace, loans on equipment Variable: Correlates directly with changes in activity e.g. Stock, Packaging, utilities, Estimate how long it takes you to make the product which includes preparation time, research, selling, marketing, packaging etc.. If this this is the same in all cases, then it is a fixed cost. If it is different for each piece you produce, then account for it as a variable cost.
- 95. There are two main methods of costing: Total Cost Approach (Total Absorption) • Calculate all costs for a product • Determine no of units – how many can you make and importantly how many can you sell (there is a difference!) • Divide total costs by no of units • Add profit figure – the magic number generating the price to customer 1
- 96. There are two main methods of costing: Contribution Approach • Determine Selling Price – influenced by the marketplace e.g. what the customer will pay and competition • Split Costs into Variable and Fixed • Calculate “Contribution” - selling price less variable costs. Example – a candle sells for €5, variable costs to produce the candle is €2.50, therefore contribution is €2.50. Contribution is assigned to pay off the fixed costs and once the fixed costs have been paid in full, the contribution stream goes straight into profit. 2
- 97. There are two main methods of costing: Contribution Approach • Calculate “Break Even Point” Establish Total of Fixed Overheads Establish Contribution per unit Divide Fixed Overheads by Unit Contribution e.g. if Total Fixed Overheads for the candle business is €10,000 and contribution is €5,000 then the break even point is €5,000. The candle company must sell 2,000 candles to break even, all sales above 2,000 are profit. 2
- 98. Managing your money Cash flow is likely to be irregular so how will you ensure you remain afloat during tough times? Many creative businesses can ask for a deposit and phased payments to allow you to survive! To thrive and survive you must become responsible for your income. Do you need to embrace a slash career or keep a part time job to provide you with the financial security you need at this time? EXERCISE Using our template, complete a Features into Benefits exercise for your product or service
- 99. Managing your money Keep clear records of all your incomings and outgoings on a daily basis relating to your business . You need these to be in control of your business to complete your tax returns correctly and check that you’re covering all your bills. Module 5 deals with “Accessing Resources” funding/loans /awards available to you & how to apply. EXERCISE Review our accounting templates as examples of a ‘book keeping’ system
- 100. TOP TIPS for writing your Business Plan 1. Visuals can help explain a business plan’s trickier aspects 2. A challenge for anyone who is passionate about their business is to explain it in terms others can understand. Perhaps write the plan in PowerPoint - If you can’t articulate your plan over 10 to 15 well- designed presentation slides, you will lose your audience 3. A business plan isn’t just about ticking a box. It needs to ooze passion, drive, inspiration and competence. Resources – UK based but applicable everywhere Arts Council England: Starting a business (pdf) Business is GREAT: Writing a business plans Nesta Creative Enterprise Toolkit Peter Thiel: sample pitch deck The Prince’s Trust business plan pack (pdf)
- 101. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. Making the Most of Business Mentoring
- 102. Making the most of a business mentor The right business mentor can have a profound and fundamental impact on your enterprise, particularly for those at the early stages of an enterprise and aiming to have high rates of growth. There are ways to make the most of business mentoring: See next slide 5
- 103. There are ways to make the most of business mentoring: 1. Understand why you need or want this mentor. Usually, the mentor is someone whose knowledge and/or experience exceeds your own to such an extent that their input can have a substantive positive impact on your business´ performance and your ability to run it. 2. Know where the issues lie. Although the mentor should be able to indicate some of the areas that you might want to focus on, you are in the best position to understand your business and the goals that you want to achieve. The mentor is there to help guide you toward these goals 5
- 104. There are ways to make the most of business mentoring: 3. Have the right attitude. You need to enter this relationship with the right mindset and attitude. See your mentor as someone who is trying to help you carry your business forward, and has valuable advice to give you. 4. Know how your mentor can add value. A mentor cannot be “ all things to all people” and to make the most of their input, you need to understand where their expertise lie and find ways that these are applicable to growing your business. 5
- 105. There are ways to make the most of business mentoring: 5. Find the time. It’s easy to get caught up in the day to day challenges of running your own business and putting bigger challenges on the back burner. The mentor is there to help you to develop and achieve your longer term goals. You should put everything out there and explore creatively with your mentor. 5
- 106. Build a professional network of peers Besides offering connections to potential customers or investors, a strong peer network can become a boundless source of support, accountability, and fresh ideas to test out and build on- new projects, collaboration. A key skill is finding a balance between creative independence and qualities allowing mutually beneficial networking. There are a range of creative /business support & Professional Development Networks that creative entrepreneurs can tap into through social media platforms, forums etc.. Research and make a list that is relevant to you.
- 107. Build a professional network of peers Example I design textiles in Ireland, I should connect into Design and Crafts Council of Ireland www.dccoi.ie Institute of Irish Designers www.idi-design.ie Design Business Ireland www.designbusinessireland.org Interiors Association www.theinteriorsassociation.ie Tap into an ongoing calendar of events/talks/summits at Local, National , International levels such as OFFEST, DESIGN WEEK, several of which we will explored in Module 2.
- 108. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. Some Rules for Success
- 109. Value Vulnerability Creative Entrepreneurs need to value their vulnerability when it comes to setting up in business. At first, it will be hard to fumble through but persistence to drive this for yourself and with the support available to you anything is possible.
- 110. We love Simon Sinek's Top 10 Rules For Success (@simonsinek) 6. Stack the deck 7. Be the last to speak 8. Be authentic 9. Find your passion 10. Start with Why 1. Break the rules (lets go one step further, that rules?) 2. Train your mind 3. Be patient 4. Take accountability 5. Outdo yourself Check out his video -https://www.youtube.com/watch?v=nJxQ2kUGJkA&t=2239s
- 111. TOP TIPS Learn something about the customer every day Get out & about to learn what customers really need , what’s important to them. Get networking, make phone calls, connect. This prevents a start- up from creating a solution first and then looking for a problem to solve. A big advantage for start-ups is they can pick a small section of the market and do that really well. 1 From Paul O’Dea, Company trans Strategies
- 112. TOP TIPS Be more flexible than a gymnast You need to experiment, change and weave towards the market. Start up’s often transform themselves many times on the route to success. Be flexible listen carefully and take feedback. It’s a skill to be able to understand & take action on the important advice you receive. 2
- 113. TOP TIPS Get a trusted, challenging advisor/ mentor as difficult as Steve Jobs 3 Start up’s need “somebody who’s relentless in moving away the cobwebs from the vision and able to help unearth the vision from the heads of the founders”. Find someone who will be there for you in the long-term but who won’t be afraid to be critical when you need to hear it.
- 114. TOP TIPS It’s a marathon, not a sprint “Starting a business is hard. It will stretch you to your limits.” Start with passion. 4
- 115. Spotlight on the UK. • In the UK in 2014, Creative Industries was the highest growth sector, it accounted for 1.8 million jobs - an increase of nearly 16% since 2011 (Creative Industries: Focus on Employment June 2015). • Self-employment is where the growth is - 43% of the current creative industries workforce is self-employed. • 78% of its businesses have fewer than five employees – so not small or medium-sized, but micro. Next up…Module 4 Marketing for Creatives We will explore the following : • You are your brand • Creating your brand • How to build a brand with very little funding • Effective tools for online promotion • How best to get noticed online