The Creative Professional's Guide to Money

How to Think About It, How to Talk About it, How to Manage It

Ilise Benun

• Publisher: HOW Books
• Year: 2011
• Print ISBN: 9781440302435
• eBook ISBN: 9781440315190
• Topic: Design
• Subtopic: Small Business

The Creative Professional's Guide to Money teaches creatives everything they need to know about the financial side of running a creative business.

Creatives - which include anyone promoting their own creative services (designers, copywriters, photographers, illustrators, interior designers, web designers, and more) - are great at their work, but when it comes to running the financial side of their business, most would rather not talk about it. This book focuses on proven techniques and resources used by a wide range of successful creatives to manage their business finances. Expert advisers are interviewed on topics such as accounting, taxes, contracts and financial planning. Using examples, case studies, and real-life stories from actual creatives, this book addresses:

• How to build the financial structure of a creative business from the ground up
• How to set up and achieve long-term financial goals and plan for a prosperous retirement
• Common financial mistakes small business owners make and how to avoid them
• How to handle taxes and insurance
• How to perform day-to-day accounting tasks
• How to create a budget and adhere to it
• What to charge for work and how to determine a profit margin
• How to talk about money with clients and prospects

PART ONE

HOW TO THINK ABOUT IT

CHAPTER 1: THE BUSINESS MIND-SET

CHAPTER 2: SETTING GOALS BEFORE PRICES

CHAPTER 3: SETTING YOUR PRICES

CHAPTER 4: PRICING STRATEGIES

CHAPTER 5: POSITIONING YOUR PRICE

CHAPTER 1

THE BUSINESS MIND-SET

“You get what you demand, not necessarily what you deserve.”

—MIKELANN VALTERRA, CERTIFIED FINANCIAL RECOVERY COACH AND AUTHOR

Can you make a successful living doing what you love?

Yes, you can—but only if you decide to take it seriously and treat it like a business.

Let's start by looking back. When you started your career, was money even in the equation and how so? Was it love of the craft and creative expression that drove you? Did you assume money would take care of itself or you would figure it out eventually?

Most people who go into business do so because they want, first and foremost, to be a business owner. That's not usually the case with creative professionals. You see yourself as a creative first, and you love the creative work. You're in business, whether as a freelancer or running a larger entity, by accident rather than by design. You may have jumped or perhaps were pushed. If you're lucky, with a combination of talent and excellent timing, you have ridden a wave of “success.” If you aren't so lucky, it's been a struggle, but you're still here. Either way, there are aspects of the business that are not your favorite, and dealing with money is probably one of them.

Self-employment offers an opportunity to take control of so many aspects of your life, to become less dependent on one entity to provide everything for you. Being your own boss—whether you choose to be a solopreneur or run a firm of any size—allows you to take on that responsibility, in essence that freedom.

And yet, so few self-employed people are actually in control of their business. This does not come naturally to many creative professionals, nor is it taught in art school. And there is a lot to learn—especially about money—if you want to have a profitable and healthy enterprise with high-quality clients, interesting projects and a strong foundation that doesn't collapse the moment the economy shifts.

This book will help, but only if you're serious about getting a handle on your finances.

SEE YOURSELF AS A BUSINESS

Many creative professionals hang out their shingles or open their doors for business, then proceed to wait and hope: hoping clients will find them, hoping they'll get enough work, hoping the client will pay the bill, hoping the checks add up at the end of the month so all the bills get paid. If you think about it, it's a very passive position, taking what comes along instead of deciding what you want and pursuing it.

There is an alternative, and it is within your reach. You can replace the passive mind-set with planning and action. The first step is to re-envision yourself as a business. But what exactly does that mean?

At the core, it's a shift in the way you see yourself, a small shift that can affect every little detail about how you do your work and especially how far you go.

Understand the Difference Between Spending and Investing

Whether you realize it or not, your personal perspective on money affects your decision-making process in business and, therefore, your ultimate success. In fact, if you have had no training in finances or business, it can be the difference between a prosperous and a struggling business.

One essential concept to understand is the difference between spending and investing. When you, as an individual, buy something, you are spending money. The more you spend, the less you have. Even if you spend your personal money as an investment—in your comfort, your happiness or your children's education—the goal isn't a tangible “return” on that investment, as it is in business.

When a business spends money—this includes your business—there is an expected return. When purchases are made with the express intention of making more money, the price paid is not as important as the return on the investment (ROI). Ideally, the greater the investment, the greater the potential return on investment.

This difference between spending and investing is also important when you make financial decisions for your business. Whatever your business decides to purchase should have a benefit (return) that outweighs its cost. For example, upgrades in computers or software should pay back more than their cost by enabling faster workflow, or by allowing you to attract enough new clients to more than pay for itself. Or, if you decide to invest between $5,000 and $10,000 to exhibit at a trade show, you should be able to project the potential return on that investment before deciding whether to do it.

Remembering the difference between spending and investing will also help when it comes to pricing your services. Your prices, whether high or low, are for services designed to help your clients achieve their goals, to get a return on their investment—by expanding their organization, enhancing their brand or increasing their sales. That means your price may not be the deal-breaker you imagine. Often it is only one of many factors in their decision-making process. You must be able to confidently make the argument that a greater investment (i.e. a higher price) can provide a greater return. When you have adopted a business mind-set, you will.

Be Objective About Your Work

Taking your business seriously also means being as objective as possible. But as a creative, your work is more than a “job.” You are probably emotionally attached to the work you do. You may even pour your heart and soul into it.

This can present a problem. According to Jon Weiman, designer and adjunct professor at Pratt Institute, “Creative professionals have trouble because they tie their ego and self-worth to the work in a way that is not businesslike. It becomes too personal.”

Know There Is No Absolute Value to Your Work

Many creatives complain about working with clients who don't value their work. But the problem isn'...

Table of contents

• Cover Page
• Title Page
• Copyright
• CONTENTS
• Foreword
• Introduction
• PART ONE: HOW TO THINK ABOUT IT
• PART TWO: HOW TO TALK ABOUT IT
• PART THREE: HOW TO MANAGE IT
• Resources
• Glossary
• Permissions