Marisa has an INCREDIBLE podcast out today on how she dealt with money in the beginning of her creative journey. It was such an inspiration to me that I had to share it. Her views on debt and “making it” are so encouraging. I personally feel like a ton of weight has been lifted off of my shoulders just from listening to her speak.
You can do it. YOU CAN. Just a friendly reminder. 
I was completely blown away by this series by Ira Glass, Host and Executive Producer of Chicago Public Radio’s This American Life. You can apply this wisdom to all aspects of the creative life, and more generally, innovation itself. (The 2nd in the series is especially good.) [Thanks, Dave.]
This is the third part of a seven-part series designed to help creative professionals succeed in doing their life’s work…for a living. New here? Start at the beginning. The third deadly sin is…
Many new business owners make the mistake of limiting their advertising to low-cost or free opportunities. They mistakenly think that cheaper = better. Banish this idea from your head. Think on it no longer. I’ll tell you why.
When you have your own business, the purchases that you make are investments. That $500 suit is an investment in your brand. That $1500 computer is an investment in your efficiency. Whatever you put toward marketing is an investment in future projects…which really might be the most important investment of all.
Remember when we figured out who our ideal clients are? Find out how the people you want to serve get their information. Do they read blogs? Do they spend hours stuck in rush hour traffic? What magazines do they read? What keywords do they use in the search engines?
Take some time to step into your client’s shoes. Put on their glasses and see the world as they see it. Ask yourself the above questions and make up your own. Then brainstorm all the possible ways that your business could fit into their natural ways of finding information.
If you want specific ways on how to market yourself and your business, Entrepreneur Magazine’s Ultimate Small Business Marketing Guide is a solid resource with tons of good information. Yeah, the title is kind of hyped up (what do you expect from a marketing guide?) but it’s absolutely packed with great ideas.
How much is your time worth? You know where I’m going with this. If your time is worth $100 an hour, and you invest 7 hours in promoting yourself (for free, no less!) in places where nary a soul will notice, how much did you really spend? $700. Not cheap.
If you spent that same $700 on an advertisement on a well-targeted high-traffic blog and got $2400 of new business out of it, how much did you really spend? Nothing. In fact, you made yourself $1700.
Bottom line: if you find a marketing avenue that effectively reaches the people you want to serve, cost should not be the first thing you consider. In fact, it should probably be the last.
This is the second part of a seven-part series designed to help creative professionals succeed in doing their life’s work…for a living. New here? Start at the beginning. The second deadly sin we are discussing is…
How much are you worth? How much is your time worth? Do you know? If so, are you confident that you are charging the right rate? If not, we’re going to help you find out. (The advice I’m giving is heavily adapted from Cameron Foote’s formula in his book, The Business Side of Creativity. This is the most comprehensive resource I have found for creative professionals.)
What do you need to make per year? You may already have an idea in your head (a million dollars, right?), but if not, here are several factors to consider:
Ask yourself these questions and determine your annual salary based on a combination of the answers. Be realistic, but don’t cut yourself short. After you have that figure nailed down, add in what you expect to pay in federal and state taxes.
Do you rent office space? Buy supplies? Spend money on monthly mailings? Write down a budget for the year. It doesn’t have to be perfect, but try not to leave anything out. Here are a few things you might consider including:
Your needs will obviously vary, but that will get your brain started.
Not every hour you spend working will be billable. In other words, you aren’t going to spend every working hour creating. You also have to spend time marketing, presenting, doing administrative tasks, and on and on. Most creative professionals spend anywhere from 50-75% of their time actually doing work that is “billable.”
To figure out your billable hours, simply multiply the number of working hours in a year by the percentage of hours that are actually billable. For example, most people work a total of 1,920 hours every year. This assumes that you work 40 hours per week for 48 weeks, taking 4 weeks off for vacation/sick time. If you work 1,920 hours in a year and expect 60% of that work to be billable, multiple 1920 by .60. That gives you 1152 hours billable hours per year.
First, divide your salary (plus expected taxes) by the total billable hours you have available to you. For example, let’s use $65,000 per year ($50,000 plus a good chunk for the government.) Divide $65,000 by 1152 billable hours, and you get approximately $56.50.
Second, divide your annual overhead and expenses by your total available billable hours. For example, let’s say you plan on spending $25,000 in business expenses. $25,000 divided by 1152 equals approximately $21.75.
Now add those two numbers together ($56.50 + $21.75) and you get a grand total of $78.25. But we’re not done yet.
I’d imagine you are interested in growing your business — not just maintaining the status quo. To do this, you will have to add in a profit factor. Foote recommends a goal of 25%. This money is for putting back into your business so that you’ll be continually growing and improving, as all viable businesses need to do.
In our example, we would multiply our minimum hourly rate ($78.25) by 1.25. That gives us our final rate — approximately $97.75 (I deal in quarters to make it easier). You can round up or down to further simplify things.
Were you fully aware of the value of your time? Are you charging enough for your work to not only pay your salary, but to be profitable? If not, make it your goal to ante it up. If you don’t feel like you can charge that much, either increase your game to make your work more valuable to your clients or come up with a more efficient way of working. When you under-price your work, you decrease its perceived value — definitely not good for the ongoing health of your business.
This is the first part of a seven-part series designed to help creative professionals succeed in doing their life’s work…for a living. It’s hard, extremely rewarding work. The best thing about it? It doesn’t feel like work. So it’s really like hard, extremely rewarding play.
Before we get started, let’s clarify something: you are a creative professional if:
Got it? Okay. If that’s you, let’s start with Deadly Sin Number One:
I might get a bit of hate mail about this, but I’ll say it anyway: when you enter the global market of goods and services, you have an obligation to meet the needs of the people you seek to serve.
That doesn’t mean that you sell your soul. It does mean that while you CAN create art for art’s sake, you will not be successful (in a financial sense) unless your work fulfills the needs of your potential clients/customers.
If you’ve sold your work in the past, perhaps you’ve noticed a trend in your clients’ personalities, interests, or habits. Take note of those similarities. Maybe a considerable portion of your past clients drive Harleys to the symphony. Maybe they get coffee at Starbucks every morning and eat out more than they eat in. The point is, there is going to be a common thread. Find it, and keep it in mind when coming up with new ideas.
If you’ve never sold your work, it’s going to take a bit of trial and error to figure this out. However, you do have an uncanny resource to start with: you. Chances are, your clients are going to share some of the same ideals, preferences, and values.
It’s hard to be objective when using yourself as a reference point, but it’s important nonetheless. What books do you read? Programs do you watch? Restaurants do you eat in?
Are you concerned about the environment? Do you spend your free time outdoors? Ask yourself questions like these to paint a visual picture of who you’re trying to serve.
Figuring out what your clients need is not too difficult once you know who they are. For example, if they are concerned about the environment, they might need several things. For example,
You could probably think of ten needs that environmentally-concerned people have. If you do that for each of your clients’ common characteristics, you will have a better understanding of the people you are serving with your art and creativity.
If you are interested in learning more about the types of people who are shaping today’s marketplace, I recommend the book Karma Queens, Geek Gods, and Innerpreneurs by Ron Rentel. Be warned: this book has a very objective, if not cynical, view of the major “consumer types.” If you are offended or put off by the thought of someone grouping the people you serve into such “types” then this book might not be your favorite.
For me, Rentel’s book gives an extremely eye-opening perspective. As you read it, you clearly see pieces of yourself and people you know in each consumer type, so while he’s mentioning their idiosyncrasies, you almost wonder if he’s making fun of you. The book’s purpose (and one that it does very well) is to give a clear picture of the wants and needs that are driving today’s economy. It’s well-written, and I highly recommend it.
With all this talk about consumer needs, you might think that I want you to go out and turn your art into some kind of mass-market product. NOT AT ALL. It’s just good to understand the people you serve so that you know why they resonate with your art. If you haven’t been successful in the past, this information could provide clues to getting your work in front of the right group of people. Knowing your clients and their needs gives you a good basis for making decisions that are going to effect your eventual (financial) success.