The Resilient Creative Business

Here’s the story of how I built a resilient business.

man on edge of cliff
Photo by Sead Dedić on Unsplash

In the fall of 2009, I’d been working in the film industry for a few years. It completely shut down as the economy went through the biggest recession in my lifetime.

A friend and I were in the middle of raising money for a feature film. We were even making some progress, but it all stopped overnight.

I had to take a job selling cars – I couldn’t find anything else. I got married a few months earlier and needed to provide for my new family. It was the only job I could find that would pay me enough for the life we had started together.

So, I did what I always do – I got to work. I figured out what would lead to making more money and more sales. I did months’ worth of training on the cars that I was selling in a matter of weeks. I got Porsche, Audi, and VW certified by Christmas, and became one of the top sellers that month.

I still have the Audi watch that they gave me for selling the most Audis of any salesman in December.

The quick success, it seems, was too much for some of the other salesmen. Rather than working harder, they decided to lie about a sale that I made – they claimed that I stole the customer from another salesman.

I was working at my desk, putting in the info from the sale, when all of a sudden the computer locked me out. Confused, I tried logging back in when the phone at my desk rang. My boss, the general manager upstairs asked me to come up and talk…

He told me that I was being fired for lying and theft of company property.

And just like that, my job was over. Income, gone. It was the only time I’d ever been fired in my entire working life, and still is to this day.

What I learned from that experience is that I never wanted to have a boss again. That way, I could never be fired ever again.

That single point of failure was just too risky for me and my family.

Working For Myself

Fast forward to 2017. I technically have a business, but it’s not great. My business partner and I are making maybe $150k total in a good year – which, after expenses and taxes and overhead, means we’re barely taking home $50k each.

The business isn’t working. The partnership is strained. The clients we have aren’t happy with the work we’re doing and we’re struggling to find new projects.

I end up going over $15k in debt to keep the business afloat and to try and save it, but it doesn’t work.

While I had removed the possibility of getting fired, I found new points of failure in my business. There was no way to save it.

So I need a business where I can work for myself. I need to remove all the constraints and the single points of failure. And, it needs to be a business that pays me enough to have the lifestyle that I want.

It’s not a big ask – low six figures would do it.

No boss that could fire me, no single points of failure…

a resilient business.

Into The Unknown

But I had no idea how to build it.

Who was gonna teach me? Who was gonna help me?

I bought courses. I signed up for seminars. I followed people on Twitter and bought their books and signed up for their email lists.

It was a tough lesson, but I finally realized that more information wasn’t the answer.

I had to build it myself.

So I did what I always do. I got to work.

I started by making sure I had enough money – the first point of failure. I now needed to have enough money to provide for my family of five, our house, everything. Cash flow in a business is like oxygen, it can’t survive without having enough of it.

The first thing I did was find a big client that was going to keep me busy – and paid – while I worked on the other areas of my business. Now I could breathe.

I started adding more clients. This time, however, only clients that I wanted to work with. I removed the single point of failure of only having one client.

If one client represents a huge percentage of your cash flow, it’s no different than the risk of having a boss that could fire you.

Get more clients.

I built systems for the other constraints in the business – sales, marketing, finances, and growth.

I found new partnerships – ones that were beneficial to both of us, rather than dependent on each other. Partnerships where working together wasn’t just 1+1 = 2, but had an exponential possibility, where 1 + 1 could equal 3, or 5, or 20.

I started creating and leveraging assets that I created rather than only trading time for dollars, which diversified the ways that I made money so that the business became even more resilient.

I built a resilient business over the last 3 years, and now I’m building two more this year. Craftsman Creative will be a resilient business in about 12 months from when it started. Benchmark App within a year as well.

Building A Resilient Business For Yourself

It’s a framework that’s built using a process that works.

Now that I’ve figured it out, the only thing I want to do is to help others to do the same: To build their own resilient creative businesses.

The process is straightforward. You start by building a solid foundation and systematically build on top of it, one brick at a time.

If you do the work, it works.

The process inevitably leads to a resilient business that supports your work and the lifestyle you want for yourself and your family

I’m devoting a huge part of my time, focus, and effort to helping other artists, creatives, and freelancers build resilient businesses in 2021.

I’ve created a 12-month, interactive coaching program. It involves monthly training, accountability, a community of peers on the same journey, and one-on-one coaching to give you everything you need to build your own resilient business.

If you’re ready to get to work, I’m excited to join you on the journey ahead.

The Financial Patterns In Your Life

The patterns & habits of your life determine your experience and results.

Picture two different creators:

One is pure artist – they create in bursts when the muse inspires them. Their passion attracts many people to follow them. They believe that money devalues art so they don’t charge for their work, ever. They have no regular income, no savings or investments, and at some point find it hard to grow past their current circumstances.

The other creator shows up every day and puts in the time to work on their craft. They know everything they make isn’t going to be their best, but they believe that they have to show up every day to get to their best work. They have systems in place to consistently grow their following and customer base. It’s slow, but steady. They believe that what they create has value, and that value can be exchanged for money. While their income is also irregular, there’s at least some consistent amount coming in every month, and it grows over time. They set aside profit for growth and investing in themselves, have money saved, and feel that their potential to contribute doing what they love is limitless.

Now, there’s not a ton of difference from the outside looking in. Both are creators, and in some ways the “pure artist” is the more desired path – more followers, a true artist mindset, etc.

There isn’t a “better” path, but it’s easy to see how certain habits, mindsets, and patterns compounded over days, weeks, months, and years will lead to a different experience.

Where are your patterns leading you?

A Basic Business Budget for Creatives

How much should you pay yourself? How much should you set aside for taxes? How much does your business actually need to make to be profitable?

A few years ago I read the book Profit First by Mike Michalowicz, and it outlines a great starting point for thinking about your business budget.

Since most solo-creatives are making between $0-$250k per year, we’ll just use that breakdown, but you can look at budgets for $250-500, $1M, $5M, and $10M per year as well in the book.

Here’s a starting point for a solo creative business:

5% – Profit (Hence the title Profit First
50% – Owner’s Compensation
15% – Taxes
30% – Operating Expenses

Take a look at your current budget? Where can you make adjustments to ensure that you have more profit, are setting aside money for taxes, and can pay yourself what you need to.

Now, if you’re creating digital products and have super low overhead, you can certainly drop that Operating Expenses budget down to 20% or even 10%, and shift more into Owner’s Compensation or Profit.

But having a very clear “job” for every single dollar that you bring into your business is an essential business practice. The alternative is having money coming into your business bank account (or worse, your personal account) and then spending if there’s money to spend.

Create a budget, set aside money for profit and taxes first, and then if you find yourself short then take the opportunity to figure out how to either cut expenses or make more money by generating more sales.

Have A Plan To Be Profitable

If you don’t plan for profit at the start, it’s harder to try and create it later.

Profit, as mentioned in an earlier essay, is what’s left between what you sell something for and what it costs to make it.

If you sell a physical album recording for $15 and it cost you $5 to create the CD and the packaging, then your profit is $10.

However, you have to think of all of the costs, not just the costs to produce the physical product.

My wife is selling these great art pieces of butterflies encased in reclaimed wood and glass frames.

Her hard costs are only about $6 per frame, so in one way she could charge $10 and be “profitable”.

However, that’s not taking into account the ~30 mins or so it takes to cut the wood, assemble the frame, and glue in the butterfly.

If she values her time at $40/hour, then she would need to charge an extra $20/frame to truly be “profitable”, but even then she would only have a profit of $4 per frame. That doesn’t even pay for another piece!

So, to be profitable from the start, she would need to account for the cost to make the product, the time it takes to make it, and profit.

$6 cost + $20 labor = $26. To have a profit of 30%, she would need to charge $37.

So, from the onset, she decided to price the pieces based on size and type of butterfly, and they range from $40-$100 each. She created a very profitable (and fun!) business from the start.

If you’re struggling to have any money at the end of each month, look at your pricing and determine how you can create more profit in the work that you’re creating and selling.

What To Charge

Simple answer: charge enough to make enough to have the kind of life you want to have.

Longer answer: there are a few ways to think about this – Hourly, Project Based, and Ownership.

To work out an hourly rate, you can figure out what the industry rate is for your type of work in your area, and charge somewhere around there. You’ll likely end up at around $25/hr on the low end, and $100/hr or more on the higher end.

In order to make a professional salary doing that ($75k/year or more), you’ll need to work a certain number of hours every week that turns into ~$1,500. So $50/hr x 30 hours, or $100/hr x 15 hours.

Project based is simpler than hourly, and potentially more profitable if you do it right. Figure out how much the project is worth to your client, and that’s how much you should charge. That is a longer conversation than “I charge $35/hour”, but it also is the next level up where they’re hiring you for your experience as much or more than they’re hiring you for your skills.

If you can charge $1,500 or more per project, you could do 4 projects a month and make ~$75k/year. Then it’s a matter of building a system that can generate at least one project per week, from finding the client, onboarding them, doing the work, and delivering the project.

Lastly is equity/ownership. Owning an asset that compounds or a part of a business that pays dividends can allow you to make money without trading your time for that money.

Record an album, put it up on iTunes for people to purchase, make money while you sleep.

Make enough records and sell enough copies, you’ll make even more. Find other ways to make money from that album, like licensing the music for a fee, and your ownership of that recording is worth even more.

The “right” answer of what to charge will be different for everyone, and may even include a combination of all three. But think about how you want to make your money and change accordingly.

Profit First

Take profit FIRST and then pay everything else, or else you won’t have any profit left.

Profit is often defined as what’s left when you subtract your expenses from your revenue. Say you make $10,000 in a month, and then spend $9,000. You’d have $1,000 left, or a 10% profit margin.

In theory that works great, but in practice, that profit margin can often get spent because it’s there to spend.

Instead, it is important to take the profit out first for your business, just as it is important to pay yourself first in your personal finances by saving and investing.

Why? Because profit leads to growth. If you take the profit first and put it in a separate account where it can’t be spent, then it starts to accrue. You then have cash available to invest in the business or pay yourself dividends.

Yes, even small businesses can pay dividends to their owners!

It also means that being profitable is a priority for you and your business. Being profitable means you’re more resilient when things get bad, like the last year with the uncertainty of the pandemic. It means that you’ll be around to serve your clients in deeper ways over a longer period of time.

Start small. Take 1% of what you make as profit and put it aside. Then adjust every quarter and increase that percentage little by little. It adds up slowly, then less slowly, then a lot over time.

Choose to be profitable, then prioritize taking profit first.