For some creative entrepreneurs, running a business is like being in a romantic relationship. Everything just seems right. The stars are always aligned. For others, it’s like letting the Trojan horse into their lives.
And that’s probably what you’re going through now that you have started out.
The thought of having a business looked like a gift…something awesome. After all, you’re creative, so having our own clients is like the most sensible thing to do. However, unknown to most of us, there’s more to running a business than fancy business cards and customized email signatures.
Yes, there’s money to be made, but there are processes to be developed, skills (other than creativity) to be learned. There’s also time to be invested (and wasted). And of course, there are those depressing moments when nothing seems to be working. At this point, the Trojan horse explodes in our faces to reveal the several loopholes we need to cover up.
But this is not what makes creative businesses fail. Every business has its Trojan horse – it’s a given. Research shows that 9 out of 10 new businesses fail. But it gets even worse.
According to the same source, out of 1000 business:
- 40% fail within the first year
- 80% fail within 5 years
- And only 4% of those businesses get to celebrate their 10th anniversary
So what makes the winners…different?
Running A Business Requires Knowledge Plus Attitude
Being a professional who gets client work done is not the same thing as being an entrepreneur who brings in the business. However, both should be priority.
Most of us launch into our own businesses with the mind-set that as long as we keep doing what we know how to do best, all will be well. But if you keep sacrificing your health, time, relationships and innovation in the name of work, then you’re headed for trouble. So how then do you create a balance?
Here are 5 reasons creative business fail, and how you can avoid them.
#1. They Put Passion Over Profit
“As long as I continue to do what I love, more money will come”.
It’s okay to be passionate about what you do. After all, if you’re going to give your whole life to it, then you had better like it. But that’s not enough. A business needs to be profitable. And sometimes, you have to do the things you don’t like, just so the business succeeds.
As creative professionals, we like doing the creative work, but not the boring parts, like marketing, or book keeping. It sucks. It’s hard. It’s uninteresting.
But it’s also super important. Yes you may have some clients now, but if that prevents you from consistently selling what you have, you won’t receive the feedback necessary to redefine your service.
While building a business out of passion is very important, it needs to be viable. It needs to attract its own customers. It needs to be completely accounted for, so you know what you’re spending and what you’re making.
Don’t just assume more money will come. Manage what you have effectively and put in the work to ensure more money comes.
#2. They Underestimate What It Takes To Create One
“All I wanted was to do creative stuff for people. Now I have to connect with people on LinkedIn? Arrgh!”
You have to do more than connect on LinkedIn. There’s Facebook, then Twitter. There’s also Quora and that little networking event in your neighbourhood that you could attend.
Don’t forget to do your client work too. And remember to get tomorrow’s blog post ready for publishing.
It’s like a crank mechanism that keeps moving. The only solution to making it work is to understand that starting a business is not as easy as you think. And for what you don’t understand, get expert advice.
Most of us like to go it alone, and that’s great, but there’s a lot of advantage in picking the brain of someone who has been there and done what you’re struggling with. The truth is you don’t have to be on all the social networks, you don’t have to attend all the networking events. And you also don’t have to take on all the clients you attract.
What you need to do is select the tasks that help you meet your goals faster. Then focus on them. If being on Facebook gives you better ROI than LinkedIn, then focus on that. If you have a client that constantly pisses you off and yet you’re not getting much financial returns from that project, then perhaps you should focus that time on getting a higher paying client.
Regardless of all the moving parts involved, work towards your goals daily. A business is like a car. From the outside, it looks sexy. But to move it, you have to turn on the ignition, release the handbrake and put the gear into position. All before you attempt to move it.
#3. They Use The Wrong Tools
“Running a business requires a ton of money. I need to invest in everything.”
This is one of the reasons why many newbie entrepreneurs have the Shiny Object Syndrome. If it looks good, sounds good and makes us feel good, we buy it.
Sometimes the problem may not be in investing in the wrong tools, but over investing in what you don’t need. For example, why would a newbie with a blog that barely gets 50 visits per day pay for hosting fit for a 100,000 visitors per month blog?
The flipside of the coin would be “investing” in a low quality email marketing software that places ads in emails you send out all because you don’t want to spend money. This still boils down to staying in line with your business goals. You know your budget and have the vision of where you want to take your business.
You’re also aware of the steps you’re already taking to get there. So if investing in a solid platform like Shopify’s ecommerce software or enterprise solutions would aid you in selling your nicely designed handbags through an online store without hassle, then go ahead.
And if paying $1,000 for quality website design helps you convince potential clients of your quality service, then be my guest.
But think before you act.
#4. They Refuse To Scale
“Paying people will cut down on my money. I can go it alone for now.”
When Danny Iny of Firepole marketing first started out online, he was alone and all he sold was a consulting service. Four years after, he has a team of 20 people and makes over a million dollars per year.
The stage in business would come when help is inevitable. But while some get the help they need, others will put their heads down to do the work with the belief that hard work pays.
If by now you have more high paying clients than you can handle, with a good number of potential client requests in your inbox, then your hard work has already paid off. Now you need to work smart.
Whether it is outsourcing some of the client work to others, or getting a full time team, you need help.
At this point, your business is at the stage where neglecting one area would affect other areas. Being that you have more clients to keep happy, pausing on marketing can cause you to lose your relevance. And what happens when you fall sick?
You run a creative business. So taking that kind of stress on yourself limits your creativity and the results you get for clients.
#5. They Don’t Understand How To Run A Business
“I wanted to build a business, but what I have is a monotonous job.”
Every business is made up of three kinds of people:
- the idea generator,
- the manager who makes business processes smooth,
- and the handy man who gets the job done.
Most creative professionals fall into the first and last categories – the idea generator and the handy man. We’re creative, so getting those ideas out is easy. And we’re professionals, so we know how to get the job done.
But some of us are very bad at managing teams. Some of us aren’t really disciplined in our daily activities. And some don’t even know what a business system means.
A system allows you to build a business with the ability to run without your 100% involvement. In other words, it gives you more time to bring up creative ideas and monitor output, without actually doing the work.
And while idea generation and monitoring can also take up time, a system makes it all look sexy. A good business book on this subject that you should dig your teeth into is the E Myth by Michael Gerber.
We started creative businesses because we like the variety. Don’t box yourself up doing the same thing every day.
Even if you’ve making some of these mistakes, don’t set yourself up for failure. Find the intersection between your passion and the viability of your business. Approach it with the right attitude (expect to do a lot of fun and boring work).
If investing in a product doesn’t take you a step closer towards a business goal, keep your cash. Instead, work smartly by investing it in a team that gives you less to do. This way, perhaps, you’d get to celebrate a 10th year anniversary with smiles.
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