Updated: Feb 3
As a creative, you have a passion for your craft that drives you to create beautiful, inspiring works of art. Me too! Getting past the feeling of charging for my work, the guilt, and letting my gratitude for doing such an incredible job as a career has been and continues to be a hurdle. Today I'm talking about profit, its impact, and your responsibility to create it.
One of the biggest pitfalls in charging what you're worth in creative fields is undervaluing your work. Early on, I lacked confidence in our work, worried about losing clients or opportunities, and rarely considered the time involved in creative work. Of course, this can undo any business, but I find creatives particularly susceptible to these hurdles. As a result, many creatives end up charging little to nothing, which can lead to burnout and closing shop, which breaks my heart. It's easy to get caught up in the excitement of a new project and overlook that you're investing a significant amount of time and energy into it. We accepted our fair share of projects that didn't pay enough, worked long hours and took on more work than we can handle.
Let's be honest: it can be tough to make a living doing what you love. That's why it's so important to focus on profitability. Money was a big hurdle (ask Ross - He has plenty of stories). Truthfully I never felt deserving to be paid or good enough. The perfectionist in me has always wanted better. This didn't change until I started seeing my relationship with money differently. Money had to change from being a reward to a resource. I'm driven and love leadership. A big part of creative work is being counted on, making things for others, and providing service. What the heck am I saying?
For quite some time, I worked a well-paying day job funding many of our client's projects, investing in every client with the thought that one day we would get the budgets we deserved. Our creative output was out of this world, our work was admired, and we had one dope demo reel, but we still left thousands on the table project after project. I'm not going to get into value propositions on this one, but that was a root cause for sure.
Here's the reality.
When you're able to turn your passion into a thriving business, you're not just supporting yourself financially—you're also building a legacy that can sustain you and your family for years (or generations) to come. And when you have the financial stability to focus on your craft full-time, you can create your best work and share it with the world. This is what I wanted. So back to that word resource and its impact. Having the proper funds lets us solve problems for our clients for each project and ensures we can give it adequate attention. Resources are crew, gear improvements, art department purchases, desired location, time, planning, meetings, and anything that comes up to serve a project.
What if I told you your clients want you to be profitable?
Oh, I can hear ya "my clients always want a deal or discount. They don't care about my profit." But, I want you to think past the now. They aren't directly saying this. Hey, we all love a good deal and asking never hurts, but it hurts you and your clients when you don't think about profit the right way. By being profitable and protecting this, you ensure you're around for the project at hand now and the next. Profit is future-proofing yourself and serving your clients again and again. This is a business of relationships, and your responsibility is to be fair to them. If you're quoting unprofitable projects, you won't be around long-term, and that's on you. Before you think I'm pointing the finger too hard, know I did this for years, and we almost had to call it to quit in 2018. Profit focus changed things for me.
Of course, it's not just about making money. It's also about being smart with your finances and thinking long-term in your business to continue growing and improving. Whether you're looking to expand your client base, purchase new equipment, or hire a creative to help you, having a profitable business model is vital.
So, how do you make sure your creative business is profitable? For me, it changed after reading Profit First by Mike Michalowicz. Shocking, right? This book doesn't just hold a key; it started challenging my deep-rooted views of money. But, of course, it doesn't hurt that theres a foolproof accounting method in full detail either. The outcome of reading this book was that it had me look at our projects not from revenue but from profitability. Before reading, I was focused on hitting higher-paying jobs rather than the quality of work. One intense instance was looking at a $6500 music video vs. an $1800 music video and realizing the $1800 video was better long-term. How?
In short, time and resources were way off in estimation for the $6500 video, and we were so accurate with the $1800 one that it was profitable. I took the time to analyze the time, purchases, and people for the $6500 video and realized it cost $11k+ (this isn't including profit), where we got resourceful with our $1800 client and landed at $1100 in cost with a $700 profit.
I started looking at our service more as products. The "smaller" job was what we were really good at. We did them fast, quoted accurately, and always made a profit (performance videos). The other job was unprofitable, and hard to nail the scope of work (art-driven campaigns). From here, I started setting a goal to do 4 out of 5 projects in the performance video lane to 1 art-driven. This offset became more manageable and gave me direction. Additionally, I started making a more precise effort to better manage art-driven projects and achieve a profitable outcome. This resourcefulness and thinking were only possible because I started analyzing my bad and good habits to build better future habits.
Now don't get me wrong. There is an opportunity cost in the unprofitable project. However, that same project has opened up way more doors to future projects than the other video, but both project types are valuable to our clients and us. We can gauge the conversations better and educate our customers on the pros and cons without mentioning profit. It's about being aware and informed of our decisions.
Truthfully, understanding your client's needs serves a better experience for all. Knowing what they're willing to pay for helps to create a pricing structure that works for you and your customers. You'll also want to keep track of your expenses, make smart investments in your business, and stay organized with your finances. I call this the data. Data lets us make better decisions.
With a few years under my belt using a more profit-focused thought process, I have seen how it positively impacts my life and our clients. Additionally, I get those more complex projects, and we can now make them profitable like the more scaled-down projects. With time this way of thinking and the behaviors that circle it start to pay off across the board. I'm far from where I want to be in business, but I'm more confident quoting big or small projects and knowing that I can impact my clients and my life with every project. Being profitable started with reviewing the data, giving myself permission, and finally being actionable in those efforts.
In conclusion, being a profitable creative is about finding a balance between your passion and business. When you turn your creativity into a successful business, you'll have the financial stability to focus on what you love, build a legacy, and continue growing and improving.
Balancing passion and profitability is crucial for the success of your creative business.
Building a financially stable creative business allows you to focus on your craft full-time and create your best work.
Understanding your target market, staying organized with your finances, and making smart investments are vital to being a profitable creative.
Revenue and Profit are different
You can price smaller projects and become profitable long-term
Loving the content and wanting more of me? Consider one of our three coaching programs.
Nailing Your Niche
For 2023 I have a goal of taking 10 creatives to help them reach their personal and business goals.