WHAT PROFITABLE CREATIVE COMPANIES DO DIFFERENTLY
In Mel Brooks’ 1968 film The Producers, hapless musical producer Max Bialystock is deliberately trying to put on a show that will bomb (Springtime for Hitler, you probably recall). Against all expectations, it turns out to be a huge success. Max is dismayed. “How could this happen?” he says. “Where did I go right?”
I’ve been working with creative businesses for a long time and I’ve been learning along the way. I’m starting to see what distinguishes successful businesses in the creative industries. It’s possible to start answering that question, “Where are they going right?”
Here are six things I’ve noticed profitable and sustainable creative companies have in common.
They meet a clear market demand
Whatever your key product or service is (and from here on in, I’ll just use the word ‘product’ to mean product or service), there has to be sufficient demand for it to be sustainable. Successful creative industries businesses get this and they know their customers. Their products are designed to solve a problem for identifiable and targetable groups of customers.
They have a core product which is profitable
Not only do great creative businesses have a product that is in demand, but they can generate a profit from it. Enough profit to pay their costs of supplying the product or service, pay their overheads and leave a return.
(In fact, answering two questions relating to those first two points will provide a good initial idea about your enterprise’s sustainability: is there a demand for your product and can you make a decent profit from providing it?)
They build great brands
Successful creative companies invest time and resources in building their brands. It enables them to charge a price above what the market would ordinarily bear. Their brands resonate with their customers and serve to enhance the products the company provides.
And they’re comfortable with selling and the sales process. They have sales people on staff and they are passionate about selling. They never stop selling. Because they realise that even the best products don’t attract customers without promotion and marketing.
They pursue quality without over-servicing
Creative industries businesses often sell the labour of the people they employ, usually on an hourly basis. Keeping track of these hours – and the other costs of providing your product – is crucial, because it tells you how much profit you’re making. Once you start over-servicing on jobs, you’re eating into your profit and your business’ sustainability. And lastly:
They maintain their passion for their creative practice
Because it is – after all – what got them into running a creative industries business in the first place. And this passion is clear to their clients, informs their brand and helps them sell.
It’s not an exhaustive list – feel free to send me a tweet (@sharped) with other characteristics you’ve identified. But hopefully I have identified a few hallmarks of success to emulate. And some things which Max Bialystock should really have tried to avoid.
If you’ve got issues in your business you don’t seem to be able to get on top of, why not get in touch? Not only do we provide a full suite of bookkeeping and tax services here at Generate, but we’re also able to help with business coaching, strategy workshops, business plans and much more. You name the problem and I’m sure we can help.