T-Shirts and Suits blog

This blog section contains new information for creative people who want to make their businesses and organisations even more successful.

Written by David Parrish, these articles add to the ideas and examples published in his book 'T-Shirts and Suits: A Guide to the Business of Creativity'.

Blog posts are listed by category - see below right.
Or go to a complete list of blog posts.

Business Growth: Does Size Matter?

Part of my job as a business adviser in the creative sector is to ask questions – sometimes awkward or unexpected questions. So when entrepreneurs ask my advice about how to grow their businesses, my first questions are: “Why do you want to grow?” and: “What do you want to grow?”

Why grow? There is often an assumption that bigger is better, but this is not always the case. It depends on what we mean by ‘Better’. Defining ‘Success’ is my starting point when discussing business development with entrepreneurs and clearly this is a matter for them to decide, not me. For some people it’s purely about money, for others a particular lifestyle, and other factors such as creative passion, autonomy, recognition, and social impact are often part of the mix.

Grow what? Many businesspeople express the growth of their enterprise in terms of their turnover, or number of employees. These are useful measures, but are they the most important? When I watch PowerPoint presentations about the growth of a particular business and the graph of increasing sales is displayed with pride, I ask about profitability. Profitability can actually go down, at least in percentage terms, as turnover grows. As the saying goes “Turnover is vanity, profit is sanity”. We need to measure the most important things that are part of our definition of success.

“And cash is king”, the same saying concludes. Growth can often lead to severe cashflow problems, especially if fixed costs increase as businesses develop. Having high fixed costs can lead to desperation for cash to pay monthly overheads, and as a result, many enterprises have accepted unprofitable work, which makes problems worse. The businesses best placed to survive the credit crunch are those which have flexible costs and are able to grow and contract according to the volume of work, month by month.

Some businesses grow by design, others by default. When I ask business owners about their plans to grow to the size they now are, the response is sometimes: “We didn’t plan – it just happened”. In other words, they got busy, took on a couple of employees, moved to a larger office, attracted new clients, employed more people, and so on. Sometimes they find themselves in an unhappy and uncomfortable position. The creative entrepreneur sometimes looks back wistfully on the days when they were hand-on themselves instead of managing others doing the creative work. And they remember fondly the nights they slept soundly, without worrying about how to pay everyone at the end of the month. For some enterprises, they have grown too much, almost by accident.

Some entrepreneurs design a business which ultimately they can sell as a going concern, without it needing them to be involved. They work ‘on’ the business rather than ‘in’ it. They design themselves out of the picture. Instead of creating a trap for themselves, they achieve liberation. For creative entrepreneurs, the key to doing this can be found by using intellectual property rights to create income streams independent of their ongoing labour.

In conclusion, the most successful enterprises have business growth strategies which are based on a clear definition of what they mean by ‘success’ – and they evaluate progress towards their goals by measuring the right things.

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Copyright © David Parrish. 2008. Some Rights Reserved 

First published by 08businessconnect

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... and what we didn't do

The most focusedcreative enterprises are clear about where they want to go and have a clear vision of the future and exactly what 'Success' means.

In a 'Designing Your Creative Business' workshop for creative entrepreneurs in Taipei, sponsored by the British Council in Taiwan and the Taiwan Design Centre, I suggested a technique to help develop a business strategy.

1. Firstly, imagine you are already in that successful place in the future. Maybe you are being interviewed by a journalist about your journey to success.

2. Then look back on the most important things you did to get to that point. These are the things that really made a difference - the things you are most proud of when you look back.

3. Now return to the present, and those key things you were looking back on are now still in front of you. They are the main elements in your business strategy.

In my book T-Shirts and Suits I recommend that sometimes we need to Say No in order to focus on the right things to do. This came up again in a conversation after the workshop.

So we also need to reflect on what we deliberately didn't do, which helped us achieve success.

And these 'Things Not to Do' in your business strategy are just as important as the things you must do.

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Viral marketing - MUTO video

Thanks to Danielly Netto from Newcastle University Business School, who's researching business models in the creative industries, for including this viral video in her presentation.

This is a video from artist BLU showing the awesome MUTO 'animated graffiti' work in Buenos Aires.

Published on the internet using a Creative Commons licence, it's already had about 3,000,000 views on YouTube so far and received nearly10,000  comments.

The business model used has been categorised as 'Findability/Creative Investment'. In other words, the creator gives something away for free in order to reap financial benefits by other means. It's one of the 3 (or 14) Kinds of Free.

It's a brilliant example of viral marketing !!

See also Viral Marketing Video from Berlitz.

See also Buzz Marketing

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Don't be a 'Poor Pioneer'

I often advise creative entrepreneurs who have innovative products or services. Sometimes it's a completely new idea and they are planning to open up a new market for it.

Someone asked me whether I'm ever tempted to 'steal' the ideas people tell me about when I'm advising them. My answer was firmly No, for two reasons - more later.

My job as an adviser is to ask questions, including tough ones, to help entrepreneurs make their creative businesses even more successful.
One question that goes straight to the heart of business strategy is this:
"If you are successful in developing your new product or service, and open up a lucrative market for it, what is to stop other businesses (perhaps bigger businesses with more resources and power than you) following you into the marketplace and taking most of the profits?"
It's a killer question that sometimes people cannot answer.

Sometimes the truth is that there is nothing at all to stop others joining the party once all the hard work has been done. In this case I fear for the business concerned. I tell them that they may end up penniless after opening up new frontiers - they may become a 'Poor Pioneer'.

In other cases the entrepreneur's answer is that other businesses cannot enter the market and take the profits, because they have created some sort of 'barrier to entry' to prevent others joining the party. In creative enterprises the barrier to entry is often some kind of intellectual property such as a patent or copyright-protected work. In this case copycats cannot easily follow them into the marketplace with 'me-too' products or services.

Intellectual Property Rights are the creative entrepreneur's defence against commercial predators.

Which takes me back to the question of why I don't copy my clients' ideas and set up a rival business.
The first answer is that it would be unethical to do so and I have a reputation to protect.
However the second answer is more pertinent and more powerful; it is in two parts:
1. I don't want to steal something that in turn can be stolen from me. In other words, if there isn't a barrier to entry for me, then there isn't a barrier to entry for further competitors. I too could end up being a Poor Pioneer.
2. The business initiatives I really do envy are those that do have barriers to entry, that have some kind of monopoly rights for the owner to exploit alone. But of course these are the very ones that I cannot steal!

So I either (1) don't want to, or (2) cannot set up as a competitor to my client after hearing about their new business initiative.
I'm still ethical, of course, but that's not really relevant here.

The most successful creative enterprises are capable of both (a) developing new products or services and (b) using intellectual property rights to protect their position against competitors so they can enjoy the fruits of their creativity without 'new entrants' stealing market share. 

So don't be a Poor Pioneer, looking back bitterly on all the creative work you did, only to find that other people made all the money from it. Use intellectual property rights in partnership with your creativity, to devise a successful business model.

It's much more fun to be a Rich Pioneer !

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See also: Creative Labourer - or Creative Entrepreneur? and Let's follow George Lucas

Artist's 'Second Life'

Artist Ken Walters sells his work in the virtual world Second Life, as well as in real life to galleries, individuals and companies.

I met Ken when he attended one of my training workshops for creative people in business and I was fascinated by his personal story as well as his artwork. A feature in The Guardian tells how a stroke made him into an artist, giving him another kind of 'second life' after previously working as an engineer, without any kind of artistic training. He now runs a successful creative business from his home in the North of England.

He has combined his new talents as an artist with a marketing strategy which includes a variety of online and virtual media including Second Life. Ken also publicises his work through social networking sites and has published images in the "T-Shirts and Suits (Creativity and Business)" international group for creative people in business within Facebook.

His income is derived from direct sales and through the licensing of his intellectual property.
Global corporation EA Games were impressed with his work and commissioned him to design 100 digital dinosaurs for a new educational game called Spore. Ken retains ownership of the copyright in the designs and gets a cut of merchandise sales as part of the licensing agreement.
In this way he is developing additional income streams as a Creative Entrepreneur.

Ken Walters can be contacted by email (mail@kwdag.biz) and his website address is http://www.kwdag.biz/.
His character name in Second Life is Blunt Fhang.

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3 (or 14) Kinds of 'Free'

Thanks to Hannah Rudman for sending me a link to an article on Chris Anderson's 'Long Tail' website about '14 Free Business Models', which is based on a paper entitled 'Copying and Copyright' by Google's economist, Hal Varian.

The 14 business models which involve giving things away free include: 'Sell Physical Complements', 'Advertise Yourself', 'Sell Information Complements', 'Site Licences', 'Sell Other Things', 'Sell Personalised Versions' and 'Ransom'.

Another blog post by Chris Anderson is about The Three Kinds of Free, ie (1) 'Cross Subsidy', where giving away one thing leads to sales of another, (2) 'Third-Party Subsidy', where advertisers, for example, pay for free content and (3) the 'Freemium' business model, where the vast majority of consumers get the product for free and a small percentage pay a premium for some kind of enhancement which subsidises free distribution to the majority. "In this model, charging a small percentage of a large user base beats charging a large percentage of a small user base", Chris Anderson says.

There are plenty of good reasons to give things away for free - including making more money.
The decision to publish my book 'T-Shirts and Suits: A Guide to the Business of Creativity' as a free eBook was based on the same kind of thinking as the business models described above.

Read also 'Give it away free' which includes example of how creative enterprises in Brazil and China have given things away free for smart business reasons.

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Creative Times: Getting ideas from unusual places

A great place to get ideas is from business sectors outside the creative industries.
Why not buy a few magazines you've never read before?
Or go to a networking meeting of professionals from an industry you've never engaged with.
Creative people should get out more!
Read article >

Creative Times is now online ! 
Link: www.creativetimes.co.uk

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Passion in business

"Do you have to abandon your creative passion to become more businesslike?" is a question I am sometimes asked when I'm talking with creative people in business. My answer is that passion is essential in a creative business. We need to harness it, not deny it. And we must stay true to our values as our creative businesses develop and grow.

Randy Komisar's book Monk and the Riddle, The: The Art of Creating a Life While Making a Living is a modern fable about life and work, set in California's Silicon Valley. It emphasises the need to integrate passion and values into your business objectives. It's an inspiring read. Its main audience is businesspeople who are driven to make money, so they can indulge their passions later, what he calls their 'Deferred Life Plan'. Komisar's message is about the importance of passion at the heart of a business strategy.

Creative people in business have plenty of passion - it's the business strategy that's sometimes the weakness. That's why my own book 'T-Shirts and Suits', written especially for creative entrepreneurs, starts with the assumption of a creative passion then explains several crucial business issues which must be combined with passion to create an effective enterprise.

Komisar and I agree: it's not a matter of choosing either/or, whether to be passionate or businesslike, as if one excludes the other. It's a matter of integrating both, in harmony. The metaphor and philosophy of 'T-Shirts and Suits' is about bringing together creative passion and smart business thinking in intelligent ways that are consistent with our values.

The best strategies involve passion - and other essential business factors.

Jim Collins' Hedgehog Strategy involves identifying what you are passionate about - plus an understanding of how you create value and in which area you can excel in relation to competitors.

Rob Kinsey is an artist with a passion - and a focus. His focus is to select a particular market he knows well and he has become successful because of this focus combined with his passion.

Sara Lönnroth's phrase "Let your heart drive you and your head guide you" emphasises the need to combine heart and head - passion with clear business thinking.

Passion is vital, but it's not enough. Necessary but not sufficient.

But passion at the heart of a creative enterprise which also uses its head to devise a clear business strategy is a potent combination.

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Chase one rabbit

Here's some ancient wisdom from a Chinese proverb:

"If you chase two rabbits, both will escape."

A useful thought for all creative entrepreneurs.

It can be applied to:
- deciding which creative speciality to choose, from all the creative things you can do
- deciding which particular market segment to focus on, rather than trying to appeal to many types of customer

Let me know about how this applies to your enterprise.

PS: Another animal to take inspiration from is the Hedgehog.

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The Art and Science of Advertising

The best advertising agencies know that the 'creative' elements of advertising are just the tip of the iceberg - or the 'icing on the cake'. Less visible, but equally important, is the market research and clear understanding of customers' want and needs. Advertising legend David Ogilvy emphasised the importance of researching how customers think in his book Confessions of an Advertising Man.

The science of psychology has a lot to offer too. A fascinating book called Yes! 50 Secrets from the Science of Persuasion uses psychological research to demonstrate how advertising can become more effective by using science as well as art.

Here are just a few examples:
- setting a very high price for one option in the pricing range makes the other prices look very economical. In other words, the £2,000 version doesn't look so expensive any more, once a £5,000 version is added to the range (even if it doesn't sell). This applies to services as well as goods.
- customers are more likely to behave according to what other people do, rather than what they 'ought' to do. In other words, it's more effective to appeal to customers' need to be part of the group than their sense of what's right or wrong. The example in the book is about a campaign to encourage people to re-use hotel towels. People responded better to the fact that other guests were doing this, rather than to an appeal for guests to 'save the environment'.
- loyalty cards with a few free stamps already attached are more likely to be used by customers. (A ten-stamp card with two already attached is more likely to be used than an empty eight-stamp card). Still needs eight more purchases but it's perceived very differently.

These 50 secrets from the science of persuasion can be used by any creative business, not just advertising agencies, to help make any kind of promotion, publicity and sales initiative more effective.

We need to underpin our creative advertising with the scientific facts.

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Get out more !

At the launch party for Creative Times Online, which was full of 'creative industries' people clustering together, I met a civil engineer.

Civil/structural engineers don't normally attend these gatherings of 'creatives' (fashion designers, musicians, writers, film-makers, advertisers, artists, website designers, broadcasters and publishers, graphic designers, performers, computer games programmers, designer-makers, etc.)

So I was intrigued. This engineer was looking for new ideas from outside the world of engineering, by learning from people in other sectors.

I consider that kind of lateral-thinking to be creative.

It reminded me of Peter Drucker's criticism of how people tend to stay within their comfort zones:

"Most [executives] think they are in touch with the outside world if they play golf with the vice-president of another company in the same industry."
- Peter Drucker. Management Guru. (Financial Times. London. 16 November 2004.)

In contrast, the most effective (and most creative) people learn from other industries and sectors. (See article on Lateral-Thinking Leadership.)

I then looked around the room and wondered how many of these 'creative' people ever go to gatherings of engineers, hoteliers or bankers in search of new ideas, business methods, or customers.

Probably very few.

We should get out more.

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Rolls and Royce

Successful creative businesses need a combination of creativity and business strategy - what I call 'T-Shirts' and 'Suits'.

Sometimes, one individual has both of these elements in good measure, but more often than not, the harmony of creativity and business is formed by two people, or a larger team.

Frederick Henry Royce met Charles Stewart Rolls in Manchester in 1904. Royce was the engineer and Rolls the businessman, and their partnership formed the world-famous company Rolls-Royce.

Jennifer Harris, writing in Management Today, points out that different skills can combine in a complementary way but different attitudes cannot. I agree.

There must be a shared vision for the enterprise, even if the partners involved are very different characters with different skills. So the shared vision is in many ways the starting point. If people are working hard together but with different goals in mind, conflict - or at least stalemate - is likely to occur.

Matters of risk, growth, financial reward and lifestyle are all issues about which partners might have different views. If these are not in harmony, each person may have a valid, but different, business strategy in mind as their road map to different destinations.

Success means different things to different people, so simply agreeing together that you want the business to be 'successful' is not clear enough. Working towards different definitions of success will inevitably bring problems. That definition of success needs to be clearly defined and agreed.

"Start with the end in mind", says Steven R Covey in his bestselling book The Seven Habits of Highly Effective People.

Having that clear vision of the future, and then starting with that end in mind, is exactly what successful creative entrepreneurs do.

Good Enough...

Thanks to Phil Birchenall for sending me this article about the Flip Video camcorder. It's about a simple and inexpensive camcorder that's "good enough" rather than being "the best". It has just the right range of features to be usable and useful, at a reasonable price. It's opened up a new market of 'ordinary' users, not just video enthusiasts.

It got me thinking more about Quality.

Creative people in business are rightly concerned about Quality. However, quality is subjective, not objective. And in business terms, the customer's perspective is vital. Sometimes creators add "too much" quality, not because the customer demands it but simply because the producer wants to - or thinks they ought to.

I recently bought a digital camera. Not the 'best' or the most complex, but one that is small and light enough to take with me without having to decide every day if I really want to carry the extra weight. As a Nikon, it's well built and I expect it to be reliable. Also it was easy to obtain and sold at a reasonable price. It does the job for me, it's 'fit for purpose', therefore it's 'quality'.

Quality has many dimensions because the consumer takes into account price, convenience, speed of delivery, maintenance costs and usability in deciding their own definition of quality. So we need to think about offering Quality in different dimensions.

For example:
- Artists sell limited-edition prints. Not as good as the original but good enough for many people.
- A product can be designed to be biodegradable - so it deliberately doesn't last too long.
- Publishers can offer an eBook version now instead of the paperback delivered by Amazon next week
- Websites can be designed without too much technical complexity so they are accessible to blind people using speech synthesis software
- Film-makers can also create short videos instead of a full documentary, quickly, in an internet-ready format, on a fixed budget, without compromising quality.

Not everyone wants the biggest, longest, most expensive or most complex version of what you can offer.

Is a Rolls Royce better than a bicycle? It depends on what the customer actually wants.
Is a bicycle a poor-quality Rolls Royce? No, it's a different product and can be even 'higher quality' in many ways.

By understanding customers' perspectives on quality, the most successful creative businesses use their creative talents to produce goods and services which fit customers' definitions of quality as well as staying true to their own sense of artistic integrity.

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Film funding through eBay...

Financing a feature film can be a complex and expensive business, and most talented film directors never get a chance to make a full-length feature film because of lack of finance.

But with her 'can-do' attitude, resourcefulness and determination, Fiona Maher has made a film on a micro-budget, raising cash from a variety of sources, calling in favours and getting in-kind support from suppliers and a wide range of talented people in her network.

One of the creative ways she raised funds was by selling roles in the film on eBay to people wanting to take part in the film project.

'The Tree of Death' is a comedy feature, described as 'Blair Witch meets Spinal Tap'
The film will be released later in 2008.
In the mean time, here's a teaser from YouTube...

CCTV = PR

Manchester band The Get Out Clause used CCTV as PR - and then were publicised on Sky News!

With the help of public relations expert Liam Walsh of AskMe PR, the band performed under Closed Circuit TV cameras in various places around Manchester - then demanded the footage from the CCTV operators under the Freedom of Information Act.

They then used the footage to make their promotional video!

This 'guerrilla marketing' stunt resulted in the band's video being featured on Sky News. Watch video here.

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Cate Blanchett 'Sparkles'

Congratulations to one of my client creative businesses, Sparkle Media on their successful projects in Australia !

The visual effects and animation company has recently worked in Australia with Oscar-winning actress Cate Blanchett and Joseph Fiennes, producing video footage for the multimedia theatrical performance Minutes of a Separation.

Sparkle Media also worked for Reebok whilst in Australia on an 'advanced fitness' website project.

It's a pleasure to work with creative entrepreneurs like Glenn Maguire and Andy Cooper, who are the company's directors.
Over the several months I have been involved in their business growth, I have been able to advise them on matters such marketing, intellectual property and enterprise development.

Sparke Director Glenn Maguire said:
"Since attending David's workshop and then engaging him as an adviser, Sparkle Media has gone from strength to strength. The company now operates on a global level, going head to head with world wide agencies - and beating them. We've never looked back and have a lot to thank David for."

Working internationally from their base in Liverpool, Sparkle has worked closely with creative industries support agency Merseyside ACME.

Creative Times: Leading Creative People - it's like herding cats!

Leading Creative People ...
                                       ...."We say it's like herding cats!" was a comment about leading and managing creative people when I was a guest speaker at the Munich meeting of MAGNET - the Marketing and Advertising Global Network.

My presentation to the owners of advertising agencies from around the world was on the subject of Leadership. One aspect they were particularly interested in was how to lead 'creative' staff.

Link to full article: Leading Creative People 

Creative Times is now online ! 
Link: www.creativetimes.co.uk

The Price of a Bed

Would you pay 50,620 Euros for a bed?
(That's over £40,000 GBP, about $78,000 USD)

Probably not. But apparently some people do. Why? What's going on here?

I'm fascinated by pricing strategies and run workshops for creative businesses on the subject.
There are different ways to decide on your pricing strategy and I'll be writing more about them soon.
Certainly, customers are often buying more than the just the bare object - they are buying into something much bigger.
See What are you selling, really?

In the case of a Hastens bed, you are invited to buy into the story of a small family firm in Sweden.

The advert asks "Who would spend 50,620 Euros on a bed?"
It continues "Most people would not or could not. A select few could and would..."

Are you one of the select few?

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I'm interested to hear from you about pricing strategies - especially about businesses in the creative industries.

Carnaby Street W1

Westminster Council bought the copyright in the design of its iconic street signs (pictured).
This means that it can now generate income fom licensing this intellectual property to businesses.

The designs were created by Misha Black in 1967 and the copyright remained with the designer until his death, when it passed to his estate. Black's son then sold the copyright to Westminster Council in London for £50,000 GBP (100,000 USD).

The Council plans to charge licence fees to more than 100 companies that use the design on popular tourist souvenirs and other products.

Designers should follow Misha Black's example by retaining copyright when creating designs for clients, to make a profitable sale later - or to generate licensing income themselves.

Photo credit: DearCatastropheWaitress.

See related blogposts:
Protecting - and profiting from - your IP 
Whose photos are on your website? 
Let's follow George Lucas 

Don't Co-operate

In contrast to the business strategies of collaboraton or Co-opetition, there is another strategy to consider: 'Don't Co-operate'.

This is one of the characteristics of the success of Apple Inc., according to Wired Magazine in an article called 'How Apple Got Everything Right By Doing Everything Wrong'. The article shows how Apple breaks several of the conventional rules of business adopted by most hi-tech companies, such as 'Communicate', 'Play Nice', 'Love Your Customers', and 'Coddle Your Employees'.

Apple's unconventional strategy demonstrates that there are no universal rules in business - you have to create a unique formula which works for your enterprise, and your customers.

Beware 'Copyright Grabs'

Photographer Chiz Dakin (Peak Images) asked me to warn other photographers about the problem of 'copyright grabs'.

Chiz is concerned about the trend for businesses, particularly large corporations, to "grab copyright in any image they can get their hands on", as she puts it.

This practice is a hazard for photographers who don't carefully read the small print in contracts with clients.
It can also apply to competitions.

So the advice from Chiz is: make sure you read the small print to ensure you don't lose your intellectual property rights in your images!

See also:
Protecting - and profiting from - your IP 
Whose photos are on your website? 

Paul Arden RIP

Advertising genius Paul Arden died on 02 April 2008.

Some of his most influential work was done while he was executive creative director at Saatchi & Saatchi for 14 years. Paul was responsible for advertising campaigns for clients such as The Independent ("The Independent. It is - are you?"), Toyota ("The car in front is a Toyota"), British Airways, Fuji, and the slashed purple silk images for Silk Cut cigarettes. Earlier in his career he worked for Ogilvy and Mather and other agencies, developing his reputation as a leader in design-led advertising.

His books are wonderful.
Bestsellers such as 'Whatever you think, think the opposite' and 'It's not how good you are, it's how good you want to be'  provide plenty of insights and provocative 'upside down' thinking: 'It's wrong to be right' and 'Compose your ad from the weakest point' jump out at me as I flick through my copies just now.
(I'm going to put them into my briefcase to dip into when I need a quick dose of inspiration.)

A real maverick and often difficult to work with, he relished getting the sack and was proud of his lack of formal education. He was a Beckham fan, notably Victoria Beckham's wanting to be "more famous than Persil Automatic" and praised Elizabeth Esteve-Coll's controversial decision to adopt the slogan "An ace caff with quite a nice museum attached" for the Victoria and Albert Museum when she was director there.

His creativity lives on...

Give it away free!

Creative entrepreneurs often ask me how they can make money from their music or computer games when MP3 files and software is so easy to copy.

One answer is to use the fact that people copy your stuff to change a threat into an opportunity.

Banda Calypso's music is copied onto CDs and sold on street corners in Brazil. They don't get a cut of this income but they don't mind. In fact they supply theses street-sellers with master CDs to copy! And they organise things so that there is a plentiful supply of their music for sale in each town on the route of their tour, before they arrive to perform. They see this copying and selling as an advertising function and they don't have to pay these street-corner entrepreneurs. Their gigs are always full and they've made enough money to buy a private jet to take the band on tour.

Timothy Chan, one of the richest men in China used to get ripped off by copyright pirates. His computer game CDs were copied illegally and sold cheaply. He could have tried in vain to stop this. Or he could have let his business go bankrupt. Instead he changed his business to take advantage of the copying. He decided to make his money from online connection fees instead of CD sales. He changed the game so people had to play online and pay a very small fee per minute. The copied CDs spread like wildfire and so did his customer base. Every CD copied now helped his business.

Smart entrepreneurs see opportunities when others see only threats.
They change their business models to take advantage of changing technology, economics and social trends.

See also: 3 (or 14) Kinds of Free

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Let your heart drive you...

A creative passion is often the driving force for creative entrepreneurs.
My advice is always to recognise this, in order to understand our own motivations in business. In other words, what 'makes us tick'.

I was asked recently by Putte Svensson from Rockparty in Hultsfred, Sweden, what would be my advice if someone said they just wanted to have fun. My answer was that fun is important and essential to any enterprise. I went on to say that I do indeed want people to have fun - and for a long time! Having fun for a short while and then going bankrupt isn't much fun at all. I help people to also look at the business issues that will help them to continue to have fun in a sustainable way, long-term. Things like marketing, finance and intellectual property also need to be taken into account to make sure the fun continues.

The philosophy of T-Shirts and Suits is about combining creativity and business acumen. It's about using rationality as well as emotion - the left side of the brain as well as the right side. I sometimes talk about 'using our heads as well as our hearts'.

Sara Lönnroth, who is the project leader for Mötesplats Mode&Design (MM&D), at the Transit Business Incubator at Konstfack in Stockholm, suggested a phrase about this, which I've adapted and translated as:
"Let your heart drive you and your head guide you".

I'm going to adopt this as one of my sayings from now on!

1,000 True Fans

Instead of dreaming about having millions of fans, nurture one thousand 'true fans'.
That's the advice for creative individuals from guru Kevin Kelly.

He writes:
"A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author - in other words, anyone producing works of art - needs to acquire only 1,000 True Fans to make a living."

True fans are the people who will buy whatever you produce or drive out of their way to see you perform.It's a feasible target and these people become the core of your customer base. You can then build up from there in partnership with a publisher, distributor or agent.

The article has lots of examples of creative people using cool business methods to build a customer base and generate income streams at the same time.

The full article is online at Kevin Kelly's Technium website/blog.

We don't sell beer...

The Duvel Cafe in Stockholm is a bar which sells a range of Belgian beers.
They are tasty, strong and expensive (compared to England).

I was fascinated by the beer glasses as much as the beer itself, so I took a couple of photos.
Part of what I was buying and enjoying was the packaging and the experience, as well as the golden alcoholic liquid.

In Sweden, they use the term 'Experience Industry' for what is known as the 'Creative Industries' in the UK and elsewhere. What I like about the Swedish term is that it refers to what the customer gets out of the deal, rather than what the producer puts in. This understanding of how the customer benefits is a crucial marketing perspective.

I asked the barman about the glass and he told me how the Tripel Karmeliet glass had been designed to improve the taste of the beer. It's shaped a bit like a brandy glass so the beer can be swirled around. For the price of a beer I was getting some information about design as well as the story of the brewery.

"We don't sell beer," he said "We sell knowledge."

The customer's experience is not just a drink of beer.
They come away with a story - about the beer and the glass.
And a story to tell their friends about their experience at the Duvel Cafe in Stockholm.

Madonna - creative businesswoman

Madonna has recently terminated her contract with Warner Music after 25 years and signed a new contract with tour company Live Nation.

Now that digital music is so cheap, not to mention illegal downloads, Madonna recognises that her main income in future will be from performances and related products, not music sales. So she has changed her business model and Live Nation is a more appropriate partner than a traditional record label.

"The paradigm in the music business has shifted and as an artist and a businesswoman, I have to move with that shift," said Madonna.

Madonna's move illustrates that creativity is not just about being an artist. You can use creativity in business too, by rearranging your business to maximise income as technology and customers' behaviour changes.

As an artist and a businesswoman (a T-Shirt and a Suit), Madonna is a topical example of how creativity and business can be combined intelligently.

Managing Cash Flow and Fixed Costs

One of the biggest challenges for creative businesses, especially fast-growing enterprises, is the management of cash flow.

When businesses fail, it's frequently because of a cash flow crisis rather than lack of profitability. The gap between cash outflows and cash inflows becomes too big and they run out of cash. An unprofitable business will inevitably run short of cash but even profitable businesses can face a cash crisis if cashflow isn't managed carefully.

As a business grows and its turnover increases, there is always a temptation to increase fixed costs. Then these higher fixed costs commit the business to regular cash outflows, even though the cash inflow may be more erratic, due to fluctuations in trade and delayed payments from clients.

I have seen businesses increase their fixed costs to such an extent that they are risking serious cashflow problems. In one company, a chief executive hired temporary staff to deliver short-term projects but then engaged them full time as employees, which meant that the company's expenditure was no longer flexible, even though an endless supply of short-term projects was far from guaranteed. To feed the company's new dependency on more and more cash, he then had to keep finding more and more projects, because they were no longer able to reduce their costs in lean times and 'ride the waves' of the ups and downs of business as they used to do. To avoid a cashflow crisis the company accepted unprofitable projects, to get a quick cash fix, even though it was digging itself into deeper trouble in the long term.

Unless future cash inflows are guaranteed to be steady, beware increasing fixed costs if you want to avoid cash flow problems.

Credit control is another major issue in managing cash flow effectively. Slow paying customers and bad debts can put a creative enterprise out of business, especially in the first few years when it is more vulnerable financially and less able to negotiate favourable trade terms with clients. Choose your customers carefully and agree a payment schedule through the project, ideally with a percentage paid up-front, rather agreeing to be paid only on completion of the job. Delays happen (often the fault of the client) which in turn delays payment and in the mean time cash is flowing out every week and month that goes by.

A cash flow projection spreadsheet is an essential tool for effective financial management of any creative business, so that potential problems can be foreseen - and then avoided.

Smart creative entrepreneurs keep a close eye on cashflow as well as turnover and profitability.

Time Management for Creative People

Time Management is an issue that comes up frequently when I'm advising creative businesses.
It seems there's always too much to do, and not enough time to do it.

In my view, time management is both a strategic issue and an operational challenge.

If we are unrealistic about what can be achieved with finite resources, we will always be frustrated. Trying to run two businesses when you only have the time needed to run one is an impossibility, not a matter of better time management. So firstly we need to prioritise strategically and decide what we are going to do - and not do. The 'Not To Do' list is as important as the 'To Do' list. It's more realistic to focus on a few things and do them well than to attempt too much and do nothing properly.

Then it comes down to operational matters - ie how to actually manage our time on a day to day basis.

Business Coach Mark McGuinness has published 'Time Management for Creative People' as a free eBook. I've recommended it to my clients as well as finding it useful for my own work. It’s subtitled ‘Manage the Mundane - Create the Extraordinary’ as it’s designed to help you maintain your creative focus while dealing with your other commitments.

Download the eBook from Mark's 'Wishful Thinking' blog .

Have a creative 2008 !

As the year draws to a close, I'd like to wish you Peace at Christmas and every success in 2008.

I'm privileged to have worked with some wonderful people in 2007.

Thank you to Mike Carney for the new visual identity and to Darren Ratcliffe for my new website and blog.

Thanks to Merseyside ACME and Smiling Wolf for publishing my book 'T-Shirts and Suits: A Guide to the Business of Creativity' as a free eBook.

The 'T-Shirts and Suits' group on Facebook has grown rapidly since the summer to become a network of more than 800 creative entrepreneurs from all over the world.

As well as working in Liverpool, Manchester, Derbyshire, London and elsewhere in England, international projects took me to Norway, Germany and Holland during the year.

Best wishes to all my consultancy clients and to everyone who attended my training workshops and seminars. I have enjoyed helping your creative enterprises to become even more successful - and I've learned a lot from you.

As well as my ongoing business advice sessions and training workshops, I will be initiating some new projects in 2008. I'm also looking forward to publishing more useful information, ideas and articles for creative businesses in the forthcoming year. Watch this space!

Have a great holiday and see you again in the new year...

David

Selling cheese: a marketing problem

An incident in the the BBC TV programme 'The Apprentice' provided an excellent example of a marketing error.
It also demonstrated how the term 'marketing' is often misunderstood and used simply to mean 'advertising' or 'selling'.
In fact the marketing process goes much deeper than selling.

In one episode, Sir Alan Sugar sent his teams of would-be apprentices to sell English food toat a farmer's market in the centre of a French town. One team did particularly badly and they were invited by a furious Sir Alan to explain themselves. The team leader pointed his finger at a member of his team, blaming the team's 'marketing manager', saying that the banner advertising the food stall was the problem. He tried to deflect criticism from himself by blaming it on his 'marketing department'.

In my opinion, the problem was indeed a marketing problem - but not the one the team leader identified.

When given the task of selling English food to the French, the team leader had decided to go to a 'cash and carry' food wholesaler and buy a huge slab of processed cheese, wrapped in plastic. They then took it to France, cut it into small cubes, and presented it to prospective customers on cocktail sticks. Then the good people of France were invited to buy chunks of processed cheese!

Needless to say, the French customers refused to buy. More than any other nation on earth, the French know about their cheeses and are very selective about what they eat.

Trying to sell processed English cheese to French consumers was always going to fail. Even if they had a multi-million Euro advertising campaign, the French would never buy the stuff. The problem was not the advertising and promotion (the 'marketing department'). The real marketing problem was choosing the wrong product to sell to customers - the marketing strategy. There was a fundamental mis-match between the product and the target customers!

If you have a flawed marketing strategy (ie business formula) , then no amount of operational marketing (adverts, promotion, banners, brochures etc) will save you!

On the other hand, if you get the marketing strategy right - perhaps by choosing to sell English chutneys, pickles and marmalade to the French - then the advertising doesn't matter as much. You could say that if you get the [strategic] marketing right, then the product doesn't need [operational] 'marketing'.

The biggest marketing mistake of all is to think that 'marketing' is just about clever advertising, colourful banners, websites etc, without checking first whether the underlying strategic marketing formula is right. In other words, marketing is not about 'selling anything to anybody' using clever techniques, but about carefully matching your products or services to the right customers.

The lesson is: get your strategic marketing right first, then think about your operational marketing (marketing communications).

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Let me know about your own experiences of strategic marketing.