Engaging in the story and practice of financials
Engaging in the story and practice of financials
Business finances can be intimidating, especially for creatives when there is a common perception that they aren’t “good” at numbers. By approaching financial models in a creative way, the Creative Enterprise Programme gives creative entrepreneurs the confidence to play.
“The problem isn’t that creatives are not good with financials or money; it is that they are too good,” is a claim I’ve made several times for the last few (30) years. This isn’t a soundbite, but based on observing and working with artists. Designers from across all sectors spend carefully, and spend on the elements of their work that they value.
I wasn’t completely right though, of course. I had forgotten crucial factors: how pricing is determined and implemented and how comfortable, confident and knowledgeable artists are about their own value. Many things will influence their confidence in pricing and in generating a sustainable income from their work.
Most creative entrepreneurs have strong visions for their enterprise and want to make an impact on society. Generating a salary is not always at the forefront of the entrepreneur’s mind. For others, generating a salary is crucial to being able to commit the time that the enterprise, and its beneficiaries, deserve. Ensuring that the creative enterprise has a sustainable financial model is key to this.
In the Creative Enterprise Programme (CEP), we support creative entrepreneurs to review, reconsider, reposition and ideally grow their enterprise. Our starting point is always the creative entrepreneur themselves and their personal values, and then their relationship with their customer/audience/user/funder, and then working towards a sustainable operational plan. The techniques we use encourage new perspectives on their work, scale of reach and business model.
CEP is an intensive and intense programme, designed to have lasting impact on people who are busy and taking valuable time away from their practice. We want participants to leave with the confidence to implement the new ideas and approaches gained from the programme, to revisit the programme tools as their business evolves, and to make values-led decisions about the future of their creative enterprise.
CEP works across different creative subsectors, cultures and geographic locations. There are different regulations for accounting and record keeping in different nations, with some generic terms remaining constant. But it is not just for this reason that CEP focuses on financial modelling, rather than financial management.
Financial management is, of course, key to an enterprise’s on-going sustainability, however it is about monitoring day-to-day rather than conceptualising the future or ideal state. Financial modelling encourages participants to explore the future potential of their enterprise.
Participants feel more in control of their whole enterprise if they are able to see how financial models are an outcome of their personal ideals and ethics, business values, customer profiles, and all the decisions they have taken about scale.
The way that anyone, but perhaps particularly creatives, engages with the process of financial modelling is key. In CEP, participants use visual thinking techniques to develop new viewpoints on their enterprise. Crucially, we don’t use templates that are commonly used for business planning – we are re-modelling the business in a creative way that speaks to creative people. Financial modelling can be no different.
With a worksheet and post-it notes, we approach financial modelling as a problem solving exercise: What do I know about my income and expenses? How can I adjust and diversify my enterprise to generate sufficient income that provides a sustainable living and sustainable salaries? Does this financial model reflect the my values and my business’ values? Do all of these answers lead to a pricing structure that suit my intended customers?
Answering these questions before generating the information that can be put into a standard format of overheads, direct and indirect costs, turnover, revenue streams, etc. works quickly and with impact.
It leaves participants able to craft their financial model, revisit it, refine it, put more information into it and move from prototyping the financials to bringing detail to them. All of this leads to a standard financial management process. The move through financial modelling ensures that creative entrepreneurs engage fully with the process, know why each number is there and what the number signifies.
Creatives are great at financials
The financial model tells as much a story of the enterprise as any visualisation tool. Seeing the story of the enterprise through financials, to understand whether the enterprise is sustainable, reflects the intentions of the founder, reflects the intended relationship with customers and users; and reflects the desired impact. Through problem solving and visual thinking, creative entrepreneurs become excellent at financial modelling, able to critique the decisions they and others make, and see how values and value is portrayed through the expression of an enterprise’s financials.