Let’s take a quick trip down memory lane…
When I think back to my senior year of high school, a cringey memory often comes to mind.
My classmates and I had received our acceptance letters, and it was time to decide where we would spend the next four years.
Some of my friends were going on to become teachers, doctors, or lawyers.
I always knew I would go to art school.
I’ll never forget a comment from one of my law-school-bound classmates after I announced my art school ambitions and my acceptance to Rhode Island School of Design.
“Art school?! Don’t worry; I’ll throw a dollar your way every time I walk by your cardboard box!”
It felt like a sucker punch square in my gut.
Talk about rude!
But, his comment stemmed from a deep-set belief that many people in society, including artists and creatives, sincerely accept.
Note the word myth. Because doing what you love AND making a good living doing it shouldn’t be so far-fetched! In fact, I believe it can and should be the norm.
Unfortunately, this starving artist myth is perpetuated because, more often than not, creatives aren’t given the business tools they need to thrive in the marketplace.
Quite simply: art school doesn’t teach us the business side of being a creative entrepreneur!
(no shade, I loved my time in art school and wouldn’t trade it for anything!)
When my Freshman year of college rolled around, I was THRILLED not to have to take a single math class because I was on my way to becoming a graphic designer!
I’ve never considered myself a “numbers person.”
If you can relate, I hope you’re encouraged by the fact that today, the girl who hated math class, helps manage the profitability (including lots of dollar signs, decimals, and numbers) of several highly successful companies.
I have come to know there are so many business-related tools that would benefit creatives early on that I didn’t learn until I was thrown into the real world. It wasn’t until after college that I realized that a few Financial Literacy, Entrepreneurship, or Business 101 classes would have come in handy!
So, if you run a creative business of any kind, it’s important you listen up. Yes, even (or especially) if you consider yourself to be number-phobic like I once did!
When you learn the business side of the creative industry, you’ll see that you don’t need to have a toxic relationship with the work you love. In fact, it is absolutely possible to cultivate a healthy relationship with your creative career.
In this blog, we’ll explore the three keys every creative business needs to be sustainable, profitable, and healthy so you can succeed as CEO, make a living doing what you love, and push past the starving artist myth for good!
Before we jump in, let’s talk about how misleading the online space can be when it comes to money. People flaunt big numbers, which…by all means, let’s celebrate! But also, let’s be honest and transparent.
You know the bro-marketing claims I’m talking about: the pitches that promise, “you too can earn seven figures while you sleep in the Bahamas on your yacht!”
SO often, the numbers you see on a website, social post, or sales page reflect a business’ REVENUE, and not their PROFIT. And that’s a huge difference.
Because Revenue is the total SALES they’ve made. It’s not necessarily money in their pocket.
Revenue numbers don’t take into account the money they spent (aka their EXPENSES) to bring in that number.
There’s often way more to it than meets the eye.
Let’s take a closer look…
Some of these businesses you encounter very well may earn and even take home six or seven figures. But the point is, you don’t always know what lies beneath the surface of that GINORMOUS number.
As a business coach, outsourced COO, and someone who has been in the online and creative business industry for a while now, I’ve been able to peek behind the scenes of quite a few businesses over the years.
And let me tell you…there are some big, flashy, 7+ figure businesses out there that tout their big number…but they don’t bring anything home.
I kid you not!
“How could this be?” you might wonder.
Often these businesses spend SO much to bring in that high quantity of sales (think: sales team, software, ads, overhead like office space, production costs, etc.) that at the end of the day, there’s nothing left!
Any revenue they bring in is simply going towards expenses to keep everything afloat. That means after everything is said and done, the business owners may not see a single cent in their bank account!
And the size of the business is no exception! This can happen to small and big companies alike.
A perfect example of this on a vast scale is the office workspace company, WeWork.
I just watched the show WeCrashed, inspired by the real company, on Apple TV. It dives into the WeWork story and how this disparity between their money claims and the money that actually makes it into the bank plays out – even in BILLION dollar companies.
P.S. If you need an extra excuse to binge the series, Jared Leto is AH-mazing in it!
In the show (based on the real-life story), Jared Leto and Anne Hathaway play two of the founders of WeWork – basically a company with a multi-billion dollar valuation that was running at a LOSS of multi-millions of dollars per day.
They burned through so much money to get through the valuation process and attempt to scale that they were actually LOSING money while attempting to keep up appearances.
Moral of the story?
Your business shouldn’t be a flimsy facade. It can and should be structurally sound.
While the big shiny companies may SEEM like the most successful, sometimes it’s the underdogs that are actually doing this whole business thing right!
I’ve worked with some really modest solopreneur operations that bring in 5-6 figures of almost pure PROFIT!!
And that kind of profit gives a solopreneur a really nice living!
They run a lean business. They keep expenses down, so almost all their sales hit their bank account and become their personal spending money. Although they may have less revenue, they also have less going out. When it comes down to it, they may not show off the flashy numbers, but they are running a more sustainable AND profitable business.
Of course, there’s a wide range of companies in between as well.
I’m certainly not saying small companies are necessarily more profitable than large companies, that earning seven figures in profit isn’t realistic, or that a solopreneur who makes six figures in business is always bringing home a six-figure salary.
BUT what I am saying is REVENUE and PROFIT are two different things.
And it’s so important to know the difference.
As a business owner, it’s vital that you ALWAYS know which you are talking about so you can be sure you are comparing apples to apples (or, in this case, revenue to revenue and profit to profit) rather than apples to oranges (aka revenue to profit).
So, let’s get clear on numbers and what they mean so that you can confidently assess your revenue, expenses, and profit as the CEO of your creative business.
If you want to be successful in business, you need to know these three numbers.
It’s time to study up— I’ll be quizzing you later!
But these are fundamental terms to know. They are often used interchangeably AND incorrectly, leading to misinformation and a lot of unnecessary confusion.
Luckily, it doesn’t have to be complicated. I’ll offer a simple definition and a quick way for you to take action! Let’s clear things up for you and your business!
Your revenue is a significant number. But your PROFIT is the MOST important number to display the health and longevity of your business.
It’s the reason I say I want to help you build a *profitable* and sustainable business that truly adds up.
Because a business that isn’t profitable isn’t sustainable, AND in reality, it’s more accurately described as a really expensive hobby.
Now it’s time to put this information into action! A lack of clarity about revenue, expenses, and profit may have been why you’ve struggled to plan for or achieve your financial business goals in the past. Now I want to help you put that doubt to bed once and for all!
To help you take the guesswork out of assessing your business’ sustainability and profitability, I’ve developed a freebie specifically for creative entrepreneurs like you.
Click here to download your copy of “5 Ways to Make Your Creative Business Profitable” where you’ll learn how to make more with less, price your offers strategically, and so much more! You’ll walk away ready to intentionally increase your business’s profitability and find the success you deserve while sharing the work you’re passionate about!