Paul Smith talks business

Here's a fascinating interview with fashion design guru Paul Smith, who talks about many aspects of growing a business in the creative industries, including:

  -  How he succeeds as a creative entrepreneur by saying no to many potential clients, choosing only those projects which fit his brand and excite his creativity. He has (politely) rejected the opportunity to design 3 hotels, 5 mobile phones and 2 cars - and that's just in the last year!

  -  How he manages his company's finances and business growth in such a way that he can be selective. He avoids the pressure to constantly grow his creative business. Crucially, he manages cash flow carefully so that he has never needed to borrow money from a bank.

  -  How he became 'big in Japan' by being respectful of Japanese people and culture (when others were being brash), and took his time to build solid business relationships.

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Designer fashion icon Paul Smith was interviewed on the London Eye by Francine Lacqua for Bloomsberg TV's 'Eye to Eye' programme.

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Discuss the points made by Paul Smith with other creative entrepreneurs on the T-Shirts and Suits Creative Enterprise Network.

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Crowd-testing

You can use crowd-funding platforms to test the market for a new product, service or project, in parallel with raising finance to fund new creative initiatives.

This was one of the many interesting points made by Slava Rubin, Chief Executive Officer of the crowd-funding platform Indiegogo, where we were both speakers at a creative industries conference in Santiago de Chile.

Market research can be expensive but it's crucial to be able to test the market to minimise risks. Feedback from potential customers can help improve products or services at an early stage of development. Posting a project on Indiegogo or another crowd-financing platform provides an opportuntiy to test the potential popularity of a new product.

Even better, creators can establish an online dialogue with potential investors who are also likely to be customers and consumers of the product.

Don't just think 'crowd-funding', think 'crowd-testing'.

Slava Rubin, Chief Executive Officer of Indiegogo, with David Parrish, at the Cultura y Economia conference in Santiago de Chile.

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Discuss crowd-funding on the T-Shirts and Suits Creative Enterprise Network.

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Creativity in Business

In this short video, David Parrish talks about:

- How Creativity and Business can be combined intelligently and sensitively to achieve business and creative success in a way which is consistent with our values and objectives.

- Being Creative in Business: How creative people can be creative in the office as well as the studio. In other words, how creativity can also be applied to the 'business system' or business model. We need to apply our creativity not only to working 'in' the business but also 'on' the business.

- How creative entrepreneurs have raised finance for projects in unconventional ways, applying their creativity to business issues, including 'crowd-financing' or 'crowd-funding'.

- How to Achieve Your Own Version of Success. Advice on being clear about your objectives and personal definition of "success". Don't just follow the crowd or develop your business in the way others suggest. Decide what you mean by Success - and then go and achieve it!

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This is a video of excerpts of the keynote speech by David Parrish about 'Creativity and Business' at the Shropshire Creative Business Conference in Shrewsbury in 2011. Click for more information about David's experience and expertise as a speaker.

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Embed this video in your own website or blog from Vimeo or YouTube.This video is published using a Creative Commons licence which allows you to republish it.

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Discuss the comments made in this video - and add your own experience and advice about how to succeed in creative business - on the T-Shirts and Suits Creative Enterprise Network.

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How to Pay the Rent

In this video, successful creative entrepreneur Sue explains to web designer Jon how to make sure he can pay his rent each month.

[ Embed this and other videos in your own website from the T-Shirts and Suits channel on YouTube. ]

She explains how she manages her business cash flow and uses her terms and conditions of trade, credit terms and a payment schedule with clients to ensure she gets paid in good time so she always has money in the bank to pay her rent and other bills.

In short, Sue tells Jon how she combines creativity with smart business thinking using the 'T-Shirts and Suits' approach to business management in the creative industries.

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Discuss this and associated business issues in the creative industries on the T-Shirts and Suits Creative Enterprise Network.

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Raising Finance by Crowd-Funding

This Financial Times article reports on a new initiative to fund arts projects by crowd funding / crowd financing. The 'We Fund' website enables individuals to donate small amounts of money to arts related projects in return for credits, perks and other benefits.

In return for pledges of amounts of cash between £1 GBP and £3,000 GBP, donors can choose from a menu of benefits ranging from a simple 'thanks to' credit, packs of goodies including DVDs, right up to special performances in your own home. For example see the  'Butter Side Down' and 'Madam Butterfly' projects on We Fund.

These are examples of raising funds through crowdfunding by offering credits, perks and other benefits in return for donations (rather than 'investments')

There are also more sophisticated financial investment schemes which enable investors to take an equity share in a project - or a company set up for a particular project. There are many examples of raising finance for film projects in this way. Such schemes generally involve larger amounts of cash and present the investor with more risk - and the prospect of substantial financial rewards - depending on the financial result of the creative endeavour.

A range of examples of crowdfunding in the creative industries are mentioned in this discussion on the T-Shirts and Suits Creative Enterprise Network.

Join this international creative enterprise community and let us know of other examples of projects and initiatives to raise finance for creative businesses and projects using crowdfunding / crowdfinancing techniques.

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Raise your Prices!

Thanks to Leslie Burns for highlighting this article in the MIT Sloan Management Review about pricing.

All of the issues it raises about pricing strategies and pricing mistakes are relevant to the creative industries, whether you are selling products or services, even though the examples are from big manufacturing firms.

The article underlines and expands on various advice published in the book 'T-Shirts and Suits: A Guide to the Business of Creativity', connects with some posts on this blog, and links in with discussions on the T-Shirts and Suits Creative Enterprise Network.

I think some of the most important points are:

1. Look at your offerings from the customers' point of view and understand how they see value in your products and services. This new perspective may allow you to increase prices.
(See also: 'What are you selling, really?')

2. Set prices according to what the customer gets out of it, not what you put into it.
(See also: 'Art is not what you see...'.)

3. Instead of competing on price with lots of competitors who do much the same as you, focus on what you can do that they can't. In other words, focus on the areas of the marketplace where you have a competitive advantage. This will lead you to particular types of customers who need and value the things that you excel at in relation to competitors. These customers are more likely to pay higher prices because they recognise you are the best in your field.

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Discuss this with creative entrepreneurs world-wide on the Creative Enterprise Network.

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Design, Pricing and Profit

Here's a fascinating article in Wired magazine about the graphic design of restaurant menus.

And here's another menu analysed in terms of design and pricing.

These are essential reading not only for graphic designers but for anyone in the creative industries interested in marketing and pricing. So that's everyone then.

Amongst other things it includes interesting insights about the psychology of pricing. For example, a very expensive item makes other expensive ones look reasonable in comparison. This 'extremeness aversion' means that people avoid the most expensive - and the least expensive items.

This approach can be used in selling any range of good or services.

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New Business Models

Customers are more powerful than ever. Because of changes in technology, particularly the interactive internet (Web 2.0), there has been a fundamental and irreversible shift of power in favour of consumers.

Creative business that embrace this change will thrive, by using new business models such as crowd-sourcing, viral marketing, crowd-financing, buzz marketing and plogging.

The bad news is that businesses that deny or ignore these changes by continuing to regard customers as passive targets will fail.

'New Business Models in the Creative Industries' was the subject of my keynote speech to the Media and Message conference of indepedent TV producers and media professionals in Finland.

We need to be innovative about how we do business and devise new business models centred on demanding, talkative and creative customers.

Presentation by David Parrish at Media & Message, Finland.
Watch the video here (if the embedded video above does not play)
[or go to the Media & Message site and click "Puheenvuorot" (speeches). It's the last one.]

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Share your own experiences, ideas and opinions about this on the Creative Enterprise Network.

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Do you give discounts?

Thanks to Natalie Bolton from Lion Eyes Television for telling me about this amusing video.

It's fun to watch - and it raises some important issues about pricing and customers for creative businesses and cultural enterprises.

If customers believe they can get a discount from you, it's because they think they can go elsewhere and get the same thing cheaper. If they can in fact get the same thing cheaper elsewhere, then you are in a marketplace with lots of competitors offering similar products or services, all competing on price. So you are in a poor negotiating position. It's a losing battle.

Instead, build your business around those goods and services at which you excel in relation to the competition. Better still, focus on your uniqueness, providing goods and services that nobody else can. Customers will then have nowhere else to go and your negotiating strength increases dramatically.

To do this requires an understanding of your competitors and your market positioning. It means that you need to choose your customers carefully, selecting those people who want what you can uniquely offer.

So be prepared to say No when people ask for a discount. Only the wrong kind of customers will walk away, which is good because you can never build a thriving business around them. The right kind of customers - the ones who recognise the how special you are - will pay the price. These are the kind of customers to build your creative enterprise around.

 - What's your business policy when it comes to giving discounts?
 - Do you know how special you are? In other words, do you know at which products/services you excel in relation to the competition?
 - Do you target those only those customers who want what you are especially good at?

It's only when you have devised your own unique business formula, based on your speciality and your special customers, that you can say No to customers asking for discounts.

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Discuss this with other creative entrepreneurs on the Creative Enterprise Network.

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The Creative Business: 12 Modules

The Creative Business is a series of 12 modules of information about developing creative enterprises, written especially for people running businesses in the creative industries.

The information is particularly relevant to creative businesses and cultural enterprises in the fields of Advertising, Literature and Publishing, Visual Arts, Performing Arts, Music, Design, Cultural Heritage, and Crafts.

Published on the Creative Choices website, this series of 12 articles covers a range of business issues facing creative entrepreneurs:

1. It's Creative but is it a Business? Business Feasibility - deciding whether or not to make a business from your creativity.

2. You're Creative - but so are they! Dealing with competition - understanding your competitive advantage in relation to rivals in the marketplace.

3. Not All Customers are Good Customers. Choosing Customers - finding the right customers to fit with your creativity, ambitions and values.

4. Precision Marketing. Advertising and Publicity - communicating your key messages to customers.

5. Structuring Your Enterprise. Setting up a Business - choosing the best structure: self-employed, not-for-profit company, or commercial enterprise?

6. Make Money While You Sleep! Protecting your Ideas - using intellectual property rights to protect your creativity and make money while you sleep.

7. Creative Collaborations and other essential C-words. Working in partnership with other individuals and businesses in the creative or other sectors.

8. Raising and Managing Money. Financial Management - getting the right financial result by managing your income and expenditure.

9. Customers as Partners. Keeping Customers - listening to customers and building closer relationships with your best customers.

10. Reassuringly Expensive. Pricing - deciding how much to charge by looking at pricing and value from the customers' point of view.

11. Focusing your Enterprise - selecting priorities for development as new opportunities arise.

12. Growing your Business - key issues ahead as your business grows. 

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Read and comment on these articles by David Parrish at The Creative Business blog on the Creative Choices website.

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