finance for ksa presentation

7/31/2019 Finance for KSA presentation

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Contents

The Creative Money Mindset

Pricing

Cashflow gaming


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Part 1 The Creative Money

Mindset


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Where do you stand on the money

& meaning matrix?

Money matters

Meaning matters


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Creative Money Mindset

7 Reasons creatives dont talk about money

1. We think its not important

2. We dont know how to get it

3. We dont know what were worth

4. We dont want to sell out

5. We dont want to look greedy

6. We dont know how to manage it

7. We wouldnt know how to spend it


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Questions to ask yourself:

Which, if any, of these reasons do you

relate to most strongly?

What difference would it make if these

reasons were no longer true about you

How would you think differently?

What would you do differently?


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Starving Artist Beliefs:

Starving artists are better artists

Poverty = integrity

Money corrupts creativity

Only suits can understand money Financial management is an impenetrable

mystery to me

How strongly, if at all, do you believe each one?

(rate from 0-5 0=dont believe, 5=believe utterly)


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Selling out vs. Selling yourself short

Sell out v. Betray your artisticprinciples by creating thingswith the sole intention ofmaking money

Leads to:

Poorer work your heart isntreally in it

Less money because if thework isnt good its hard tocharge higher prices or sell

more work Losing your soul bybecoming greedy & cynical

Sell yourself short v. Fail toachieve your full creativepotential because of yourattitude to, and lack of, money

Leads to:

Poorer work because youreunder-funded and stressed outby lack of cash

Less money because if thework isnt good, its hard to

charge higher prices or sellmore units

Losing your soul bybecoming disillusioned andcynical


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What difference would it make if you

stopped believing in them?

What would you do differently?

Why not start doing that this week?


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Are you in danger of selling

yourself short?Selling yourself short can be just as destructive as selling

out. Are you in danger of this?

How much of your week is taken up with anxiety aboutmoney?

Do you ever find it hard to focus on your creative workbecause you are worrying about money?

If your income is not as high as you want it to be does thisaffect your confidence in business?

Have you ever had to turn down a creative opportunity forlack of money?

Have you ever felt that you had to compromise a creativeproject for lack of funding?


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Money as a Support System for

your Creativity Mental Bandwidth

Time

Equipment & Materials

Inspiring Experiences

Which of these are most important to you?

Can you think of other ways in which money supports yourcreativity?

What could you do differently if you had enough money to

fund each of these four areas properly?What difference would this make professionally and

personally?


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Motivations

Intrinsic:

Challenge

interest

Freedom Learning

Meaning

Purpose

Creative flow

Rate these in order of

importance

What difference would itmake if your finances

were under control so you

werent distracted by them

and you were able to

focus 100% on theseintrinsic motivations while

you worked?


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Motivations

Rate these in order ofimportance to you

What difference would it

make if you had a LOTmore of the ones thatmatter to you?

Do you have any hesitationabout pursuing any ofthese motivations?

If so, what would you have tochange to get over thishesitation?

Extrinsic: Money Fame & recognition Awards

Praise & appreciation Status & privilege Opportunities


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Your Creative Money Goal

Imagine you can look into a crystal ball and seeyourself in the future, when you are on top ofyour finances and your business is earning asmuch money as you want

Use your imagination to build up a picture aboutwhat is different you personally, your work,your business and your lifestyle

Include the ways in which money supports yourcreativity and your motivations

Draw a picture of this or write a description


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The Creative Money

visualisation


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Creative Money Mindset Beliefs

Money is a means, creativity is an end

Money can support my creativity

Creativity can lead to money Its ok for me to make a lot of money

Starving artists are barking up the wrong

tree Growing my business is a creative act


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Never base a business decision on artisticcriteria, never base an artistic decision on money

There are more important things to think about

than money Financial hardship corrodes creativity

Financial literacy is an essential skill for acreative professional

Money brings opportunities, creativity bringsfulfillment


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How strongly if at all do you believe each

one?

Which two or three would make the

biggest difference to your life and work if

you started believing them?

What would you do differently if you really

believed them?

Why not start believing them right now?


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Where do you stand on the money

& meaning matrix?

Money matters

Meaning matters


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Part 2 - Pricing


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A Basic Approach

Services:

What would you like

to turnover in a year?

How manychargeable days in

the year?

Products:

What would you like

to turnover in a year

How many small,medium & large sales

do you think youll

make in a year

What is the value of

each of these

(approx.)?


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Can you charge this in your

market?

The sense check!

Vi l A t C ft & D i I St


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Visual Art, Craft & Design Income Streams

corporate design fee

one off / bespoke commission

domestic design fee

gallery shop retail

workshops & classes

production pieces

licensing royalties

M i I St


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Music Income Streams

new writing commission

headline tour

merchandise

regular gig slot

royalties

corporate gig

workshops & classes

downloads

session work

support slot

Screen & Digital Media Income Streams


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similar uniquelow

premium

Distinctiveness

Marke

tPrice

commercials

awards

technical services

workshops & classesroyalties

new film commission

corporate films

Screen & Digital Media Income Streams

Literature Income Streams


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similar uniquelow

premium

Distinctiveness

Marke

tPrice

publication advance

speaker fee

education work

short articles

licensing royalties

new use

copywriting

commission

Literature Income Streams

Performance Income Streams


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similar uniquelow

premium

Distinctiveness

Marke

tPrice

advert / radio fee

performance showcase

indie film

advert / voiceover repeat fees

role play

TIE / workshops

Performance Income Streams

rep season / long run

TV seriescommercial film

event staffing


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asking earning

Types of Income

Income SpectrumDeveloped from NCVOs Sustainable Funding Project


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GrantFunding

Investment

Fees

Sales

Royalties

In KindSupport

Loans

Sponsorship

DonationsCrowd

Funding

Commissions

Employment

asking earning

BankInterest

Types of Income


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low premium

Market Price

Value Spectrum: Price

How much?

Good value / valuable

Budget & Affordability


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low premium

Market Price


Can you present, package, bundle or breakdown your

offer to

create more price points?

increase value?

offer more value for money?


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similar unique

Distinctiveness

Value Spectrum: Distinctiveness

How many?

Demand

Capacity

Availability / Exclusivity

Competition


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similar unique

Distinctiveness

Value Spectrum: Distinctiveness

One-offHigh volume

5Commissions

per year

Product run of5000


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new established

Time in the market

Value Spectrum: Timescale

How long/often?

Frequency

Time to build demand early adoption and/or late majority

Lifespan quick win or long shelf life


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low premium

Market Price$50 $5000



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new established

Time in the market

Value Spectrum: Timescale

How long/often?

Frequency

Time to build demand early adoption and/or late majority

Lifespan quick win or long shelf life


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Where do you fit?

On the general price spectrum for yourmarket & sector?

How does this compare to your production

capacity? How does this compare to the sectors

place on the adoption curve?

How might your place on these variousspectrums change as the companygrows?


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Loss

Profit

Break Even


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Loss

Profit

Break Even


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Part 3 Cashflow Workshop


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Three parts to this today:

Example 1 a commercial contemporary

art gallery

Example 2 a young fashion designer

Your turn the cashflow plan for your

business


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Example 1 - art gallery

A small-ish gallery

With a great reputation and some prize

winning artists

Has been investing in its artists

The investment has been greater than the

sales so they are in debt

How can we get out of debt in two years?


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Where are the problems?

What problems can you see in the profit &

loss sheet?

What are the three things that cause you

greatest concern?

How worried would you be if this was your

business?

Are there any fundamental flaws that you

cant imagine can be fixed?


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Things to consider - costs

Are there core costs that we have to incur just to

be in business so what are our minimum

outgoings?

Are there areas where we can cut cost? If we do that will the customer notice?

Can you negotiate better deals with suppliers?

What difference does cutting cost make overall ..is it getting us out of debt?


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Things to consider - income

What is the mix of high and low value sales?

Which markets are delivering most sales?

If we want to grow sales rapidly what would be

the most profitable way to do it? How much more risky would this be?

Can you increase or decrease prices?

Would there be any negative impact onreputation?


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Lessons to be learnt?

What lessons can you apply to your own

business?

What money traps are you risking falling

into and how does this case study show

you a way to avoid them?

What will you do differently as a result?


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Example 2 - fashion

High quality design

Went solo a couple of years ago

Has launched their own retail outlet

Costs are exceeding income

What would you do to make this aprofitable business?


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Where are the problems?

What problems can you see in the profit &

loss sheet?

What are the three things that cause you

greatest concern?

How worried would you be if this was your

business?

Are there any fundamental flaws that you

cant imagine can be fixed?


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Things to consider - costs

What are the core costs of a fashion business?

What are the types of product

What are the key points in the year when costs are

incurred?

What types of costs do you incur in order to make sales

wholesale and retail

Is it worth having a retail unit?

Can the atelier be run more efficiently Should the directors be paid?

What about the loan?


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Things to consider - income

What is the mix of bespoke, retail and wholesale

Which markets are delivering most sales?

If we want to grow sales rapidly what would be

the most profitable way to do it? How much more risky would this be?

Can you increase or decrease prices?

Would there be any negative impact onreputation?


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Lessons to be learnt

What lessons from this case study can you apply

to your own business?

If youd known this sooner would you have done

anything differently? How will you change your plans as a result of

this exercise?

Can you see the difference between getting to

day to day profit vs. return on investment?


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Goals

Greater familiarity with the ebb and flow of

monies through your business

Sales growth planning

Cost management

Understanding the difference from day to

day profit vs. return on investment

Sheet 1: Working out what


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Sheet 1: Working out what

youve invested so far What money have you spent on the business

so far? On all the R&D

Your time and other peoples (even if no cash has

changed hands) Other in-kind use of space, equipment etc etc

How much more money will you invest beforelaunch?

What do you expect to spend per annum onrunning costs?

Sheet 2: 12 month post launch


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Sheet 2: 12 month, post launch

cashflow Take the future costs those that are one

offs and allocate them in the pre-launchcolumn

There are some blank rows at the bottom so that you

can just add the ones you need You need to work out how you will pay for these as

they affect your cashflow

So, is there any investment/loan/grant/ revenue you

can put in the pre-launch revenue that will coverthese start up costs?

If not how is the business paying for them?


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Sheet 2: (cont.)

Take the annual running costs and to start with

put them in the total column

Now allocate them by month

For things like rent the monthly amounts will be thesame each month

But for things like marketing you may find that there

is an annual cycle or key events

Equally if you are producing goods then youll bemaking bulk orders intermittently


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Sheet 2: (cont)

Now you need to estimate the revenue for the company Do you have an overall goal for the first 12 months? (put this

sum in the total column)

Now allocate it to the months, consider where the peaks andtroughs in sales will be

Will this sum cover the running costs of the business or do youexpect to run at a loss?

If the answer is youll run at a loss can you reduce some ofyour running costs (will you pay the directors from the start forexample?)

How do sales volumes affect production costs and have youplanned to scale production up or down accordingly

How many days to pay are you putting on invoices?


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Sheet 3: overview of 3 years

Now that youve done the first 12 monthsestimate how things will grow/change inyears 2 & 3

Start with the revenue this time and look athow it will grow

Then work through and see how this growthinfluences both direct and indirect costs

more production costs, more staff, biggeroffice, more storage???

Make notes as you go


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Sheet 4: key figures for your b/p

Now that youve done the hard work ofplanning out the cashflow review theresults

Use the headlines from the first threesheets to answer questions about the rateof return your business offers, the breakevent point etc etc

What other key figures do you think youneed?

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