The Business of Being Creative

I was having a fascinating conversation with Maria Bayer last week. If you are in the wedding business and do not know Maria, you should. Her sales techniques are terrific as they are based on selling your intrinsic value as both an artist and creative business. Fantastic stuff.

We were talking about The BBC Collective and the types of creative businesses I most enjoy working with. My answer: if we are on a scale of one to ten, one being a start-up and ten being the artist at the very top of his/her game, my focus is on six to ten. I work with creative businesses that have established themselves (usually at least four years old), been through at least one boom-bust cycle, made it through and have a decent sense of themselves and what the future might hold. Sixes are at the beginning of the spectrum, nines and tens at the height.

Maria did not let me off that easy. She noted that a six is not a nine so what is the difference in what you do for the six as opposed to the nine. In both cases, it is getting creative businesses to honor who they actually are.

For the six, it is letting go of the training wheels that got them to where they are but are now ballast to a balloon yearning to fly. A quick example would be a designer (Event or Interior, either is fine here) that is simultaneously doing projects at $30 and $75. $30 is where they got their start and what they still consider their bread and butter. $75, though, is their jam. At $75, there is enough there to really dig in and shine with the work that they do. $75 clients love them and appreciate what it is the designer’s work offers them. The $30 clients are more of a means to an end because the budget is just not there.

Of course, telling the six level designer to drop the $30 client is the easy part. The hard part is the resistance and working diligently to create a statement as to why ONLY doing $75 business will actually increase everything – sales, profits, reputation. That is the thing about trap doors, when it gets tough or scary, knowing the trap door is there, even if you do not use it, stops you from moving into and through the tough and scary part we all must face on the path to self-awareness. Self-awareness as an artist, creative professional and business is inhabiting only the skin that you have earned the right to live in.

Nines, on the other hand, most times lose the idea that the right amount matters. It is one thing to make half of what you are supposed to make when that half does not cover the rent, it is a whole other thing when it does. This is cancer and it is just about the only thing that can kill a nine, and, just like cancer, it is far too common than any of us need to tolerate.

Another quick example, if a designer (again, Interior or Event, either work) needs to make between 25% and 38% on a project and that project is $10 million, then the right amount the designer is to be paid is between $2.5 million and $3.8 million. To be clear, the right amount is what the designer needs to charge based on her business, the industry’s expectation and, most important, her client’s expectation of what someone of her caliber (talent, experience, breadth of business) should charge.

Truly, numbers are numbers to me. They do not have emotions, relativity, or context. They are what they are. The air your creative business breathes is not free and all things need to be considered. Money just happens to be the most expedient measurement, although not the only one. So when the nine creative business owner comes to me and says that if she does not take the job for $2 million she will lose it, my response is: “you never had it to begin with and, if you did, you should not want it. If you take it, you will be on the road to a place of compromise and confusion you will regret and likely never be able to come back from without extraordinary pain.” But it is $2 million dollars! Literally, I do not care, $2 million is the wrong number. The designer’s fee needs to be at least $2.5 million or she has lost before she ever starts.

This is the slippery slope for all artists. If nines do not act as they should, fall in love with $2 million as if it is enough, we all suffer. False comparisons will abound and the industry will be limited because those who must be beacons willingly choose to dim their own light to accept good enough. Yes, I am all about making sure that does not happen to nine creative businesses and undoing it if it does.

The distillation is this: once you have an inkling of who you are as an artist and a creative business, my work is to help you shine the light ever brighter, both today and towards tomorrow. Even more, my work is to help you ignore yesterday as it no longer matters if you choose to shine differently and brighter today.

It is August. Hopefully, time for a breather before a busy Fall is upon you and your creative business. While you are moving a little slower, perhaps it is a great time to reevaluate, perhaps even redefine your foundation as an artist and creative business. What follows is a discussion of the pillars of the foundation under every creative business: The Outer Boundary, The Design Statement and The Value Timeline. It might seem like high-level work that does not really impact your day-to-day reality. As you will find out in my next post, a solid foundation defines your reality and that of your art and creative business.

THE OUTER BOUNDARY – The bedrock of a successful creative business is a firm understanding of the outer boundary. The outer boundary is how much to do you want to work and how much do you want to get paid to do that work. You can argue with me all day long about starting from the bottom up – i.e., if I charge $2 how much business will come my way and if enough comes I will be ok. However, the essence of creating art that matters is doing only your best, not your best under the circumstances. If circumstance dictates everything (i.e., how many clients may or may not show up given a price), you really have nothing. Instead, outer boundary first. How much do you want to work and how much do you need to make to do the work. Thirteen projects and generate $500,000 (wrong assumption for sure, but assume $100,000 in expenses so you take home $400,000). Then your price has to be $40,000 give or take. I do not care (here anyway) how you get your $40,000 – fees, commissions, etc. – you just need to be able to get there, which, of course, leads to:

DOES IT PASS THE SMELL TEST? If you can appreciate that you need to take home $400,000/yr. and only want to work thirteen times per year, the question is NOT whether THE market can support that level of work, the question is whether YOUR market can support that level of work. For interior designers, if 35% is a good goal and your average project is $120,000 or $60/sf on a 2,000 sf house, you are right there. Not so much if the price is $30/sf or $120/sf. Goldilocks – too expensive for the $120/sf project, too cheap for the $30/sf one. If you pass the smell test for your market, move on; if not, then reconsider the outer boundary. No firm outer boundary, no creative business. And I really do not care whether you have been in business for a hundred years or a day, you go nowhere without a firm outer boundary and so you need to do the work regardless of what has (or has not) happened thus far in your creative business. Also, the outer boundary is not static, it is dynamic. It moves. You should reevaluate the outer boundary at least annually if not semi-annually. February will be here soon enough.

THE DESIGN STATEMENT Presuming we now have alignment with the type of art you want your creative business to create (i.e., you know your cost of production and level of production), we turn to filling everything in.

The first practical exercise is to write a design statement. Design is a statement of your art – I create this for you. This statement applies to ALL creative businesses. Whether you decide to share it with clients, potential or actual, is of no consequence. You need to write it down as it is the basis for what is valuable about your creative business. If you cannot fully and specifically articulate your art – why and for who far more than how and when, why should a client believe in you, your art and your creative business – why should your client hire you. You are not a convenience you are an artist. To be an artist, you have to consider yourself expert at what you do and therefore have an opinion about how you go about creating. Note, your design statement is NOT a brand statement. It is how you go about thinking about creating art for a client. More “we consider the ceiling first” and less “we love modern ethno-fusion.”

THE VALUE TIMELINE At one of the earlier Engage! conferences, I happened on a conversation between Marcy Blum and Tara Guerard. Both Marcy and Tara, of course, have had great success at what they do. They were arguing though about whether the band plays during dinner. Marcy thought it absolutely necessary otherwise everyone would get bored. Tara, on the other hand, thought the exact opposite – dinner was dinner and then we move on to entertainment. Ambient music only during mealtime.

It is irrelevant your personal opinion on the matter. What is relevant is that if you were building the relationship with your client, how and when conversations go would most certainly be different for both Tara and Marcy. With your design statement in hand, you then must create a value timeline. How do you go from the bottom of the mountain to the top and what is each stage worth to you and your creative business? Take everything you now know about who you are as an artist and creative business owner, who you look like (or want to look like) and then assign hard percentages to each phase of your journey with a client. Begin with commitment to each other and end with the end of the project.

What is your design worth (and, again, ALL creative businesses are designers)? If there are stages to design, what is each worth? Do they grow in importance? When does design end and production begin? Are there phases to production? What is each worth? In a perfect world, you would simply multiply the percentage times your fee (here $40,000) and get paid at each stage. Of course, this might be impractical given too many value points (too few is not an issue). Then the exercise is logical groupings so that a client is not writing your creative business a hundred payments along the way.

Notice I said logical groupings. That does not mean half and half or thirds – that is random. You have to be able to defend the value point groupings as making sense to you and your creative business’ process. Erase any idea of a “right” or “accepted” practice and, instead, substitute what makes the most sense for your creative business process. Why? Your process is your own and payment (both in terms of money and decisions) is the only way your creative business can move things forward. To round out the example, our designer is fee based and charges $10,000 to engage, $20,000 for design and $10,000 for installation.

FAILSAFES – Ok, now we have the outer boundary, a design statement, a value timeline and possibly value groupings. The last piece of the foundation is what happens when a client (and/or employees, colleagues or vendors) challenges any piece of the foundation. In some instances, it is full stop. You do modern, they want classic. You work at $60/sf, they want $200/sf. In other circumstances, it might just be a course correction. They want to talk about hard shell (paint, flooring, fixtures) first and you are all about décor first. Course corrections cost money as you and your creative business have to endure pain that your creative business did not cause. The questions are how much pain is caused, how much pain are you willing to endure and what is the price for having to endure the pain? Finally, what happens if the pain continues and becomes full stop – translation: when does your best become impossible? Putting in failsafes brings a sense of flexibility and rigidity where appropriate, but in all cases reaffirms the power of the foundation.

I want to stress to you that hubris hurts A LOT. All pipes get gunk in them, all boats need barnacles cleaned off. Putting more water in an impeded pipe makes the pipe burst as much as it might lead to more water coming out. My guess is that you have never really honored an outer boundary because, hey, if that juicy project appears (or any project when you are worried if there will ever be one), you are off to the races. Probably, none of you have a design statement and, if you do, it is static with lots of words that really express no opinion as to why and how you create art. If you have done a value timeline, it is probably not based on the design statement and, therefore, likely an exercise rooted in nothing related to your actual creative business.

You defend pricing and failsafes with your design statement in mind, not the other way around. No matter who you are, have beginner’s mind and do the foundational work described here. More than anything, you will be surprised by where you will want to go once you have done the work. Of this I have no doubt: it will be much much farther than you have already gone. Happy Summer.

As a rule, I am underwhelmed by the presentation process most creative businesses undertake.

The willingness to ask a client to invest sometimes hundreds of thousands of dollars on a Pinterest-type mood board and simple samples astounds me. Shame on any creative business for letting clients believe that this is, in any way, acceptable. We all need to raise the bar here if we are to move the business forward.

Mailing in a presentation sucks. We all need to do better and be better. Imagine, for a second, you wanted a custom home built and the architect showed you a mood board and some rough floor plans for you to decide if this is the home you wanted. Oh, and had $30,000 of your money before they did this “work.” You see my point. And do not get me going on all things that would not be considered “design” – catering, entertainment, custom furniture, photography, textiles, florals, etc. They have to present their vision for their art just like any other creative business and they, as a rule, do not. Awful.

If you consider yourself an artist, have a creative business and get paid to create for a living, you need to present.  Period. Just because you do not call yourself a “designer” does not mean you are not one. The responsibility is yours.

Presentation is the very moment any creative business translates senses. Whether you do it as a series of building statements (like a Shopper interior designer) or with a single grand statement (like the Power Presenter interior designer) makes no difference. Presentation has to be appropriate to the moment, but still has to honor the moment of translation. Think about it – up until presentation, you might have been listening, maybe visiting, even experiencing. With your presentation, you and your creative business take that information and say to your client, “this is my intention, here is what I want to create for you in the sense(s) I will do it in.”

Business. Presentation is a value point – meaning something has to happen to move the process forward. That something is that the client says yes or no and/or pays you money. There is no going back once the presentation is done. What done looks like is up to you. I tend to be in the power presenter category and believe in very little choice. If you are a power presenter, in fact, I do not believe in choice at all. Here is a great post about why you should only show one option. That said, if you are a shopper, certainly there has to be more than one option, but not twenty. Your opinion matters. In fact, it is everything. You are not a diner, so do not act like you do not care what the client chooses.

Effective presentation then requires three things:

An Understanding Of The Gravitas Of What Is Being Asked Too often I see or hear about presentations as if they were an afterthought, an inconvenience or an apology along the way towards completion. Designers literally do not want to face rejection so they offer so many back doors to a presentation (“well, if you do like this, we could do this” and so on and so on) as to make the presentation meaningless. Any great presentation says, “This is what I want to create for you. Period.” Will there be tweaks? Sure, but never redesign. If you get it wrong, you deserve to lose and be done. Only the most forgiving client will (or should) allow you a second shot. But, make no mistake, there is always a price for getting it wrong. After all, you are paid to get it right. If you can appreciate the seriousness of the moment, the importance of taking a stand and can communicate that there is no “I changed my mind” after a client says yes, your whole approach to presentation will change.

Presentation Is A Separate Investment — Here is an example from the wedding business, but it can be applied to just about any creative business trying to sell a product in the end:

A florist has an awesome opportunity to do a 200 person wedding for$100,000. She gets a $3,000 deposit (which goes against the cost of the flowers) then proceeds to put on an over-the-top, incredible presentation: she has it catered with champagne and canapes, there are renderings, tablescapes, even a Cellist. The clients love love love everything but then Dad steps in and starts to question every line in the florist’s proposal. Why $500 for a centerpiece? Do we really need 10 people on site? The florist is stunned. They LOVED everything, so how come Dad is going so nuts? They have the money and I came pretty close to their budget. Can’t he see how much time and energy AND money I put into the presentation? How much I actually care?

Then, of course, the $100,000 job turns into a $65,000 job, still a good job

just not a great one. There is a bitter taste in the florist’s mouth and she

vows to never put herself out like that again.

All of you might relate to the florist with your presentations and think what a jerk Dad was. And maybe he is, BUT BUT BUT not in this case.

Here is the deal. The air in your creative business is not free and clients know that. To be alive, you need to be paid for your effort — whether that is press, money, effective decision making, does not matter, you need to be paid. SO when the florist did her amazing presentation but did not charge for it, the money, the return, has to come from somewhere. Dad knows this. Since the only place it can come from is the cost of the flowers (this is the only money the florist is charging), the more ornate the presentation, the more Dad will question the prices BECAUSE the money has to come from somewhere. So he starts to think of the $500 centerpiece — $100 is to pay for the presentation, $400 is for the flowers. I don’t want to pay for the presentation and I think a fair price for flowers given what else I can see online is $350. And so the negotiation begins. Except Dad is better at negotiating than the florist (it is what he does in some capacity every day) and the florist has no mechanism to separate out the cost of presentation from the cost of flowers so no way to stop this negotiation conversation from going down the rabbit hole.

The solution — charge for presentation or, if you are unwilling to do that, be specific about what part of the price of flowers is for the presentation. Or the florist can keep thinking her client’s Dad is a jerk. The cost to create, the cost to present that creation and the cost to produce the creation are three separate items. Mix them at your own risk.

Overinvest In Presentation – How many of you own a 3D printer? How many of you use it for presentations? None of you I suspect. Presentations today are based in an analog era. Today’s technology allows you to move into scale and virtual relationship effectively and far better than anything that used to exist before in analog. If you can appreciate one and two above, you will overinvest in what is available to you to present your ideas – whether you are a power presenter or a shopper.

Of course, there is value in the physical item, a rendering does not smell or feel wonderful (yet). However, that day is coming soon with virtual reality. The point is to see presentation as an opportunity to build your story; to establish and earn your trust with clients and the value it alone can deliver.

The shift is complete. You will all do a great job in the end. The images and testimonials will be ridiculous. Who cares? When the project is finished, there is no more investment to be garnered from a client. Counterpose the end with presentation. Effective presentation creates unyielding anticipation and enthusiasm. It makes success of a project that much more inevitable and the journey that much more pleasant. So make the time to present well and overinvest.

As I said during my conversation with The BBC Collective this week and on Facebook, there is a college student (or thousands of students) who is/are currently a social media maven (like every other college student), totally into virtual reality and 3D printing For fun, she creates amazing immersive experiences for her friends. Yes, she is the designer of the future and her ability to present her ideas is already insane. What do you think it will be in seven years when she is ready to challenge your creative business? You can rely on your reputation and the ability to get away with little or no effective presentation for only so long. She is coming for you whether you like it or not. So here is a thought: invest in presentation. Be intolerant of ANY creative business who does not ask clients to pay for the creativity alone. Or you can get run over. Your choice.

As a consultant and overall student of creative business, it is my job to understand and develop archetypes for the types of creative businesses I work with. I have been incredibly fortunate to have consulted with a wide variety of creative businesses from many different industries, luxury event and interior design in particular. So I sit in the most fortuitous position of knowing an awful lot about how each industry and the players in the industry work.

What I have learned and noticed is the overwhelming convergence that is occurring (and accelerating) for interior and event design.

Interior and event designers (planners too) face similar issues and, while I do not think there will ever be complete convergence, the similarities are not going away anytime soon.

Pre-digital, choice was limited, not only as to who was in the industry but what resources were available to the industry. Of course, the information age has changed all of that. Today, clients can see what every designer does in a nanosecond and what elements they would like to use for the project even faster. The access and diversity of product available to designers is truly, at best, overwhelming, and, at worst, incomprehensible – sometimes for designers and clients alike. When there are infinite choices, choosing one is fraught with complexity.

How to manage the abundance and complexity of choice is the purpose of event and interior designers as much as it is the power of design and envisioning what is to be created.

For the business end of things then, convergence places a growing premium on understanding the archetypes of each industry. In addition to convergence, it is more and more likely that a client throwing a luxury, power luxury and certainly ultra luxury wedding or other social event is also a client of a high-end interior designer that operates similarly to the event designer.

This is why the discussion last week and this week with The BBC Collective members was and will be so important. Knowing the language of each industry can only help members in their respective industries. This post highlights the work we have done and will do together in The BBC Collective on the topic. If you want to dig in deeper, please become a member and join the conversation.

Here will be what I believe are the three primary archetypes for interior designers. In a later post, I will do the same for the event industry.

A few note before I do though. My focus is on residential interior design, where the interior designer is the star of the show (as is the event designer and/or planner for a social event). No question, there is some overlap to commercial work (hotels, restaurants, country clubs, offices, etc.), but commercial work is another cat. Just like corporate work for events, a) most often commercial interior designers have an industry savvy player on the other side, and b) the interior design work is not the star of the show (no matter how beautiful the restaurant, if the food and service suck, it will fail). So we will save the commercial conversation for another day for both interior and event design.

No doubt, those not in the interior design space will learn the most here. However, for interior designers, my hope is that you will see yourself and your creative business in one of these archetypes. Of course, we are all more than one thing, but we are not bunnies. We lead with one foot and then the other will follow. You and your creative business can be more than one archetype, just not at the same time. Learning how to own your archetype and correct the disconnects that might exist can only serve you and your interior design business. So please do not dismiss the discussion with, “Well, my business is not like any of these, therefore there is nothing to learn here.” Instead, look for where your place in the reflection and see if you can make the reflection stronger.

The three primary archetypes for residential interior designers are: The Shopper, A Power Presenter, and The Project Manager. What I will lay out is what each of these archetypes represent and the business models that are often times associated with each (or at least should be). Each archetype has its own positives and negatives. No judgment as to which is better or worse, only an idea that there is alignment with how the creative business operates relative to the archetype.

The Shopper – The Shopper is an interior designer that heavily invests in going with her client to the various vendors that will help her complete her client’s space. The Shopper does not use much by way of presentation – maybe a few renderings/floor plan and a mood board or two – because the real work is hand-holding a client through the entire process and “collaborating” with the client to have the space evolve until they are done. Typically, though, The Shopper has an idea to the order of things. Take living spaces for instance, The Shopper might start with window/wall treatments, then move on to the floor and then to bigger pieces (sofa, chairs, coffee tables) and then leave lighting for last. Even though it might look random to a client, often The Shopper has a vision of how she likes to build a space and sets the timetable and order for doing so. Rinse and repeat until the entire project is finished.

The Shopper’s Model – Shopper’s typically charge an hourly fee to cover the cost of shopping and managing the procurement (and storage) of each item. Sometimes this work is covered in a flat fee (whether calculated a per square foot price or just a random number – at the end of the day it is just a number). Apart from the hourly/flat fee, The Shopper typically gets at percentage of items acquired by the client for the project. The percentage can be captured in a retail/wholesale spread meaning the client pays retail for the item and buys directly from the interior designer. The interior designer makes the difference between what she can buy the item for and retail. The spread averages around 25-30%. Or the client buys the item at the interior designer’s price (whether directly from the vendor or the designer) and pays a commission to the interior designer on top of the “wholesale” or “net” price typically at the 30-35% range. Quick example, an interior designer buys a lamp for $1,000 at her price, retail would be $1,300. Client pays either $1,300 and the interior designer makes $300 profit or the client pays $1,000 plus 30% commission or $1,300, same $300. In a perfect world for The Shopper, there is roughly a 50-50 split between fees and commissions as time investment and product acquisition are roughly equal.

The Power Presenter – Unlike The Shopper, The Power Presenter does not “collaborate” with clients at all. There are “get to know you” meetings, maybe even a few preliminary floor plans and boards, but nothing compared to the presentation. Most Power Presenters will present the entire project at once, have every item preselected (and priced) and will usually only present one (maybe two, never three) options for a client. The presentation of a Power Presenter is largely a take it or leave it exercise. If you love it, you buy it, if you do not, see ya. Some Power Presenters may break the presentation into two or three meetings depending on the size and scope of a project, but never more than three. There might be tweaks to a design but they will not last long – if the base design is not accepted by the client, the relationship ends fairly quickly.

The Power Presenter Model – Power Presenter’s do have modest fees to get a presentation ready and to invest their time in design, but, on a relative basis, not close to The Shopper. The Power Presenter is betting the farm on whether he can nail the design through presentation. Typically, a Power Presenter will charge commissions of 35-42% on the Power Presenter’s cost of items. The vast majority of Power Presenters use net commissions as opposed to the retail/wholesale spread as it is just cleaner given the importance of the sale of product to a Power Presenter. That said, a lot of Power Presenters either own their own store and/or have their own line of product that they are allowed to retail. In this case, a Power Presenter would make the wholesale/retail spread (which they might discount as they would to any other designer) AND charge a commission on top of the price. Quick example: Power Presenter has a store. He chooses a lamp for $1,000 (designer price) for one of his projects. He bought the lamp for $500. He makes $500 on the sale of the lamp, plus $350 in commissions (presume rate of 35%) for a total profit/fee of $850 on a $1,000 item. The ideal for a Power Presenter is to make roughly 75-80% of their money from the sale/acquisition of products for a project. Power Presenters are relying heavily that they will be able to blow their clients away with their vision and what their space will look like after the Power Presenter is finished.

The Project Manager – Even though The Shopper and a Power Presenter can be involved in extensive and true long-term (read: 18 months+), it is not their game. Both The Shopper and a Power Presenter like to be finished in four to six months. There might be some minor renovation with a project, but nothing like ground-up construction or extensive remodel (that would like involve architects, contractors and tons of permits). The Project Manager, on the other hand, lives for these projects. First, there is working with the architect to create flow and layout of the space. The architect may create the structure, but the interior designer creates the environment. Then there comes hard goods, fixtures and appliances. Soft goods come last and are driven by the first two. Yes, The Shopper and a Power Presenter can jump in at the end (or the middle), however The Project Manager’s brilliance is knowing the interplay of all three stages at every moment of the work. Like being able to see the wave at the shore when the pebble is dropped in the middle of the lake.

The Project Manager Model – Because projects are so extensive, the Project Manager tends to use flat fees to generate design, hourly to manage the process and percentage commission on soft goods. Since there are other players (i.e., architects and/or contractors) typically taking a piece of items other than soft goods (i.e., construction cost, cost of hard goods and fixtures/appliances), most Project Manager’s are not able receive commissions on these items.   The ideal for the Project Manager, as you would (or should?) expect is to have fees/hourly represent roughly 70-75% of compensation for a project. If they were only to rely on commissions on soft goods, it just would not be enough given the length of the project. Unlike The Shopper, however, a Project Manager cannot just rely on hourly fees. The lulls of the project are significant and yet resources need to be dedicated to the project because they will be needed later. Likewise, there is not enough of a lull to allow those resources to be used elsewhere. The interplay between flat fees and hourly are critical for the Project Manager. Most often, there is a base fee with a trigger for overages based on hours over a certain amount.

Of course, there are mix and match, custom approaches. For instance, a Power Presenter may also have in the presentation items to be acquired but not yet found (i.e., one-of-a-kind antiques); in which case, the Power Presenter would then become The Shopper after presentation. However, the key point is to understand each model and its objectives relative to the archetype. Unlike events, the single biggest risk to interior designers is time. Compensation stays static (or relatively so) while time expands, sometimes exponentially. If you thought making a $100,000 was appropriate if the project was five months, then it completely sucks if the project pushes to ten months through no fault of your own and your compensation only goes up $30,000 (it needed to go up $100,000). The key for interior designers is to first figure out what they need per month based on the project and then use their model to generate the requisite revenue, not the other way around.

My prayer is that the above gives all creative professionals, not just interior and event designers, a framework to relate to. From here, we can move things forward by leaps, not steps.