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How to make money with a creative business

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Yet too often, creative workers, whether freelancers or running their design firms, approach the business aspect of their profession with awe, indifference, or both. This occurrence may be because people create something and feel that it is a direct reflection of their personal qualities and are not confident that they are demanding the full value of the product. Other times, creatives' eyes dim when they ponder things like contracts, invoices, and project fees because none of these are the art and as fun as photographing in an African bush or creating a corporate identity from scratch.

But creatives need to remember that they are business people whose specialty is illustrating, graphic design, or any other art form. Since we make our living by selling and not producing our work, art cannot be separated from commerce. Below you can find detailed career tips on how to make income streams for creatives.

Art as a source of life

  • Consider your expenses

Successfully managing the finances of an artist (or any other person) begins with determining the costs of living and working and answering the question - "How much money do you need to live and make the art?"

Monthly costs include apartment, studio rent, utilities, credit card, and student loan payments, as well as food, art supplies, and other additional essentials or activities. This list allows artists to figure out how much money they need to save to fund their basic needs and, at the same time, their practices. It also helps prioritize payments, identify unnecessary costs, and free up more money to spend on materials and studio expenses. 

  • Never work for free

Never work for free

Some people say that the best way to break into the creative industry is by initially working for free to gain experience. However, others vehemently oppose that idea because they believe it harms a creative’s ability to make fair income streams down the road. Giving the art away for free is a serious trap because people will say, “You did it for them for free, why aren’t you doing that for me?” If you bank yourself as someone who works for less than nothing, you will never be able to charge what you’re worth.

  • Create a budget

Budgets help you define everything you need to do with your money. When your money isn't invested, and you're just spending willy-nilly on your day-to-day activities, at the end of the month, you may find that you haven't paid your credit card or your electricity bill. Budgeting is also important for navigating the artist's fluctuating income streams and planning for periods when money isn't coming in. It is recommended to postpone living expenses for the next few months before spending on additional services.

For recurring expenses that don't go away, such as rent, utilities, student loans, and so on, add them up, so you know you need to defer and set them up to make recurring and automatic payments through your bank or credit card. 

 

Conditions of sale

Conditions of sale

Don’t charge less for work that comes easy to you…

When something comes naturally to you, it can seem wrong to charge a large amount of money for it. The more you do something, the easier it becomes, causing you to think about charging less. But don’t discount your skills or experience level when factoring in your rate. Something that takes you a short amount of time might be impossible for your clients to create on their own. Plus, many professionals, from doctors to plumbers, are paid certain going rates, regardless of whether their job was easy or difficult. Similarly, the conditions of sale should include receiving compensation for the contribution, rather than by calculating how simple the job is for you. Then you will have income streams.

…And consider what your client gets from your work and factor that into the rate.

Too often we set our rates for our work based on specific standards, like the price per hour or project. The problem with that approach is that it only takes into account what you put into the project and not what your client gets out of it. If you look at yourself as a creative problem solver and ask yourself, "How much is it worth for your client to make their problem go away?" it will help you create a compelling proposal that’s much more than “here’s a list of what I’ll do and a price”. So if you’re designing a brand logo for an international company that people will see all over the world, make it one of the conditions of sale - take this into account in your assessment, as the job is decidedly worth more to you and your client.

 

Coordination of income streams

Coordination of income streams

  • Pay down your debts

If you don't know how to spend the money from art sales, pay down loans and credit card debt first. The burden of student loans is so toxic that some people ignore it thinking it will go away, but it won’t. 

  • Set goals

Budgeting is made less arduous and more effective by setting goals. A budget is not going to work at all without a set of clearly defined goals because your goals will inspire you to do incredible things that you never thought you were able to accomplish. Once you define your goals, or what you’re trying to save for, you want to put that money away—you want to rein in your spending on stuff that’s not as necessary. Setting career and monetary goals and conditions of sale will help define your budget and funnel money towards the aspects of your life and art career that matter most to you. Have a plan for your money so that when you make it, you’ll have a clear idea of how to spend it in a way that furthers your life and professional goals.

  • Address how changes to the project will affect your fees

Even when you’ve clearly defined the scope of work, clients will sometimes change what they originally asked for; this can lead to them expecting you to do additional work for no extra money, a situation where conditions of sale and a clear written agreement can really help.  State in your contract that changes to the scope of work will lead to additional fees, the process for doing so, and also how many rounds of revisions, if any, are included in your base fee. You can even specify what you will charge for additional rounds. If you think there’s any room for doubt in your client’s mind about what constitutes a “round” or a “revision,” spell out what those terms mean to you. 

  • Start saving—for both the near future and the far

For artists, saving is especially important given the inevitable slow periods in an artist's life between work, art sales, or exhibitions. Many artists think, “I have no money. There is no point in even trying to start saving”. But even small amounts saved regularly, as a habit, can be very beneficial over time. In particular, it is recommended that you open a Roth IRA (on Investopedia, you can find detailed information about what it is) or a highly diversified retirement account, into which your money will be invested - even as little as $ 10 - so that income streams grows over time.

  • Pay yourself the equivalent of a salary, so you have year-round income streams

For those whose earnings ebbs and flows throughout the year, it can be impossible to count on regular income streams. So once you have built up a steady roster of existing clients, pay yourself a monthly “salary” that is one-twelfth of your annual earnings. A predictable pay structure allows you to work and live with the predictability and structure of a salaried employee.

  • Sweat the small, nitpicky stuff related to money

Sweat the small, nitpicky stuff related to money

Contracts, invoices, tax forms, expenses reports, budgets – no creative truly likes pouring through these kinds of documents. But think of them as the glue that holds your business together. As such, you’ve got to both continuously review and properly store them. 

Of all the meetings you take, the recurring one focused on keeping your finances tidy is arguably the most important. At least once a month, sit down and review your finances so you’re aware of what’s coming in and going out. And, if you’re like me and you need assistance in the numbers / legal departments, you can always hire an accountant or lawyer to do it. That way, you both protect your financial and operations flank while freeing up your time for your creative pursuits.

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