A Guide to the Business of Creativity

Description
More than just a great read, T-Shirts and Suits is a valuable tool for anyone embarking on, or surviving, business in the creative sector.

T-ShirtsandSuits
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AGuidetotheBusinessofCreativity
DavidParrish
ForewordbyShaunWoodwardMP
MinisterforCreativeIndustriesandTourism
“Owning this guide
is equivalent to
having
a
professional adviser on
call.”
Anne
M
cInerney. UK
Trade
and
Investm
ent.
“M
ore
than
just a
great read, T-Shirts and
Suits is a
valuable
tool for
anyone
em
barking on, or surviving, business in
the
creative
sector.”
Diane
Earles. Chartered
Institute
of M
arketing.
“A very useful and stimulating book,
and a much-needed companion
for would-be entrepreneurs in the
creative industries.”
Dag Kjelsaas Hotvedt.
Akerselva Innovasjon, Norway.
“T-Shirts and Suits demystifies the ins and outs of building a business in the creative industries by providing a practical guide
for creative entrepreneurs that uses case studies to illustrate best practice.”
Alexander Schischlik. UNESCO.
T-ShirtsandS
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beyond!Youcandipinandoutanditreadslikeacreativemind.”
PatriciavandenAkker.CulturalIndustriesDevelopmentAgency.
“W
e
both
read
this over the
sam
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weekend, which
you
can’t say for m
any
m
anagem
ent books, and
we
found
it both
inspirational and
practically useful –
particularly essential when
working in
creativity when
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A
Sense
of Place.
Successful creative enterprises integrate creativity and business.
T-Shirts and Suits offers an approach which brings together both
creative passion and business best practice.
Written in an engaging and jargon-free style, the book offers inspiration and
appropriate advice for all those involved in running or setting up a creative business.
Marketing, intellectual property, finance, competition, leadership
– and more – are included in this guide.
Examples of best practice are illustrated in eleven ‘Ideas in Action’ sections
featuring a range of creative businesses and organisations.
David Parrish specialises in advising and training creative entrepreneurs
using his own experience and international best practice.
www.t-shirtsandsuits.com
“David’s book is great! It’s accessible and provides informa
can be dipped into as and when it’s needed by nascent entrep
Lorna Collins. National Council for Graduate Entreprene
T-Shirts and Suits
A Guide to the Business of Creativity
David Parrish
tion that
preneurs.”
urship.
Published by Merseyside ACME 
303 Vanilla Factory, Fleet Street, Liverpool, L1 4AR. England 
www.merseysideacme.com 
First published in paperback 2005 
Reprinted 2006 
This electronic book published 2007 
Copyright © 2005-2007 David Parrish. 
The right of David Parrish to be identified as the author of this work has been  
asserted by him in accordance with the Copyright, Designs and Patents Act 1988. 
Some rights reserved. This work is licensed under the Creative Commons ‘Attribution- 
NonCommercial-NoDerivatives 2.0 UK: England & Wales’ Licence. You are free to copy, 
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Any of these conditions can be waived if you get written permission from the copyright holder,  
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Your fair use and other rights are in no way affected by the above. 
This is a human-readable summary of the Legal Code (the full licence). 
To view a copy of this licence, visit http://creativecommons.org/licenses/by-nc-nd/2.0/uk/ 
Disclaimer. Although every effort has been made to ensure the accuracy of the information  
provided in this book at the date of publication, readers are advised to check that the information 
supplied has not changed since going to press. The information contained in this book is of a  
general nature and the author and publisher cannot accept liability for its use in conjunction with  
a commercial or other decision nor for errors or omissions. The information contained herein does  
not constitute professional advice. Readers are advised to consult their own professional advisor. 
The views expressed in this publication are the author’s own and may not necessarily reflect those  
of Merseyside ACME. 
ISBN 978-0-9538254-5-5 
A CIP Catalogue record for this book is available from the British Library. 
This book is also available in paperback, priced £15.00 (UK). ISBN 978-0-9538254-4-8 
T-Shirts and Suits
®
and the T-Shirts and Suits logo are Registered Trade Marks. 
www.t-shirtsandsuits.com 
Design by Mike’s Studio, Liverpool. 
E-book produced in interactive PDF format by Smiling Wolf, Liverpool. 
Contents
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1. Creativity andBusiness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. KnowYourself. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3. Keeping aLookout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4. TheMagic ofMarketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5. Dealing withCompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6. Protecting yourCreativity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7. Counting yourMoney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8. KeepingGoodCompany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9. Leadership andManagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10. BusinessFeasibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11. YourRoute toSuccess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Appendix1.TheCreativeIndustries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Appendix2.MerseysideACME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Acknowledgements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
FurtherInformation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
IdeasinAction
SharonMutch. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PepperedSprout/PlasticRhino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
OnlineOriginals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
NewMind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ESPMultimedia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Medication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
JABDesign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
RedProductionCompany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
TheTeam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
MandoGroup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
TheWindowsProject . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
ForewordbyShaunWoodwardMP
MinisterforCreativeIndustriesandTourism
TheCreativeIndustriesarehugelyimportantto
theUK’seconomyandtheyareonlygoingto
becomemoreimportantinthefuture.
IfthatfutureisgoingtobebrightforourCreative
Industries,weneedoursmallandmediumsized
businessestohavesoundbusinessskillsanda
strongentrepreneurialbase.That’sanessential
driverofgrowthandprosperityinamoderneconomy.
Butatthismomentintime,theaveragelifespan
ofanSMEbusinessintheUKisjust24months.
It’satthatpointthatapoorlyconceivedbusiness
strategybeginstoshowthecracks.
Howcanwestopthathappening?Howcanwe
prolongthelifeexpectancyofacreativebusiness
andturnitintothesuccessitsetsouttobe?
ThisissomethingthattheGovernmentisexploring
throughitsCreativeEconomyProgramme,which
welaunchedattheendof2005.
Wehaveestablishedworkinggroupsforeachof
thekeythemesoftheprogramme,oneofwhich
isbusinesssupportandaccesstofinance.
Creativityandbusinessskillsdon’talwaysgo
handinhand–butbothareneededtosucceed
inthe21stcentury.Therearetwoschoolsof
thought:thatthereareleftsidedbrainsandright
sidedbrainsandneverthetwainshallmeet;or,
thatthoseworkinginthecreativeandcultural
fieldsjustdon’tdobusinessbecausethey’ve
neverhadthetrainingandsupporttodoso.
Whatthisdilemmademonstratesisthatthere
isamanagementskillsgapandweneedto
addressthis.
The‘T-ShirtsandSuits’approachtomanagement
bringstogethercreativethinkingandbusiness
skills.Asapublication,T-ShirtsandSuitsprovides
examplesofhowcreativeandbusinessbrains
canmergetogivebirthto–andsustain–
successfulenterprises.Thebookillustrateshow
thebestbusinessideasandconceptscanbe
usedinthecontextofcreativeenterprises.
DavidParrishhasusedhisknowledgeand
experiencetoarticulateandillustrateessential
businessprinciplesinawaywhichisappealing
tocreativeentrepreneurs.Assuch,T-Shirtsand
Suitsmakesanimportantcontributiontothe
managementskillsofcreativeentrepreneursand
consequentlytothesuccessoftheirenterprises.
IwouldliketocongratulateDavid–and
MerseysideACME
1
–forbringingthisbusiness
guidetothecreativeindustriesatlargeandto
theindividualbusinessesthatwillnodoubt
benefitfromreadingit.
ShaunWoodwardMP
4
Introduction
Thisbookisintendedtobebothinspiringand
practical,tooffersomegreatideasforbuilding
creativebusinesses,yetatthesametimewarn
thatit’snoteasy.Itisforstart-upsandestablished
enterprises,largeandsmall.Itaimstobereadable
asawholeandalsousefultoreferbackto,section
bysection.Takefromthebookwhat’susefulto
youasandwhenitsuitsyouandleavetherest
forotherpeopleorforanotherday.
MostofwhatIhavewritteninthefollowingpages
Ihavelearnedfrommyownmistakes.Mybest
qualificationsarenotmyacademicandprofessional
onesbutthosegainedbyhavingbeenthere,done
it,gotitwrongandthensometimesgotitright.
Ihavebeeninvolvedinrunningworkers’
co-operatives,socialenterprisesandbusinesses
inthecreativesectorsincewellbeforetheterm
‘creativeindustries’wasinvented.I’vedealtwith
alltheissuesinthisbookinonewayoranother
andIamstilllearning.NowadaysIwearasuitas
wellasaT-shirt.
Myapproachtoconsultancyandtrainingisnotto
lecturebuttofacilitate–tooffersomethoughts
andexperiencetostimulatenewideasand
empowerothers–thenhelppeopletofindthe
individualsolutionsthatsuittheirenterprise.
ItisinthesamespiritthatIhavewrittenthisbook.
Asyoureadthisguide,bearinmindthatnothing
initisabsolute.Eachideaneedstobeadapted
toyourowncircumstancesandethos;eachis
offeredasastartingpointratherthanaconclusion.
Ifyoudisagreewithsomeofit,that’sfine.Ifit
promptsyoutofindamoreeffectivesolution,
that’sevenbetter.Thepurposeofthisbookis
nottotellyouhowtorunyourbusinessbutsimply
toprovidesomeideasandsupport.
Myinspirationforthisbookcomesfromthe
hundredsofpeopleIhaveworkedwithandadvised
intheCreativeIndustriesovertheyears.
TheCreativeIndustriesturncreativetalentinto
incomestreamsfortheownersoftheintellectual
propertythatthistalentcreates.Britainisnowa
leaderintheCreativeIndustriesandthat’swhy
theBritishGovernmentissupportingthisgrowing
economy.Britainhasalottooffertherestofthe
worldandtheBritishCouncilispromotingthe
ideasofthecreativeindustriesworld-wide.
UNESCOisalsosupportingtheCulturalIndustries
inthedevelopingworld.
It’sbigbusinesswhichneedsbothT-shirts
andsuits.(FormoreinformationontheCreative
IndustriesseeAppendix1.)
Someofmymostrecentworkhasbeenwiththe
CreativeAdvantage
2
projectonMerseysidewhich
supportsawiderangeofcreativeenterprises,
bothestablishedandnew.Thisbookbuildsonthe
successofthatwork.Severalofthepointsmade
inthisguideareillustratedbyexamplesof
Merseysidebusinesses,butthethemesare
universalandIhavealsodrawnonmyworkwith
CIDS,
3
CIDA
4
andotherorganisationsaswellas
myinternationalexperienceofconsultancyand
trainingincountriesasdiverseasChina,South
AfricaandIndia.
Iwouldliketohearfromyouwithyourcomments
onthisbook,otherexamplesofbestpractice,
andadditionalideasthatIcansharethroughmy
consultancyassignments,trainingworkshopsand
supportprojectswithothercreativeentrepreneurs.
DavidParrish,November2005.
[email protected]
5
1
Creativity and Business
— This first chapter challenges the apparent contradiction between
Creativity and Business and suggests how they can be combined – creatively.
— It asks fundamental questions about why you are in a creative business
or plan to be.
— It also discusses different approaches to business and the importance
of being clear about your values and goals.
6
CreativityversusBusiness?
Somepeopleregardcreativityandbusinessasbeinglikeoil
andwater–theyjustdon’tmix.Theythinkit’saquestionof
choosingbetweencreativityorbusiness.Idisagree.
AtaconferenceIattendedonthethemeofcreativity,some
peopleunderstoodcreativitytomean‘art’,donebyartistsof
one kind or another – all of them wearing T-shirts. These
artistsrealisedthatsometimes(unfortunately)theyhadto
‘
speakwithbeingsfromaparalleluniverse,iethebusiness
world – people in suits who think differently and speak in
strange tongues – and inevitably don’t understand them.
Irejecttheideathatbusinessandcreativityareincompatible
opposites.AtthatconferenceIpointedoutthatIambotha
published poet
5
and an MBA,
6
which perhaps unsettled
afewpeopleforamoment.Iwentontosaythatmybest
creativity is not my poetry but my inventiveness within
the business world, adapting ideas and methods to new
circumstancesacrosstheboundariesofindustries,sectors
andculturesinternationally.Otherdelegatesconfirmedthat
’ 
theyhadseenfarmorecreativityinengineeringfirmsthanin
someadvertisingagencies.Creativityisnotthemonopolyof
the ‘artist’: it is much wider than that and can be found
in education, science and elsewhere. Creativity is in and
aroundusall.
7
‘
’
BusinessFormula
seepage97
CreativeAlchemy
The most exciting creativity, I believe, is the alchemy of
blending apparent opposites, what we often call ‘art’ and
‘science’,recognisingthattheyarenotoppositesatall,from
whichwehavetochooseeither/orinabinaryfashion,butthe
yinandyangofawhole.Thisbookisaboutbringingtogether
creativity and business as allies. It’s about combining the
best ideas of both ‘T-shirts’ and ‘Suits’ in the business of
creativity,turningcreativetalentintoincomestreams.
Successfulcreativeentrepreneursembracebothcreativity
andbusiness.Perhapstheydon’tusebusinessjargonand
maybeprofitisnottheirprimaryaim.Sometimestheywill
proceedonahunch,orputtheirsuccessdowntogoodluck,
but there is nevertheless a method behind their apparent
madness,whethertheyrecogniseitornot.
The art of business is to select from a palette of infinite
choices to draw together a specific product or service,
with specific customers’ needs, in a way that adds up
financially. The resulting picture is a unique business
formulaforasuccessfulenterprise.
Naturally, creative businesses tend to have a high
concentration of new ideas in their product or service.
Successful organisations of all kinds combine all the
essentialbusinesselementscreatively.Successfulcreative
enterprisesneedtohaveacreativeproductorservice;they
also needto invent aspecialand workableformula which
combinesalltheessentialingredientsofbusiness.
TheArtofnot‘SellingOut’
Iamoftenaskedwhethermakingabusinessoutofartor
creativityinevitablymeanscompromisingartisticintegrityor
inotherwords,‘sellingout’.Myansweristhatitcando,but
itdoesn’thaveto.Thesolutionisintheformulamentioned
abovewhichreferstospecificproducts/servicesandspecific
customerswho,ifchosencarefully,areessentialingredients
in the formula for success. If you combine the wrong
customers with your product or service there will be a
mismatchleadingtoachoicebetweensellingoutorgoing
8
Selectingtherightcustomers
seepage36
Vision
seepage11
TripleBottomLineapproach
seepage99
bust.Youcannotsellallofyourproductstoallcustomersall
ofthetime,butifweapplysomecreativitytoselectingthe
rightcustomers,choosingappropriateproductsfromour
portfolio,whilstmakingthebooksbalanceatthesametime,
wecandeviseafeasiblebusinessformula.
Success
Themeaningof‘success’isforyoutodefine,notme.There
arenovaluejudgementshereaboutwhatexactly‘success’
mightmean.Biggerisnotnecessarilybetter;oftensmallis
beautiful. You must decide where you want your creative
enterprisetobeinthefuture.Astheysay:“ifyoudon’tknow
whereyouwanttobe,thenyouwillneverfigureoutwhich
road to take”. So your road to success depends on your
destination–whereyouwanttobeinthefuture–yourVision.
Profit?
Profit is not always the point – though even not-for-profit
organisations cannot survive if expenditure exceeds total
income. As well as spanning 13 sub-sectors,
7
there are
different economics models adopted in the creative and
culturalindustriessector:commercialbusinessesseeking
profit, not-for-profit or charitable organisations and social
enterprises.That’swhyIreferto‘thedesiredfinancialresult’
rather than necessarily ‘making profits’. Many arts
organisationsareconstitutedascharitiesandtheirincome
includes grants and subsidies. Social enterprises define
successwiththeTripleBottomLineapproach,measuring
successonthreecounts:financial,socialandenvironmental.
Somecreativeentrepreneursarealso‘socialentrepreneurs’.
Lifestyle
‘Lifestylebusinesses’succeedbydeliveringbothahealthy
incomeandarichqualityoflifefortheirowners.Forothers,
successmeansbuildingaprofitablebusinessthateventually
doesn’t need them, so they can sell it and move on. And
somepeople wanttheir creativity tosit alongsideanother
careerasahobbyratherthanabusiness.
9
‘
’
BusinessFormula
seepage97
Whydoit?
For those about to embark on a journey into creative
enterprise,thefirstquestionmustbe:Whydoit?Whybuilda
businessaroundyourcreativepassion?Theobviousanswer
is to express your creativity and make a good living at the
same time. But is it that simple? This book outlines a
range of challenges affecting businesses and offers some
pointers towards solutions. There are many hurdles to
overcome,compromisestobemadeandtoughdecisionsto
makealongtheway.Sofirstit’sworthtakingstockofwhat’s
attheheartofyourcreativeenterpriseandwhyyoudoit–or
plantodoit.
Though the intention is to allow your creativity ‘free rein’
bydoingitfull-timeasabusiness,somepeoplecomplain
that now they are in business they have less time for
their creative passion, not more. Others have considered
changingtoaconventionaljobtoearnmoneysoastobe
able to indulge their creativity in a pure way, free of the
constraintsandpressuresofbusiness.
Perhapsitisbettertoseparateearningalivingontheone
handandcreativityontheothersoastodoeachonetothe
utmost,ratherthandoingneitheroneproperly.Istherearisk
that your creativity will be curbed by business? You may
consider this suggestion inappropriate in a book like this,
but it is better to deal with this issue frankly now if it is a
matteryouarefacing–orlikelytofaceinthefuture.
Yes, there is a risk of compromising your creativity with
business – and compromising your business profitability
byindulgingyourcreativity–ifyoudon’tgetthebusiness
formularight.Forexampleafinancialformulathatworksfor
ahobbyusuallydoesnotworkforabusinesswhenhigher
pricesneedtobechargedtocovertherealcostsoflabour
andotherexpenses.
10
Vision
Listeningtocustomers
seepage38
Mission
Values
Where?
Where do you want to be in the future? Pick a significant
future date or milestone in your life (it doesn’t have to be
‘infiveyearstime’,thoughitcouldbe).Describewhatyour
businesswilllooklike.Whowillbeyourclients?Howmany
people will be involved? What level of income will you
achieve?Drawupablueprintforyourgoals.Beambitious.
Select a destination which is out of reach but not out
ofsight.ThisisyourVision.
What?
Whatbusinessareyouin?Thebestpeopletoanswerthis
areyourcustomers.Youmightthinkyou’reinthewebsite
design business but your customers see you as their
marketing consultant; you might describe yourself as a
theatrecompanybutwhatyourcustomersarebuyingisa
mediumforcommunicatingmessagesaboutsocialissues.
Listen to customers to find out what they really value
aboutyou.Whatisthevaluetoaddforcustomersandyour
contribution to a better world? Answer the customer’s
question‘What’sinitforme?’tofindoutwhatitisyoureally
doforthem.ThisisyourMission.Youdon’tneedtohavea
‘missionstatement’(especiallynotaglibone),butyoudo
needtounderstandwhatcustomersvalueaboutyourbusiness
andwhattheyreallypayyoufor.
How?
How do you do business, ie what are your beliefs, morals
andethics?YourValues.Sometimesthesearesomucha
partofuswecannotseethem,orjusttakethemforgranted.
Forexample,myclientspointedoutthatmyabilitytolisten,
respectothers’viewsandhelpthemachievetheirgoalsin
their own way were my special values; but they were so
much an integral part of me that I couldn’t see them.
I had missed the point and my publicity highlighted
my professional qualifications instead. Ask other people:
associates,friends,colleaguesandespeciallycustomersin
order to see yourself and your business more clearly.
SeeChapter2:KnowYourself.
11
IdeasinAction—seepage14
FeasibilityFilter
seepage89
Vision,MissionandValues
Visiondescribeswherewearegoing–the‘promisedland’.
TheVisionistheenterprise’s‘dream’ofthefuture,apicture
paintedinwords(andnumbers)whichisintendedtoinspire
peoplebyappealingtotheheartaswellasthehead.
Missiondescribeswhatwearegoingtodotoachieveour
Vision.Amissionstatementissimplyaspecificdescription
ofwhattheorganisationactuallydoes–itscontributionto
theworldandsociety–sothatemployees,customersand
otherstakeholdersunderstandwhatthebusinessneedsto
excelat.
Values describe how we are going to conduct ourselves
alongtheroadtosuccess.
When?
Isthetimeright?Areyoureadytogointobusinessnowor
shouldyouwaituntilabettertime?SharonMutchlefther
photographic art under dust covers for nine years before
settingupinbusiness.
When you have put together the answers to the Where,
What,HowandWhenquestions,thenextmattertoconsider
is whether or not it all adds up into a workable business
formula,abusinessmodelthat’srealisticandachievable.
Later in the book, the Feasibility Filter will help you to
examinethefeasibilityofdifferentoptions.
Thisbookwillhelpyoutoachievesuccessintwoways:
1  Challengeyoutodefinesuccessinyourownterms,
inotherwordstospecifyyourgoals.
2  Findaroutetosuccesswhichisrealisticandworkable.
12
KeyPoints
1 Somepeoplethinkthatcreativityandbusinessdon’tmix.
Idisagree.Thinkofbusinessandcreativityaspartners,
notopposites.
2 CombinethebestideasofbothT-shirtsandSuitsto
turnyourcreativetalentintoincomestreams.
3 Creativetalentdoesnotautomatically‘deserve’
businesssuccess.Notallcreativeideasmake
feasiblebusinesses.
4 Makingabusinessoutofcreativitydoesnot
involvesellingout–solongasyouinventthe
rightbusinessformula.
5 Aswellasacreativeproductorservice,youwillneedto
createauniqueandfeasiblebusinessformula.
6 Beclearaboutyourowndefinitionofsuccess.
Knowwhereyouwanttogetto–yourVision.
7 ClarifyyourspecificbusinessMission.
8 RecogniseandholdontoyourValues.
9 Decidewhethernowistherighttimetostartorexpand.
10 Theseprinciplesapplytonot-for-profitorganisations
aswellascommercialbusinesses.
13
IdeasinAction
SharonMutch
PhotographicArtist
SharonMutchisanartistwithapassionfor
herworkandaheadforbusiness.
Herartisticpassionisbornofherexperience.
“DuringthesecondyearofmyFineArtdegree
Isufferedanectopicpregnancyandnearly
died.Ibegantoincorporatethisexperience
intomyphotographicartandmanyofmy
worksareimagesofwomen:FeminaeinVitro
(WomenwithinGlass)isthenameofthe
collectionofmywork,”shesaid.
Aftergraduation,Sharonexhibitedat
severalhigh-profilephotographers’galleries.
“However,thetimingwasnotrightforme.
Irecognisedimmediatelythatmyworkwas
stronginbothimagery,contentanddepth
ofmeaning.Ialsorealisedthattheemotive
symbolismofmyworkhitarawnervewith
manywomenregardlessofsocialstatus,
viewsandpersonalexperience.Eventhough
myworkwasreceivingquiteabitofattention,
IfeltasthoughIdidn’tbelonginthe‘artworld’,
thatitwashappeningtooquickly,”sherecalled.
Nineyearslatersheunwrappedthedust
sheetsfromherworkandfeltthetimewas
righttogointobusinessandshesetupasa
soletrader.“IamtheartistandIamalsomy
manager/agent,mybusinessbrainisthe
rulingfactorwhenitcomestocommission
rates,galleryrepresentationandmarketing,”
sheexplains.Herbusinessbraindecidedto
www.sharonmutch.com
approachthetopartmarketsintheworld:
NewYork,LondonandParis.Shewas
preparedto‘sayno’tolesseropportunitiesso
astoconcentrateallhereffortsonbreaking
intoNewYorkCity’sChelseaandSohoarea
despitebeingadvisedbytheBritishConsulate
thatthisis“themostdifficultartsceneinthe
worldforfindinggalleryrepresentation”.
Sharonwasawareofthechallengebutshe
alsoknewthatifshecouldsucceedhere,
thenotherexhibitionsandsaleswouldfollow.
Havingdevisedherstrategysheresearched
theselectedmarkets,atfirstthroughdesk
research,trawlingwebsitesandexamining
galleries’submissionscriteria.Withthehelp
ofUKTradeandInvestment’s‘Passportto
Export’scheme,andtheassistanceofthe
BritishConsulateinNewYork,sheattended
theNewYorkArtExpoandvisitedgalleries
withherportfolio.Thisresultedinoffersof
exhibitionsfromtwogalleriesandshechose
theViridianArtistsGallery.Herworkwas
exhibitedthereinJuly/August2005.
Thissuccess–whichwillnodoubtleadto
otherexhibitionsandsales–wastheresult
notonlyofartisticpassionandtalentbutalso
ofusingabusinessheadtobreakintothe
difficultyetlucrativeNewYorkmarket.
14
‘VesselofConfinement’©SharonMutch
Linkstorelatedideasandtopicsinbook:
Combiningthebestof‘T-shirts’and‘Suits’(seepg8)
Thetimingofsettingupinbusiness(seepg12)
Targetingspecificmarkets/customers(seepg36)
MarketResearch(seepg38)
SayingNo(seepg92)
2
Know Yourself
— In this chapter we look at a technique for objectively assessing your own
strengths and weaknesses as part of the process of finding your feasible
business formula.
— We look at the core competencies on which you can build your creative enterprise.
— In addition there are some thoughts about learning, training and continuing
professional development.
16
‘
’
PRIMEFACTchecklist
InTheArtofWar,ChinesemilitarystrategistSunTzuwrote:
“Ifyouknowtheenemyandknowyourself,yourvictorywill
notstandindoubt”.
8
Whetherornotyouregardbusinessasakindofwarfare,
9
his
pointisthatknowingone’sownstrengthsandweaknesses
will help you to decide when, how and where to proceed.
It will help you recognise the customers, competition and
conditionsthataremostlikelytosuityou–ornot.Yet‘knowing
ourselves’, in the sense of making objective and critical
assessmentsofourshortcomingsandspecialqualities,isvery
difficult.Itismucheasiertoassessanotherenterprisethan
ourownandthat’swhyitisusefultogetoutsiders’viewsif
wearetogetaclearpictureofourselves.
Knowingyourselfappliesnotonlytoyourpersonalcreativity,
skillsandaptitudes.Weneedtounderstandthestrengths
andweaknessesofourbusinessororganisationtakinginto
accountallthepeopleinvolvedinthecoreteamandwider
‘family’ofstakeholdersincludingassociatesandadvisers.
Wealsoneedtoassessourassets,reputation,knowledgeof
themarketandintellectualcapital.
EvaluatingStrengthsandWeaknesses
Rather than simply attempting to write down all the
strengthsandweaknesseswecanthinkofonablanksheet
ofpaper,thePRIMEFACT checklistonthefollowingpage
providesausefulstructureforacomprehensiveanalysis.
I devised this checklist specifically for the creative and
culturalindustriesandhaveuseditsuccessfullywitharange
ofclients.
17
IntellectualProperty
seepage54
MarketResearch
seepage38
Values
seepage11
Finances
seepage64
ThePRIMEFACTChecklist
People
Whatarethestrengthsandweaknessesofourpeople?
Employees,directors,members,associates,advisersand
otherstakeholders.
Reputation(orBrand)
Whatisourreputationwithourtargetcustomers?Whatare
thestrengths–orweaknesses–ofourbrandorbrands?
IntellectualProperty
Whatintellectualpropertydowehave?Howisitprotected?
Howeasilycanitbeturnedintoincomestreams?
MarketResearch/MarketInformation
Whatinformationdowehaveaboutmarketsegmentsand
markettrends?Whatdoweknowaboutindividualclients
andtheirspecificneeds?
Ethos(orValuesorCulture)
Whatisourethos,ourvaluesandourorganisationalculture?
Doallstakeholderssubscribetothissameethos?
Finances(ieMoney)
Whatisthecurrentstateofprofitability,cashflowandassets?
Howmuchmoneydowehavetoinvestorcanweborrow?
Agility(orNimblenessorChange-ability)
Areweagileenoughtoseizenewopportunities?
Arepeoplepreparedtochangeandreadyforchange?
Aretherebarrierstochange?
Collaborators(Alliances,PartnershipsandNetworks)
Whatarethestrengthsandweaknessesofour
associationswithotherbusinessesandorganisations
(includinggovernment)?
Talents(CompetenciesandSkills)
Whatareourcorecompetencies?
Whatskillsdowehaveavailableandwhatgapsarethere?
Howwillwelearnnewskills?
18
CompetitiveAdvantage
seepage45
CoreCompetencies
IdeasinAction—seepage24
Be frank about your weaknesses too. Remember that not
all weaknesses need to be fixed. Maybe you can find a
new market position where your weaknesses are not
so significant. The important thing here is to recognise
yourstrengthsandweaknessesinrelationtocompetitors.
Youmayhaveaparticularstrength,butifyourcompetitors
have it too, or are even better, then it does not give you
CompetitiveAdvantage.
CoreCompetencies
Your Core Competenciesarethekey skillsonwhich you
baseyourbusinesssuccess.Theseareoften‘deeper’than
firstthought.
ForexampleCanonrecognisedthattheircorecompetencies
werenotincameras,butmorefundamentallyinopticsand
this allowed them to see that they could transfer their
expertiseintothephotocopiermarket.SimilarlySony’score
competencyisnotelectronicsbutminiaturisation;Honda’s
isnotcarsbutengines–whichhelpedthemseebeyondcars
intomotorboatandlawnmowermarkets.RichardBranson’s
Virginbrandisfundamentallyaboutcustomerservice,soit
canbeappliednotonlytomusicbutalsotoairlines,trains,
financialservicesandmobilephones.
Some theatre companies view their core competency as
‘communicating a message’ using drama – rather than
dramainitsownright.Insomecaseswebdesignershavea
core competency in branding and marketing consultancy.
PepperedSprout’scorecompetencyisnotpublishingbut
‘deliveringideastoclients’.
Deepdown,whatareyourcorecompetencies?
19
HedgehogStrategy
95:5Rule
TheHedgehog
Oneofthereasonstoassessyourcompetitivestrengthsisto
answer the question: What can your business be world-class at?
Note that the question is not what you would like to be
world-classat,butwhatyoucanbe.Knowingthis,andthen
playingruthlesslytoyourkeystrength,ispartofasuccessful
HedgehogStrategy.
10
Thefox,renownedforhiscunning,hasmanystrategiesfor
killingthehedgehog.
11
Ontheotherhand,thehedgehoghas
only one strategy for defending itself. Whenever the fox
attacks,fromwhateverdirection,thehedgehogrollsitself
intoaballof spikes. Itworks every time.The hedgehogis
supremelygoodatonething,anditsurvivesbystickingtoits
winningstrategy.Identifyingyourownenterprise’sHedgehog
Strategyflowsfromathoroughandobjectiveunderstanding
ofwhatyoucan(andcannot)beworld-classat.
The95:5Rule
Whensearchingforopportunitiesandthreats,theknackis
topickouttheimportantfewfromthetrivialmany,because
here,aselsewhere,theParetoPrincipleapplies.Basedon
economist Wilfredo Pareto’s observation that 80% of the
wealthwasownedby20%ofthepopulationinItalyatthe
time,theParetoPrincipleisalsoknownasthe‘80:20Rule’.
Ifindit’susuallymoreofa95:5Rule.
The 95:5 Rule describes the way that an important few
things are responsible for most of the impact on events.
Forexample95%ofsalescancomefrom5%ofproducts.
95%ofprofitscancomefrom5%ofcustomers.Or95%of
yourcompetitiveadvantagecouldbederivedfromjust5%
ofyourstrengths.(Also,95%ofheadachesarecausedby
5%ofcolleagues!)Etcetera...
20
‘
’
ContinuingProfessional
Development
IdeasinAction—seepage86
Weaknesses may be plentiful and can be found in any
area of the PRIMEFACT checklist. The good news is
that they don’t all need to be fixed. Playing to your
strengthsalsoincludesplayingawayfromyourweaknesses.
Your business formula includes deciding what not to do.
Only weaknesses which could jeopardise your business
strategyneedtoberectified.SeeChapter11:YourRoute
toSuccess.
Skills:TrainingorLearning?
There are many more ways of learning than attending
trainingcourses.Aswellasrecognisingyourenterprise’skey
skills(corecompetencies),therewillbeareaswhereskills
need to be improved, and given the changing external
environment and changing needs of customers, constant
learning is inevitably an ingredient of success. A training
needs analysis can be undertaken to assess the gaps in
skills and knowledge essential to the business strategy,
thoughpersonallyIprefertofocuson‘learningneeds’rather
than‘trainingneeds’.Learningismuchwiderthantraining.
Acultureofencouraginglearningismuchmoreimportant
thanabudgetfortraining.
Lifelonglearningisnotjustabuzzwordbutafactoflifeand
aprogrammeofContinuingProfessionalDevelopment
(CPD) is essential for all individuals playing a part in the
enterprisetoensurethattheirskillsandknowledgearekept
uptodateforthebenefitofthebusinessanditscustomers.
Eachpersoncouldhavea PersonalDevelopmentPortfolio
orplan(PDP),asdostaffmembersatTheTeam.
21
TheLearningOrganisation
At a corporate level there needs to be a philosophy of
building a Learning Organisation, which I describe as
a company or other institution within which everybody
continuouslylearns:fromcustomers,fromthecompetition
andfromcolleagues.SeeTheTeam.Justasimportantisa
culture where this learning is shared with colleagues and
through systems this knowledge is embedded within the
organisation as ‘structural intellectual capital’. This is the
know-how in the firm which is more than the sum total of
individuals’expertiseandbelongstotheorganisationrather
than(oraswellas)thepeopleworkingwithinit.
Inacreativeenterprise,constantlearningandthebuild-up
ofknowledgeshouldbepartofaBusinessDashboardand
monitored as closely as financial measures of success.
Crucially, the priorities for learning must be aligned to
the overall business strategy, rather than individuals’
personalpreferences.
22
IdeasinAction—seepage86
BusinessDashboard
seepage99
‘
’
LearningOrganisation
KeyPoints
1 Assessthestrengthsandweaknessesofyourselfand
yourbusiness,includingallstakeholders.
2 UsethePRIMEFACTchecklist.
3 Askoutsiderstohelp–theymayseeweaknessesand
strengthsyoudon’t.
4 Rememberthatnotallweaknessesneedtobefixed.
5 Identifythecorecompetenciesattherootof
yoursuccess.
6 Thinkofthehedgehog’sstrategytofindoutwhatyou
canbeworld-classat.
7 Usethe95:5Ruletoidentifythemostimportant
5%ofyourstrengthsandweaknesses.
8 Identifytheadditionallearningandskillsneeds
requiredtosupportthebusinessstrategy.
9 Acultureofencouraginglearningismuchmore
importantthanabudgetfortraining.
10 Therearemanymorewaysoflearningthanattending
trainingcourses.Think‘learning’ratherthan‘training’
soastoopennewpossibilitiesforincreasing
knowledgeandskills.
23
IdeasinAction
PepperedSprout/PlasticRhino
Advertising
“Welikedtheproductsomuch,weshreddedit.”
Thiswas(almost)whatChrisMorrissaidwhen
hewastellingmeabouthowtheysetoutto
winnewbusinessfromPumaUKforhis
companyPepperedSprout.Chrisand
businesspartnerPeterKellettdecidedthat
Pumawasoneoftheirtargetclientsand
decidedtoimpressthemwiththeir
outrageouscreativity,publishingphotosof
Pumashoesshreddedintohairpiecesintheir
magazinePlasticRhino.Theywontheaccount.
DeliberatelyfollowinginthefootstepsofDavid
Ogilvy,founderofworld-famousadvertising
agencyOgilvyandMather,Chrisdoesn’tfit
thestereotypeofthestripedshirtandbraces
Manhattanexecutive.Hiscasualclothesand
easymannerdisguiseashrewdbusinessbrain.
LikeDavidOgilvy,ChrisandPeterhaveatarget
listofclientstheyintendtoworkwithandthey
activelypursuethem.Theydon’tadvertise.
Theydon’tdotendering.Theygoforthejugular.
PlasticRhino,theirmagazine,wasoriginally
“afolly”,confessesthisadvertisingman,but
inpracticeithasturnedouttobethemost
effectivewayofpromotingthemselves–
ashowcasefortheideasgeneratedbytheir
8staffandinternationaldatabaseof
freelanceartists.Withdistributionin15
countries,PlasticRhinoisasuccessin
itsownright.
www.pepperedsprout.com
“Thebestthingwedidwastosetoutourstall,”
saysChrisashetoldmehowheandPeter
workedoutclearaimsforthebusinessinthe
earlydays.Theyhadbeenpublishersand
couldhavefocusedonpublishingPlasticRhino,
definingtheirbusinessaspublishing.Instead
theyrecognisedthattheircorecompetencies
areindeliveringideastoclientsandthe
magazineisjustonemanifestationofthat
capability.Andsoitsitsundertheumbrella
ofPepperedSproutwhichprovidesadvertising
forclientsthroughin-storeinstallations,
photographyandillustration,packagingand
bespokepublishing.
TheteamatPepperedSproutknowwhere
they’regoing,playtotheirstrengths,areclear
aboutwhatbusinesstheyarein,andwhich
clientstheyintendtowintodeveloptheir
creativeenterpriseinthechosendirection.
24
Photograph:MarkMcNulty
Linkstorelatedideasandtopicsinbook:
Selectingtherightcustomers(seepg36)
Knowwhereyouaregoing–Vision(seepg11)
RecogniseCoreCompetencies(seepg19)
Mixofemployeesandfreelancers(seepg84)
3
Keeping a Lookout
— This chapter outlines the benefits of using a business ‘radar’ to monitor the
changing world for opportunities and threats which could affect your enterprise
for better or worse.
26
‘
’
BusinessRadar
ICEDRIPSchecklist
IdeasinAction—seepage102
Watchout!There’sstuffgoingonouttherethatcanmakeor
breakyourbusiness.It’sarapidlychangingworldandthe
changes taking place are outside our direct control –
changes in technology, economics and regulations for
example. Such changes in the external environment can
have dramatic effects on businesses and organisations,
indeedonwholeindustries.
Mobilephoneshavealteredthewaywecommunicateinthe
last few years, the Internet has opened up global markets.
EuropeanUnionregulationsaffectagrowingnumberofnational
governments and every citizen living inside its expanding
borders.Changeisconstant.
Using‘Radar’
Tostayaheadofthegameweneedtoanticipatechanges,
notjustreacttothem.Thisrequiresconstant‘scanning’of
the external environment and I liken this to a ship’s radar,
constantlylookingoutforbothhazardsandhelp,pickingupon
itsradarscreensapproachingshipsandimpendingstormsin
goodtime.Naturally,weareintouchwiththeworldwelivein
and we constantly learn about new developments from TV,
friends,publicationsandahostofothersources.Buttohave
an effective 360º Business Radar, it pays to be more
systematicinscanningforopportunities–andthreats.This
scanningcanbecalledanExternalAudit(orEnvironmental
Analysis).APESTAnalysissimplyinvitesustolookinfour
directionsolitical,economic,socialandtechnologicalfor
threats and opportunities. A more thorough approach is to
look in eight directions using the ICEDRIPS checklist
overleaf,anacronymIinventedwhichIhaveusedwithmany
organisationstohelpthemidentifyopportunitiesandthreatsto
their businesses or social enterprises. SeeTheWindowsProject.
27
IdeasinAction—seepage32
ForcesofCompetition
seepage47
IdeasinAction—seepages 78,102
Co-opetition
seepage48
TheICEDRIPSchecklist
Innovations
includecomputertechnologyandtheInternet(ofcourse)but
otherdevelopmentsinthebiosciencesandtransportation.
Competition
notonlyfromrivalsbutthreatsfromotherForcesof Competition
suchasnewentrantsandsubstituteproducts.
Economics
includesfactorssuchasinflation,exchangerates,downturns
intheindustry,publicspendingetc.
Demographics
includetheageingofthepopulation,migration,
trendsinemployment,socialclassetc.
Regulations
suchasnewlaws,protocols,agreements,conventionsand
industryregulationsegOfcomregulationsandschool
inspectionsviaOfsted.
Infrastructure
suchastelecommunicationsnetworks,transport,
publicservicesandutilities.
Partners
Strategicallianceswithothercompaniesororganisations
(seealsoCo-opetition).
Socialtrends
includingacceptanceoftechnology,useofleisuretime,
fashionsandchangingbeliefs.
Thefactorsabovearenotinorderofimportance,
thechecklistmerelyprovidesaneasytorememberacronym.
28
‘
’
ForcesofCompetition
seepage47
Thebestwaytousethechecklististoproducealonglistof
100orsothingsgoingonintheworld–andthingslikelyto
happen. (Imagine all the things you would have to tell a
colleaguewho’dbeeninouterspacefortenyears!)
Thiswillproduceagenericlist,usefulforallorganisations.The
CompetitionandPartnerselementswillapplymorespecifically
tothebusinessororganisationinquestion.
Thenaddanyspecialexternalfactorsrelevanttoyoursector.
This might include technical developments, government
initiativesorindustrymattersforexample.
Writeallofthemdownandthensiftcarefullythroughthemfor
thefactorsthatcouldrepresentopportunitiesandthreatsfor
yourbusiness.
Forexample,low-costinternationalflights(infrastructure)and
downloadablemusicfiles(innovation)provideopportunities
forsomeenterprises,whilstontheotherhandtheincreasing
possibilityoflitigation(regulations)andnewentrantstothe
market from new European states (competition) represent
threatsforotherbusinesses.
Dependingonyourposition,changescanproduceprogressor
disaster;changescanbeforcesforgoodorbaddependingon
howtheyaffectyou;changescanpresenteitheropportunities
or threats, depending on how you deal with them. For
example,theDisabilityDiscriminationActintheUKaffects
architects, web designers, advertisers and other creative
businesses. Whilst some will see it as a problem for their
businesses,thosewhoare‘aheadofthegame’willadaptto
newrequirementsquicklyandgaincompetitiveadvantage.
RememberthatthereareotherForcesofCompetitionas
wellasyourimmediaterivals,includingtherelativepowerof
buyersandsuppliersaswellasnewentrantsandsubstitute
products, that can present either opportunities or threats,
depending on how you manoeuvre in the changing
competitiveenvironment.
29
Co-opetition
seepage48
IdeasinAction—seepage32
95:5Rule
seepage20
RiskAnalysis
seepage100
BusinessRadar
seepage27
On the other hand, apparent competitors can become
co-operators in certain circumstances, transforming rivals
intopartnersandthreatsintoopportunities,usingtheidea
ofCo-opetition.
TimothyChan,ChairmanofShanghai-basedcomputergames
manufacturerShandaEntertainment,operatesinaculture
wherepiratingsoftwareisrife.Softwarepiratingwasathreat
butheturneditintoanopportunitywhenShandachanged
theirbusinessmodelsothatclientshavetopaytoplaygames
online. So the distribution of pirate copies of the software
actually encourages more people to log on and become
payingcustomers.
12
OnlineOriginalstookadvantageofchangesintheexternal
environment (especially Innovation) to launch the very first
Internet-onlye-bookpublishingventure.
Having used the checklist to identify as many positive and
negativefactors,thenextstepistoidentifytheimportantfew
ofeach,usingthe95:5Rule.Itmaybejust5%ofexternal
opportunitiesthatleadto95%ofyourfuturesuccess.Just
onemajorthreatcouldbetwentytimesmoresignificantthan
severalotherthreatsidentified.
Asforthreats,anticipatetheworstpossibilities–thendecide
howtodealwiththemoravoidthem.SeealsoRiskAnalysis.
The counterpart of Risk Analysis is Opportunity Analysis.
UsingsimilarprinciplesasRiskAnalysis,OpportunityAnalysis
is the technique of assessing which opportunities are
most likely to present business benefits, and the possible
positiveimpactofeachofthem,inordertoprioritisethemost
significantopportunities.
Inconclusion,theICEDRIPSchecklistenablesyoutodevise
your Business Radar as an early warning system to avoid
or defend against threats whilst identifying emerging
opportunitiesbeforeyourcompetitorsdo.
30
KeyPoints
1 Externalforcesbeyondourcontrolcanaffectour
businessespositivelyornegatively.
2 Weneedtoanticipatechanges,notjustreacttothem.
3 UsetheICEDRIPSchecklistasa‘businessradar’to
scantheexternalenvironmentforforcesthatcould
affectyourenterprise.
4 Sifttheexternalenvironmentfortheoneortwospecial
opportunities–andforpotentialthreats.
5 Threatscanbeturnedintoopportunities.
6 Rememberthe95:5Ruleandseparatetheimportant
fewfromthetrivialmany.
7 Anticipatetheworstpossibilities–thendecidehowto
dealwiththemoravoidthem.
8 Constantlykeepalookout.
31
IdeasinAction
OnlineOriginals
InternetPublisherofElectronicBooks
OnlineOriginals,theworld’sfirstInternet-only
e-bookpublisher,tookadvantageofseveral
changesinthetechnologicalenvironmentto
becomethepioneerofInternete-bookpublishing.
Theywereresponsibleformany‘firsts’inthe
sector:theuseofPDFfilesasthestandard
formatfore-books;theissuingofISBNnumbers
fore-books;andreviewsofe-booksinthe
mainstreampress.Theyalsopublishedthefirst
e-booktobenominatedfortheBookerPrize.
Theirlistincludesoriginalworksofbook-length
fiction,non-fictionanddrama.
In1995,DavidGettmanandco-founder
ChristopherMacannsawanopportunityfor
anewkindofpublishingventure,taking
advantageoftheInternetasanecommerce
distributionchanneltoreadersusingPCs,
AppleMacsandPalmpersonaldigitalassistants
toreaddigitalfilesoftheirauthors’works.
Atatimewhenmostpublishedauthorswere
lockedintocontractswithtraditionalpublishers
whichexcludedelectronicpublishingrights,
OnlineOriginalswerequick-wittedandagile
enoughtonegotiate‘electronicrightsonly’
dealswithauthors,includingbest-sellingwriter
FrederickForsyth.Thisarrangementleaves
authorsfreetonegotiateothercontractswith
conventionalbookpublishers.
OnlineOriginalsredefinedpublishingandcreated
anewbusinessmodelwhichcutsoutmostof
thecostsassociatedwithtraditionalpublishing
includingprinting,warehousing,physical
distributionandtheremainderingofunsold
www.onlineoriginals.com
stock,basedinsteadalmostentirelyon
intangibleassets.Thisnew‘businessformula’
makesiteconomicallyfeasibletopublish
shortprintruntitlesthatwouldnotbe
commerciallyattractivetothepublishing
conglomerates.What’smore,theirneweconomic
formulapaysafull50%ofnetsalesincomeas
royaltiestoauthors,whoretaincopyrightin
theirworks.
Whilsttraditionalpublishersarewaryofthe
potentialofe-bookstounderminesalesof
papercopies,asanelectronic-onlypublisher
OnlineOriginalstakesadifferentview.
Encryptiontechnologyisrejectedforboth
philosophicalandbusinessreasons,encouraging
thesharingofdigitalbooksbetweenfriends,
whichactsasaformofviralmarketingspreading
thewordaboutOnlineOriginalsitselfasthe
e-bookispassedfromonereadertoanother.
Withthehelpofventurecapitalinvestment,
OnlineOriginalsnowusethelatesttechnology
toautomatemanyofthebusinessprocesses
ofpublishing–eventhehandlingofmanuscript
submissionsandtheirreviews.Thisautomates
their unique peer-reviewsystemfor submissions,
wherebythecommunityofcurrentauthorsserves
asthe‘gateway’foradmittingnewtitles.It’salso
avirtualorganisation(there’snomentionhere
aboutwhereit’slocatedbecauseitdoesn’t
matter)whichdoesitsbusinessmainlyin
cyberspace,withouttheneedforcorporate
headquarters,storagefacilitiesorretailoutlets.
32
Linkstorelatedideasandtopicsinbook:
ExternalEnvironment(seepg27)
VirtualOrganisation(seepg75)
Copyright(seepg54)
IntangibleAssets(seepg53)
ViralMarketing(seepg40)
4
The Magic of Marketing
— This chapter explains that the real meaning of marketing is not about advertising
and selling but choosing the right customers in the first place, then being prepared
to put them at the centre and build your business around their requirements, listen
to them and respond to their changing needs.
34
‘Marketing’ isn’t just a posh word for ‘selling’. It’s much
more radical than that. Marketing in its widest and best
sense is about aligning your whole business to the
changingneedsofyourcustomers.
TheMarketingProblem
Oscar Wilde wrote: “The play was a great success but the
‘ 
audience was a total failure.” Some people tell me their
businessisfine–theproblemisthecustomers!Usuallyalack
ofthem.The‘marketingproblem’theyclaimtohaveisthat
they cannot convince people to buy their things. Their real
problemisthattheirbusinessisbuiltaroundthemselvesand
theirproductsorservices,notaroundcustomers’needs.They
do their thing in a customer-free zone, a kind of creative
vacuum. They are product-focused, not customer-focused.
Thentheyhopethatsomemarketingmagicwillsellit.It’sasif
they believe marketing is a kind of magic dust that clever
marketers can sprinkle onto any old product or service to
’ 
makeitselllikehotcakestoanyone.
Successfulcreativeenterprisesaretrulycustomer-focused,
notinthesenseofputtingcustomersintheirsights(asiffiring
productsatthem),butputtingthecustomeratthecentreof
theiruniversesothattheirentirebusinessrevolvesaround
them.It’safundamentallydifferentphilosophy.
It’sashiftofthinking,fromHowcanwesellwhatwewant
to create?toHowcanweuseourcreativitytoprovide
whatcustomerswanttobuy?
Theword‘marketing’encompassesbothscienceandartas
wellasawiderangeofskills,butessentiallyitcanbeseparated
intostrategicmarketingandoperationalmarketing.
35
‘
’
Selectingtherightcustomers
StrategicandOperationalMarketing
Operationalmarketingis the morevisibleside:advertising,
PR and selling that is about communicating towards
customers, telling them about products and services.
Strategic marketing concerns itself with deciding what
productsandservicestoproduceinthefirstplace,basedon
customers’changingneeds.Itisresponsibleforaligningthe
wholeorganisationaroundtheneedsofparticularcustomers.
It’scrucialthatstrategicmarketingcomesfirstbecauseunless
your initial business formula is right – matching particular
products and services with selected customers profitably –
then operational marketing will fail, no matter how clever
(orcreative)theadvertising.
The strategic marketing formula includes decisions about
whichcustomerstoserve.Thisisnotamatterofopportunism
butattheheartofyourbusinessformulaandroutetosuccess.
CustomerFocus
Selectingtherightcustomersinthefirstplaceisanessential
elementofanysuccessfulbusinessformula.Thenorganising
yourenterprisearoundthechangingneedsoftheseselected
clientsormarketsegmentsiswhatmarketingreallymeans.
Inotherwords,puttingcustomersfirst–atthebeginningof
the business process, not at the end. Customers’ needs
have to be the whole point of the business from
beginningtoend.That’swhyDavidPackardco-founderof
HewlettPackardfamouslysaid:“Marketingistooimportantto
beleftjusttothemarketingdepartment.”Marketingisthe
responsibilityofthewholebusiness,notjustthesalespeople
attheendoftheline.
Themoststrategicallyfocusedbusinesseshavealistoftarget
clientsthattheyhaveidentifiedasfittinginwiththeirbusiness
strategy.DavidOgilvy,founderofadvertisingagencyOgilvyand
MatherwroteinhisbookConfessionsofanAdvertisingMan
howhebuiltuphisbusinessbytargetingclientsandfocused
on getting their accounts at all costs. Ogilvy and Mather’s
client list over 50 years includes names such as American
Express,Ford,Shell,Barbie,Kodak,IBM,DoveandMaxwell
36
IdeasinAction
—seepages14,24&94
MarketSegmentation
House.Forexamplesofothercreativebusinessesthathave
targetedspecificcustomersseeSharonMutch,Peppered
SproutandtheMandoGroup.
Marketingisdefinitelynotamatteroftryingto‘pleaseallthe
customersallthetime’,butselectingthecustomersyoucan
partner with most effectively and profitably, matching their
needs with your creative skills. Just as business strategy
includesdecidingwhatnottodo,strategicmarketingincludes
decidingwhichcustomersnottodealwith.Notallcustomers
aregoodcustomers.Tryingtofocusoneverypossiblecustomer
isnotbeingfocusedatall!
SegmentingtheMarket
Market Segmentation is the process of dividing potential
customersintogroupswithsimilarcharacteristics–perhaps
geography,gender,age,needs,industry,orwhateverismost
usefulorrelevant.Analysingcustomersegmentsallowsclear
decisionstobemadeaboutprioritisingtargetsegmentsand
decidingwhichtypesofcustomerstoavoidbecausetheydo
notfitthespecificationofyourbusinessformula.Itcanalso
help with operational marketing as each segment’s similar
characteristicscanhelptoidentifythemosteffectivemedia
channels to use to approach each group. One particularly
useful way of segmenting customers is based on the
media they read and watch, since this also automatically
indicateswhichadvertisingmediatouse.
Existingcustomersareausefulresource,becauseanalysing
theircharacteristicscanhelpyouunderstandwhichmarket
segments you can work with best. Despite the strategic
approach advocated here, your customer base may have
developed more by accident than by design. And your
currentcustomersmayhelpyoutounderstandyourbusiness
strengthsandweaknesses–ifyouaskthem.SeeChapter2:
KnowYourself.
37
Listeningtocustomers
IdeasinAction—seepage14
IdeasinAction—seepage42
Furthermore,it’seasierandcheaper(uptofivetimesasmuch,
itissaid)towinmorebusinessfromexistingclientscompared
towinningnewcustomers.Takecareofthem!
Inaddition,existingcustomerscanbetheroutetonewclients.
Wordofmouthisthebestadvertising(andthecheapest)so
encourageittohappenifitleadstotherightkindofcustomer.
ListeningtoCustomers
So if customers are the whole point of the business, from
beginningtoend,it’sclearlynotenoughsimplytotalkatthem
attheend,buttolistentothemfromthebeginning.Marketing
isadialogue,notamonologue.Listeningtocustomershas
many dimensions but it is primarily an attitude towards
customersasactivepartners,notpassivetargets.Thisinvolves
lookingatthingsfromthecustomers’pointofview.
Marketingcanbedescribedas‘beingclosetothecustomer’
anditincludesmarketresearchbutnotonlythestereotypical
market research (which makes me think of avoiding eye
contactwithpeoplecarryingclipboardsinthehighstreetand
thoseannoyingunwantedphonecallswhenI’mwatchingTV).
Therearemanywaysoflisteningtocustomersandlookingat
thingsfromthecustomers’pointofviewifyouwantto.Ifyou
reallywanttoknowaboutmarketsandcustomers,youcanfind
outthroughvariousmeans,indirectanddirect.Aswellasdirect
(primary)research,marketresearchalsoincludessecondary
(desk)researchusingpublisheddatafromindustryanalyses,
government statistics and trade journals, much of which is
availableinlibrariesorontheInternet.SeeSharonMutch.
More directly you can visit customers, invite them to focus
groups,andwatchthemuseyourproduct(oracompetitor’s).
Visit them to see how they work. Get customers involved
innewproductdevelopmentasNewMinddo.Explorehow
you can help their businesses develop. Last but not least,
listen to them and establish a dialogue through feedback
mechanisms,focusgroups,suggestionsboxes,oroveralunch.
Buythemadrinkandgettoknowthem.Inreturnyou’llget
theirgoodideasandloyalty.
38
‘
’
FourPsofMarketing
Product
Price
Promotion
Place
Benefitsnotfeatures
seepage47
Sometimesinsightsemergeaboutwhatcustomersarereally
buying,whichmaynotbewhatyouthinkyouaresellingthem.
Forexampletheapocryphaltalesofthebeerthatwasbought
only because the empty can made an excellent oillamp in
Africa;thebookstorethatfoundnobodyreturnedthevoucher
placeddeepinsidetheBookerPrize-winningnovelbecausein
reality people bought it to leave on their coffee table to
impresstheirfriends.Suchunsettlingobservationshelpyouto
seethingsfromthecustomer’spointofview.
Askyourself:Whatdoyouknowaboutyourcurrentcustomers,
lost customers and target customers? What would you
ideallyliketoknow?Deviseawayoffindingout.
OperationalMarketing
If you get your strategic marketing right, then operational
marketingbecomesmucheasier.Inotherwords,ifyouhave
devised a business formula around a natural fit between
selectedcustomersandtheproductstheywant,attheright
price,thenadvertisingandpromotionbecomesmoreamatter
ofinformingthemratherthancoercingthem.There’snoneed
forcoldcallingorhardsellingifyou’velistenedtocustomers
all along and they’ve been included in the project from
thestart.Ontheotherhand,eventhemostpersuasive(or
‘creative’)advertisingwillnotsellaproductifit’snotwhatthe
customerswantandattherightprice.
TheMarketingMixisablendoftheFourPsofMarketing:
Product, Price, Promotion and Place. (Place really means
Distribution but ‘3 Ps and a D’ doesn’t have the same ring
to it.) These four controllable elements can be blended in
differentwaystomaximisesales–solongastheproductis
rightforthecarefullyselectedtargetmarket.
Promotion is actually just one aspect of the marketing mix
but it’s what people often mean when they use the term
‘marketing’asshorthandforadvertising,publicrelations(PR)or
otherchannelsofmarketingcommunicationsincludingdirect
mailandattendingtradeshows.Alloftheseareessentially
aboutgettingtherightmessagetotherightpeopleinthemost
effectiveway,emphasisingbenefitsnotfeatures.
39
IdeasinAction—seepage94
ViralMarketing
IdeasinAction—seepage32
Operationalmarketingisalwayslimitedbybudgetsandthat
budgetcanbeverysmallindeed,especiallyfornewcreative
businesses.Sometimes,however,thecheapestisthebest–
wordofmouthrecommendationsforexample–soencourage
this to happen and reward it when it does. Mando Group
gives a percentage commission for recommendations that
leadtonewwork.ViralMarketing,usedextremelyeffectively
byHotmailtoadvertiseitselfatthebottomofmessagesas
emails zoom around the Internet is also used by Online
Originalsastheire-booksaresentbetweenfriendssharing
worksofliterature.
Byadoptinganattitudetocustomersaspartnersratherthan
passivetargets,interactiveformsofmarketingcometomind.
Forexamplewebsitesthatpeoplecanengagewith(notjust
read) and printed materials that invite a response all treat
customersasactiveparticipants.
Ratherthanthinkingofexpensiveandrelativelyuntargeted
massmarketing(whichinanycasewouldbeinappropriatefor
mostcreativebusinesses)turnthisapproachonitsheadand
decidewhichsinglecustomerwouldbeperfectifyoucould
onlyhaveone.Thentrackdownthisidealcustomer,thenfind
onemore,thenanotherandsoon.
Inconclusion,marketingisnotamagicdustthatcanmake
anything sell. The magic of marketing works when you put
customers at the centre and build your enterprise around
theirneeds.
40
KeyPoints
1 Marketingisnotjustaposhwordforselling.
It’smuchmoreradicalthanthat.
2 Sortoutyourstrategicmarketing(partofyourbusiness
formula)beforeplanningyouroperationalmarketing.
3 Targetspecificmarketsegmentsorspecificcustomers.
Drawupatargetlistofclientstowin.
4 Marketingisadialogue,notamonologue.Itincludes
listeningtocustomersaswellastalkingtothem.
5 Notallcustomersaregoodcustomers.
Decidewhicharegoodandbadforyourenterprise.
6 Areyoutrulycustomer-focusedorstillproduct-focused?
7 Buildyourbusinessaroundcustomers’changingneeds.
Bepreparedtochangeascustomers’needsdo.
8 Howmuchdoyouknowaboutyourcurrentcustomers,
lostcustomersandtargetcustomers?Whatwouldyou
liketoknow?Deviseawayoffindingoutwhatyouneed
toknow,throughvariousmeansincludingdirectand
indirectmarketresearch.
9 Helpandencourageexistingcustomerstorecommend
youtonewcustomers–solongastheyaretherightkind.
10 Definetheidealcustomerthenfindone.
Thenanotherone,andsoon.
41
IdeasinAction
NewMindInternet
Internet,MarketingandTechnology
“Identifyamarketsegmentandmakeityour
own”isRichardVeal’sadvicetoothercreative
entrepreneursandthat’swhatNewMindhas
donewithitsspecialistsoftwareforthetourism
sector.“Aworldclassproductinaniche
market”,Richardalsodescribesitas“apiece
ofsoftwarethatworksforclients”.Oneofthe
reasonsitworkssowellisthatcustomersare
involvedinitsdevelopmentandnewversions
ofthesoftwarearereleasedeverythreemonths
tokeeppacewithclients’evolvingneeds.
NewMindlistenstoitscustomersand
concentratesitscreativityandskillson
deliveringsolutionsthatdeliverresults.
Incontrasttothecompany’sIomis
®
product,
whichisaimedatamoregeneralmarket,its
tourismsoftwarehasnogenericbrandbutis
a‘whitelabel’product,enablingclientsto
badge itwiththeirownbrand.Soforexample
itisknownbytheLancashireTouristAuthority
as‘LOIS’,theLancashireOnlineInformation
SystemandbyTheMerseyPartnershipas
‘MERVIN’theMerseysideVisitor
InformationNetwork.
www.newmind.co.uk
Foundedin1999byRichardandbusiness
partnerAndyAbram,theNewMindGrouphas
30employeesandaturnoverinexcessof£2m.
Itsrapidgrowthof1000%in5yearsearned
thebusinesstheprestigious‘InnerCity100’
awardforfastestgrowingbusinessinthe
NorthWest.NewMind’stechnologyand
websiteshavealsowonawardsforseveral
ofitsclients,theportfolioofwhichincludes
BathTourismandTheBeatlesStory,plus
manyothers.
TheNewMindGroupisincorporatedasthree
separatecompanies:NewMindTechnology
Ltd,NewMindInternetConsultancyLtdand
NewMindMarketingLtd.Thisispartlyto
provideseparatebrandingfortheirrangeof
workandalsotodistributebusinessrisk.
NewMindInternetConsultancyemploysthe
Group’s30membersofstaffandmostofthe
Group’sbusinessisconductedthroughthis
company.Quitedeliberately,theGroup’s
intellectualpropertybelongstoNewMind
TechnologyLtd,whichwouldallowtheGroup
tosellitsintellectualpropertyatalaterdate
throughthesaleofthiscompany,withthe
benefitsofithavingnoemployeesand
providingatax-efficientmeansofsellingits
valuableintangibleassets.
42
Richard(left)andAndy,NewMindInternet
Linkstorelatedideasandtopicsinbook:
ExploitationofIntellectualProperty(seepg58)
CompanyStructures(seepg75)
Customerinvolvementinthedevelopmentofproducts(seepg38)
Customers’changingneeds(seepg36)
5
Dealing with Competition
— In this chapter we look at Ideas about how to deal with competitors and position
yourself amongst them to create a competitive advantage.
— We also look at the larger forces of competition, including new entrants and
substitute products as well as your immediate rivals.
— Finally the idea of co-operating with the competition – ‘co-opetition’.
44
CompetitiveAdvantage
‘
’
Selectingtherightcustomers
seepage36
Aswellasfocusingoncustomers’changingneeds,themost
successfulcreativebusinessesrecognisetheyareworking
in a competitive environment and devise a competitive
strategy.Otherbusinessesareinthemarketforthesame
customers too! Some enterprises will compete on price
whilstothersspecialisetoserveanichemarket,becoming
thebestinthatnicheandchargingpremiumpricestomatch.
CompetitiveAdvantage
Oneofthequestionstoansweris:Whatcanwedobetterthan
ourcompetitors?Ironicallythismightnotbewhatyouarebest
at!CompetitiveAdvantageisfoundinthatareawhereyou
beatyourcompetitorshands-down–evenifit’snotyourbest
skill,orthethingyouenjoythemost.
TheanalogyIusehereisaboutmyfellrunning.Irunfaster
downhill than uphill (obviously) but so does everyone else!
Running uphill is slower and more painful – but it is for my
competitorstoo.IntheuphillstageIfinishnearerthefrontof
thepackbutI’mslowerthanaveragerunningdown.Somaybe
I should compete in Italy where fell races finish at the top,
becausetheremycombinationofstrengthsandweaknesses
wouldgivemeacompetitiveadvantage.
Thinking about competitive advantage in this way and
focusingoncustomers’needsatthesametime,thequestion
becomes: Which customers’ problems can we solve
betterthananyoneelse?
Businessstrategy–yourroutetosuccess–involvesdeciding
whatspecificallytodo,andwithwhichcustomers.Italsoinvolves
deciding what not to do, including deciding which market
segments not to compete in because the competition is
too strong, concentrating instead on areas where you have
competitive advantage.Selectingtherightcustomersneeds
tobedoneinthecontextofcompetitors.
45
CompetitivePositioning
Chartingthecompetition
YouandYourRivals
CompetitivePositioningisthetechniqueofanalysingwhere
youcurrentlyfitinamongstcompetingbusinesses,deciding
whereyoushouldbeandidentifyingyourown‘highground’on
thecompetitivebattlefield.
What is your customers’ perception of your business
inrelationtoyourrivals?
You and your competitors can be plotted on graphs with
various axes, such as price, service level, speed etc.
Atechniqueknownaschartingthecompetition
13
allocates
scoresagainst,say,tenkeycriteriaforeachofyourcompetitors
as well as yourself. This helps to establish where you can
positionyourselfandwhereyouneedtoimprove.
Customers’perspectivesareparamounthereandit’svitalto
lookatyourbusiness–andtheothers–fromthecustomers’
pointofview.Customerswilllabelyouoryourrivalsas‘cheap
andcheerful’,‘mostexpensivebutworththemoney’,being
‘easytodealwith’,havingthe‘fastestturnaround’orwhatever
theydefineas‘quality’.
Quality
Everyoneisinfavourofquality–butwhatexactlydoesitmean?
Moretothepoint,whosedefinitionofqualityismoreimportant
–yoursorthecustomer’s?TheNationalLibraryfortheBlind
(NLB),publisherofbooksinBrailleformat,pridesitselfonthe
highqualityofitsflawlessBraille.It’saskilledprocessthatcan
take months. By listening to its readers, NLB found that
somecustomerspreferredtoreaduncheckedBrailleproofs,
availablejustdaysafterthepublicationoftheprintedoriginal,
ratherthanwaitseveralweeksfortheperfectitem.Forthem,
speed was a quality issue. Now the NLB lets its readers
choosewhichtypeofqualitytheywant.
Quality is not a fixed thing. In business terms quality is a
harmonybetweencustomers’needsandwhat’sprovided.
46
ForcesofCompetition
‘
’
Benefitsnotfeatures
ForcesofCompetition
Themostobviouscompetitioncomesfromtheotherguyswho
dothesamethingasyou,butthesearemerelyyourrivals,
accordingtoProfessorMichaelPorter
14
ofHarvardBusiness
School.TherearefourotherForcesofCompetitiontotake
intoaccount.TheseareNewEntrants,SubstituteProducts
and Services, the Bargaining Power of Suppliers and the
BargainingPowerofCustomers.
Thequestiontoaskinrelationtonewentrantsis:What’sto
stop someone else setting up in business and competing
directlywithus?The‘barrierstoentry’maybeflimsy,unless
yourenterpriseisfoundedoncopyright-protectedtechnology
ordesigns,needsspeciallicencesorrequiresmassivecapital
investment.Howcanyoumoveintoapositionwhereothers
cannoteasilyfollow?
An even more potentially devastating competitive force is
the substitute product. Remember what affordable word
processorsdidtothetypewriterindustry!WhogoestoNew
Yorkbyoceanlinerintheageoftheplane?Again,lookingat
it from the customer’s point of view, what they want is not
a typewriter or word processor but the ability to produce a
professional document; not a berth in a ship or a seat on
aplane,buttoarrivesafelyandquicklyinNewYork.
Intermsofpotentialsubstituteproducts,thequestionhereis:
What is the benefit that the customer gets from existing
productsandservices?Arealunderstandingofcustomers’
needsmakeyoumorelikelytoinventthesubstituteproductor
serviceyourself–ratherthanbecomethevictimofit.
Entrepreneursfocusoncustomerbenefitsnotfeaturesof
theequipmentorservicethatprovidesit.Thecustomerwants
toknow“What’sinitforme?”.Ifthecustomer’sresponseis
“Sowhat?”,thenyou’vebeentalkingfeatures,notbenefits.
47
Co-opetition
‘
’
Co-opetition
Sometimes competitors can also co-operate as partners
inprojectsorjointventures.Co-opetition
15
istheresultof
bringingtogethercompetitionandco-operationtoformnot
justanewwordbutalsoanewpartnership.
Aco-opetitionpartnershipismorelikelywhenyourcompetitive
positioning is different in some way, ie your specialities and
strengthsarenotexactlythesame.
Co-opetitionisfoundedontheconceptthatbusinessesdonot
have to fail for others to succeed. They can co-operate to
enlargethepiethencompetetocarveitup,eachgettingmore
thantheyhadbefore.ThinkofLondon’sCharingCrossRoad
wherebooksellerscompetealongsideeachotherbutatthe
sametimecombinetoattractmorecustomerstotheirworld-
classstreetofbookshops.Motorracing’sFormula1industryis
centredonaclusterofsmallspecialistfirmsinthesouthof
England. Similarly, ‘creative clusters’ in Liverpool, London,
Helsinki, Huddersfield, Tokyo, Dublin, St Petersburg and
Los Angeles attract customers by bringing together a
concentrationofrelatedbusinesseswhichbothcompeteand
collaboratewitheachother.
Inanutshell,competitiveadvantageistheresultofselecting
the customers and markets where you will be a winner.
Astutechoicesarisefromunderstandingyourstrengthsand
weaknessesinrelationtootherenterprisessothatyoucan
choose wisely whether to avoid, compete (or co-operate)
withthem.Thewinnerswillbethebusinesseswhoprovide
the quality that profitable customers want, better than
anyoneelse.
48
KeyPoints
1 Assessthestrengthsandweaknessesofyourrivalsin
relationtotargetcustomers.Decidewhichcompetition
youcanbeat–andwhichyoucannot.
2 Anticipatecompetitivethreatsfromsubstituteproducts
–inventthembeforesomeoneelsedoes.
3 Understandthecustomers’needsthatthecurrent
productorservicesatisfies.
Engageinadialoguewithcustomers.
4 What’stostopotherpeoplesettingupinbusinessin
competitionagainstyou?Howcanyoumovetoaplace
wheretheycannotfollow?
5 Chartthecompetition.Wheredoyousitamongstyour
rivals?Whereelsecouldyoupositionyourself?
6 Ask:Whichcustomers’needscanweservebetterthan
anyoneelse?
7 Whatarecustomers’perceptionsofyourbusinessin
relationtoyourrivals?
8 Ifthecustomers’responseis“Sowhat?”thenyou’ve
beentalkingfeaturesnotbenefits.
9 Aretherecircumstancesinwhichyoucouldcollaborate
withcompetitors?ThinkaboutCo-opetition.
10 Areyoupartofacreativecluster?Couldyoube?
49
IdeasinAction
ESPMultimedia
CD/DVDAuthoringandVideo/ AudioPost-Production
ESPMultimediaLtdisanewmediadevelopment
company,specialisinginCDROMandDVD
authoring,andvideo/audiopost-production
work,ownedbyDavidHughesandDavidHarry.
ItsimpressiveclientlistincludesWarnerBros,
BBC,Sky,Toyota,SmirnoffandFilmFour.
BeforesettingupESP,DaveHughes
co-composedthesoundtrackforthefilm
Lock,StockandTwoSmokingBarrelsand
soonafterwardsfoundhimselfinLosAngeles
workingonfilmssuchasTheBachelorstarring
RenéeZellweger.Suchhigh-profileprojects
arenotalwaysthemostlucrative,saysDave.
More‘commercial’projects,suchasbuilding
SkyTV’smusiclibraryaremoreprofitablelong
term–andtheyarenotalwayslesscreative,
insistsDave.
DavidHarrywasamemberof90s’chartdance
act‘Oceanic’beforeturninghistalentsto
multimediaasadeveloperandconsultant.
ESP’sbusinessformulacombinesthehighly
creativeprojectswithwhatDavecallsthe
“breadandbutter”activities,iesmallerjobs
whichkeepthemoneycominginbetweenthe
majorprojects,forexampleauthoringand
duplicatingDVDsandCDs.
www.espmultimedia.com
www.cdduplicator.co.uk
ESP’sCDduplicatingbusiness,originallya
partnership,hasnowbeenbroughtinsidethe
limitedcompany,inordertoreducebusiness
risksfortheowners.‘CDDuplicator.co.uk’is
stillaseparatebrandandnowactsaswhat
Davecallsa“frontdoor”forclients,tointroduce
themintoESP’ssophisticatedrangeoftechnical
specialismsandprofessionalmediaservices.
Anotherincomestreamisderivedfromroyalties
oncopyrights.FortheBBCTVseriesFunland,
DaveHugheshasnegotiatedretaininghis
publishingrightsinsomeDVDreleasesand
anyothersalesoftheprogrammefollowing
thebroadcastoftheseriesintheUK.
Despitetheirhigh-profileprojectsandextensive
clientlist,Davemaintainsthattheircreative
enterpriseisultimatelyaboutqualityoflife–
inotherwords,a‘lifestylebusiness’.
50
DavidHughesatwork
Linkstorelatedideasandtopicsinbook:
PartnershipandCompanystructures(seepg75)
‘Commercial’and‘Creative’notnecessarilyaconflict(seepg8)
Retentionofcopyrighttocreateincomestreams(seepg58)
Brands(seepg53)
LifestyleBusiness(seepg9)
6
Protecting your Creativity
— This chapter comments on the growing importance of intangible assets in the
Age of Information.
— It talks about the importance of Intellectual Property and how to protect your
ideas through copyright, design rights, trademarks and patents.
— Crucially, it discusses how to use intellectual property rights to turn your
bright ideas into income streams.
52
Intangibleassets
‘
’
The new millennium heralded the ‘Age of Information’
andatransitionfromtheindustrialageassignificantas
thetransformationtotheindustrialerafromagricultural
society a couple of centuries earlier. Correspondingly
there was a shift in power and wealth from land to
factoriesandfromnowontowardsinformationandideas.
TheAgeofIntangibles
ThisneweracouldbecalledtheAgeofIntangiblesbecause
somuchpowerandwealthisbecomingtiedupinintangible
assetssuchasbrands,marketinformation,know-howand
ideas. Though we cannot touch them, intangibles can be
bought and sold like land or machines and represent an
increasingproportionofglobalwealth.Ifyoubuyasharein
Microsoft,onlyasmallfractionofwhatyouarebuyingisin
land,buildingsandcomputerhardware;mostofwhatyouare
buyingintoisashareofMicrosoft’sbrands,licences,systems,
expertiseandmoraleofitsemployees–inotherwordsthe
intangiblestuffthatwillproducefutureprofits.Conventional
accountancyfailstofindagoodwayofcountingthevalueof
intangibles,butthemarkettakesitintoaccountandiswilling
topayfarmorethanisrepresentedonthebalancesheet.It’s
amulti-billiondollarequivalentofpayingextraforthatinvisible
goodwillwhenbuyingashopformorethanthevalueofthe
premisesplusitsstock.
IntellectualProperty(IP)
Creativeideashavebeenaroundsincewellbeforesomeone
designedandbuiltthefirstwheel,butownershipofcreativity
has never been as clear-cut as ownership of natural
resourcesorproductionfacilities,andstillisn’t.Forcreative
entrepreneurslivingintheAgeofIntangibles,ownershipof
creativity has never been so important. The ownership
of creativity is complex, both philosophically and legally.
53
IntellectualPropertyand
IntellectualPropertyRights
‘
’
Intellectual Property (IP) is the product of creative ideas
expressedinworksandIntellectualPropertyRights(IPR)are
thelegalpowersassociatedwiththeownership,protection
andcommercialexploitationofthosecreativeworks.
IntellectualPropertyisattheheartofthecreativeindustries
whichhavebeendefinedas‘thoseactivitieswhichhavetheir
origininindividualcreativity,skillandtalent,andwhichhavea
potentialforjobandwealthcreationthroughthegeneration
andexploitationofintellectualproperty.’
16
Copyright,Designs,
TrademarksandPatents
Thisisacomplexlegalareabutthesemainpointsshouldprovide
thebasisforfurtherresearchbeforeseekingspecialistadvice.
Inlegalterms,ideasthemselvescannotbeowned,onlytheir
expressioninaspecificway.Sotheideaforanovelcannot
be protected by copyright, only its written form. In UK law,
copyrightexistsassoonasanideaistransformedintosome
permanent / tangible form. Registration is not necessary.
Copyright automatically protects works including writing,
music, film, artwork, broadcasts and computer programs.
Generallycopyrightlastsforthelifetimeoftheauthorplus70
years.Thecopyrightsymbol©isnotessential,butindicates
thecopyrightownerandthatpermissionshouldbeobtained
tocopytheirwork.Unregistereddesignrightariseswhena
designiscreated,inasimilarwaytocopyright.Designscan
alsoberegisteredthroughtheUKPatentOfficesolongasthey
haveaunique‘individualcharacter’.
Trademarksareusedtodistinguishthegoodsorservicesof
onebusinessfromanother.Trademarksarenotonlythelogos
that companies and organisations use as badges, but can
also be words, shapes, pieces of music, smellsor colours.
(Cadbury’sfamiliarpurplecolourisaregisteredtrademark–
nobody else can use the same colour for chocolate
packaging.)Trademarksapplytodifferentclassesofgoods
and services which is why Penguin can be a trademark for
bothbooksandbiscuits.MimashimaRecordscheckedout
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IdeasinAction—seepage60
‘
’
trademarks globally before deciding their trading name.
Though‘shima’wasusedbycompaniesinJapan,nonewere
recordlabelsandsotheywerenotinfringingothercompanies’
trademarkrights.Medicationisaregisteredtrademarkofa
nightclubpromoter,notadrugcompany.
Trademarkscanbeunregistered,orregisteredpermanently
throughtheUKPatentOffice.Patentsthemselvesareusedto
registerandprotectinventionsandaremainlyconcernedwith
mechanisms,designs,processesetc.
TheUKPatentOfficewebsiteprovidesusefulinformationand
detailsofregisteringpatents,designsandtrademarks.
There is no obligation to register trademarks, designs or
inventions – indeed the recipe for Coca Cola is protected
bysimpleold-fashionedsecrecyratherthanapatent.Without
registration,however,itwillbemoredifficulttoobtainlegal
protection if someone else uses your design, trademark or
inventionfortheirownpurposes.
IntellectualPropertyRights(IPR)
IntellectualPropertyRightsincludemoralrights,publishing
rights and mechanical rights. Moral rights relate to the
creator’srightstoreceiverecognitionasthecreatoroftheir
workandtopreventothersfromfalselyclaimingcreditforthe
creator's work. Copyright may remain with the creator of
the work, or be transferred to another person or company.
Publishingrightsmaybegrantedtoathirdpartytopublisha
workinaparticularway,foralimitedduration,inspecified
markets,withouttransferringcopyrighttothepublisher.The
term ‘mechanical rights’ is used in the music industry and
referstoaparticularrecordingofawork.Sothemoralrights,
copyright and mechanical rights in a piece of music may
belong to three different people or companies. Copyrights,
trademarksandotherintellectualpropertycanbeboughtand
sold like other commodities. The rights and ownership of
YesterdayandotherBeatlessongsisastoryinitself.
55
IdeasinAction—seepage70
InrecentyearstheadditionaloptionofInternetdownloadshas
created a new way to commercialise intellectual property.
RocklegendPeteWyliehadtheforesighttoinsistonkeeping
thedownloadrightstohismusicwhennegotiatingwithhis
record company in 2000. His songs are now available for
download from the iTunes Music Store and the resulting
royaltiesarehis.
David Bowie, both an artist and a businessman, put his
creativityintocommercein1997andpioneeredthesaleof
bondstoraise$55milliontobuybackthecopyrightsinhis
music. He now controls the use of his works and repays
bondholders a fixed rate of return on their investment
fromincomegeneratedbytheexploitationofhisintellectual
propertythroughnumerouslicensingdeals.
Employees,ContractorsandClients
It’sworthnotingthatanemployeewhocreatessomethingas
partoftheiremploymentnormallydoessoonbehalfoftheir
employerandsotheydonotownitthemselves,theemployer
does. There should be a clear understanding between
employer and employee about these issues, and this is
normally set out in a contract of employment. New Mind’s
employees’ contracts specify that the software they create
belongstothecompany.Forfreelancecontractorsandother
situations the position is less clear cut and is negotiable.
Thisisanimportantconsiderationinthebusinessenvironment
ofthecreativeindustrieswheretherearesomanyfreelance
contractorsandadhocpartnershipsaswellasconventional
employer-employeerelationships.Whenengagedbyaclient
toproduceacreativeproduct,ownershipandfutureuseofthe
fruits of creativity needs to be agreed in advance so the
position is clear to all parties involved. The ownership and
transferofIPshouldbewrittenintoclientcontractsandterms
oftrade.SeeJABDesign.
Sointangiblescanbeprotectedtosomeextent,butownership
oftheirmeansofproductionisvirtuallyimpossible.Foodisthe
productoflandsomebodyownsandgoodstheproductofa
factoryownedbyafirm,butideasaretheproductofabrain
belonging to a person who cannot be owned and can walk
56
‘
’
IdeasinAction—seepage42
awayfromthebusiness.Ifallyouremployeeswonthelottery
jackpotinasyndicateanddidn’treturntoworkonMonday
(it happened in Spain!) what value would be left in your
creativeenterprise?Landorfactoriescannotjustwalkaway,
butyourhumanassetscan.
Whatyouhaveleftinthebusinesswhenalltheemployees
havegonehomeisreallyallthatyouown.Onlythosethings
thatarenotdependentonindividualsbelongtothebusiness
itself. These tangible assets probably amount to not much
morethanofficefurniture,computersandsomeequipment.
A creative enterprise’s wealth is more likely to lie in its
intangible assets, ie in its intellectual property such as
copyrights, brands, trademarks and patents, appropriately
registeredandprotected.
Generatingideasistheeverydayworkofcreativeandcultural
enterprises and the expression of those ideas creates
intellectual property. Protecting that intellectual property
throughtheregistrationoftrademarks,designsandpatents
prevents unfair exploitation of your creations so that you
remaininbusiness.Owningintellectualpropertythatbecomes
anintangibleassetunderpinsthevalueofyourenterpriseso
thatyourbusinessremainsbeyondyou.
Whenyouwanttomoveonorretire,thisisallyouhavetosell,
becauseiftheenterpriseisentirelybasedonyourskillsand
what’sinyourhead,yourbusinesscannotbesoldtosomeone
else.NewMindputalltheirintellectualpropertyintooneof
theircompaniessothatitcouldbesoldseparatelyinthefuture.
TurningCreativityintoCashflow
Whilstmoralrightsgiverecognitiontotheartistorcreator,in
business terms the point of intellectual property rights is
toutilise(exploit)themtocreaterevenuestreamsfortheir
ownerthroughdirectsalesandlicensingagreements.
Many creativebusinessesviewthewholeareaofintellectual
property purely defensively, simply to protect their rights.
Successful creative entrepreneurs also have an assertive
approach. I will use a metaphor from the world of tangible
57
IdeasinAction—seepage78
IdeasinAction—seepage50
products,forexamplegoodsstackedinawarehouse.Yes,we
need to lock them securely away at night to protect them
fromthieves.Butduringthedayweneedtoopenourdoors
widelyandconfidentlytosellourwares.That’swhenwemake
ourmoney.Whilstweneedtoprotectourintellectualproperty
fromtheft,wemustalsolookforopportunitiestosellit,which
cannot be done if the focus is so much on protection that
thedoorsarepermanentlylocked.
Creative work can be repurposed, ie expressed in different
waysthrougharangeofsaleableitems.Soforexamplean
artist can sell not only the original work but also prints,
postcardsorevenmugsandmousemats.
The Red Production Company licenses format rights and
sellsDVDsofitsTVproductions.
Licence agreements allow third parties to use intellectual
property,forspecificpurposesandperiodsoftime,inexchange
for fees, without selling the intellectual property rights. For
exampleDavidHugheshaslicenceagreementswiththeBBC.
SeeESPMultimedia.
Inconclusion...
thebusinessofcreativityistheartof
turningrecognitionintoreward,
andthescienceofturningintellectual
propertyintoincomestreams.
58
KeyPoints
1 Countyourintangibleassetsaswellasthetangibleones.
2 Assessyourcurrentintellectualassetsaspartofthe
PRIMEFACTanalysisofyourstrengthsandweaknesses.
3 Includeyourintellectualproperty–anditsprotection–
inyourbusinessstrategy.
4 Intellectualpropertyshouldnotonlybeprotectedbut
alsoexploited.Howcanyouturnitintoincomedirectly
orindirectly?
5 Areyousureyouarenotinfringingonotherpeople’s
intellectualpropertyrights?
6 Areyourcontractswithemployees,clientsandcontractors
clearabouttheownershipandtransferofintellectual
propertyrights?
7 Acreativeenterprise’swealthismorelikelytoliein
intangibleassetsthantangibleones.
8 Whatvaluedoyouhaveleftinthebusinesswhenall
theemployeeshavegonehome?
9 Getexpertadviceonregisteringdesigns,trademarks
andpatents.Howmuchvalueliesinthepartsofyour
businessthatcannotjustwalkaway?
10 Remember:thebusinessofcreativityistheartof
turningrecognitionintorewardandthescienceof
turningintellectualpropertyintoincomestreams.
59
IdeasinAction
Medication
StudentClubNightandPromotionsCompany
Medication
®
istheregisteredtrademarkof
MedicationLtd–notapharmaceuticals
companybutthepromotersofLiverpool’s
mostsuccessfulstudentnightout.
FounderMarcJonesregisteredhisbrandas
atrademarkwiththeUKPatentOfficeunder
Class41,whichincludes‘entertainment
services;nightclubanddiscothequeservices’.
Marcexplained:“Itwouldbeimpossibleto
register‘Medication’asatrademarkforany
kindofmedicalproduct,butthat’snotthe
businesswearein,andtherewasnoproblem
registeringitforexclusiveuseasan
entertainmentbrand.”
MarcandbrotherJasonJonesplantobuild
thebrandanddiversityintomerchandise
includingmusicpublishingandclothing.
Bythinkingahead,theyalsoregistered
MedicationasatrademarkinClass09
(soundandvideorecordingsintheform
ofdiscsortapes)andClass25(clothing,
footwearandheadgear).
Medicationisabusinesswithnosignificant
fixedassetsandMarcandJasonrecognisethat
theirenterpriseisbasedontheirknow-how
andanotherintangibleasset–theirbrand
andregisteredtrademark.
Theprotectionoftheenterprise’sIntellectual
Propertythroughtheregistrationoftheirbrand
asatrademarkputstheminapositionto
expandtheir‘studentnight’businesstoother
cities.Thetrademarkregistrationinadditional
classesenablesthemtodiversifythebrand
intootheractivitiessuchasmerchandising.
Furthermore,theyarenowinastrongposition
tonegotiatejointventureswithotherbusinesses
hopingtocapitaliseonthe‘Medication’brand.
Atthetimeofwriting,Medicationhavejust
startedajointventurewithLiquidation,one
ofLiverpool’sleadingalternativenights,
called‘Indiecation’–anewFridaynightthat
islookingtocapturethenation’sreawakened
interestinbigguitars,fuzzyampsandskinny
boyandgirlbands.
www.medication.co.uk
60
Linkstorelatedideasandtopicsinbook:
IntellectualProperty(seepg54)
Trademarks(seepg54)
IntangibleAssets(seepg53)
Brands(seepg53)
7
Counting Your Money
— This chapter emphasises the importance of understanding and monitoring
your enterprise’s financial health by looking at financial measures from three
different perspectives.
— It also covers raising funds and the importance of generating future income
streams both for investors and your own long-term financial security.
62
‘
’
This financial section applies to not-for-profit
organisations as well as commercial businesses. In
factinmyownexperienceitsometimesrequiresmore
financialacumentorunasocialenterprise,balancing
creative or social ideals with economic pressures to
achievetherequiredfinancialoutcome.
WhenIaskbusinessesabouttheirweaknesses,usuallyone
of the first answers I receive is “we don’t have enough
money!”Clearly,acriticallackofcashisaproblemforany
businessorsocialenterprise–neworestablished–andit
canpresentbarrierstothrivingorevensurviving.
The financial barriers are real – or sometimes imaginary.
‘Imaginary’inthesensethatpeopleoftenimaginethatto
start a new business requires immediately having all the
assets and trappings of a well-established enterprise:
equipment,offices,vehiclesetc,whenveryoftenitneeds
lessthantheythink.Thequestionisnotsomuch:Howmuch
moneywouldwelikeideally?Abetterquestionis:Howlittle
doweneedtomaketheenterprisefeasible?(eitheranew
businessoranadditionalventure).Waitingforthedayallthe
moneyarrives,fromthebank,afunder,ortheLotterycould
mean it never happens. Success stories often start from
meagre beginnings. Equipment can be hired or borrowed
ratherthanboughtnew,vehiclesrented,officescanbeshared
(orvirtual)andprofessionalservicescanbetraded.Growth
can be organic rather than a sudden step-change and
managingonlowoverheadscanbenotonlyausefuldiscipline
intheearlydaysbutalsothebasisofasustainablelong-term
financialstrategy.
Being clear about how much is needed – for capital
expenditureandworkingcapital–isessential.Minimising
purchases of equipment reduces funds tied up in fixed
assetsandcashremainsfreetoprovidethelife-bloodofa
63
Threefinancialwindows
‘
’
businessieworkingcapital–themoneypumpingthrough
thebankaccounttoenableessentialeverydaypaymentsto
bemade.Ifthisworkingcapitalisinsufficient,thebusiness
couldcollapsedespitehavingprofitableprojectsinthepipeline.
ThreeWaystoCountMoney
Thethreewaysoflookingatthefinancesofanyenterprise
are through three financial windows, the Income and
ExpenditureAccount,theBalanceSheetandtheCashFlow.
Each of these can be reports of past activity or projections
anticipating a future situation. Each tells its own story and
helpstoplanasuccessfulfuture:thecreativeentrepreneur
needstounderstandanduseallthree.
TheIncomeandExpenditureAccount
17
showstheprofit
made over a particular period, usually one year. (Even for
not-for-profit organisations this is a crucial concept. The
co-operative movement prefers the word ‘surplus’ and this
termcanbesubstitutedthroughouttherestofthischapter
ifrequired.)
The Balance Sheet shows the total value (net worth) of a
businessataparticularpointintime.It’sa‘snapshot’ofthe
assets,liabilitiesandequityoftheowners.Thebalancesheet
indicatesthefinancialstrengthandcapabilitiesofabusiness.
TheCashFlowReportshowswherecashcamefromandwent
tointhepast.Crucially,acashflowprojectionindicateswhen
cashislikelytocomeandgointhefuture,onamonthlyor
weeklybasisintheforeseeablefuture.Acashflowprojection
isavitaltooloffinancialmanagement.
Financialaccountsarethereportsforlegalandtaxpurposes
and tend to be produced long after the event. In contrast,
managementaccountsareformanagerstouseinrealtime.
Itistheinformationyouneed,whenandhowyouneedit,to
enableyoutokeepaneyeonwhat’shappeningandguidethe
businessthroughgoodandbadtimes.
64
Cash Flow – or lack of it – is the quickest killer so the
management of cash flow must be of most immediate
concerninday-to-daymanagement.Aslongascashflowis
healthy then rises or falls in profitability can be survived,
thoughunprofitableactivitieswillhitcashflowsoonerorlater.
It’s vital to manage the cash flow but essential also to
understand the profitability that creates cash. An effective
businesspersonknowstheprofitabilityofeachprojectinthe
enterprise,notjusttheircombinedtotal.
Eachprojectordepartmentneedstomakeacontributionto
the overheads of the organisation as well as cover its own
direct costs. Or to put it another way, a proportion of core
costsneedtobeallocatedtoeachprojectordepartment.
Thebalancesheetshowsthevalueofthebusinessatspecific
points,past,presentandfuture.Thisispublicinformationfor
alimitedcompanyandgivesoutsidersastatementofthenet
worthofacompanyintermsoffixedassets(equipmentand
property), current assets (cash and bills receivable), and
currentliabilities(overdraftsandbillspayable).Itisagainst
theseassetsthatthecompanymightwanttoborrowfunds.
Many creative and cultural enterprises focus on sales
(turnover)insteadofprofit.Astheysay,“turnoverisvanitybut
profitissanity”.Evenforsocialenterpriseswhereprofitisnot
theprimeconcern,lossescanbefatal.Clearly,profitisderived
fromthedifferencebetweenincomeandexpendituresothe
controlofcostsisessentialtoo.
ControllingCosts
Therearetwokindsofcoststocontrol.Firstlyvariablecosts
(thecoststhatwillgoupanddowndependingonthelevel
of sales), because reducing variable costs will help make
activitiesandprojectsmoreprofitable.
Secondlycontrollingfixedcosts(thecostsyouarecommitted
topayingwhetheryou’rebusyornot)willhelpavoidcashflow
65
IdeasinAction—seepage94
IdeasinAction
—seepages94&70
problemsandpotentialdisasterduringtheleanertimes.Low
fixedcostsalsoenableyoutobelessdependentonconstantly
highsalesandsolessdesperatetobringincashatanycost–
forexamplehavingtodounprofitableprojectsfornon-target
customers–seeMandoGroup.Useyourcashflowforecast
toseehowsoonacashcrisiscouldoccurifbusinesshitsa
temporarydownturnwithdifferentfixedcostscenarios.Being
abletosurvivethebadtimessometimesamountstohavinga
philosophyofkeepingfixedcostsaslowaspossible.
Oneofthebiggestcostsisstafftimeandsothisneedstobe
monitored to get useful management information, control
costsandincreaseprofitability.Romanianbrandingcompany
Grapefruit uses an automated system to record staff time
spent on projects, good practice learnt in the USA by the
company’sChiefCreativeOfficer,MariusUrsache.
RaisingFunds
Raisingfundsisessentiallyajobofpersuadinginvestorsthat
theywillgetareturnontheirinvestment.
Thisapplieswhetherit’sabankthatneedstoknowhowyou
willbeabletorepaythecapitalandinterest,orashareholder
whoneedstopredictareturnoninvestmentfromprofitsand
dividends.Apublicfundingagencywillneedtobeassuredof
yourlong-termsurvivalsoastomaintain‘publicbenefit’in
order to justify their investment from the public purse.
(Financial viability may include match-funding from other
sourcesoradegreeofself-generatedincome.)
Sowhicheverwayyouarelookingforfunds,thestartingpointis
nottheapplicationformbutthecreationofafeasiblebusiness
formula,inotherwordsasustainable‘businessmodel’,which
willprovidepredictablefinancialresults.Itisessentialtoget
thebusinessformularightinthefirstplacebeforewritingitup
into a business plan.Mando Group obtained a number of
loansonthebasisofitsbusinessplan,asdidJABDesign.
Predictions involve risk and the degree of predictability
dependsontheinvestor’sattitudetorisk.Investorsareoften
66
‘
’
risk-averseandwillrequireachargeonyourassets.Intangible
assetssuchasintellectualpropertyarenotoriouslydifficultto
useassecurity.Bankswillinsistthattheriskispartlyyoursby
takingguaranteesbasedonyourbusinessassetsorpersonal
property,whereasventurecapitalfirmswillgenerallyaccept
moreriskbutexpectagreaterpaybackintermsofalargeslice
ofyourbusiness.
There are numerous schemes to provide start-up grants or
loansforspecifictypesofbusinessinparticularregions.They
changesofrequentlythatitisnotworthbeingspecifichere.
Seekfinancialadvicefromprofessionals,mentors,friendsand
supportagenciestoapplytoloanguaranteeschemes,totake
advantage of tax breaks or to obtain partnership funding.
It’sworthnotingthataswellascollectingtaxes,HMRevenue
andCustomsalsoprovideextensivehelpandadvice.Business
support agencies will have up-to-date advice and their
contactdetailscanbefoundonthewebsite(seetheFurther
Informationsectionattheendofthebook).
Itshouldbenotedthattherearealwaysconditionsattachedto
grantsandloansandtheapplicationprocesscantaketime
andpossiblydelayprojects.IntheworstcasesIhaveseen
inappropriate grant aid push organisations in the wrong
direction.Sometimesbusinessesaskforhelptogetgrants
andloanswhenwhattheyreallyneedisadifferentbusiness
modeltomakethemstrongerandlessdependentongrants
orloans.Itisthereforeadvisabletoassessthedisadvantages
aswellastheadvantagesofgrantsandloansbeforedeciding
whetherornottoapplyforthem.
YourFinancialControlPanel
Financeandaccountingareoftenregardedastheboringside
ofbusinessbycreativepeople,butthosewhoignoreitarenot
in control of their business destiny. It’s like driving a car
withoutlookingatthedashboard.Successfulentrepreneurs
don’tneedtolookatallthedetailedfinancialinformationbut
doneedsightofthekeyfinancialmeasures.Thesearethe
equivalentofthecar’sdashboardinstrumentsshowingthe
67
FinancialDashboard
BusinessDashboard
seepage99
importantinformationsuchasspeed,fuelandoilpressure.
The financial equivalents are profitability (per project and
overall),cashflowandnetassets.
What each enterprise needs is a simple but effective
Financial Dashboard, constantly visible when driving the
business. More sophisticated measures include financial
trendsandratios.Unlessyouhaveoneeyeontheprofitability
andcashflowdials,you’reheadingforacrash–oranempty
tankinthefastlane!
A more comprehensive Business Dashboard will take
into account other vital indicators as well as the main
financialmeasures.
CreatingFinancialSecurity
Financial security is derived from creating income streams
thatarenotdependentonyourcontinuouslabour.Theseare
theincomestreamsthatflowwhileyousleep.Thethingsthat
createthiscashflowcanalsobesoldatalaterdate.Inthe
creativeindustries,thisismostobviouslyachievedthrough
the utilisation or exploitation of your intellectual property.
Intellectual property rights, managed skilfully, enable a
creatortoreceiveongoingincomefromavarietyofsources.
SeeChapter6rotectingYourCreativity.
Inanutshell,thebusinessofcreativityistheartofturning
creativetalentintointellectualpropertythatprovidesincome
streamsfortheownersofthatIP.
68
KeyPoints
1 Don’twaitforthedayyouhaveanidealamountofmoney
–itmightnevercome.
2 Understandyourbusinessfinancesbylookingatthem
fromthreedifferentperspectives.
3 Usemanagementaccountstomonitorandplan
yourbusiness,notjustfinancialaccountstoreport
onpastevents.
4 Keepfixedcostsundercontrol.
5 Toraisefundsyouwillneedtoshowhowyourbusiness
formulawillcreatesustainableincomestreams.
6 Decidewhatneedstobemeasured,thendevisea
financialdashboardsoyoucanstayincontrol.
Keeponeeyeonthedialssothatyoudon’tcrash
–orrunoutoffuelinthefastlane.
7 Getexpertadviceontaxation,VATetcfrom
anaccountant.
8 It’snotjustaboutbusinessprofits–socialenterprises
needtogeneratesurplusestoo.
9 Beawareofthestringsattachedtograntsandloans.
10 Createfinancialsecuritythroughtheexploitationof
yourIntellectualProperty.
69
IdeasinAction
JABDesignConsultancy
IndustrialProductDesign
JABDesignisaninternationalaward-winning
productdesigncompanywhichworkswith
innovatorsandmanufacturerstodevelop
commercially-successfulnewproducts.
Thecompanyhasexperienceindesigning
medicaldevices,lighting,furniture,laboratory
automation,consumables,electronics
enclosuresandseveralothertypesofproduct.
ManagingDirectorJonathanButterssays:
“Insteadofspecialisinginjustonefieldwework
acrossconventionalspecialismsbecauseit’s
theinterfacebetweenthemthat’sinteresting
andcreative.Forexamplewedesignmedical
equipment,traditionallyusedonlybyspecialists,
forusebypatientsintheirownhomesusing
ourexpertiseofdesigningconsumergoods.
Similarly,theinterfacebetweenpsychology
andengineering,orelectronicsandsociology
alsogivesrisetocreativenewdesigns.”
“Gooddesigncannotbetheego-centriccreation
ofthedesignerworkingalone.Designisa
process,”heemphasises.“Thedesignprocess
involvesadialoguewiththeclienttoaddress
theneedsofvariouscommunitiesofinterest
includingtheenduserandthoseresponsible
fortheproduct’ssale,maintenanceand
disposal.”Gooddesignerscandealwith
customers’needsandhepointsoutthat
creativegeniusessuchasCaravaggioand
DaVinciworkedmainlyforcustomers,rather
thaninartisticisolationandwerestillableto
putsomeofthemselvesintotheircreations
withoutanycontradictionbetweenartistic
integrityandclients’requirements.
www.jabdesign.co.uk
Withabackgroundinengineering,Jonathan
startedinbusinessasasoletraderin1999
andin2001devisedabusinessgrowthstrategy
foranewcompanywiththehelpofbusiness
supportagenciesincludingCreativeBusiness
Solutions.Theirbusinessplanidentifiedgrowth
areastofocuson,suchasbiotechnology,
medicalandsafetyequipmentamongstothers.
Ineachareatheyhavedesignedsuccessful
productswhichledtomoreworkinthatfield.
It’sagrowthtechniqueJonathandescribes
as“usingasmallfishtocatchabiggerfish”.
Businessgrowthdependedonloansand
Jonathanfoundtohisdismay(thiswasno
surprise!)thatbanksandotherfunderswere
“onthewholearisk-aversebunch”.Hisown
bankturneddownhisapplicationforaloan
andotherinstitutionswereequallyreluctant
atfirst.Itwasn’tuntilheputhisownmoney
wherehismouthwas,byre-mortgaginghis
ownhome,thathewasabletofindfunders
willingtosharetherisk.“Funderswantto
knowthatyou’regoingtofeelthepainofthe
challengeandputyourallintomakingthe
businesswork.”Thefinalfundingpackageof
around£200Kwasmadeupfromloansfrom
theMerseysideSpecialInvestmentFund,
theSmallFirmsGuaranteeScheme(through
LloydsTSB)plusre-mortgaginghisownhome.
TherewasalsograntmoneyfromBusiness
LinkandBusinessLiverpool.
Sincethen,JABDesignhasgrownintoathriving
businesswith9staff,20clientsandaturnover
ofaround£750kperannum.Beforeemploying
70
Linkstorelatedideasandtopicsinbook:
CreativityAlchemy(seepg8)
Businessasadialoguewithcustomers(seepg38)
Workingonthebusinessnotinthebusiness(seepg81)
Raisingfundsandusingsupportagencies(seepg66)
OwnershipandtransferofIPtoclients(seepg56)
Values(seepg11)
staffJonathaninvestedinlegaladvicetoensure
thecompany’scontractofemploymentwas
comprehensive.Sincethenthecompanyhas
beenabletodealwithsomestaffissuesfollowing
thecorrectprocedureswithoutopening
themselvesuptoappealsandcounterclaims,
due to having up-to-date contracts of employment.
Nolongeraone-manband,Jonathannowspends
moretimeworkingonthebusinessratherthan
init,whathecalls“occupyinghigherground”.
Hisstaffconcentrateondesignworkusing
high-endtechnology–SolidWorks3DCAD
softwareandhesupervisesallprojects
“addingaqualitativelayeroverthetop”as
heputsit.Oneofhiskeytasksisliaisingwith
customers,whichincludeswritingthebriefs
andtechnicalspecifications,agreeingstagesof
workwiththeclientandmanagingcustomers’
expectations,allofwhichcallfor“UnitedNations
leveldiplomacyattimes”accordingtoJonathan.
Thecompany’sTermsofTrade(availableon
itswebsite)wereestablishedearlyonwith
specialistinputandJonathanlooksbackat
thisasanimportantmove.Theyhavebeen
amendedtwicesincethen,toclarifysome
issuesraisedbyparticularclients.JABDesign
havesincehadasignificantdisputewitha
clientandmanagedtogainasettlementout
ofcourtbecauseoftherobustnatureoftheir
termsandconditionsoftrade.
Importantclausesdealwiththeassignment
ofintellectualpropertytotheclient.Crucially,
thisreleaseofIPistiedtoclientpayments,
therebysafeguardingcashflow.Inrecent
developments,JABDesignhasnegotiated
paymentsthroughroyaltiesonproductsales
inexchangeforareductionindesignfees.
Talkingaboutthecompany’svalues,
Jonathansays“weareenthusiasticabout
productsthatincreasequalityoflife,not
trivialstuff.Medicalandsafetyequipmentis
importanttousandqualityoflifeincludes
sportsandleisureproducts.Wedon’tdo
militarywork.”AnotherJABDesignproject,
anewsafetyproductforthedeep-seafishing
industrywhichispredictedtosave50livesa
year,wasstillsubjecttoclientconfidentiality
atthetimeofwriting.Watchthisspace!
8
Keeping Good Company
— This chapter explains limited and unlimited financial liability and the pros
and cons of setting up a limited company for your business as well as
considering other corporate structures.
— Different organisational structures are outlined as well as concepts such as
the ‘virtual organisation’.
72
The vast majority of businesses employ less than ten
people and the creative industries are no exception –
many are one-person enterprises, operating on a
self-employed basis as sole traders. Other creative
businesseshavesetupascompaniesorsocialenterprises.
FinancialLiability
Whilst self-employment has some benefits it also has
disadvantages,includingunlimitedliabilityfortheowner
‘ 
sinceinlegaltermsthebusinessandtheindividualareone
and the same thing. The owner’s personal and business
finances are all in one ‘pot’. This unlimited liability also
applies to partnerships (except in the case of a Limited
LiabilityPartnership).
’
Limited liability is usually achieved through setting up a
‘limited’ company as a separate entity or vehicle for the
businesssothattheliabilityoftheinvestors(members)is
limitedtotheamounttheyhavechosentoinvestinit.Ifthe
businessgoesbust,theirlossesarelimitedtotheirbusiness
investment,nottheirpersonalpossessions.(Thiscontrasts
with‘unlimitedliability’soletradersandpartnerswhomight
havetopayoffbusinessdebtswithpersonalfunds.)
Evenwithalimitedcompany,abankmayrequirepersonal
guarantees against a business loan if the business does
not have sufficient suitable assets. The liability is then
effectivelytransferredawayfromthecompanytotheperson
guaranteeingtheloan.
It’s important that everyone involved in the enterprise
understandstheirfinancialliability.
73
CommunityInterestCompany
LimitedCompanies
Settingupaprivatelimitedcompanyisstraightforwardand
theprosandconsshouldbeconsidered.
In law, a limited company is regarded as a separate legal
‘person’.Thisseparationisanessentialelementofproviding
limitedliabilityforitsmembers.Italsomeansthatitisthe
companythatownstheassets–andcanbesuedinacourtof
law–nottheindividualshareholders.
Oneofseveralconsiderationsforsmallerenterprisesisthe
‘image’ofhavinglimitedcompanystatus,whichmaygivethe
businessmorecredibilitythansoletraderstatus,depending
onthesectoryouarein,andcustomers’perceptions.
Acompanywithsharesprovidesausefuldeviceforfundraising
byissuingsharesinthebusinesstoinvestorsandbringingin
otherpeopleasthebusinessgrows,eitherasshareholders,
directorsorboth.
One of the disadvantages of companies is that they must submit
detailsofdirectorsandannualaccountstoCompaniesHouse,
wherethisinformationismadeavailableforpublicinspection.
SocialEnterprises
The benefits of limited liability also apply to not-for-profit
organisations (or more precisely, non-profit-distributing
organisations).Thesecanregisterasa‘companylimitedby
guaranteewithoutsharecapital’,whichisacompanyjustlike
anyotherbutwithnosharesandthereforeunabletodistribute
profitsasdividendstoshareholders.Companiesofthiskind
canalsobecomeRegisteredCharities.Asocialenterprise–a
business with primarily social aims – will usually register
acompanyalthoughsomeco-operativesareIndustrialand
ProvidentSocieties.ThenewCommunityInterestCompany
statuscanbeappliedtocompanieswithorwithoutsharesand
has been introduced to provide a specific legal status for
socialenterprises.
74
IdeasinAction—seepages102&42
VirtualOrganisation
Dependingontherangeofbusinessactivityyouareinvolved
in and taking into account partnership working with
otherindividualsandbusinesses,theremaybeacasefor
usingmorethanonestructureforyourbusinessactivities.
Ascompaniesgrow,theymayacquireotherbusinesses,give
birth to subsidiaries, or split into separate legal entities if
newopportunitieswithdifferentbusinessstrategiesrequire
alternative structures. Charities often set up a separate
companyasatradingsubsidiary.Businessessetupseparate
companiesforthesakeofimageandbranding,ownership
andinvolvement,saleofintellectualpropertyorreductionof
overallrisk.SeeTheWindowsProjectandNewMind.
OrganisationalStructures
To work effectively in the project-based environment,
organisations need to take on new forms. The traditional
steady-statecompanywithafixednumberofemployeesand
a traditional hierarchical structure is not suited to this new
environment. The information-age enterprises need new
organisational structures,which have been called:Virtual,
Network,ShamrockandClubSandwichorganisations.
Suchorganisationalmodelsarenotspeciallegalstructuresbut
conceptsaboutflexiblewaysoforganisingbusinessactivities.
A Virtual Organisation can be ‘invisible’ insofar as there
is no identifiable headquarters; its members might be
geographicallyremoteandprobablyconnectedthroughthe
Internet.Virtualorganisationscanformquicklyforaparticular
purposefromanumberofindividualsandorganisationsina
network. Often the majority of its work is subcontracted to
associatecompanies.Thevirtualorganisationco-ordinates
this work and controls the intellectual capital and other
intangibles such as branding. The virtual organisation can
disappear as soon as the job is done, yet its individual
memberscanrapidlyreforminadifferentcombinationgiving
risetoanewvirtualorganisation.
75
IdeasinAction—seepage78
ClubSandwichOrganisation
A Network Organisation can describe several separate
organisationsorindividualsworkingtogetherforacommon
goal,forexampleadesigner,manufacturerandsuppliers.
Thetermcanalsobeusedtodescribealargerorganisation
inwhichthevariouspartsinter-reactinamoreorganicand
autonomouswaythaninatraditionalhierarchicalstructure.
AShamrockOrganisationisCharlesHandy’s
18
namefora
business of three parts – the core staff, freelance project
workersandsubcontractedfirms.RedProductionCompany
is a good example of this model. With a small core staff,
it engages hundreds of freelance workers needed for TV
drama productions and it outsources functions such as
merchandisingtoaseparatejoint-ventureenterprise.
Building on the shamrock model is my concept of the
ClubSandwichOrganisationwhich:
A. acknowledges creative individuals who need the social
interactionandfacilitiesofa‘membersclub’,
B. provides a metaphor for the three ‘layers’ of core staff,
freelanceworkersandsubcontractedfirms,andalso
C.thedifferentrelationshipsandlevelsofbondingbetween
thethreesliceswhichcanbelikenedtothedifferentfillings
ofaClubSandwich.
Thinkingthroughmattersofcorporatestructuresmayseem
like unnecessary hassle in the early days of a creative
enterprise,butgettingthispartofthebusinessformularight
canpreventalotofheadacheslateronandhelpyoualong
yourroadtosuccess.
Inconclusion,decisionsaboutorganisationalstructuresshould
supportyourbusinessstrategy,notdriveit.
76
KeyPoints
1 Understandyourfinancialliability.
2 Considertheprosandconsofsettingupacompany
tolimityourfinancialliability.
3 Considerhavingseparatecompaniesfordifferent
activitiesandprojectstocompartmentalisebusinessrisk.
4 Beclearaboutwhereyouaregoing.Doyouwanta
lifestylebusinessoranenterpriseyoucaneventuallysell?
Usedifferentstructurestosupportyourbusinessstrategy
–don’tletyourstructuredictateyourbusinessdirection.
5 SocialenterprisesshouldconsidertheCommunity
InterestCompanyoption.
6 Gettingthecorporatestructurerightearlyoncouldsave
lotsofhasslelater.
7 Lookatyourstructurefromanimageandbrandingpoint
ofview–thecustomers’perspective.
8 Takespecialistadviceasrequiredfromabusiness
adviseroraccountant.
9 Considerpartnershipsthroughvirtualorganisations.
10 Decidewhichaspectsofyourenterpriseshouldbe
handledin-houseorsubcontracted.
77
IdeasinAction
RedProductionCompany
TVDramaProductionCompany
ClockingOff,TheSecondComingand
CasanovaaresomeoftheTVdramasproduced
bytheaward-winningRedProductionCompany.
QueerasFolk,writtenbyRussellTDavieswas
itsfirstsuccessafterRedwasfoundedby
NicolaShindler,whoalreadyhadafinetrack
recordwithproductionssuchasHillsborough
writtenbyJimmyMcGovern.
“TVproductionisafreelanceworld,”says
managingdirectorAndrewCritchley,andso
Redengagesfreelancestafftoexpandand
contractaccordingtoitsproductions’needs.
Withacoreofjust8employees,andrenting
anofficewithinanotherTVcompany,Redkeeps
itsfixedcoststotheminimum.Aclassic‘project
organisation’,Redcanengageseveralhundred
peopleonafreelancebasisasneededforits
variousproductions.
Asuccessfulenterpriseinbothartisticand
commercialterms,Red’sprofitabilityisderived
mainly fromits scale rather than its profit margins,
accordingtoAndrewCritchley.A£5mproduction
withjust5%marginstillrepresentsasignificant
£0.25mprofit.
Redsetsuplimitedcompaniesforeach
productionandthese‘singlepurposevehicles’
(SPVs)enableRedtodividethebusinessrisks
associatedwitheachventureintoseparate
compartments.RedProductionCompanyLtd
www.redproductioncompany.com
www.ind-dvd.co.uk
isatthecentreofanumberofotherassociated
companies,suchasSecondComingLtd,Linda
GreenLtd,BobandRoseLtd,eachcompanyan
SPVforitsassociatedproduction.Thewhole
businessofeachproductionisputthroughits
owncompanyandtheSPVscontinuetobe
activeinordertocollectongoingincomestreams
fromthesaleofrights,formatfeesandDVDs
fortheirrespectiveproductions.
ChangesinthebusinessenvironmentforTV
productionhasseenthetermsoftradeshift
infavourofindependentproducerswhonow
retainagreaterpercentageofintellectual
propertyrightsintheirproductions.Thishas
comeaboutduetotheinterventionofPact
19
andchangesinOfcomregulations.
20
Respondingtothischangeandtakingadvantage
ofnewopportunities,Redincreasinglyexploits
theintellectualpropertyinitsproductions
throughthesaleofrights,formatfees(such
asthesaleoftheformatofQueerasFolktoa
UScablenetwork)andDVDsofitsTVseries.
Thismarketingandmerchandisinghasbeen
achievedthroughtheDVDlabel‘inD’,ajoint
venturewithproductioncompaniesfrom
differentgenrestoforminDDVDLtd.
78
RedProductionsMineAllMine(top)andCasanova
Linkstorelatedideasandtopicsinbook:
SeparateCompanyStructures(seepg75)
Changesintheexternalenvironment(Regulations)(seepg28)
Lowfixedcosts(seepg65–66)
VirtualOrganisations(seepg75)
ExploitationofIntellectualPropertyviamerchandising(seepg58)
9
Leadership and Management
— This section looks at the change from working ‘in’ your business to working ‘on’
your business.
— It explores managing and leading people, both employees and others,
using different leadership styles and dealing with change through leadership.
— It also looks at some aspects of employing people.
80
‘
’
Managementcanbedefinedas‘theachievementofaims
throughotherpeople’andthejobofamanagerthereforeis
toco-ordinatetheactivitiesofotherpeopletogetthings
done.Formanypeople,thetransitionfrom‘doingityourself’
tomanagingothersisadifficultoneandthisoftenappliesto
creativepeoplewhosetuptheirone-personbusinessand
thenemployotherpeopleastheenterprisegrows.
Themanager’sjobasco-ordinatorcanbecomparedtothat
of an air traffic controller whose job is to make sure that
planescomeandgosafely,withoutcollisions.Theirjobisnot
toflyplanesthemselves.Thefrustrationofbeingamanager
isthatyounolongerflyplanesbecauseyourjobisnowto
co-ordinateothers’worktohelpthemtodoitwell.
Working‘in’and‘on’thebusiness
Inmostorganisations,aspeoplearepromotedtheytendto
becomemoreremovedfromtheoriginaljobthatattracted
them in the first place and this applies to teachers,
salespeople,nursesandothers.It’sthesameforcreative
entrepreneurs, who often tell me that as their business
grows they have less time for creative endeavour directly
and spend more time on administration and managing
otherpeople.Perhapsthat’sonereasonwhymanybusiness
peopledonotaimforbusinessgrowthintermsofemploying
lotsofpeoplebutwanttobuildlifestylebusinessesinstead.
Mostpeoplesetupinbusinessbecausetheywanttocreate
a job for themselves working in the business, but it’s
essential for an entrepreneur who wants to grow their
enterprisetofocusonworkingonthebusiness.Thecaptain
ofashipneedstonavigatefromthebridge,notworkinthe
engineroom.Ifyouwanttobuildabusinessthatyoucan
eventuallysell,youmustconstructitsothateventuallyyou
arenotinvolvedatall.It’simportanttobeclearaboutyour
aimsandobjectives.
81
Gettingthingsdonethroughotherpeoplecanbedifficultfora
‘
numberofreasons.Atfirstittakeslongertotrainsomeone
elsethantodoityourself.Thelevelofcommunicationneeded
’
LeadershipStyles
tomakethemfullyawareofeverythingyouknowaboutthe
business is immense. Taking on the first administrator, for
example,freesyouofsomepaperworkbutatthesametime
tiesyouintobeingamanager.Communicationwithinateam
is essential but can be extremely time-consuming. As the
numberofpeopleinthebusinessgrows,thecommunication
requiredbetweenthemexpandsexponentially.Decidingwhat
peopledoanddon’tneedtoknow,howtheygettoknow,and
whotellsthem,isamanagementjobinitself.
Leadership
Thewordleadershipoftenbringstomindsomeoftheworld’s
greatleadersofnationsandmovements:NelsonMandela,
WinstonChurchill,MahatmaGhandi,MartinLutherKing,etc
and so it can seem much too grand a term for the boss of
a five-person design firm. However, the requirements for
leadership(asopposedtomanagement)arestillthesame.
Broadly speaking, management concentrates on telling
people what to do, whereas leadership focuses on telling
peoplewheretheyaregoing,theninspiringthemandenabling
themtoplaytheirpartinthejourney.
The effective leader needs to know different Leadership
Styles – and ideally to be fluent in all the ‘languages’ of
leadership,usingeachofthemappropriatelyatdifferenttimes
accordingtocircumstances.Myowntermsfortheleadership
stylesbasedonthosesuggestedbyDanielGoleman
21
are:
Dictator—themachoboss
Visionary—inspireswithavision
People-person—personable,communicator
Listener—consultative,democratic
Superman/ woman—setsafastpaceofwork
Nurturer—coachesanddevelopsothers
Thetrickistobeabletousealloftheleadershipstyles–and
knowwhenitisappropriatetodoso.
82
EmotionalIntelligence
Level5Leader
Justasitisoftenjokinglysaidthatthebusinessisokbutfor
its customers, leadership and management would be easy
if they didn’t involve dealing with people. People come in
all shapes and sizes: employees, partners, customers,
associates, suppliers etc and can at times be awkward,
demanding,overenthusiastic,distracted,talkative,stubborn
orjustdownrightirrational!
Toworkwellwithpeople,it’sessentialtohaveagoodmeasure
of Emotional Intelligence which I define as ‘an ability to
manage ourselves and our relationships with other people
effectively, by understanding our own and other people’s
feelings, recognising that we human beings have an
emotionalaswellasarationalsidetoourmake-up.’
It’s no coincidence that the people who rise to become
leadersoftheirbusinessesorinstitutionsarethosewhohave
skillsofcommunicationandemotionalintelligenceaswellas
acreative,academicortechnicalspeciality.
Therearedifferenttypesofleadership–itdoesn’thavetobe
aboutthecharismaticmachostereotype.Someofthebest
leaders are personally modest whilst being also ruthlessly
ambitious for their companies – what’s been called the
Level5Leader.
22
Inspirationalleadersprovidewhatmostemployeessaythey
wantfromtheirbosses–inspiration–thoughonly11%say
theyactuallygetit,accordingtoasurveyundertakeninthe
UKbytheDepartmentforTradeandIndustry.
23
Lateral thinking leaders search for and listen to ideas from
outside their own industry or culture to find great ideas or
newtechniques,thenapplythemimaginativelytotheirown
enterprise.Sothislateralthinkingleadershipinthecreative
industrieswouldacknowledgeideasfromoutsidethecreative
sector,andthenapplycreativitytousingthoseideaswithinit.
83
IdeasinAction—seepage24
‘
’
ManagingChange
The ‘management of change’ is a perennial businesstopic
sincechangeitselfisconstant.Butthemanagementofchange
istosomeextentamisnomer.Iprefertheterm‘leadingchange’
because, importantly, change needs leadership as much as
managementand‘changemanagement’tendstoimplythat
changeisanadministrativeortechnicaljob.Inrealityit’smore
aboutinspiringpeopletowardsavisionandgivingthemthe
freedomandsupporttodowhat’sneededtogetthere.
EmployingPeople
Leadingandmanagingpeoplecertainlyappliestoemployees,
butemployingstaffisnottheonlywaytogrowabusiness–
ortoleadpeople.
The pros and cons of employing people versus engaging
freelancers needs to be considered carefully and some
organisationsuseapowerfulblendofboth.PepperedSprout
is an example of a business which uses both contracted
permanentemployeescombinedwithadatabaseoffreelance
artists. Network businesses and virtual organisations are
prevalentinthecreativesector–seeChapter8:Keeping
GoodCompanyformoreideasaboutstructures.
The benefits of employing people are mainly in having
constantandexclusiveaccesstotheirtimeandexpertise–
and ownership of their creative output (see Chapter 6:
ProtectingyourCreativity).Onthenegativeside,thereis
thecommitmenttothefixedcostsofsalariesandthelegal
responsibilitiesofbeinganemployer.
Freelancers can provide the skills you need, just when you
needthemwithoutthefixedcosts,thoughthehourlyratewill
be higher. The responsibility is less, but so is the control –
oftheirtime,availabilityandcreativity.
Thebigstepfrombeingaone-personoperationtotakingon
yourfirstmemberofstaffisacrucialoneandmarksaturning
pointfromworkinginthebusinesstoworkingonthebusiness.
84
IdeasinAction—seepage70
JAB Design took legal advice about their contract of
employment (as well as their terms of trade) at a very
early stage. Keeping abreast of employment regulations,
taxation and benefits, as well as operating good systems
and procedures for induction, training appraisals, staff
development, remuneration, grievances and disciplinary
mattersisjustonemoreaspectofmanagingpeoplewithin
asuccessfulcreativeenterprise.
KeyPoints
1 Areyoupreparedtobecomean‘airtrafficcontroller’?
2 Towhatextentdoyouwork‘in’or‘on’thebusiness?
3 Bealeaderaswellasamanager.
4 Areyouremployeessomeofthe11%whoareinspired
bytheirleader?
5 Areyoualateralthinkingleaderwholearnsfrom
otherindustriesthenadaptstheirideas?
6 Buildintimeforcommunicationwithyourstaffand
betweenmembersofthestaffteam.
7 Learn–anduse–thesixdifferentleadershipstyles.
8 Developyouremotionalintelligencetobeabletowork
withpeopleevenbetter.
9 Weighuptheprosandconsofemployingpeopleversus
usingfreelancers.
10 Ensureyouremploymentcontractsandprocedures
arewatertightanduptodate.
85
IdeasinAction
TheTeam
BrandCommunicationConsultancy
TheTeamisrankedasthemosteffective
brandcommunicationconsultancyintheUK
byDesignWeeksurveys2002,2003and
2004.Thecompanyboastsanimpressive
arrayofclientsfromtheprivate,publicand
not-for-profitsectors,includingVodafone,
theNHS,ComicRelief,theBBC,theChartered
InstituteofPersonnelandDevelopment,the
BeatlesandtheMetropolitanPolice.
ManagingDirectorJulianGricewasoneofthe
fourdesignerswhostartedTheTeam20years
ago.“Inthosedaysitwasreallyfourseparate
businesses,witheachdesigneradoptinga
differentbusinessmodel,dealingwithdifferent
clientsandfocusingondifferenttypesof
work,”saysJulian.
Eightyearsago,TheTeamassessedits
internalstrengthsandweaknessesandcame
totheconclusionthattheywere“leaderless”.
Asaresult,TheTeamredesigneditsbusiness
andnowhas“asecondgenerationmanagement
teamwithacarefullychosenmixofskillsand
experience.Eightpeople,eachwithadifferent
voice,”asJuliandescribesit.
TheTeam’ssuccessisaresultofadeliberate
integrationofcreativityandbusiness.Julian’s
roleasleaderincludes“carefullycraftingan
atmospherewherepeople’sviewsare
respected,whethertheyarein‘creative’or
‘business’roles,”hesays.TheTeamisthen
abletobringtogetheritsvariousskillstofocus
onclients’needs.“Weenjoyachievingthings
forclients,”headds.
www.theteam.co.uk
InasectorthatJulianbelievesisgenerallynot
goodatmanagingcustomerrelationships,
TheTeampridethemselvesonbeing“hugely
pragmatic,applyingcreativethinkingtoreal
lifesituations.”“CreativityisnotontheBoard
agenda,”hesays,“becauseit’sassumedtobe
ineverythingwedo.”EverythingatTheTeam
takesplaceinthecontextofclients’needs
andtheyfocusonparticularmarketniches.
TheTeammovedconsciouslytowardspublic
sectorclientsinthelate1990s.Thiswas
partlybecausetheyfoundthattheirpassion
forcommunicatingissuesproducedtheirbest
workinthissectorandpartlytoavoidthe
economiccyclewhichaffectstheprivate
sector.Asthecompanyhasgrownandinvested
inskillsandsystems,thismoveintothepublic
sectorhasbecomemorefocused.
TheTeamisclearaboutitsstrategy,whoits
clientsareandsignificantly,whatitwillnotdo.
Thecompanyhasapolicyof‘sayingno’to
potentialcustomersinthetobacco,defence
andpropertydevelopmentindustriesfor
ethicalreasons.Formorepracticalreasons,
theywillnottakeonprojectsifthecompany
doesnothaveatechnicalspecialisation,such
asinretailingorpackaging.RiskAnalysisisa
factortooandTheTeamwilldeclinebusiness
toavoidthebusinessriskassociatedwith
someparticularclientsandprojects.
86
JulianGrice
Intheareaofpersonneldevelopment,The
Teamagainblendsprinciplesandpragmatism.
Toincreasestaffcommitmentsandreduce
staffturnoverTheTeamhasworkedclosely
withtheCharteredInstituteofPersonneland
Development(CIPD)toadoptbestpractices
inhumanresourcemanagement.Everymember
ofstaffhasaPersonalDevelopmentPortfolio
orPDPwhich,importantly,isdrivenbythe
employee,notthemanagement.“Wetakethe
viewthateverythingisalearningopportunity,”
saysJulian,todescribetheir‘learning
organisation’,mentioningarangeofmeans
bywhichpeoplelearnatwork,addingthat
ironically,formaltrainingisoftentheleast
effectiveofthese.
TheTeamrecruitsstafffromdesigncolleges
withwhichtheyhavecloselinksthroughkey
tutors.Byprovidingplacementopportunities
forstudents,thecompanycanassesspotential
employees,bothintermsoftheircreativityand
cruciallyintheirabilitytoworkpragmatically
forclients–anotherexampleofTheTeam’s
effectivenessinblendingcreativeand
businessthinking.
Linkstorelatedideasandtopicsinbook:
Blendingcreativityandbusinesseffectively(seepg8)
Evaluatingstrengthsandweaknesses(seepg17)
MarketSegmentation(seepg37)
Focusingonclients’needs(seepg36)
Leadership(seepg82)
SayingNo(seepg92)
RiskAnalysis(seepg100)
ContinuingProfessionalDevelopment(seepg21)
PersonalDevelopmentPortfolios(seepg21)
LearningOrganisations(seepg22)
10
Business Feasibility
— This chapter gives you an opportunity – and a specific technique – to test the
feasibility of your business ideas so that you can choose those that will give you
a feasible formula for your creative business.
88
‘
’
SayingNo
seepage92
FeasibilityFilter
Youhaveyourcreativityandyourgoals,butthesealoneare
notenough.Youneedafeasiblebusinessformula–orelse
youcouldfaillikesomanyothercreative,intelligentand
enthusiasticpeoplehavedonebeforeyou.
It’sfataltoassumethatanycreativitycanbeturnedintoa
successful business, or to believe that wonderful creativity
‘deserves’businesssuccess.Ittakesmorethanjustanyold
mixofbrilliantcreativityandabunchofpotentialcustomersto
makeasuccessfulformulathatachievesthedesiredfinancial
result.Theknackistobeabletorecognisewhichformulaeare
likelytosucceedorfail–andtodothisquicklyandpainlessly
beforeprecioustime,energyandmoneyarewasted.
Thisrequireshavingmorethanonerigidideaandamethodof
selectingthosewhicharefeasible,thenchoosingthebestone
fromallthegoodones.Sincewearecapableofcreatingmore
thanoneidea,judgingoneparticularideatobenotfeasibleis
not a ‘failure’, but simply one more step along the road to
success.Thejobtobedonebyentrepreneursandthosewho
wanttohelpthemisnottotakethefirstideayouthoughtofand
somehowmakeitworkbythrowingmoney,marketingadviceor
trainingatit.It’salsoaboutSayingNotothoseideaswhichare
notlikelytobefeasible.
What’sneededisamethodforexaminingideastofindout
whether(ornot)eachideaisfeasibleinordertoselecttheone
ortwothataremostlikelytosucceed.Weneedtogenerate
lotsofideasandthenhaveamethodtoselectthebest.Iuse
atechniqueforassessingthefeasibilityofcreativeenterprises
whichIcalltheFeasibilityFilter.
24
89
TheFeasibilityFilter
Itprovidesawayofassessingthebestbrightideas,projects
andbusinessopportunitiesintwowayssimultaneously:
Doesituseourcreativitytothefullandallowit
toshine?
Isthereamarketwhichwecanworkwithprofitably
toprovidesustainableincomestreams?
Clearlythesequestionsneedtobeansweredinthecontext
ofyourValues.
This Feasibility Filter should be applied to each product,
serviceorprojectyouareconsideringtofindthosewhichscore
highestagainstbothquestions.
COMPETITIVECREATIVITY
isthedegreetowhichyoucansolveclients’
problemsbetterthanyourcompetitorscan.
MARKET SUITABILITY
isthedegreetowhichspecificclientsand
marketsegmentscanhelpyouachieveyour
financialobjectives.
MARKET SUI TABI LI TY
C
O
M
P
E
T
I
T
I
V
E
C
R
E
A
T
I
V
I
T
Y
A
B
C
D
E
90
BusinessFormula
seepage97
A
B
Thediagramisillustratedwithtwocontrastingexamples:
Isaproductorservicewhereyourcreativityislessableto
provideacustomerbenefitthanyourcompetitorsANDwhere
themarketsegmentdoesnotsupplysufficientnetincome.
Isaproductorservicewhichusesyourcreativityto
producecustomerbenefitsbetterthanyourcompetitors
ANDthecustomersinsufficientnumberareableand
willingtopaythepriceyourequire.
Forexampleawebdesigncompanymayhavearangeofskills
andseveralpossiblemarkets.
One idea might be to design websites for schools, but the
FeasibilityFilterhighlightsthefactthattherearecompetitors
who are better at serving this market and the reality that
schoolsdonothavethebudgetstomaketheworkfinancially
viable.(Thisisrepresentedby
A
inthediagram.)
Ontheotherhand,anoptiontoworkforgovernmentagencies
could show up as an area where there is a competitive
advantageandafinanciallylucrativemarketsegment.(Thisis
illustratedby
B
inthediagram.)
Manyotherpositionsonthefilterarepossibleandtheseare
shownas
C D
and
E
.
By plotting several different ideas on the Feasibility Filter,
we can choose those that will produce the most feasible
elementsforyourBusinessFormula.ByusingtheFeasibility
Filter,incombinationwithcreatingnewideas,youcancombine
businessknow-howwithcreativitytofindaviableformulafor
successmorequickly.
91
IdeasinAction—seepage102
MissionandValues
seepage11
‘
’
SayingNo
I have used the Feasibility Filter approach to help many
creative businesses. It can also be applied to not-for-profit
organisations.TheWindowsProjectusedamethodbased
onthisapproachtoselectopportunitieswhichcombineits
creative skills and financial viability in the context of its
specificMissionandValues.
If a proposal doesn’t hold together to form a workable
businessformula,maybeitneedstobeamended–ortaken
rightbacktothedrawingboard.
Andthat’sok!It’sbettertoreviseyourproposalandgetitright
thantorushinandfail.Andascreativepeoplewecanthink
ofplentyofotherideasifthefirstfewjustdon’tadduptoa
feasibleformula.
The other chapters of this book will help you devise and
revise your ideas taking into account changing conditions,
customers’needs,competitiveforces,andotheraspectsof
business.ThenusetheFeasibilityFiltertotestandrevisethem
untilthebestonesemerge.
“No!”
SayingNo
25
tounfeasibleorunstrategicprojectsshouldbe
regardedasastrengthnotaweakness.
TimothyChan,Chinesecomputergamesentrepreneurand
oneoftherichestmeninChina,modelshimselfonBillGates
inthisrespect,sayingthatGatesissogreatbecausehecan
resisttemptation.
26
Bothhaveenoughmoneytoventureinto
otherindustries,yettheyhavethestrategicself-disciplinenot
todiversify.
92
KeyPoints
1 Creativetalentdoesnotautomatically‘deserve’
businesssuccess.
2 Businessfeasibilityisamatteroffindingabusiness
formulathatmatchesspecificaspectsofyourcreativity
withspecificcustomers’needs.
3 Whatcreativitydoyouhavethatcansatisfyspecific
customers’needsbetterthanyourcompetitors?
4 Whichspecificmarketsegmentscanprovideyouwith
suitableincomestreams?
5 UsetheFeasibilityFiltertoassessdifferentoptions
forbusinessideas,projects,products,servicesand
marketsegments.
6 TheFeasibilityFilterworksfornot-for-profitorganisationstoo.
7 It’sbettertotestideasagainsttheFeasibilityFilterand
findthattheymaynotworkthantotesttheminreallife
withthepossiblelossofmorale,money,timeand
otherresources.
8 Bepreparedtoreformulateyourideastomake
themfeasible.
9 Referbacktodifferentchaptersofthisbookwhen
re-thinkingyourideas.
10 Asyoutestthefeasibilityofdifferentoptions,remain
truetoyourcreativepassionandvalues.
93
IdeasinAction
MandoGroup
WebDevelopmentandDesignConsultancy
‘MandoGroupisawebdevelopmentand
designconsultancy.We’reheretohelpour
clientsbecomemoresuccessful.’
“That’sourmissionstatement,”saysMando
GroupManagingDirectorMattJohnson,
“butittookalotofiterationsover5yearsto
makeitsoconciseandaccurate.”TheMando
Groupareclearaboutwhattheydo–andwhat
theydon’tdo.Webdevelopmentis80%of
theirbusinessandtheother20%isfrom
designwork.Thecompanydoesn’tundertake
projectsthatareoutsidethisbrief.
MattandbusinesspartnerIanFinchhave
builtacorporateculturebasedontheirValues.
Creativity,Openness,ResponsiveandEngaging
arethefourvaluesthatunderpinthewaythey
dobusinessandtheyrecruitonlypeoplewho
canembracethosevalues.
Thebusinesswassetupbythreestudentsin
1997usingtheirstudentloansascapitaland
tradedunderthename‘WebShed’until2002.
WithassistancefromMerseysideACMEand
loansfromvarioussources,thecompanywas
debtfinancedtothetuneof£250Katone
pointasthedirectorsinvestedheavilyin
businessdevelopmenttoachievethe
company’sgrowthambitions.
Mandohavea“passiontodeliver”andcan
be“aggressivelyfocused”onwinningbusiness
saysMatt.EarlycontractswithMerseyTV’s
BrooksideandHollyoaksopeneddoorsto
otherclientsincludingtheinternational
computergamesgiantCapcom.
TheGroupfocusesalmostexclusivelyonthe
publicsectorandlargerSMEs,saying‘No’to
potentialcustomerswhodon’tfittheprofile
ofclientsthattheycanbestserveprofitably.
Thisprofileisbasedonthesizeofthecompany,
locationandcreditratingsamongstother
factors.Mattadmitsthatintheearlydays
theywere“notgutsyenough”toturndown
businessbecausetheyweredesperatefor
cashandendedupdealingwith“nightmare
customers”whoturnedouttobemore
expensivethaniftheyhadsimplyborrowed
themoneytheyneededatthetime.
MandousesKeyPerformanceIndicators
(KPIs)tomeasurebusinessperformanceona
weeklyandmonthlybasis.TheseKPIsinclude
metricssuchassales,newleadsfoundand
actedon,proposalssenttoclients,cash
received,billingpredictionsanddebtoranalysis
aswellasprofitability.Thisdataisuseddaily
formanagementinformationpurposesand
formsthebasisforreportstotheBoard.
TheseKPIsformabusinessdashboard
thatMattwatchesashedrivesthebusiness
successfullytowardsitsgrowthtargets.
www.mandogroup.com
94
Linkstorelatedideasandtopicsinbook:
Mission(seepg11)
Values(seepg11)
KeyPerformanceIndicators(seepg99)
Loans(seepg66)
Focusonmarketsegments(seepg37)
SayingNo(seepg92)
ConsumerwebsiteforCapcomEurope
11
Your Route to Success
— This chapter is concerned with pulling together all the elements considered
so far and formulating a specific plan for your feasible creative business.
96
Vision
seepage11
BusinessStrategy
BusinessFormula
SWOTAnalysis
Firstlyyouneedtobeclearaboutthesuccessyouwantto
achieve–yourVision.
Thenyouneedarealisticplantogetthere–yourBusiness
Strategyorroutetosuccess.Thisroutemustbebasedon
youruniqueBusinessFormula.
A Business Formula is your unique mixture of particular
products/services at which you excel, carefully selected
customersormarketsegments,whichcancombinetoproduce
thedesiredfinancialresult,consistentwithyourValues.
A feasible business formula must be based on a realistic
assessmentofthemarket,competitorsandaSWOTAnalysis
of your own Strengths and Weaknesses, combined with
OpportunitiesandThreatsinthechangingworld.
Clearly,youwillplaytoyourstrengths,seizeopportunities,fully
understandselectedcustomers’needsandpositionyourself
shrewdlyamongcompetitors.
SevenStepstoSuccess
Itcanallbeboileddowntosevensimplesteps:
1.Beclearwhereyouwanttogo–yourVision.
2.Knowyourselfandyourcurrentsituation.
3.Understandcustomers’needs,competitionand
externalforces.
4.CarefullycreateyouruniqueBusinessFormula.
5.Deviseaplanofaction–yourBusinessStrategy.
6.Turntheplanintoaction.
7. Sticktoit–bepreparedtoSayNo.
97
‘
’
SayingNo
seepage92
Ofcoursetherewillbethousandsofthingstodoalongtheway
(tasks)andsomeimportantdecisionstobemade(tactics)but
thestrategyisaboutthebigissues–theessentialmilestones
orkeyturningpointsalongtheway.Itisimpossibletoplan
preciselytheexactanddetailedseriesoftasks,orpredictthe
tacticsyouwillhavetouse,buttherewillbeseveralessential
big steps to be taken. These will be different for each
enterprisebuttheymightincludevitalmatterssuchasfinding
aninternationalpartner,investinginnewtechnology,protecting
andexploitingintellectualproperty,attractinginvestment,etc.
Acreativewaytothinkaboutthisistoimagineyouareinthe
futureandhaveachievedyoursuccess.Inaninterview,telling
thestoryofyourjourney,youlookbackonthekeydecisions
andactionsthatprovedtobeturningpointsorvitalingredients
ofyoursuccess.Perhapstherewerefourorfivecriticalmoves
thatyouwilllookbackonfromthefuture.Returningtothe
present,younowhavealistofthekeythingsyouneedtodo.
Notethatthisappliesequallytonot-for-profitorganisationsas
wellascommercialbusinessesandcanbeappliedtopersonal
aswellasorganisationalgoals.
Implementingastrategyisnotalwayseasytoplansinceyou
cannotpredictjusthowandwhenparticularopportunitieswill
ariseorcircumstanceschange,butifyouknowwhatyouare
looking for, you can look in the right direction, or spot
opportunitiesiftheycomeyourway.
Avitalingredientofimplementingtheplanisstickingtoitand
thatmeansSayingNotoopportunitiesthatarenotinline
withyourbusinessformulaandstrategicplan.
98
KeyPerformanceIndicators
IdeasinAction—seepage94
BusinessDashboard
TripleBottomLine
MeasuringPerformance
Alongtheway,youwillneedtomonitorprogressindifferent
ways:firstlytomakesureyouarenotdeviatingsubstantially
fromyourbusinessformulaandarerightontracktohitthe
key milestones; secondly to make sure that your business
is progressing at the right pace. Deciding what needs to
improve, and what doesn’t, is an integral part of a clear
businessstrategy.
Youcanthensettargetsforimprovingtheimportantthings
andthesecanbecalledKeyPerformanceIndicators(KPIs).
Depending on your business, they might include targets
for sales, customer satisfaction, profitability, innovation,
growth,marketpenetration,developingcoreskills,etc.See
MandoGroup.
Using the balanced scorecard
27
approach, these should
includefinancialmeasuresbutnotexclusively.ABusiness
Dashboard for your own enterprise should also take into
accountcustomers,creativity,learning,andefficiency.This
providesyouwithabusinessdashboardorcontrolpanelwhich
constantlyshowshowthingsaredevelopingandquicklybrings
toyourattentionanythingthatisn’tgoingwellsothatyoucan
takeappropriateactionimmediately.
Imagineyouareawayfromthebusinessforayear,butwantto
know how things are going. What ten pieces of information
wouldyouwanttoreceiveonasinglepieceofpapereachweek
togiveyouanoverviewofthebusiness?Theanswertothisis
yourspecificationfordesigningyourownbusinessdashboard.
Dependingonyourphilosophiesandprioritiesyoumaywant
tomeasuresuccessusingtheTripleBottomLineapproach,
measuring financial performance, social benefits and the
environmental impact of your business. This is a way that
socialenterprisesmeasuresuccessandisincreasinglybeing
adoptedbylargecorporationswhoareeagertodemonstrate
thattheirmotivationsarenotpurelyfinancial.
99
RiskAnalysis
‘
’
IdeasinAction—seepage102
Risks
Risksarepartofanybusinessandcalculatedriskswillhaveto
betaken,basedonaRiskAnalysis.Youwillprobablyfacea
rangeoffinancialandlegalrisksaswellasriskstoyourbrand
andpersonalwellbeing.
RiskAnalysisissimplythetechniqueoflistingallrisksand
rankingthemaccordingtotheirlikelihoodofhappeningand
thepotentialnegativeimpactonthebusiness.Thepoint,of
course,istominimisetherisks,focusingfirstonthoserisks
that score high on both counts and making plans to make
them less likely to happen and/or have a lesser impact if
they do. A calculated assessment of risks is an important
elementofchoosingthebestroutetosuccess.Anactionplan
to deal with risks will help to navigate that chosen route
withoutmishaps.
BusinessPlans
A detailed businessplan isusuallyrequiredto explain your
intentions to investors and partners. Just as importantly, it
shouldprovideausefulguideforinternalusebytheowners/
directorsandstaff.Somepeoplefindthatwritingabusiness
planisanightmare.Othersfindthattheexerciseproducesa
uselessdocument.Inbothcasesthereasonisoftenthatthe
proposedbusinessisnotbasedonthesolidfoundationsofa
feasiblebusinessformula.
It’sessentialtoestablishthefundamentalsofwhyyouare
planningtodoitaswellashowyouareplanningtodoit.Once
youareclearaboutthesemattersandhavetheframeworkof
afeasibleformulawhichbringstogetheryourskillsandyour
selectedcustomers’needsinafinanciallysustainableway,
thentheroutetosuccessbecomesclearandtherestofthe
businessplanwillfallintoplacerelativelyeasily.
Thereisnostandardtemplateforabusinessplan.Infactyou
don’t even have to call it a business plan – The Windows
ProjectpreferredthetermDevelopmentPlan.Itissimplyyour
wayofsettingoutyourplansforyourselfandforothersina
comprehensive,clearandusefulway.Itshouldanswerallthe
100
questions that a potential partner or investor might ask.
Thebestbusinessplansarethosethatacreativeentrepreneur
actually wants to refer to often and is updated on a rolling
basisastimegoesbyandcircumstanceschange.
Yourbusinessplandescribesyourroutetosuccess.Itisyour
pocketguideonanexcitingjourneyandhelpsyoukeepgoing
intherightdirectionastheadventureunfolds.
KeyPoints
1 Beclearaboutyourgoals–yourVision.
2 Knowyourself,yourbusinessandallthoseinvolved.
3 Identifyopportunitiesandthreatsusingthebusiness
radarapproachandtheICEDRIPSchecklist.
4 UsetheFeasibilityFilter.
5 Identifythecrucialstepsthatyouwilllookbackonas
turningpoints.
6 Analyserisks–thenminimisethem.
7 Measureyourprogressbymonitoringtheimportant
thingswithyourownbusinessdashboard.
8 Bepreparedto‘sayno’tothingswhichdistractyoufrom
yourplan.
9 Getthefundamentalsrightandabusinessplanwillbe
easytowrite.
10 Writeabusinessplan(ordevelopmentplan)foryourown
useasapocketguidetothejourneyahead.
101
IdeasinAction
TheWindowsProject
CommunityWritingProject
TheWindowsProjectisanot-for-profit
organisationwithamissiontopioneerprojects
whichenablepeopletodeveloptheircreativity
throughwriting,inallsectionsofthecommunity.
FoundedbyDaveWardandDaveCalderover
25yearsago,itwasinnovativeinrunningwriting
workshopsinplayschemes,youthcentresand
schools.Ithasamembershipofover40writers
includingtheinternationallyrecognisedLevi
Tafariandactsasanagencybetweenthe
writersandthecommunity.
Lookingahead,theWindowsProjectis
committedtoremainingloyaltoitsmission
whilstseekingexcitingnewopportunitiesina
fast-changingworld.Itwillpioneerprojectsin
newareasofthewidercommunityandindeed
withonlineandvirtualcommunities.
Theproject’ssuccessovertheyearshas
takenplaceinchangingcircumstancesand
theWindowsProjecthasplannedforitsfuture
byundertakingananalysisoftheexternal
environmentusingtheICEDRIPSchecklist
toidentifyopportunitiesandthreats.
Changesinthewayschoolsarefunded,
thestrictchildprotectionregulationsapplying
tothoseworkingwithyoungpeople,including
CriminalRecordsBureauchecks,the
reorganisationoftheartsfundingsystem,
thenationalcurriculumandschoolinspections
viaOfsted,allpresentchallengesforthe
WindowsProjecttodealwith.Ontheotherhand
thereareopportunitiesforcollaborationwith
CreativePartnerships,ArtsCouncilEngland,
theNationalHealthServiceandtheCityof
Liverpool,EuropeanCapitalofCulture2008.
TheInternetalsoprovidesincreasing
opportunitiestoworkwithonlinecommunitiesin
newwaysandfurtherdevelopinternationallinks.
TheWindowsProjectinvolvedallits
stakeholdersinasystematicprocessto
deviseanewDevelopmentPlan–the
organisation’spreferrednameforabusiness
plan.Thisincludedagreeingasharedvision
forthefutureoftheproject,ananalysisofits
ownstrengthsandweaknessesandprioritising
itsstrategicobjectives.
TheWindowsProjectisconstitutedasa
registeredcharityinconjunctionwithan
Associationwhichactsasitstradingwingfor
mostofitsactivities.Thiscombinationprovides
maximumflexibilityintermsofobtaining
charitablefundingandgeneratingearned
incomefromcontractsforservices.The
Associationisinpracticeasocialenterprise
andbroadlymeetsthecriteriatobecome
constitutedasanewCommunityInterest
Company.Ithasacommunitypurposeand
isaccountabletoitsstakeholderswhich
includeAssociationmembers,employees,
clientorganisations,fundingpartners,
trusteesandothersupporters.
www.windowsproject.demon.co.uk
102
TheWindowsProject’svisionofthefuture
remainstruetoitscoreMissionandValues
soitwillcontinuetofocusoncommunities,
recognisingthatitsstrengthsandcompetencies
areinthisarea.TheProjectwillcontinueto
balanceitscreativeandsocialmissionwith
economicrealitiesbyoperatinga‘mixed
economy’ofgrantsandcontractsforservices.
Usingatechniquebasedontheprinciplesof
theFeasibilityFilter,Windowswillselect
projectsinfuturewhichmeetthedualcriteria
offulfilingitssocialmissionandensuringthe
Project’sfinancialsustainability.
Onthisbasis,theWindowsProjectissetto
staytruetoitsValuesandMissionduring
changingcircumstancesandcontinueto
pioneernewprojectsoverthenext25years.
Linkstorelatedideasandtopicsinbook:
Not-for-profitorganisations(seepg9)
CorporateStructures(seepg75)
SocialEnterprise(seepg74)
ICEDRIPSchecklist(seepg28)
Mission(seepg11)
Vision(seepg11)
Values(seepg11)
BusinessPlan/DevelopmentPlan(seepg100)
FeasibilityFilter(seepg90)
Toconclude...
Theobjectiveofthisbookistoofferanapproachwhichbringstogether
bothcreativepassionandbusinessbestpractice.
T-ShirtsandSuits–creativityandbusinessinharmony.
4
Bealeaderaswellasamanager.
Theartofgettingthingsdonethroughother
peoplerequiresyoutoconstantlystriveto
becomeanevenbetterpeopleperson.
2
Selectyourcustomerscarefully.
Toturnyourcreativityintoabusiness,use
itforthebenefitofyour(carefullyselected)
customers.Thisinvolvesunderstanding
theirpointofviewandthenbeingeven
morecreativewithyourtalents.
3
Acknowledgethecompetition.
Decidewhereyoustandamongstyourrivals.
Figureoutwhichcustomers’problemsyou
cansolvebetterthananyoneelse.
1
Beclearaboutwhereyouwanttogo
andyourowndefinitionofsuccess.
104
5
Measuretherightthings.
Designasimplebuteffectiveinformation
systemasaBusinessDashboardsothat
youcankeepacheckonhowyouare
performinginseveraldimensionsasyou
driveyourenterpriseforward.Keepaneyeon
theFinancialDashboardtomakesureyou
don’tcrashorrunoutoffuelinthefastlane.
6
Protectyourcreativity–it’swhatyour
businessisbuilton.Usecopyright,trademarks
andpatentstoprotectyourintellectual
property.Exploityourintellectualpropertyto
createfutureincomestreams.
7
CreateauniqueBusinessFormula.
AfeasibleBusinessFormulaisessentially
acarefullydesignedcombinationofsome
ofyourbestcreativeskills,withselected
customers’particularneeds,whichworks
infinancialtermsforthemandyou.
10
BeCreative
8
UsetheFeasibilityFiltertoassesseach
option.Somecreativebusinessideasmay
notbefeasible.Bepreparedtoadjustan
ideatogettheBusinessFormularight.
Orcreatenewideas.
9
BepreparedtoSayNo.
Onceyouhaveaclearroutetosuccess,
‘sayno’totemptingopportunitiesthatdon’t
leadtowardsyourdestination.Some
temporarydiversionswillbenecessary
butdon’tlosesightofyourgoal.
105
Appendix1
TheCreativeIndustries
The‘creativeindustries’havebeendefinedbythe
UKGovernment’sDepartmentforCulture,Media
andSport(DCMS)
28
as:‘Thoseindustrieswhich
havetheirorigininindividualcreativity, skilland
talentandwhichhaveapotentialforwealthand
jobcreationthroughthegenerationand
exploitationofintellectualproperty.’
Theterm‘culturalindustries’isalsousedby
someagencies,thoughthistermrelatestoa
morespecificrangeofindustriesandcanbe
regardedasasubsetofthecreativeindustries.
TheculturalindustriesaredefinedbyUNESCO
29
as‘industriesthatcombinethecreation,
productionandcommercialisationofcontents
whichareintangibleandculturalinnature;these
contentsaretypicallyprotectedbycopyrightand
theycantaketheformofagoodoraservice.’
Therearethirteensub-sectorsundertheterm
‘creativeindustries’andtheseare:advertising;
architecture;theartandantiquesmarket;
crafts;design;designerfashion;filmandvideo;
interactiveleisuresoftware;music;the
performingarts;publishing;softwareand
computergames;andtelevisionandradio.
AccordingtoDCMS
30
research,theCreative
Industriesaccountedfor8.2%ofGrossValue
Added(GVA)in2001intheUKandthesector
grewbyanaverageof8%perannumbetween
1997and2001.ExportsfromtheUKbythe
CreativeIndustriescontributed£11.4billionto
thebalanceoftradein2001.Thisequatedto
around4.2%ofallgoodsandservicesexported.
ExportsfortheCreativeIndustriesgrewataround
15%perannumovertheperiodof1997–2001.
InJune2002,creativeemploymenttotalled1.9
millionjobsandtherewerearound122,000
companiesintheCreativeIndustrysectorson
theInter-DepartmentalBusinessRegister
(IDBR)in2002.
AccordingtotheFinancialTimes,
31
“areport
fromthe(UK)Government’sStrategyUnithas
concludedthatthecreativeindustriesinLondon
arenowmoreimportantthanfinancialservices
totheeconomy.Employmentinthecreative
industries(includingfashion,softwaredesign,
publishing,architectureandantiquedealing)has
topped525,000andisstillrising,comparedtoa
mere322,000andfallinginfinancialservices.”
Internationally,theCreativeIndustriesareone
ofthefastestgrowingsectorsinOECDeconomies,
employingonaverage3–5%oftheworkforce
accordingtotheUnitedNationsConferenceon
TradeandDevelopment.
32
Theglobalvalueof
CreativeIndustrieswasexpectedtoincreasein
theyearsfrom2000to2005fromUS$831
billiontoUS$1.3trillion,acompoundannual
growthofover7%.
33
Thisastoundingfigureisachievedbycreative
businesses,mostofwhicharesmallormedium
sizedenterprisesandinrealityareverysmallor
micro-enterprises,includingindividual
practitioners.TheBritishCouncil
34
pointsout
thatthisscenarioistypicalinternationallyand
workstosupportinternationalco-operation
sincecreativebusinessesmovemorequickly
tointernationalmarketsthanmanyotherforms
ofenterprise,oftenusingtheInternet.
TheCreativeIndustriesaretheonlysectorwhich
hasbeenidentifiedasapriorityareabyallofthe
countriesandregionsoftheUK.Thisisreflected
bythenumberofagenciessupportingthe
creativesector,suchasCIDS(CreativeIndustries
DevelopmentService),CIDA(CreativeIndustries
DevelopmentAgency),InspiralandCreativeKernow.
Thefirstofthesetobeestablishedinthelate
1990swasMerseysideACME(Arts,Cultureand
MediaEnterprises).
106
Merseyside ACME is a development agency for
the Creative Industries sector, working to support
the growth and sustainability of creative businesses
and organisations based on Merseyside.
ACME works collaboratively with both the public
and private sectors to:
•
Promote the importance of the Creative
Industries as an economic driver for the region.
•
Ensure the availability and continuity of
sector specific business support and
information services.
•
Promote the use of creativity as a means of
supporting community and economic regeneration.
•
Promote connectivity across the Creative
Industries sector.
Complementing its strategic development role,
ACME provides a range of general client-facing
support services for creative businesses and
organisations in the region. These include
information and research support, and general
business advice and referral services.
In addition to its ongoing general support services,
ACME also delivers bespoke programmes, designed
in direct response to feedback from the
businesses that it works with.
As well as supporting creative businesses, ACME
has developed projects which have shown how
powerful and effective creativity can be in
regenerating communities. It is respected
nationally for its work on social impact studies,
for developing models and delivering programmes
which promote best practice in monitoring and
evaluation. It provides independent evaluation
support services to community driven programmes
and organisations across the UK.
Since being established, Merseyside ACME has:
•
Assisted over 700 businesses and helped to
safeguard over 600 jobs on Merseyside.
•
Delivered 200 seminars, reaching over 3500
creative professionals and practioners.
•
Developed Creative Advantage, a business
support model which has been adopted
regionally and nationally.
•
Published three books, including a significant
impact study. All have received national and
international acclaim.
•
Developed a creative industries e-news bulletin,
securing nearly 2000 subscribers to date.
•
Supported CISS, Merseyside’s longest running
network of creative business support providers.
•
Supported four US trade missions, generating
more than a £1.5m in export business.
•
Through its arts and regeneration activity,
worked with over 200 community regeneration
projects, developed 30 new organisations and
community businesses.
•
Developed a self evaluation framework which
has been adopted by organisations across the UK.
•
Led the development of Kin www.kin2kin.co.uk,
Merseyside’s first ever online community
exclusively for creative businesses.
•
Led the development of Futures
www.futuresnetwork.org.uk, Liverpool’s first
professional network for advertising and
design businesses.
•
Managed the Arts and Regeneration strand of
Liverpool’s bid to be European Capital of Culture.
Appendix 2
Merseyside ACME
107
www.merseysideacme.com
1
2
3
4
5
References
MerseysideACME(arts,culture,media,enterprise).Formoreinformationseewww.merseysideacme.com
CreativeAdvantage.Formoreinformationseewww.creativeadvantage.co.ukorwww.merseysideacme.com
CIDS.CreativeIndustriesDevelopmentService.Formoreinformationseewww.cids.co.uk
CIDA.CreativeIndustriesDevelopmentAgency.Formoreinformationseewww.cida.org
Thisisstrictlytruebutmodestyforbidsmetoletitgowithoutafootnote.Withoneshortpoempublishedin
aliterarymagazine,Iclaimtobetheleast-published‘publishedpoet’intheworld.Ontheotherhand,havingbeen
paidfivepoundsformyHaikuof17syllablescouldmakemeoneoftheworld’sbest-paidpoets–persyllable(!)
6  MastersDegreeinBusinessAdministration(withdistinction).BradfordUniversitySchoolofManagement.1995.
7  The13sub-sectorsofthecreativeindustriesare:advertising;architecture;theartandantiquesmarket;crafts;
design;designerfashion;filmandvideo;interactiveleisuresoftware;music;theperformingarts;publishing;software
andcomputergames;andtelevisionandradio.
8 SunTzu,TheArtofWar.TranslationbyLionelGiles.
9 Interestingly,severalwordsofmilitaryoriginhavebeenadaptedforuseinbusiness,suchas‘campaign’and‘strategy’.
10 JimCollins,GoodtoGreat.RandomHouse.2001.
11 WhenIusedthisconceptonaconsultancyprojectintheMiddleEastwithagroupofseniormanagersfromdifferent
countriesitbecameclearthatmanyofthemwerenotfamiliarwithhedgehogs.Iexplaineditisananimalwithspikes
onitsback–asmallerversionoftheAmericanporcupine.
12 Guardian.08November2004.
13 W.ChanKimandReneeMauborgne,‘ChartingYourCompany’sFuture’.HarvardBusinessReview.2002.
14 MichaelPorter,CompetitiveStrategy:TechniquesforAnalyzingIndustriesandCompetitors.FreePress.1980.
15 AdamM.BrandenburgerandBarryJ.Nalebuff.Co-opetition.HarperCollins.1996.
16 UKGovernment.DepartmentforCultureMediaandSport(DCMS).
17 TheIncomeandExpenditureAccountcanalsobecalledaprofitandlossaccountorincomestatement.
18 Handy,Charles,TheAgeofUnreason.RandomHouse,London.1989.
19 PactistheUKtradeassociationthatrepresentsandpromotesthecommercialinterestsofindependentfeaturefilm,
television,animationandinteractivemediacompanies.Seewww.pact.co.uk
20 OfcomistheindependentregulatorandcompetitionauthorityfortheUKcommunicationsindustries,withresponsibilities
acrosstelevision,radio,telecommunicationsandwirelesscommunicationsservices.Seewww.ofcom.org.uk
21 DanielGoleman,‘Leadershipthatgetsresults’.HarvardBusinessReview.March–April2000.
22 JimCollins,GoodtoGreat.RandomHouse.2001.
23 InspirationalLeadership,UKGovernment,DepartmentforTradeandIndustry.2004.
24 ReaderswearingsuitswillrecognisethatthisisinspiredbytheMcKinsey/GEMatrix,whichIhaveadaptedfor
creativeentrepreneurswearingT-Shirts.
25 Bishop,Susan,‘TheStrategicPowerofSayingNo’.HarvardBusinessReview.November–December.1999.
26 Guardian.08November2004.
27 NortonandKaplan,‘TheBalancedScorecard:TranslatingStrategyintoAction’.HarvardBusinessReview.1996.
28 MappingDocument,CreativeIndustriesUnitandTaskforce.UKGovernmentDepartmentforCulture,
MediaandSport(DCMS).October1998.
29 UNESCO,Paris.2000.Culture,TradeandGlobalisation:QuestionsandAnswers.
30 UKGovernmentDepartmentforCulture,MediaandSport(DCMS).
31 FinancialTimes.04July2003.
32 UNCTAD,Geneva.2004.CreativeIndustriesandDevelopment.
33 Howkins,John,TheCreativeEconomy:HowPeopleMakeMoneyfromIdeas.AllenLane,London.2001.
34 BritishCouncil.www.britishcouncil.org
108
Index
80:20Rule20
95:5Rule20,23,30,31
A
Abram,Andy42
Advertising–seeMarketing
AgeofInformation53
AgeofIntangibles53
Agility18
Alliances18
AmericanExpress36
AppleMac32
ArtofWar17
ArtsCouncilEngland102
Artsfundingsystem102
Artsorganisations9
Assets64
• fixedassets63,65
• intangibleassets32,42,53,57,59
• netassets68
B
Bachelor,The50
BalanceSheet64
Balancedscorecard99
Barbie36
Bargainingpowerofcustomers47
Bargainingpowerofsuppliers47
Barrierstoentry47
BathTourism42
BBC50,86
Beatles42,55,86
Benefitsnotfeatures39,47,49
BobandRoseLtd78
BookerPrize32
Bowie,David56
Braille46
Brands18,53,60,75
Branson,Richard19
BritishCouncil5,106
Brookside94
Businessdashboard22,68,94,99,101,105
Businessformula9,10,13,32,36,66,89,
91,97,105
BusinessLink70
BusinessLiverpool70
BusinessModel12,66
Businessplans100,101
Businessradar27,30
BusinessStrategy21,45,86,97
Butters,Jonathan70
Cadbury’s54
Calder,Dave102
Canon19
Capcom94
Caravaggio70
Casanova78
Cashflow64,68
Chan,Timothy30,92
Change18
• leadingchange84
• managementofchange84
ChangeManagement84
Charitableorganisations9
Charities74
CharteredInstituteofPersonneland
Development(CIPD)86,87
Chartingthecompetition46,49
Churchill,Winston82
CIDA5,106
CIDS5,106
CityofLiverpool102
Clients–seeCustomers
ClockingOff78
ClubSandwichorganisations75,76
CocaCola55
Collaborators18
ComicRelief86
Communication82,85
CommunityInterestCompany74,102
Companies73
•  companylimitedbyguaranteewithout
sharecapital74
• limitedcompanies74
• privatelimitedcompanies74
• tradingsubsidiaries75
CompaniesHouse74
Competencies18
Competition28,104
• chartingthecompetition46
• competitiveadvantage19,29,45
• competitiveenvironment45
• competitivepositioning46
• competitivestrategy45
• competitors45,93
• rivals46,47
Competitors–seeCompetition
ConfessionsofanAdvertisingMan36
ContinuingProfessionalDevelopment(CPD)21
ContractofEmployment71,85
Contractors56
Contracts59
Co-operativemovement64
Co-operatives5
Co-opetition30,48,49
Copyright54,105
Corecompetencies19,23,24
Corporatestructures77
Costs
• fixedcosts65,69,78
• variablecosts65
CreativeAdvantage5
CreativeBusinessSolutions70
Creativeclusters48,49
CreativeIndustries4,5,17,106,107
–seealsoCulturalIndustries
• creativeIndustries–definition53
• creativeindustries–sub-sectors106
CreativeIndustriesDevelopmentAgency
(CIDA)5,106
CreativeIndustriesDevelopmentService
(CIDS)5,106
CreativeKernow106
CreativePartnerships102
Creativity7
CriminalRecordsBureau(CRB)102
Critchley,Andrew78
Culturalindustries5,9,17,57,65,106
–seealsoCreativeIndustries
Customer-focus35,36,41
Customers11–seealsoMarketing
• bargainingpowerofcustomers47
• benefitsnotfeatures39,47,49
• clients’evolvingneeds42
• currentcustomers37,39,41
• customersatisfaction99
• customersegments37
•  customers’changingneeds35,41,42,
45,93
• customers’perceptions46,49,74,77
• customers’pointofview39,46
• feedbackmechanisms–suggestionsboxes38
• idealcustomer40
• listeningtocustomers11,38
• lostcustomers39,41
• selectingcustomers24,104
• selectingtherightcustomers9,36,45
• targetclients36
• targetcustomers37,39,41
D
DaVinci,Leonardo70
Davies,RussellT78
Demographics28
DepartmentforCulture,MediaandSport
(DCMS)106
DepartmentforTradeandIndustry(DTI)83
Designrights54
DesignWeek86
Designs54
Deskresearch14–seealsoMarketresearch
Developmentplans100,102
DisabilityDiscriminationAct29
Distribution39
Dove36
E
E-books32,40
Economics28
EmotionalIntelligence83,85
Employment
• contractofemployment71,85
109
C
• employees18,24,56,84
• employers84
• employingpeople84,85
• employmentregulations85
Environmentalanalysis27
Equity64
ESPMultimedia50,58
Ethics11
Ethos18
EuropeanCapitalofCulture2008102,107
EuropeanUnion27
ExternalAudit27
Externalenvironment27,32
Externalforces31
F
FeasibilityFilter12,89–92,93, 101, 103, 105
Featuresandbenefits–seeBenefitsnotfeatures
FilmFour50
Finances18
FinancialAccounts64,69
Financialcontrolpanel67
Financialdashboard68,69,105
Financialliability73,77
FinancialTimes106
Finch,Ian94
Fixedassets–seeAssets
Fixedcosts–seeCosts
Focusgroups38
ForcesofCompetition28,29
Ford36
Formatfees78
Formula148
Forsyth,Frederick32
FourPsofMarketing39
Freelancers24,85
Funland50
G
Gates,Bill92
Gettman,David32
Ghandi,Mahatma82
Goleman,Daniel82
Governmentstatistics38
Grants67,69
Grapefruit66
Grice,Julian86
H
Handy,Charles76
Harry,David50
HarvardBusinessSchool47
HedgehogStrategy20,23
HewlettPackard36
Hillsborough78
HMRevenueandCustoms67
Hollyoaks94
Honda19
Hotmail40
Hughes,David50,58
I
IBM36
ICEDRIPSchecklist27,28,31,101,102
IncomeandExpenditureAccount64
inDDVDLtd78
IndustrialandProvidentSocieties74
Infrastructure28
InnerCity42,100
Innovation28,30
Inspiral106
Inspirationalleaders83
Intangibleassets–seeAssets
Intangibles–seeAgeofIntangibles
IntellectualProperty(IP)18,42,53–54,57,
59,60,68,69,71,105
• exploitationof68,106
IntellectualPropertyRights(IPR)54,55,59,
68,78
• exploitationof68,106
• mechanicalrights55
• moralrights55
• publishingrights55
Investors66
Iomis42
iTunesMusicStore56
J
JABDesignConsultancy56,66,70,85
Johnson,Matt94
Jones,Jason60
Jones,Marc60
K
Kellett,Peter24
KeyPerformanceIndicators(KPIs)94,99
King,MartinLuther82
Kodak36
L
LancashireTouristAuthority42
Lateral-thinkingleadership83,85
Leaders85,104
Leadership82
Leadershipstyles82,85
LeadingChange–seeChange
Learning21,23
Learningorganisation22,87
Level5Leadership83
Liability64
• financialliability73,77
• limitedliability73
• limitedliabilitypartnerships73
• unlimitedliability73
Libraries38
Licensing58
Lifelonglearning21
Lifestylebusiness9,50,77
Limitedcompanies–seeCompanies
Limitedliability–seeLiability
LindaGreenLtd78
LloydsTSB70
Loanguaranteeschemes67
Loans67,69
Lock,StockandTwoSmokingBarrels50
M
Macann,Christopher32
Management81
Managementaccounts64,69
ManagementofChange–seeChange
Managers85
Mandela,Nelson82
MandoGroup37,40,66,94,99
Marketresearch14,38–seealsoMarketing
• deskresearch38
• focusgroups38
• primaryresearch38
• secondaryresearch38
Marketing35,41–seealsoCustomers
• advertising38,39,40
• directmail39
• feedbackmechanisms38
• fourPsofmarketing39
• internationalmarkets106
• marketinformation18,53
• marketpenetration99
• marketsegmentation37
• marketsegments36,41,45,93,97
• marketingbudgets40
• marketingcommunications39
• marketingmix39
• marketingproblem35
• massmarketing40
• nichemarkets45
• operationalmarketing35,36,39,40,41
• publicrelations39
• strategicmarketing35,36,39,41
• tradeshows39
• viralmarketing32,40
MaxwellHouse36
McGovern,Jimmy78
Mechanicalrights
–seeIntellectualPropertyRights
Medication55,60
MerseyPartnership42
MerseyTV94
MerseysideACME94,106,107
MerseysideSpecialInvestmentFund70
MetropolitanPolice86
Micro-enterprises106
Microsoft53
MimashimaRecords54
Mission11,12,13,92,103
110
Missionstatement11,12
Money18
Moralrights–seeIntellectualPropertyRights
Morris,Chris24
Mutch,Sharon12,14,37,38
N
Nationalcurriculum102
NationalHealthService(NHS)86,102
NationalLibraryfortheBlind(NLB)46
Netassets–seeAssets
Networth64
Networkbusinesses84
Networkorganisations75,76
Networks18
NewEntrants47
NewMindInternet38,42,57,75
Newproductdevelopment38
NewYorkArtExpo14
NHS(NationalHealthService)86,102
Nichemarkets45
Non-profit-distributingorganisations74
Not-for-profitorganisations9,13,63,74,92,
93,98
O
Oceanic50
Ofcom78
Ofsted102
OgilvyandMather24,36
Ogilvy,David24,36
OnlineOriginals30,32,40
OpportunityAnalysis30
Opportunities97
Organisationalculture18
Organisationalstructures75
• clubsandwichorganisation75,76
• networkorganisation75,76
• shamrockorganisation75,76
• virtualorganisation75,77
Overheads65
P
Packard,David36
Pact78
Palmpersonaldigitalassistant(PDA)32
ParetoPrinciple20
Pareto,Wilfredo20
Partners28
Partnershipfunding67
Partnerships18
PassporttoExport14
PatentOffice55
Patents55,105
Penguin54
PepperedSprout19,24,37,84
PersonalDevelopmentPortfolio(PDP)21,87
Personneldevelopment86
PESTAnalysis27
Place39
PlasticRhino24
Porter,Michael47
Price39
Primaryresearch–seeMarketResearch
PRIMEFACTchecklist17,18,21,23,59
Product39
Product-focus35,41
Profit9
Profitability68
Promotion39
Publicbenefit66
Publicfunding66
PublicRelations(PR)39
Publishingrights
–seeIntellectualPropertyRights
PumaUK24
Q
Quality46
QueerasFolk78
R
RedProductionCompany58,76,78
Regulations28
Reputation18
RiskAnalysis30,86,100
Risks100,101
S
Sales65
SayingNo14,86,92,94,98,101,105
SecondComing78
Segmentation–seeMarketing
Self-employment73
Selling35
Sellingout8
Shamrockorganisations75,76
ShandaEntertainment30
Shell36
Shindler,Nicola78
SinglePurposeVehicles(SPV)78
Skills18,21
SkyTV50
SmallFirmsGuaranteeScheme70
Smirnoff50
Socialentrepreneurs9
Socialenterprises5,9,63,69,73,74,77
Socialtrends28
Soletraders73
Sony19
Staffdevelopment85
Stakeholders17,18,23
Strategy86
Strengths17,37,97
Structuralintellectualcapital22
SubstituteProducts47,49
Success9
SunTzu17
Suppliers–bargainingpowerofsuppliers47
Surplus64,69
SWOTAnalysis97
T
Tafari,Levi102
Talents18
Taxation69
TermsofTrade71,85
TheTeam21,22,86
Threats97
Toyota50
Tradejournals38
Trademarks53,54–55,60,105
Tradingsubsidiaries–seeCompanies
Training21,23
Trainingneedsanalysis21
TripleBottomLine9,99
Turnover65
U
UKTradeandInvestment14
UNESCO5,106
UnitedNationsConferenceonTradeand
Development(UNCTD)106
UnlimitedLiability73
Ursache,Marius66
V
Values11,12,13,18,71,92,93,94,
97,103
Variablecosts–seeCosts
VAT69
Veal,Richard42
Venturecapital67
ViralMarketing–seeMarketing
Virgin19
ViridianArtistsGallery14
Virtualorganisations32,75,77,84
Vision9,11,12,13,97,101
Vodafone86
W
Ward,Dave102
WarnerBros50
Weaknesses17,37,97
WebShed94
Websites40
Wilde,Oscar35
WindowsProject27,75,92,100,102
Workingcapital63,64
Working‘in’and‘on’thebusiness81,84,85
Wylie,Pete56
Y
Yesterday55
Z
Zellweger,Renée50
111
Author’sAcknowledgements
IwouldliketothankallatMerseysideACMEandallthosewhohavehelpedmeintheir
variouswaystomakethisbookpossible,especiallyPhilBirchenall,HelenBowyer,
HelenBrazier,PeterBurke,JonathanButters,AnthonyByrne,MikeCarney,MarcCollett,
GemmaCoupe,AndrewCritchley,RichardEngelhardt,MattFinnegan,NoelFitzsimmons,
KateFletcher,DavidGettman,JulianGrice,GeoffreyHorley,DavidHughes,IanHughes,
MattJohnson,MarcJones,MoiraKenny,AndyLovatt,AitorMate,KevinMcManus,
ChrisMorris,SharonMutch,BridgetteO’Connor,KathOversby,AndrewPatrick,
EcaterinaPetreanu,CathySkelly,JaneThomas,MariusUrsache,RichardVeal,
DaveWard,GeoffWhiteandPeteWylie.
FurtherInformation
Thewebsiteassociatedwiththisbookprovidesadditionalinformation,newmaterialand
furthercasestudies,detailsoftrainingandconsultancyprojects,aframeworkforabusiness
plan,aglossaryoftermsandlinkstootherusefulwebsites.
www.t-shirtsandsuits.com
Publisher’sAcknowledgements
MerseysideACMEwishestothankallthoseorganisationsandindividualswhohave
collaboratedwiththisprojectincludingthesupplyofimagesandthepermissionfortheiruse.
David Parrish, MBA, MCMI, AIMC, MCIM, MIBA
David has direct experience of leading and managing creative and
cultural enterprises. His practical experience is complemented by
academic qualifications, professional accreditations and membership
of several management institutes.
He uses his knowledge and experience to help creative and cultural
enterprises to become even more successful through specialist training
and consultancy projects.
David adds value to clients’ businesses and organisations internationally
by transferring great ideas, effective techniques and best practice
between industries and sectors, and across national and cultural
boundaries. He empowers clients by helping them to adapt international
best practice to their own local circumstances.
David’s work is internationally respected and he has assisted numerous
businesses, government agencies and not-for-profit organisations in the
UK, India, Canada, the United Arab Emirates, France, Italy, Switzerland,
Egypt, Turkey, Germany, Denmark, South Africa, Singapore, Thailand
and China.
www.davidparrish.com

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