Question: What’s the difference between a hobby and a business?
Answer: Billable hours!
This is a crucial thing to begin to understand if you really want to earn a living from your creative pursuit. I’m quite certain that you love to do what you do, whether that’s paint, sculpt, knit, sing or dance. You can lose yourself for hours in the process of making your art. When you are ‘in the zone’ the hours fall away and suddenly it’s night time. You’ve been enthralled in the creative process and maybe you even have something tangible to show for that time. Or maybe you were experimenting or exploring new mediums or avenues of exploration. These are all noble pursuits and crucial to your artistic development.
But they ain’t gonna help you run a profitable business.
I had a great day on Monday. I was busy all day doing emails, researching some new songs, singing, learning new material for an audition which might materialize, writing this blog, etc. I felt creative, I felt like I was doing what I was meant to do.
And yet, there was only about 1 hour maximum which leads to any money in my bank account – and that was some time I spent chasing outstanding invoices and checking with a supplier who stocks my work to see if he needed any more of my CDs (he did, which resulted in a new invoice).
Other than that I was perhaps laying the groundwork for future work (if this audition comes through, if it is successful and if it leads to a job offer) but that’s a lot of ifs and sadly my bank is not that interested in me paying my mortgage with ifs. The only currency they accept is cold hard cash – and unfortunately if you want to make a living out of your art, then you need to start thinking like your bank.
Billable hours are where someone is paying you to do the work or where you are producing materials that have been ordered.
This might mean being hired as an actor for a shoot. Getting a paid contract with a dance company. Or getting a commission for a painting or sculpture. These are billable hours and they result in money in the bank.
Working on your art without any commissions, acting for free, singing at your cousin’s wedding (in the hope that it might lead to other bookings) – this is all speculation. It might lead to something paid in the future, or it might not. But in the meantime you are exchanging the only thing you’ve really got, your time right now, for something that may materialise in the future. This is a form of gambling.
It can occasionally pay off. There are enough stories of novels written in spare time being sold for ridiculous amounts of money to fuel countless dreams, but these stories are the exception to the rule.
Your creative business, like every other small business, succeeds or fails due to management of cash flow. Cash flow is the bain of every small business. As a small business, you have overhead: rent, salaries, materials etc. These have to be paid for on a regular basis. That’s cash going out the door. At the same time, you are never quite sure when cash is going to come in the door to replace it. This creates a dilemma as it is very easy for more cash to be going out the door than in. This is not sustainable and often leads to the collapse of both the business and the dream.
This has happened to countless creative businesses and is the reason why most fail.
So what can you do about it?
Besides managing your money (which we will go into later) you can manage your time. Try to allocate as much of your time to billable hours rather than speculative hours. That means you’ve got to sell you services or products and get the bookings.
The majority of your working hours should be spent either pursuing billable hours or executing billable hours for clients. You’ll soon find it takes you AT LEAST as many hours to find the billable work as it does to execute it. I think in any given week, as a solo entrepreneur, you’ll be lucky to execute 20 hours of billable work and will spend another 20 hours pursuing billable work. This doesn’t leave a lot of time for mucking about in the studio.
But that’s the difference between a hobby and a business. Can you spend your evenings and weekends exploring your creativity and your 40 hour work week selling it and executing your skills for paid clients?
If you can’t do this, then you probably aren’t going to make a sustainable living from it.
What can you do today to get you closer to some billable hours?
And start questioning your time. Am I being paid for this? If the answer is no, then the next question is: Will this time lead to billable hours? if the answer is yes or probably, then it’s a good use of time. If the answer is possibly, then you decide if it’s worth the gamble. If the answer is probably not, then you have to acknowledge that this action needs to happen outside of your work hours as it has nothing to do with your business.
Harsh but true.