The first business plan I wrote in January followed an old-fashioned template. One aspect of my business is making up small runs of publications for musicians to sell at their performances. There may be as few as 50 in a run or as many as 300. The business plan asked me to quantify this business opportunity using sales figures and trends from the record industry. The conundrum is that my business stems from the failure of the record industry and the fact that nothing has emerged to take its place, so musicians are taking back the rights to their own music and selling it directly to their audiences, but this is private and ad hoc.
The big picture only started to make sense once I started reading the blog published by the Australian office of the global engineering firm, Arup. They share their research materials on del.icio.us and project news on their blog. The neighbourhood is my business but the city that neighbourhood is part of is taking shape through projects like Arup’s Sustainable Melbourne.
I rarely read the Sydney Morning Herald but picked up a copy on my way out of the Australian Museum one day earlier this year and read a report about the Creative Sydney Festival. The SMH was bamboozled. It didn’t know how to evaluate the festival because it was full of people and projects without celebrity status or name recognition, there was no way, within traditional newspaper articles to show that it’s the cumulative dynamism of all of these projects and people, with small-scale cross-connections that’s important, not individuals.
I read about Marcus Westbury’s incubation of arts projects in Newcastle and the practical information he publishes on his blog has been invaluable to me in trying to come to terms with the funding of small scale projects. Here’s a sampling of his insights:
“I believe in the power of initiative, experimentation, entrepreneurship and innovation.”
“I believe that culture comes from the bottom up and not the top down.”
“Most artists and creative types don’t actually get or particularly need grants – but they need economic models that capitalise on their strengths and limit their weaknesses.”
“When you start to think of culture and creative enterprise as organic, and small scale, it starts to change the way you think about it and it starts to change your perception of what creative initiatives and enterprises need to succeed.”
A business plan is a set of guiding principles, something to refer to so that one doesn’t lose sight of the big picture during the daily distractions of setting up and running a business. But where does the inspiration come from in a time of upheaval?
How does a neighbourhood bookstore thrive when the publishing industry is in peril, a newsagent when print journalism is rapidly becoming extinct, a music store when CD sales are plummeting? In my neighbourhood, the Potts Point / Kings Cross area in Sydney I’ve seen local businesses adapt, survive and thrive through ingenuity. Phoenix Music, for instance, is a beautifully designed CD store with the sleekness of a jewellery store and it is introducing a trade in rare vinyl albums.
Big Businesses that are in peril can provide no inspiration or guidance. Jeff Jarvis, who is monitoring changes in the newspaper business is favouring smaller enterprises. “Individuals who succeed in this upheaval become entrpreneurs” he writes. “The new business models have one entity being replaced by well more than 100 entities, each run according to new opportunities and needs, each smaller, each contributing real value, each sustainable (some very profitable, some choosing no profit). Everyone in this ecosystem has to think about running a business rather than preserving one.”
The collapsing of old business models that’s opening up new opportunities is also closing off opportunities for me to earn money to start a new business, though. I’ve been in two failing professions in a row. I’m trained as a journalist and my area of expertise is computer technology, science, architecture, industrial design and engineering. These are all beats that are invaluable foundations for my bookbinding and publishing services business but there is no longer a freelance journalism market that will allow me to earn money to put towards making things rather than writing about the making of things. I’m a gifted amateur in the kitchen, good enough to get continual casual work in catering, which is as much about planning and quick thinking as cooking skills. But the world’s economic crisis has made catering an unpredictable and unreliable sideline. Moving into new fields as old ones collapse is a great theory but in each new profession I start at the bottom, earning substantially less, and being far less in control of my fate than I would be in my own business. Pursuing these new avenues also takes me further away from my own business.
The crucial thing is to be able to show that the custom stationery and publishing services business is sustainable and that there’s enough security for a bank to fund me. At the moment I’m resourceful and flexible, working within the limits of uncertain and unpredictable financing. The next step is a workshop that is also a showroom, to consolidate my business and help it grow.
I presented my business plan to a bank this week for a small amount of funding to purchase materials to make the first orders I have from private clients and local merchants. These materials will be enough for the amount of books I’ll likely need to make until December this year and provide cash flow for the next phase of my business.
This week I presented my business plan twice. Once to my accountant and once to a small business manager at a bank. My accountant, graphic designer and bank are the most important relationships at the moment. I approached the only bank with a physical presence in my neighbourhood. I’ll be selling books through a few local merchants and my next step is to rent a studio / showroom in my area and work up to buying a building here. This bank has started a new venture to incubate small businesses.
In the last few months I’ve made up sample books, established the costs for making these books, shown them to local merchants, sought their advice on pricing the books and made some sales arrangements. I’ve also made an agreement with a wholesaler to distribute some of my books and I’m working out the manufacturing details and costs. My accountant has reviewed the costs and my cash flow projection to make sure they’re realistic and can be achieved.
The collapse of the large global publishing, record and art businesses has created opportunities for writers, musicians and artists to pursue their own projects. Manufacturing is changing too with economical local alternatives emerging to the current practice of having printed books and stationery made up in large quantities in factories in China. I needed to be able to turn those opportunities into tangible projects that could be valued and stand as the security a bank would need to fund me to make the first few projects and then let the business create it’s own momentum.