Scaling any business is challenging.

Just look at the volume of business books and blogs written on the topic. But if scaling any business is hard, then scaling creative businesses is like training for a triathlon and getting a Ph.D. all at once. Service-based businesses like yours are generally in the business of trading dollars for hours, and eventually, your people only have so many productive hours in a day to give!

So how do you keep it growing? How do you maintain quality?

The challenges facing a creative entrepreneur trying to scale up to $1 million in revenue are immense and varied. How many of these sound like you?

  • Your sales process is entirely dependent on you. Nobody else knows quite how to package or price your services, and nobody can really talk to the clients the way you do.

  • You’ve always created highly customized content for your clients, but it’s getting harder and harder now for some reason.

  • You’re struggling to demonstrate the value you provide to your potential customers. You want to be paid for your experience, but there are so many folks out there undercutting your fees.

  • The cost of acquiring talent is SO high, the market is SO competitive, it feels impossible to build a team that’s ever going to really get things off your plate.

  • The clients want flat-rate projects so they can hold you to a budget, and as soon as you agree… the change orders and scope creep begins!

If growing a creative business to the $1 million mark is your goal, you have a lot to overcome. In fact, broadly speaking, only 7% of all businesses will reach that mark in the US. Think about that for a second… 


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So in order to beat the other 93% of businesses in the pack, you’ll have to do things differently. What can you do to set yourself apart as a creative entrepreneur? Be a little more thoughtful and careful. Be intentional. Be judicious. And you’ll have to solve for several key challenges that many creative business owners face. We’ve compiled these pillars not to create one more “list” out there, but to give you actionable steps that will get you closer to scaling to $1 million and beyond.


The Seven Pillars of Scaling Creative Businesses

Challenge 1:

There are just too many distractions and too many demands on my time as the owner.

Solution:

Let’s understand something about the value of your time. Most folks in various creative firms (from branding to design to consulting to development) have a sense of their billable rate. Are you wondering how much to charge for your time as a creative professional? Send us an email and we’ve got a great tool for you. But there’s a lot that doesn’t get reflected in that hourly rate, and you might not even be on track to reach your goals. Let’s think about it differently.

Let’s say you’re going to work 50 of the 52 weeks in the year, and let’s say on average you’re going to work 40 hours each week. (OK, we know you’re probably doing more, but then we have weeks where family and other things demand attention, so let’s use this for now.) So 50 weeks at 40 hours per week means you’re working 2,000 hours that year. Billable or not. Building a marketing strategy or shopping for the best project management software for creative firms. (Yeah, we see you.) So what do you have to be generating each hour to make a million dollar business for yourself? $1,000,000 over 2,000 hours is $500 per hour! That means you’ve got to be solving problems at a $500/hr scale! You’ve got to be generating traffic and new business at a $500/hr rate! It also means that every hour you spend generating less than that (or worse spending hours that cost your firm money) are setting you further away from your goal.


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So you’ve got to be ruthless about what you do with your time. Learn to delegate and to be a better manager. Read The EMyth Revisited if you don’t know the difference between the entrepreneur, the manager, and the technician. Read The One Thing to reframe how you show up to work every day. Focus on only the most important things and start taking pride in saying NO to everything else.


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Challenge 2:

It’s costing us too much and taking too long to hire new people.

Solution:

There are usually two things creating hiring struggles for firms. They have different solutions. How do you hire great people for your creative business? See if either of these pivots resonates with you.

Instead of investing in sky-high salaries, or ping-pong tables (who’s working at offices these days anyway?), invest in your culture. Who you are as a culture should be crystal clear and should be consistent. It should be all over your website and in the tone of voice in your social posts. It should attract the kind of people you want to work with and repel the ones you don’t. Let high salaries and giving away equity be the price the other folks pay for not having as attractive a culture as you.

And rather than putting yourself in a position to have to hire quickly to staff up for a project, always be hiring for key roles. It’ll allow you to recruit and hire organically more and be less reliant on high-price placement agencies. It’ll also enable to you be a little more choosy about who you bring on so you don’t wind up settling for “the best of who’s available right now.” We can hear it now… but what if I’m not ready to bring on that next person but they show up? Think about it this way: the cost of that new person isn’t their whole annual salary all at once–it’s just each month’s wages one month at a time. And by having the right person in the right seat, you’ll be increasing your chances of growing and scaling your creative business to the level you’re aiming for anyway. They’re your rocket fuel to get there. And let’s not forget the cost of settling, hiring the wrong person, and having to correct your mistake. So which is actually more costly to you?


Challenge 3:

Clients don’t want retainers, deal flow isn’t consistent, and ultimately cash flow is always a challenge.

Solution:

We get it, the market is changing. Without monthly retainers, it’s hard to plan for growth and to manage your cash flow. The antidote here is simple but important… Now is the time for a model and a budget–you can’t wing it anymore. Let’s leave that to sink in for a moment.

Planning for cash flow changes is already hard. What makes cash flow even more challenging for creative entrepreneurs? When you don’t have a clear financial model for your business. That means understanding for every dollar of revenue you generate, how much of it is going to direct costs, how much it takes to support each of the major areas of overhead. How much you’ll have left as profit.

And beyond the model, you’ll want a budget or a forecast. Something you can use with a cash flow model to understand if you’ll have tight spots in the months to come, where they’ll be, and how you’ll deal with them when they come. Thinking about this stuff in the abstract is difficult, anxiety-producing, and not helpful. But thinking about it in real dollar terms by creating models and scenarios puts you back in the driver’s seat and enables you to respond to the twists and turns that inevitably come up.


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Challenge 4:

We’re doing more work but somehow never making enough money.

Solution:

You can only make decisions based on the information you have. And now it’s time to really dissect what it costs to deliver every service and understand which clients and projects are truly profitable.

Not every project nets you the same margins, and general wisdom is that 80% of your profits probably come from about 20% of your projects. So how do you increase the profitability and health of your creative business? You become super curious about how profitable your various clients and projects really are. Invest in some software or tools that help you track costs on a per-project level. Apply those project costs directly. Apply the other general direct spending pro-rata.

Keep the few highest-margin activities you have and cut the rest. It’ll feel like that’s cutting off your revenue, your lifeblood, etc. But every one of those low-margin activities is stealing away time, focus, and your people resources from potentially working on more high-value items. And besides–don’t you want to become known industry-wide for those things? The ones that make you the most money (and likely are the most fun anyway)? Of course, you do. (This tool below is Xero Projects, which we highly recommend exploring if you want more insights into your project cost.)


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Challenge 5:

The sales process is entirely reliant on me. I’m the bottleneck, but I don’t have more time to devote to it.

Solution:

You need a sales process that anyone on your team can do. Simple as that, but it’ll take a little investment on your part to get it moving. This is a non-negotiable key to scaling… you’ll never be able to have enough conversations and manage all the other aspects of the business to scale up. Fortunately, the sales process itself usually only has a few components. They are:

  1. Understand your client’s pain. What’s at stake for them if they stay where they are? What do they need to be done and how quickly do they need it? Why is the ground they are standing on today not suitable going forward? 

  2. Where do they need to go? What’s the goal of the work and what does it mean to them? Put yourself in their shoes, ask questions, and really listen. 

  3. How can you help them bridge that gap? Paint them a picture! What can you bring to the table? What does it look like for clients of yours that have already started working with you? What do they say about you or about how your work has benefited them? Convince the client that where you can take them is better than where they stand today. Be the guide for them on their hero’s journey.

And get their commitment that they’re ready for help now. If they’re not ready, you’ll never succeed with them anyway. Are they ready for help and are they clear about the value you’d provide? If they can spend $20k to solve a $50k problem, will that work for them? And are they ready now?


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Once you finish building this process, invest the time in doing some calls with your team. Give them constructive nudges and coaching. Help them see themselves as guides and coaches and not salespeople. After all, you won’t be the right fit for everyone. You only have to be ready for the ones who are.


Challenge 6:

The custom design process is too labor-intensive to scale–and besides, it’d become harder and harder to ensure quality!

Solution:

Custom work is amazing, and many brands become known for the highly customized and one-of-a-kind work they produce. That said, those diamonds in the rough overcame significant challenges to grow, and ultimately they’ll never scale to the level they could (even if they’re big, successful businesses already). Why? You need to productize your services and to create a proprietary process.

John Warrilow wrote a book called Built to Sell which any creative entrepreneur looking to scale ought to read. Read it whether you want to sell your firm or not. Because as the book points out, the very same things you would need to do to make your business ready for sale are the same things that you’ll want to do to make it a healthier business regardless! And in that book, in the stories told by the characters, you’ll uncover the power of taking your services and developing a structured process around them. Making a service into a product. It’s the key to scaling, to maintaining quality, to really being known for something specific.


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Challenge 7:

Knowing when to hire, how many people to hire, etc, always feels like a crapshoot. How can we keep a consistent flow of projects coming and plan for growth?

Solution:

Uphill math is the strongest medicine for inconsistent project flow. What do we mean by that? You probably know how much revenue you’d like to generate each month. And if not, go back and read #3 again. So if you know how many dollars you want to bill each month, having the right information about your sales and marketing process can be everything you need to make it happen.

It starts with tracking the right information. Keeping track of every step of the journey from initial reach outs to clients signing on the dotted line. You’ll need a system like a CRM or a marketing automation platform like Hubspot or ActiveCampaign to help build your funnel and to track your metrics. And then once you know your numbers and ratios, the rest is “uphill math.” Let’s look at an example.

Say you want to generate $65k a month in revenue.
What is your average total fee per engagement? $12k
Ok, so you need about 5.5 engagements per month.
What percentage of sent, reviewed proposals wind up becoming paid engagements for you? 50%
Ok, so you’ll need at least 11 sent, reviewed proposals per month to come up with those 5.5 paid engagements.
And how many initial conversations with a potential client lead to a reviewed proposal? 35%
Ok, so that means you’ll need about 31 initial conversations per month. That’s about one per day. Seems reasonable.
And how many cold reach outs does it take to land 31 conversations in a month? What’s your conversion rate on reach outs to introductory calls? 5%
Great. So you’ll need at least 620 cold reach outs per month to land those 31 conversations. That’s about 155 per week. Do you have time to do that? Probably not. But it’s the perfect thing to script out and assign an assistant to do for you–your team can take it from the initial call and beyond.

It’s not rocket science, it’s just uphill math. Understanding how every one step in the process leads to another and determining how much effort is needed at the top. The top of the hill is the only part you have absolute control over. Everything else is up to someone else’s response. So put your effort and focus in the area you have the most control!


So in summary…

Numbers. Data. Systems. Process. It’s not sexy, but it’s the stuff that any strong and growing business is made of. It’s not for everybody. And plenty of creative entrepreneurs make a conscious decision to stay small. To only do custom. To cap their growth at a certain level that’s comfortable. And that’s 100% respectable. But for those who are looking to become one of the 7% of business owners in the US running a business of over $1 million per year, these seven pillars are here to support you. To be your foundation.

And if you’re in need of better support than you have right now… more data, better analysis, forecasting and models, tax strategies… then click here to share some information about your business and to see if Revel CPA might be the right firm for you. We’re focused 100% on helping owners of creative businesses grow and scale to make their personal dreams and goals a reality–in particular for entrepreneurs who have a steeper climb than most (women, LGBTQIA, people of color, immigrants, and all the amazing intersections thereof!).

Let’s grow together!

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