Entrepreneurial Fundamentals: Key entrepreneurial skills required to navigate in the Creative Industries

By Gene Shill

The impact COVID 19 has had on the global creative economy has been devastating. Yet amidst the deluge of destruction, the consumption of entertainment-based products not limited to music streaming, movies and user-generated content such as video games have seen exponential growth. 

In times of hardship and uncertainty, many turn to products from creative industries to reflect, inspire and enrich their lives, and this highlights how much these typically intangible goods underpin the fabric of society. With more downtime and consistent access to WiFi, consumers have gravitated towards visual forms of entertainment (Westcott Grant, 2020) with millions of people going online for their fix  – and even more. Total internet hits have surged by between 50% and 70%, and streaming has also jumped by at least 12%. Additionally, eCommerce will see a revenue boost as a result of the pandemic, adding $175 billion in revenue in 2020, which represents a 5% increase.” (Forbes, 2020). 

Therefore, during this historical ‘downtime’ and combined with the democratisation of technology, online consumerism is beginning to rapidly evolve, whether it be in the form of entertainment, education or business. COVID-19 has been the catalyst to further liberate entertainment, education or eCommerce products through online platforms and will continue to serve as a legitimate platform well after a vaccine is available. But who will conceptualise, develop and produce the necessary content to support growth? In short. It’s creatives. Yet many of them face a bleak and uncertain future of higher sporadic unemployment than historically documented. And the question is, why? Why don’t we as a global community, acknowledge the valuable contribution creatives make to society. One answer is. We don’t place enough social capital on creatives and often disadvantage them in the central area of education. 

For those who studied a creative discipline in a vocational or higher educational environment, curriculum rarely educates creatives on how to build and manage a business around their intellectual property. Contrarily, in business studies, it’s the opposite. Students study the fundamentals that underpin business and usually apply them within the course of their degree program. Sometimes the theories are tested in research or industry-based environments allowing students to gain insight into their practical applications. It equips them with a sound overview of the depth and diversity of fundamentals such as consumerism and provides them with a platform for growth.

However, the majority of students studying disciplines that sit neatly in the creative economy are only generally encouraged to leverage their intellectual property to develop a creative outcome that ‘may’ appeal to an audience ‘somewhere’ and that’s where the responsibility ends.

Sadly, the diversity of curriculum within the Creative Industries typically fails to educate individuals on how to strategise, promote, manage or even scale their intellectual property, and this fundamental gap in knowledge is where these incredibly talented individuals are disadvantaged.

In professional educational contexts, academia is too often responsible for lack of purposeful and diverse curriculum design around the creative disciplines. Failure to acknowledge that encouraging individuals to develop and leverage their intellectual property is encouraging an entrepreneurial mindset and therefore requires the accompanying business skills to support any future ventures. There needs to be a conduit between the entrepreneurial process of finishing an offering and reaching the market place to engage in audiences. The responsibility lays with professional education environments in offering the necessary education that not only educates individual’s how to leverage intellectual property, but how to manage it. 

The following headings outline some of the more critical entrepreneurial skills required to navigate in the Creative Industries and better negotiate an already exploitative and reflective consumer industry.

Acquiring a sound understanding of fundamentals such as Value Creation, Marketing, Sales and Finance, are not only essential for entrepreneurship but necessary skills to manage intellectual property successfully. Additionally, some of the subheadings will encourage critical reflection about flexibility and ultimately, how to leverage its advantages. 

Value Creation

Perceived Value: For many entrepreneurs in the creative industries, ‘perceived value’ poses a tricky fundamental to navigate, namely because, an individual’s interpretation of what perceived value is often quite different from reality. Perceived Value determines how much your customer will be willing to pay for your offering (Kaufman, 2019). Factors to consider are. Is there a precedent or market value for your offering? Are you leveraging any form of Intellectual Property? If so, is it yours or in the case of a musician/band covering songs, does it belong to someone else? If it’s yours, factor in the time and resources it takes to manufacture your offering and even imagine what you’d be willing to pay for a similar offering. If it belongs to someone else, remember that you’re fundamentally exploiting someone’s intellectual property for your gain. 

Therefore, it’s always best to rediscover your moral compass and navigate towards an ethical solution. Additionally, there’s no cut and dry answer for this, so take the time to research and whatever you do, don’t pluck a random value out of thin air. It will come back to bite you, especially if you’re unable to quantify the figure rationally to potential customers, or worse, investors. 

Economic Values: Determining your ‘Economic Value’ is another vital piece of the equation. What value does your potential customer place on your offering other than a monetary figure? Here is where the idea of ‘affordable luxury’ comes into play. Essentially the notion of affordable luxury is a decision driven by emotion. Is your offering a necessity or an affordable luxury? What emotional value is your customer willing to place on your offering? 

Shadow Testing: Testing your offering with friends and family is safe, but can they provide the non-biased feedback you need to reflect critically on your offering? Feedback doesn’t have to hurt, so don’t shy away from it. Think of it as information or data. The more information/data you collect, the more resources 

Marketing

Hook: What is your Unique Selling Proposition (USP)? A ‘Hook’ is a single phrase or sentence that describes an offering’s primary benefit. Sometimes the Hook is a title, and sometimes it’s a short tag line. Regardless it conveys the reason someone would want what you’re selling (Kaufman, 2019 p.105). Additionally, developing a ‘Hook’ can also help clarify to other’s what you do shortly and succinctly. 

Narrative: What is your story, and is it relatable? Remember, if it’s out of reach for the general consumer, then they can’t relate to it. 

Does your narrative require the empathy/sympathy of your customer, or does it just need to make sense? You’re aiming to leverage the focus and emotion of the consumer, and if it’s too hard, they’ll walk away. It is your responsibility to make the narrative as clear and relatable as possible. 

Sales 

Transaction: How will you sell it? Where will you sell it? Do you require an online platform for distribution? If so, who will distribute it? Additionally, what percentage of sales is the distributor entitled to receive from each transaction? These are essential questions, and this is where ‘NET and GROSS’ profit start to factor into the overall operation of your business. I’ll touch on this shortly.

Value-Based Selling: How do you add value to your offering? 

If it’s a book, do you have a website for the book where consumers can access more information about you and a suite of publications? Does the book serve as a precursor to specialised courses and instructional content? Value-Based Selling exists at all levels of consumerism and is about leveraging additional elements to ‘add value’. 

Finance

Profit: Profit is about how much you get to keep from your offering. There is a difference between ‘NET’ profit and ‘GROSS’ profit, and it’s essential to know the difference. ‘NET’ profit is how much you have at the end of the day once you have paid all operating, interest and tax expenses. ‘GROSS’ profit is how much revenue you have left after minus the cost of goods sold. Although this shortest overview, it’s essential to know, as it will help determine what 

Profit Margins: Is the difference between how much revenue you capture and how much you spend to capture your offering, expressed in percentage terms. The results (Revenue-Cost)/Revenue) x 100 = % Profit Margin (Kaufman, 2019 p.164). 

Overheads: This represents the minimum ongoing resources required for a business to continue operation. It includes all of the things you need to run your business every month, regardless of whether you sell anything: salaries, rent, utilities, equipment repair and so on (Kaufman, 2019 p.185).

More and more creative entrepreneurs and institutions are looking towards the future, intending to better equip the entrepreneurial mindset with the necessary skills for success. However, those institutions that focus on advertising, architecture, art, crafts, design, fashion, film, music, performing arts, publishing, R&D, software, toys & games, TV, radio and video games, that have yet to do so are in the crosshairs of survival. Those that have yet to subscribe to greater responsibility will simply need to re-evaluate the strength and diversity of their offerings and find the ‘value-add’. The Entrepreneurial Revolution is well in motion. 

About the Author

Dr Gene Shill, is an Assistant Professor with specialisms in creative entrepreneurship, creative practice and contemporary record production. With a background in entrepreneurship and intellectual property law in the global creative industries, he is also the established contemporary saxophonist, record producer and DJ of the alias ST. AMANT.

References

Beech, M. (2020, March 25). COVID-19 Pushes Up Internet Use 70% And Streaming More Than 12%, First Figures Reveal. Forbes. https://www.forbes.com/sites/markbeech/2020/03/25/covid-19-pushes-up-internet-use-70-streaming-more-than-12-first-figures-reveal/#1df954593104

Kaufman, J. (2019). The Personal MBA: a world-class business education in a single volume. Penguin Business. www.personalmba.com. UK

Kristin Wescott Grant, & Viner, J. (2020, May 16). The Future Of Music Streaming: How COVID-19 Has Amplified Emerging Forms Of Music Consumption. Forbes. https://www.forbes.com/sites/kristinwestcottgrant/2020/05/16/the-future-of-music-streaming-how-covid-19-has-amplified-emerging-forms-of-music-consumption/#412b338e444a