In this third blog of the series on developing local creative micro-companies and freelancers we look at the various existing resources available to support creatives and what needs to be created to improve the situation. Why is this so important?
“….many creative enterprises reported that those offering finance and support were either lacking in their understanding of the way the creative industries work, or could not tailor their product or service to their specific needs.” – Growing the UK’s Creative Industries’ CIF December 2018
In this context there is a need to review and develop new business support systems covering not only accountancy but also business planning, financial management and creative skills. However, the problems do not stop there.
“Many – particularly micro-businesses and self-employed workers – were also not undertaking enough measures to protect and maximise the value of their Intellectual Property ( IP ), and were unaware of the growth opportunities that exporting their services and/or products might deliver.” – Growing the UK’s Creative Industries’ CIF December 2018
The significance of this aspect of new support structures is that without this ability to protect their Intellectual Property and market it to the widest possible audience the creative enterprises remain uninvestible. The result being that without the investment the creatives are not in a position to protect their IP, and thus are trapped in a cycle of client dependency and no real growth.
Increasing the Earnings for Creatives
The majority of small creative enterprises traditionally work with a small client base or market place. These range from a handful of broadcasters for indie TV companies to weekly markets for makers. This approach to selling your work has been impacted by YouTube and Netflix developments at one end of the spectrum and e-commerce sites e.g. etsy at the other. However, the vast majority of creatives as explained in – Five Questions for any Creative Cluster – are too limited by their working time and resources to easily exploit these new opportunities.
The answer to this scenario to date has been either grants e.g. ACE lottery, and Esme Fairburn or loans . However, as anyone who has been involved with creative activity will know the lack of stable cashflow, the freelance nature of employment, and the reluctance of traditional lenders to give without capital assets makes this approach to growth very limited.
The only effective answer to growth in this scenario is the provision of equity investment.
Investors have proven very reluctant to become involved with creative activity, especially when over the last decade ‘tech’ based companies have been seen as the way to make the most from investment. However, the failure of many ‘tech’ investments has now shown that this area is just as risky as any creative enterprise.
“67% of the Creative Businesses thought that lenders
find their sector hard to understand and 61% that their sector struggles more than others to get funding”. Access to Finance. CIC 2017
The need for equity investment in creative enterprise will, obviously, not be solved just by the failure of other investments. There is a need for micro-companies and freelancers to become more attractive to investors. This can be achieved by a number of new business support services , which are tailored to creative activity, and focus on those creatives who see the potential to grow.
What type of business support – financial?
As is the case with most small companies creatives have access to specialist accounts packages ranging from Freeagent , designed for sole traders at £9.50 pcm to larger packages such as Sage at £10-22pcm. In addition, there are emerging several specialist accountants, again ranging from larger firms such as Ward Williams Creative and Bishop Fleming through to providers who have emerged from specific creative sector need. In this latter group two examples Lime Green from music and AJN Accounting from photography offer potential models for other service providers, or an expansion of existing services.
The emergence of new challenger banks may provide some new opportunities, for example Coconut, but their charges may prove prohibitive, and the old problem of creative activity being seen as too risky to support could easily strangle any developments in this area.
Each of these firms etc., offer a limited range, and scale, compared with the potential need across the whole creative sector in the UK. An online solution may meet some of this need e.g. Crunch- Online Accounting but ensuring a low cost affordable service is critical to micro enterprises being able to develop a sound financial base.
The major issue with regards to this type of business support is clearly not the management of money, but more how to develop a business plan and ensure solid financial projections going forward.
In ‘Five Questions for Any Creative Cluster ‘,we identified the ‘Prosper’ model as having established some clear parameters that will work in this sector. Unfortunately, this was a time limited project restricted to the Arts Council’s remit, and though the Creative United team is now funded until 2021, they, on their own, will not be able to meet all the needs across the UK.
In addition, to this work there are several short courses run by organisations from the Creative Industries Federation and Creative Entrepreneurs to the two-year programme of ‘Boosting Resilience’. Again the issue is one of scale there are only 26 participants on the latter programme, and the short courses tend to be focused in the South East, and run for very small numbers compared with overall need.
The only potential solution to this is not only an expansion of online support, but crucially the development of local creative support systems. Services which could be met by University/college business schools/media departments/accelerators in conjunction with Local Authority economic development units or LEP Growth Hubs.
What Type of business Support – Skills?
One of the major challenges of the whole of the creative sector is the lack of business and creative skills identified within various reports and by the receipt of new funding under the government Industrial Strategy. Despite these initiatives there is the ongoing problem of a range of skills development for individuals working as freelancers, and within the small micro-companies, who do not have enough money/time to take time off for training, or access training at all when it is focused in large metropolitan areas only.
These creatives need cost-effective flexible training, which can only be delivered by local providers and online services. There is a significant lack of skilled local providers throughout the UK, a deficiency which will not be overcome overnight. This points to an online service, which needs to be easily accessed. Many of the creative skills training/information in this space does exist, e.g. screenskills but needs clearer sign posting, and a local contact point to saves time and duplication of effort.
Building a network of business skills provision and adapting existing provision, especially for graduates, specifically for the different creative sectors is a priority that realistically can only be undertaken by a combination of local and national activities.
What Type of Business Support – Marketing?
This is the weakest part of the current provision for creatives apart from those associated with indie music. Though everyone is aware at a very basic level of the need for a website, and Facebook, or Instagram, presence, the vast majority of freelancers and micro-companies still rely on word of mouth and tender applications for expanding work opportunities. The degree to which this is overlooked in many discussions is a reflection that small enterprises are so bound up in surviving that looking up and planning a marketing strategy appears to be a luxury.
Though this may be the case it is clearly something which has been tackled within the music businesses in the UK. Apart from the now long history of indie labels and the recent successes of BBC 6 Music and The Rattle accelerator there exists a growing marketing support structure for musicians.
Sine Digital, which grew out of Lime Green Records, provides a digital marketing service for musicians, while at the other end of the spectrum Quite Great Music has grown into a substantial PR/branding outfit from its base in Cambridge.
“our approach to marketing for the creative industries and creative businesses means that by freeing you from your desk, you can be more hands on in the areas of your business that you love, whilst we are hands on with your marketing!” Gingerfizz website.
Another example of specific marketing support is GingerFizz based in Huddersfield, which provides a service designed for artists, designers and makers. With these examples it is possible to envisage a more comprehensive eco-system, where creatives have access to marketing support services that would ensure they are in a more competitive position to exploit their IP.
Therefore, developing a new strategy for marketing creative outputs for micro-companies and freelancers, though a critical factor, is currently missing from the landscape for future investments and growth within the creative industries as a whole, but it is nonetheless achievable.
Academia could potentially play a major part in this with courses such as those provided at the University of Leicester and the University of the Creative Arts business schools. It is early days for all these ventures and the question of scale compared with the overall needs indicates an urgent need to expand such activity. There is the potential for this within the AHRC Policy and Evidence Centre (PEC) research programme where Newcastle University are linking with the Department of International Trade.
The aim of support
The needs have been identified, there are some models for expanding services and there is the potential based upon local cluster research to develop a new infra-structure for creative micro-companies and freelancers.
The aim of all this is to help make these creative enterprises ready for investment and crucially to link them with local angel investors with the support of the new British Business Bank Regional Angels funds, which are being launched in January 2019.
It is this link which will be addressed in the last of these blogs on how to build a local creative cluster and thus help sustain creative activity and grow creative enterprises.
