My reaction to today’s Demos report – RISKY BUSINESS – by Helen Burrows and Kitty Ussher

“The lazy assumption  that the
creative industries are inherently risky is harming Britain’s path to growth…”

This is a great report – and I use the word advisedly.   The first Creative Sector Mapping document in
1997 changed the way we, the creative sector denizens, began to look at ourselves.  Importantly, it also at least
started the process of other sectors, government bodies and financial institutions looking at us differently.  It gave rise to a lot of arguments and issues, most of which are acknowledged in this report, but at least those discussions were happening.  This report takes on most of the important ones and effectively dismantles them, using detailed analysis to show the myths for what they are.

Most significantly, in my view, the report reinforces our belief that the creative sector is not ‘a bunch of airheads who couldn’t organise the proverbial in a brewery’, as one financier said to me ten years ago.  It demonstrates with hard figures that we are not inherently ‘riskier’ than other businesses and that we survive as well as the best and better than most.  Finally, with feeling, I believe it shows triumphantly that the ‘improvisational entrepreneurship’ that commentators witheringly accused us of in 2000 is in fact a significant element in our success, and our use of creativity as part of our business skills mix is in fact what gets us going, keeps us going and leads us to success.

It’s an essential read for any creative entrepreneur – and for anyone purporting to deal with creative sector businesses.  It will absolutely build your confidence in what you do.  One of the key issues we in Cida Co meet when we are working with creative entrepreneurs is helping them to recognise and sustain a belief in themselves, not as artists – they usually
have that – but as creative businesses, with a real capacity to earn their living from their creativity.   All too often,
they are either victims of well intentioned but wrong headed academics who have (even in the 21st century) assured them that they are ‘artists’ and should not be concerned with ‘business’; or of parents, friends, banks and the
public in general, who recommend they get ‘a proper job’. In a workshop I was running just recently, a young designer burst into tears when she realised it was okay to come up with a concept and only then find your market – she understood she was not being released from the responsibility of knowing her market if she wanted to make her idea a reality, but it’s outdated and simply wrong that creatives should only find a market gap and respond accordingly.  They’ve never done that in the past – of course they’re not going to start doing it now.  But they absolutely must recognise, like all entrepreneurs, that without knowing their market, their chance of success is almost non existent.

This is, of course, just an easy and classic example of how the creative sector can turn established philosophy on its head, improvise intelligently and succeed.  We provided models for business practice when the world moved to a knowledge economy, where ‘a job for life’ was a thing of the past and job insecurity (an occupational inevitability for us) became a modus vivendi for everyone.  We provided models for business practice when we introduced creativity as business practice, serious play as a management tool, and demonstrated collaborative working as the essential ingredient in successful innovation.  We have much in everyday business practice to be proud of and to share – but this report takes us all to the next stage, able to declare and demonstrate with real evidence why a vibrant creative sector is rightly the aim of governments all over the world.

More specifically, I just want to pick up a few points, either reinforcing or questioning some of the key issues in this report:

Size of business:  We have always made great issue of the fact that we are sector dominated by the micro business, as though this made us different. The report demonstrates this difference to be illusory  – but why then has so much been made of this  by other economic and government commentators?  – do other sectors use freelance workers the way we do?  Why has collaboration always been seen as a particular characteristic of the sector, enabling us to come together to respond collaboratively to projects and then disbanding on completion, to go and do something else elsewhere?  Why have we been dismissed when measured against the Govt success metric re duration of business when if fact we are clearly do at least as well and sometimes better than others?  – I just wonder if there is something here about the large businesses in our sector being largely dependant on the publishing and distribution of IP created by the micro businesses, so that the symbiotic relationship between the large and the micro is both unusual and currently under severe threat as both publishing and distribution become more in the hands of the creatives?

Definition of creative business:  The question of definition is still a vexed one – not from the point of view of the argument the report makes here, which deserves full support, but in practical, sector specific terms – using the NT as the comparator for the ‘not for profit’ business means that the report’s  figures might sweep away a raft of the sector who ARE focused on earning profits/ reserves /surpluses to keep the business going but whose motivation is still mission led rather than profit led – i.e. there is a danger of actually diminishing the number of creative businesses that would absolutely support and benefit from the report’s main arguments.  Instead of all ‘not for profits’, the better comparison may be with companies that are regularly subsidised, who do not, for example, have to worry too much about core costs, and who are funded to focus  on creating work (like the NT).  A creative company like mine, Cida Co, for example, in existen ce for 12 years, completely (and proudly) independent, with no subsidy or contribution to core costs, who works in both private and public sector, is registered as ‘not for profit’ (or, preferably, non-profit distributing!) and would apparently fit your category and yet we unequivocally regard profits as our lifeblood – without it, we can neither survive nor  develop.

Investing in the sector:  How fascinating – how wonderful! The report states: ‘previous experience [of investment] makes a difference with just 14 per cent of those who have invested previously agreeing with the statement [‘one third of investors agree that the business models for the creative industries sectors are too risky to be worth investing in’] compared to 40 per cent of those who haven’t’.  (My italics).

‘Lifestyle’ businesses – er……….:   I am concerned about the report’s apparent buy-in to the concept of ‘lifestyle’ businesses.  This phrase, so often used in a pejorative sense, has driven me mad for years so early on in Cida Co, (set up 2000), I did some research of my own.   The term “lifestyle entrepreneur” appears to have been coined in 1987 by William Wetzel, a director emeritus of  the Centre for Venture Research at the University of New Hampshire. Dr Wetzel was using it then to describe ventures unlikely to generate economic returns robust enough to interest outside investors.  ‘In financial jargon, there’s no upside potential for creating wealth,’ he explained. Today [2001] however, it seems he has recanted.  According to the Wall Street Journal, no less, Dr Wetzel recognizes lifestyle entrepreneurs as a specific breed of business owner  who is neither a financially independent hobbyist nor wealth-seeking empire-builder. ‘Lifestyle ventures are usually ventures that are run by people who like being their own bosses,’ he says. ‘But they’re in it for the income as well.’

It’s a pity we promulgate the myth which even Wetzel has disowned – he recognised, and we should too, that even thought it is the work itself that gets creative entrepreneurs out of bed in the morning, they are also interested in the money – sometimes in itself, as straight profit, and sometimes in it as a means to an end – but don’t ever doubt the interest in earning, particularly once they start !

It’s also worth noting (and the report’s example of Thomas Benski, Pulse Films, gives plenty of support for this) that we never describe ourselves as ‘lifestyle businesses’ – in most cases of successful creative entrepreneurs, Benski’s  admonition is fully endorsed: “Be the best at whatever you do. Mediocrity is the killer. Don’t do it for lifestyle,
be truthful to what you want to do. Come from the right place

Mutual respect and understanding between financiers and creatives?:  The report states: “It is possible that the problems of understanding between the financial and creative worlds result from financiers not understanding how creative businesses manage their risks and assets and thus poorly assessing their potential, rather than creative businesses being unaware or unconcerned by business risks.”   The usefulness of an independent report stating this, which most of us have known or suspected for some time, is incalculable.  In 2008, Cida Co ran a day’s workshop in Brussels with artists, creative intermediaries and financiers from across Northern Europe.  It was the first time most of them had been in a room together.  The real shock was the gulf in understanding amongst British financiers in particular and the creative businesses.  The Europeans seemed to be on the way to finding partners and solutions.  But at the time, although our conclusions were similar to the report’s comment above, credibility and power was on the side of the financiers and they went away convinced the problem lay with us.

SIC Codes:  Excellent, detailed and positively hopeful analysis and recommendations on SIC codes – we all know
it’s been bedevilling accuracy of information about the sector since we started to try to compile meaningful economic data on our work but it is great that someone has now done the detailed analysis.  Hopefully  this might inspire and
will certainly enable Govt to do something intelligent about the issue.  However apparently tedious, SIC codes that accurately represent activity in the sector are important to us all to give us both benchmarking and context as we make the case for our businesses –

So thank you Demos for a terrific report – I hope it has huge impact – certainly, I will take it with me everywhere I go. (I’m about to go and teach creative entrepreneurs in Nigeria to access bank funding – this will be both invaluable
and eye-opening!)  Let us know if we can do anything to help spread the word!

Anamaria Wills, CEO Cida Co

[1] Wall Street Journal 2005