Ideas are Great. Execution is the Best.
Focusing on profitability can help creatives make their ideas become reality
Don’t avoid the details of how to reach your goals because creative, big picture ideas are more fun.
I was recently talking with a close friend of mine. She is one of the original six architects in what is now a firm with 50 architects. She was recently nominated for a national award for one of her restaurant designs. She is an extremely talented creative thinker.
She mentioned that creative and fun were some of the core values of her company. But recently, it was starting to feel corporate and stalled. She wasn’t sure what had changed.
I have been a Chief Financial Officer and Chief Business Officer for a variety of companies. I am a detail person by nature. I am fascinated by the details of how different businesses run. Sometimes a company can stall because of the work to people ratio. When there are too many people and not enough work, its like a car with its wheels spinning out, weighed down in the mud. When there is too much work and not enough people, it can be like a sports car by the side of the road. Out of gas and the people who are willing to drive it.
I started asking her some questions about her business. How did you get to the point of having 50 architects? Do you think your company is overstaffed, or understaffed? What does your project pipeline look like?
My friend looked at me. “Oh, I have no idea how our business is doing. I just like to create.”
I hear this sentiment so often from creative entrepeneurs and small business founders. Entrepeneurs by nature tend to be people who have big dreams and the guts to follow them.
On the flip side, they often shy away from, look down upon, or downplay the details that go along with execution.
You can set big, hairy, audacious goals for your company. Goals are critical. You can also determine your core values. But without understanding what goes into the execution, you risk tanking your company.
One concept to use for a framework around execution is the concept of profitability.
When you think about the profitability of an idea, you need to think about two parts: what goes in and what comes out.
People, resources, funds, and time go in. How big a step you can make toward reaching your goal is what comes out.
Here are three ways for a big picture creative think about profitability.
Admit that it is important to make money.
Money is a way of creating a measurable goal. Some creative people feel shame about wanting to make money. Or believe that it shouldn’t be a priority. Especially if that creative is also a woman.
Not everyone is looking to make $1B. Some goals align with giving back to a certain community. Some companies are outright non profit organizations. That’s ok. In order for you to further any goal that you have, you are going to need money. Being fiscally responsible and socially conscious are not mutually exclusive.
Determine if and why an idea is worth your time.
This is the fundamental concept of profit.
I worked with a nonprofit company last year. They had an amazing cause and wanted to put on a huge fundraising event in support of their mission. The leaders were well connected in the community. They knew they could host a large gala that would bring in quite a bit of money.
I asked them to put together a budget for the event. The number of people they wanted to invite meant they needed an enormous space. The cost of the event space erased the amount of money they would raise for the organization. So, the revenues would be large, but the profits would not exist.
We figured out a way to scale back the event. The revenues were not as high as if they had hosted a grand affair. But more money came back to the organization, which was the goal.
The moral is, if you have to spend $2 to bring yourself $1 closer to your goal, you better have a great rationale to do it.
Understand the time lag between investment and outcome.
Not every opportunity is going to result in profit right away. But an idea now can mean more profit down the road. Its pretty common for a biotech or pharma product to lose money in the first year it is on the market. A lot of money is required to get a sales force up to speed and a marketing campaign right. That early investment in a product will pay off massive dividends in years 2–10. The revenues from those latter years will more than make up for the early investments. So the investment is worthwhile.
Its ok if an idea isn’t profitable right away. Investing in things like coaching or writing classes don’t have an obvious near term profit. But, have a well informed opinion on the timeline. And how much money you might need to invest until you reach that point.
Profit is only one way to think about executing on your goals and your vision. But it is a framework. It makes you think about a few of the puzzle pieces that need to fit together to create the bigger picture. And those little pieces might not be as dramatic or fun as the big dreams. But without them, execution becomes nearly impossible.