When Creatives Become Accidental Owners
I have a confession to make. I'm a creative. A chief creative officer at a small agency and production company I've run for nearly 15 years. For most of that time, I had no business running my business—because I'm an accidental owner. Vexed by most nuts and bolts matters of business ownership specifically because my expertise is in writing and producing.
Accidental owners are professionals who have enough clients to go into business for themselves, but who have no fundamental knowledge to run their business. They have no initial grasp on accounting, bookkeeping, contracts, marketing, sales, bank projections, benefits or human resources. Accidental owners don't know how to draft a business plan. They don't know how to develop a succession plan. All they know is their craft.
Accidental owners come in all shapes and sizes. They can be almost any service provider or craftsperson—plumbers, architects, electricians, lawyers, consultants, etc. My skill set is very specific—I'm a writer and creative director—but my story is universal. I'm a creative person who needed to become a businessperson and cross the huge gap between the two.
In 2005 I had a bunch of freelance clients, experience from running a staff at a television channel (VH1) and a brand-new pink slip (from VH1). I needed to do something new and, rather than look for another job in television, I opted to open my own agency with a trusted colleague. We were classic accidental owners. Neither of us knew anything about business. Sure, we'd had a few economics classes in college and could balance our checkbooks. But we had always worked with producers who handled the budgets for the projects we were assigned. We were spoiled.
We were learning on the job, feet firmly to the fire, which led to a bevy of regrets, also known as teaching moments. Since the inception of our first company, my colleague decided to move away. I got new partners and investors, and over the years I've cultivated a set of pillars that have guided my business functions, helped me avoid curveballs and equipped me to run my company profitably.
No matter how great you are at your craft, as an owner, you are taking on liability for your employees and your clients. Managing people on a creative level is one thing, but managing people's livelihoods is quite another. Initially, I thought I was getting expert advice from our broker, but a few years into the relationship, we had to fire him because he didn't advise us on the other available policy options. For several years we overpaid for health premiums because I didn't know about professional employer organizations (PEO companies) like Insperity, Justworks and Trinet. I ended up reading about these in business magazines and seeing ads in the subway. Luckily, we now offer our people the best, most affordable health insurance rates possible every year—but getting there was a struggle.
There's an endless dance in business about whether to buy or rent your equipment. When we first started working with NBC Universal and USA Network we had to deliver our projects using an expensive machine called a Digibeta SR Deck. My gut said buy or lease one. But a colleague had been renting and tried to convince me that doing so was smarter. So I did… for three weeks, in which time I spent an amount equal to the price of a small car. So we financed the SR Deck and made the right decision for our company. Had I been more skilled with spreadsheets and had better guidance, I might have been able to figure this out ahead of time. But it was a lesson to do the math to support my gut feelings as opposed to trusting colleagues and friends.
Place: Real estate
I was trying to find office space in Manhattan, perhaps the most difficult market in the United States. I was also looking to keep five different staffers happy. I worked closely with a seasoned real estate broker who knew the market as well as our specific slice of the city. My investor, who had owned his own business since 1979, was able to give me advice on dealing with New York landlords, which, as you can imagine, is no picnic. I was able to marshal expert advice, despite what I didn't know, and gain vital experience in the process. For eight years our initial office worked well—until it didn't, then we found a new, better space.
When Covid hit, we were forced to react fast, moving our staff home on March 12, 2020, a full week before the rest of the world shut down. We figured out quickly that we could absorb our monthly rent into our overhead. Ultimately, going fully remote made sense for our new, post-Covid business pivot, so we reconfigured our financials for the remaining length of the lease.
As you may surmise, I keenly rely on consultants and in each area I have to make a financial commitment. When you're an accidental owner you have to challenge these advisors. They assume a lot about what you know, especially if you're already running a profitable business. I came up with a technique wherein I would demand more than their first answer to my specific question/concern/problem. My rule was this: give me five possible solutions. Even if their first answer was the solution we would ultimately go with, by presenting different outcomes, I was able to get a sense of how they got to their go-to solution, and I was able to be sure they weren't relying on orthodoxy. Also, the more you understand about available options, even if they're not the right calls, the more you understand about the problems you're facing. We do this with our accountants, lawyers, insurance brokers and technical advisors and it's helped shape our view of the business world.
The goal of every accidental owner should be to turn the transition from a craftsperson to a businessperson into a journey where every obstacle prrsents an opportunity to learn something new and vital. Today, I admit it, I'm still learning. But now that I've learned how to tackle important things—like net profit over revenue, our company's culture, and being sure my staff feels good about what they do and where we are. I'm in a good rhythm where my life is balanced enough to have the freedom and bandwidth to do creative work, too.