Unit 1 Task 8

 Other Considerations for Businesses

Apart from all the previously mentioned considerations when running your own business within the creative industries, there are a number of other things that one must keep in mind when they're planning a business for themselves. Whilst some of these are much smaller considerations that could make your life just slightly more convenient, there are some things that are extremely important for a business to mull over before they begin formulating their business.

Finances

In order to even get a business running in the first place, you're likely going to need some source of funding in order to ensure you can afford to keep the business running. What your finances will be spent on will vary depending on the nature of your business, such as a painting business needing to buy paints and canvases or a film crew needing to buy/rent out equipment for the shoot. No matter the business, finances are going to be required. But how does a business get enough money to put their foot in the door if they don't have any equipment yet?

For funding a business, there are 6 options that are most effective for getting yourself set up financially. The first of these options is known as bootstrapping, which is another way of saying that you're self-funding your enterprise. According to Grasshopper.com, this means that "you use your own capital to get the business going." Starting a business via bootstrapping means that you don't have to worry about shares of profits being taken by shareholders and you have total creative control over the enterprise (as all the money going into it is yours). However, there are downsides to bootstrapping a business as well. There's a lot more personal risk with bootstrapping as you're risking your own money to get the business going. Furthermore, there's some evidence that a business entirely self-funded could be seen as "less credible" than a business with official investment from a partner/investor. I personally see this as an effective option if you have the money to spend on the expenses, although I doubt it's the method I'll be considering as I don't believe I have the personal funds to start a business on my own capital.

The second option for finances is obtaining money via your friends and family. Quite obviously, this option simply means you ask your family and friends if they can give you some money to help you with the business. This option has some benefits, including the trust and support you can expect from your loved ones as well as not having to worry about any interest when you pay them back on their investments. However, there are a number of cons to this option as well. Funding a business this way can complicate your relationship with your family if things go wrong, and there's still a limit on how much money you'll be able to raise from just your family and friends alone. With all this in mind, I doubt I'd use this option either for my own business. I would feel horrible using the money from my loved ones to start a business, especially if it ends up going wrong and I let them down.

The next and more wide-spread option is to obtain your finances through crowdfunding. This is similar to the family and friends option, although instead of obtaining your money from people you know very well you'll be getting money from people all across the world interested in your business. This has some very clear benefits, including a much higher potential capital gain when compared to the previous two methods (due to the sheer amount of people donating money) as well as being able to create a customer base before you've even set up your business due to attracting the people who invested. However, crowdfunding a business can lead to pressure from the funders once the business is fully funded, potentially making the enterprise not run at full efficiency due to stress on the owner's part. Additionally, it's possible that having your business concept on the internet could lead to theft if you're not careful with your IP. This isn't super likely, but it's definitely possible. When compared to the previous two funding methods, I believe this one is far better and a more likely option for me to choose, although I'll still have to consider carefully due to the potential pressure from the funders.

After crowdfunding comes a slightly more lucrative option for funding your business - competitions and grants. This method simply requires you to enter competitions with money as the prize and/or apply for business grants in order to get some funding for the business. This is a far less secure method, as you're relying entirely on the possibility of winning/succeeding with the grant rather than simply asking people for money. You could spend all of your time on trying to get your funding instead of thinking about the more important aspects of the business. Despite this, it's a good way to get money with no downsides and can even allow you to get some publicity if you don't succeed.  This also feels like a pretty good option, but I wouldn't use this option alone. If I were to use this funding route, I'd probably pair it with another one in order to secure that I'd have enough finances to succeed.

The penultimate option for getting capital for an enterprise is through loans. This is quite a common route for people to take when accessing finances, although it has one very obvious drawback - the debt that you acquire from taking the loan. Depending on the size of the loan you get for your business, this debt could become very difficult to pay back resulting in issues later down the line with your business. However, this option provides way more finances than most of the other options with little to no risk of losing your equity or creative freedom. Additionally, your business could be seen as having slightly more credibility when funded by an official loan in comparison to bootstrapping. This feels like a very good method for funding a business as well, although the idea of having a debt looming over me does feel rather daunting. Assuming I felt confident enough about the success of my business, this could be a very effective funding route.

Finally, the last potential route for funding a business comes from something known as Venture Capitalists, or VCs. This method is far less common than some of the previous funding methods, although it still has its benefits. Obtaining funding from a VC can give you a rather large amount of capital when compared to self-funding or obtaining finances from loved ones, as well as providing connections and credibility due to your financial source being investors. However, there's a catch. VCs provide you this financial boon in return for a chunk of equity. Therefore, you'll have to consider whether you want to lose out on this equity before obtaining your funding. Additionally, VCs are "the most hands-on investors", meaning that they'll almost definitely want to influence the way your business runs in one way or another. In my opinion, this feels like a less likely method for me to use simply due to the loss of creative control. They could end up trying to turn my business to a direction I don't want it going, leading me to not want to obtain capital via VCs.

With all this in mind, I feel that it's most likely for me to obtain my funding through either crowdfunding or loans, with potentially some additional funding from competitions or grants should I need the bonus finances.

Insurance

While funding and capital is obviously very important for a business to be set-up, there's something else to be considered as well that's equally important - insurance. If something goes wrong during your business hours, such as broken equipment or potential injury of staff (should you have employees), you'll want to be insured to avoid a massive loss. With this in mind, it can seem rather daunting to find an appropriate insurance plan for your business, especially within the creative industry. With this in mind, I went researching for insurance firms that specialised in businesses within the creative industries, aiming to see what they offered and what options there are for creative businesses.

The first one I found is called Well Dunn Insurance, who has a very simple website where you can get a quote on your insurance. According to their website, they say that "[their] friendly and experienced staff specialise in non-standard and commercial insurance, so your business is in safe hands." Furthermore, they write that they can provide liabilities, professional indemnities event insurance, intellectual property and "whatever you need to keep your business safe" for your insurance. Whilst I'm absolutely not an expert with how insurance operates, this feels like a very good potential option for businesses within the creative industries due to their speciality. Additionally, they are apparently "based in the heart of Manchester city centre [surrounded] by creative businesses", meaning they've got plenty of experience of helping creative businesses already.

Another example of a creative insurance firm I found was simply called Create Insurance, who seem to have a far more elaborate and well-designed website in my opinion. In addition to this, their website offers far more information about what they offer and what kind of price plans they offer their services for. According to their website, they "asked creatives what they'd like to see in self employed insurance", meaning they specialise in insurance for freelancing businesses rather than bigger creative businesses. They list on their website that they offer:

• Short Term Solutions
• Meaning they are happy to provide insurance for a short-term period rather than a long time
• Only Pay for What you Need
• They describe this as meaning that they don't offer complex prices, stating that interested parties can "explore prices from £3.74 a month with no hidden fees".
• Be Insured for Adventures
• This one means that they offer "worldwide insurance", meaning that you can remain insured no matter where in the world you go to operate, which is especially beneficial for businesses like photographers who have to keep moving to get nice locations to shoot.
• Get Legal Guidance
• They write in this section that "all policies come with access to a 24/7 legal helpline", which can provide assistance with the running of the business.

All things considered, this looks like a very good insurance option for creative businesses (more specifically freelancing businesses, such as what mine will likely be). They offer professional indemnity, equipment insurance, employers' liability and all the things listed above, meaning that people aiming to get insurance within the creative industries have plenty of good options for where to get insured.

Working From Home

Something else to consider when setting up a creative business would be whether or not you want to work from home with your business. While lots of businesses will rent an office space to work from and will spend the majority of their time operating from this office, plenty of creative businesses enjoy operating from the comfort of their own home rather than a corporate office space. But what are the positives and negatives of this?

According to an article from ThriveGlobal, employees who worked from home (primarily during the Covid lockdowns) reported benefits of working from home such as no commute times/costs, more time to take their kids to school, feeling healthier and a reported 14% productivity increase. This productivity increase was reported from a study by the Graduate School of Stanford. In addition to these bonuses, working from home can feel very comfortable and take off quite a bit of the stress that can be experienced working in an office space. Additionally, small freelancing creative businesses could enjoy the money saved from not having to purchase an office space to work from (especially if their only employee is themselves). 

There are downsides to working from home, however. Choosing to work from home rather than being forced to doesn't provide any tax relief according to the government's official website, meaning you'll still have to pay the bills for wherever you live. This could potentially change if you end up in a situation where you're forced to work at home anyway, such as another lockdown or disability. In addition to this, working from home can leave you feeling too comfortable to get much work done. In my own personal experience, I find it hard to work whilst in a home environment when compared to the college environment.

Despite this, I do feel that I may want to consider running any potential business from home. The business ideas I have in my mind all consist of me working by myself, meaning I don't have to worry about the potential isolation from co-workers that could be experienced by working from home. Additionally, working from home gives me plenty of resources that I'd need for a proof-reading/writing service: internet access, a computer, books to read for material, shelter, etc. The only downside would be working within a home environment potentially hampering my productivity, although I feel this could be countered by creating a workspace within the home, such as a mini-office.

Business Rates

When you run a business, no matter the kind of business you operate, you must consider the business rates that you'll be encumbered with throughout your day-to-day life. According to the UK government's website, business rates "are charged on most non-domestic properties". These include "shops, offices, pubs, warehouses, factories" and "holiday rental homes or guest houses". This section of the website is elaborated on, stating that you'll most likely have to pay rates if you use any part of a building for a commercial purpose. With this in mind, you'll have to pay a small amount when you use a building for a non-domestic purpose such as running a business.

Furthermore, the website states that your local council will send a bill towards the beginning of the year for the following tax year, detailing you the amount you have to pay regarding your business rates. The website states that you can "estimate your business rates bill" via a small series of steps requiring the value of your business and some calculations. Some of this bill can be waived if you are able to apply for a business rate relief from the local council. Apparently, "this is sometimes automatic [although] you may need to apply." There are also some properties that are exempt from business rates, although these aren't generally important for creative businesses as they usually comprise of farm buildings or "places used for the welfare of disabled people", which are unlikely to fit the description for creative businesses.

Geography, Transport & Accessibility

The final thing to consider is the potential geography and transport considerations for a business that you set up. It's important to consider where you set your business up and what kind of resources you'll have available in said area such as shops, public transport, customers and assistance. For example, setting up a business in the middle of the countryside could be a bad idea if you're running a painting business, as you'll have little access to painting materials and will most likely have to order them online, resulting in additional delivery fees and having to wait for the materials to arrive which could hamper your production time.

There are some businesses that are less hampered by location, such as digital businesses like website designers and digital writers. Businesses like these only really need a computer and their imagination, and could theoretically be set up anywhere as long as they had internet access. However, there are still potential things to consider that could give your business a boost. As another example, setting up a creative writing business could be set up in the countryside as long as you have internet access, as you can just write your stories on the computer and get them sent off to your clients/publishers as you please. However, setting up in a location such as Norwich would give you additional resources such as plenty of shops to obtain necessities from like groceries and close access to the National Centre for Writers, which could offer lots of aid with generating ideas and grammatical help should that be required. Additionally, Norwich has plenty of public transport links such as trains and buses that would allow for easy access to other parts of England for travel, which could be important to reach opportunities like creative fairs and conventions.

Conclusion

To conclude, there are tons of things that must be considered when setting up a creative business. Ensuring you've got a good source of funding for your business, making sure you're properly insured against potential accident or injury, whether or not you want to work from home, whether or not you may incur business rates and so on. The importance and specific considerations for these aspects of running a business can vary greatly depending on the type of business you aim to run, and therefore require careful specific thought from the owner of the business rather than general aid aimed at a wide number of potential businesses.