When the bottom fell out of the publishing world, full-time writer Tom Hodgkinson decided to go into business. He took the risky step of opening an independent bookshop, café and arts venue. In doing so he learned about business the hard way - by making every single possible mistake (as detailed in his new book, Business for Bohemians). Here are seven of the most common pitfalls that catch out creative entrepreneurs.
1. They think the product will sell itself
'Make it and they will come': that is what we arty business types reckon. Whether it is a painting or a pair of shoes or a book, we think that all we need to do is to create something beautiful, and the rest will take care of itself. People will mention this great piece of work to each other, promote it to their friends, and we will just sit at home as the orders flood in. That does not happen. Sales are hard things to get. Every creative entrepreneur must put equal amounts of work into selling as making. It’s all about marketing.
2. They think they’re going to be rich
Entrepreneurs are rich, right? Wrong. Only a small handful of them make a any real money. Most are toiling away with little reward. If you want to make money you’d be better off becoming an orthodontist and buying flats. We made virtually nothing in the first few years. On one occasion I was invited on to Monocle radio to appear as a guest on their entrepreneurs show. I went to get the tube and found that my Oyster card needed topping up. I attempted to top it up but I had gone over my overdraft limit. I then had to walk back home and borrow four pounds from my 15 year old son. Now I am happy to be making a reasonable living doing what I enjoy - while building something. If riches come, fine, but that is not actually the primary aim. The primary aim is to be happy in daily life.
3. They employ friends and friends of friends
This is a common error. You meet someone who seems nice or you have a friend who needs a job. You employ them and you think that as long as you are basically nice then everything will be OK. It’s not like that. Soon both parties are seething with rage and feel aggrieved. You begin to realise why there is an enormous pile of management books out there - because managing well is a very difficult thing to do. It takes time, practice and patience. When employing people, you should go through the boring old routines of interviewing a lot of people, following up references, and choosing very carefully. There are times when you should go with the flow but this is not one of them.
4. They try to do too much
Because creative people have lots of ideas, they are always trying out new things and they can end up overburdening themselves. Over the last year we have cut back on the number of things we do and refocussed on three or four key products that only we can make. One example is bookselling: we are drastically reducing the amount of book stock we sell on our website, having realised that there really is no point in trying to compete with Amazon.
5. They have no understanding of basic business concepts
Real business people spend years studying business. They go to Harvard and do MBAs. The creative entrepreneur thinks that they can grasp this stuff in a few minutes. You would not build a table without having made a study of carpentry, and it is the same in business. That’s not to say you shouldn't get out there and do it, just to advise that in all probability your first few years will be a sort of apprenticeship - you won’t make money.
6. They fear the spreadsheet
Creative people rarely like spreadsheets. They run away from them. This is a mistake as spreadsheets are your friend. If you have a busy, chaotic and disordered mind, as creative people do, then the spreadsheet helps you to bring order into your life.
7. They are too passionate
A lot of nonsense is talked about 'passion' in business. You are constantly told that you must be passionate about the thing you are selling. Well the opposite is true. You should be dispassionate so you can see the reality and remain unswayed by your personal affections and prejudices. Luke Johnson says the biggest mistake he made in business was giving in to his passion for books. He bought Borders, and disaster ensued.
Passion literally means 'suffering', as in Christ’s passion on the cross. Life is hard enough as it is without heaping more passion around the place. Yes, you must love what you do and have a real interest in it, so you can make good judgements, and enjoy every day of your life. But passion - that is just too much.
Tom Hodgkinson is editor of the Idler. His book Business for Bohemians is published by Portfolio Penguin.