Financing your creative business

,  17 September 2014

What can you do to make your business ready for investment? Sarah Thirtle from Creative United, which helps creative organisations to maximise their commercial potential, shares 5 steps for getting your business primed for finance.

"Spending time tracking your incomings and outgoings every month can highlight where you could be saving, or spending, more."

It seems to be a perennial cause of frustration for creative entrepreneurs: you need to find finance to grow your business.

But few lenders or investors seem to understand the business of creativity. How do you even start looking for the money?

Investment for your creative business

There are a number of ways to raise investment. Traditionally many arts or creative organisations have fundraised through applying for grants from bodies such as Arts Council England or trusts and foundations. 

This route comes with its own limitations, such as competition for increasingly hard-to-come-by resources and needing to fit around a grant-making organisation's own deadlines.

If you want your business to grow, then you need to know your market inside and out.

The funding may come with its own criteria, conditions and preferred outcomes. If your ideas don’t fit, you’re back to square one.

Crowdfunding is increasingly being turned to, but may not be the answer for those that have yet to develop their market, audience or consumer base.

Venture capitalists or business angels specialise in investing in businesses when they can see great potential. But what if you don’t want to give away a stake in your company?

Taking a creative business loan

Another option for financing your business’s growth plans is taking on a loan. "But the banks won’t lend!" I hear you cry.

That may well be true, but here at Creative United, we’ve designed the England-wide Creative Industry Finance programme to meet this challenge.

We’ve made it our mission to equip creative entrepreneurs with business skills and savvy, enabling their businesses to become investment-ready and to access finance from our lending partners.

5 steps to get your creative business ready for finance

1. Get your business plan in order

Writing a business plan may sounds like the dullest thing in the world. But this is your opportunity to really hone those ideas and plans you’ve been fomenting.

It’s a way of building the framework and route map by which you are going to achieve your ambitions.

Visualise what success is going to look like for you and your business. Identify the realistic and achievable steps over time in order to realise that success.

2. Learn to love a spreadsheet

If your receipts and invoices are residing in a shoebox, take them out and sort them. Spending time tracking your incomings and outgoings every month can highlight where you could be saving, or spending, more.

Having a good grasp of communications & marketing builds confidence in possible investors.

Another side to this is creating cash flow projections. Imagine if you had the finance you need. How would this impact your spending on marketing, your purchases, your studio or office rental, and thus your sales or commissions?

Map this out. It’s a very worthwhile exercise, and you will be able to see clearly how any loan repayments would fit into all this.

3. Know your creative market

If you want your business to grow and need finance to kick-start this, then you also need to know your market inside and out. Spend time finding out who they are and where they are.

Use the insights from your social media and Google analytics to track their engagement – are they sharing or retweeting? Which pages are they visiting on your website and for how long?

Importantly, understand your potential income from your current market. Could you attract more interest or buy-in from more people?

Having a good grasp on your marketing and communications builds confidence in possible investors, showing where the demand is for your work.

4. Show me the money

Use the insights from your social media and analytics to track engagement.

It’s one thing to say you need finance, but you have to be clear about how much. Too little and you run the risk of not reaching your goals, too much and you could run into difficulties with repayments or the return on investment.

There’s nothing wrong with being ambitious with your targets, but setting achievable goals will go a long way to avoiding too rapid an expansion. Carefully cost out your growth plans, negotiate the best possible deals, and set the amount of finance for your need accordingly.

5. Be investment-ready

As well as all of the above, keep in your mind the idea of you and your business being ‘investment-ready’.

You’ve done all the preparation: you’ve got your business plan written, your accounts are in order, your marketing strategy is good to go, you know how much finance you need and why.

The next step is identifying where to get this finance and ensuring that, when you approach an investor, you are confident that you’ll be presenting such a strong business case that they won't be able to find a reason not to offer you the money you need.

Find out more about how advice and finance can help you grow your business by visiting the Creative Industry Finance website.

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