5 Myths Killing Your Creative Business (And How to Overcome Them)

time as it turns out is the most valuable non-renewable perishable resource you can make more money but you can't make more time your primary job is to consolidate the largest amount of discretionary time to do and think of the only things that you can do and no one else can when you run this properly your business can earn more in one project than a year of grinding away as an employee the key is to learn how to run your business and the first step is a what is up everybody Christo here today I'm going to talk about the five myths creatives tell themselves about entrepreneurship before I get going I just want to thank today's sponsor Gusto an all-in-one platform that helps business owners with everything they need to take care of their teams make sure you grab a copy of your own downloadable workbook how to hire your first employee it's a step-by-step guide on what you need to do when bringing on your first employee or contractor check the link in the description myth number one you need to do it all yourself you got into your work because you want to create you want to keep your hands in the work isn't it cheating or dishonest to have others do it for you well your name and your brand are all over your work and you want your clients to feel the passion come through what you've delivered for them and what if your clients like your teams work better than your own and cut you out of the process many years ago when I was still running my design agency I got a new client who was in the tech space his business was growing rapidly so he needed external design help for Branding and design work he needed an agency to work with that could meet the demands of his company great I thought now I felt compelled to let him know I could do all the work myself he smiled and said Chris I don't need to know how you do the work I expect you to hire people to do it he was almost bothered that I was telling him this after all he was an entrepreneur himself and he didn't do all the work and that was a valuable lesson for me to learn to the second point of clients cutting you out of the work to directly work with your team now this is a situation that might happen but it's not often because of the way that you think it's not because they like their work better or because it's cheaper to work with them directly it's usually because you failed in keeping the relationship they feel neglected so if you're not doing the work and you're not maintaining the relationship then yeah they might go elsewhere so one thing you need to realize is that people hire people they know like and Trust almost all sales are based on individual relationships so as a business owner make sure you don't neglect this aspect so here are some things that you can do number one is don't take the relationship for granted treat the client like your other important relationships two check in with them periodically three celebrate important Milestones anniversaries and things of that nature while back a story I like to share with people is by real estate broker someone who helped me purchase my house in the Pacific Palace he would periodically leave messages on my office phone now during the pandemic I didn't go to the office very much but on an occasion I went to the office I saw that flashing red light so then I checked my messages lo and behold it was Robert and Robert says hey Chris it's Robert just checking in with you fun fact it's been 16 years on this very day that we helped you to buy your house I hope you Jesse and the boys are doing well and just want to let you know if there's anything you ever need from me or if you know someone who's looking to buy a home let them know so unbeknownst to me just two months later my wife and I decided to move to Pasadena who else were we going to call we're going to call Robert of course it didn't even occur to us to call anybody else so his ability to stay in touch with us to build that Rapport just to let him know he's been thinking about us and his timing was impeccable and that's how you maintain those relationships so number four make sure that you're personal take note of important details and facts of the relationships of the people that you have myth number two you can't afford to hire help just work harder here's the fear that you have Financial instability and loss of control can you really afford to pay someone else's salary what if things slow down will you have to take on more projects that you don't want just to pay for overhead this is what I refer to as worst case scenario thinking it's like Doomsday instead of imagining all the positive outcomes you obsess over how everything can go wrong as Peter Ducker says in business all profit comes from risk is to be a true entrepreneur you need to embrace risk and uncertainty as part of your entrepreneurial mindset that's the difference between being an employee and a business owner an employee goes home each night relatively confident that the next day will be similar to the previous day they will get the same paycheck every two weeks or so regardless if they hit home runs or strike out it's predictable and safe entrepreneurship on the other hand is inherently risky you take on projects with no certainty of outcomes expenses or even profit margins sometimes you can work really hard to make no money and so you build this into your pricing your payment terms contracts and overhead on the upside though when you run this properly your business can earn more in one project than a year of grinding away as an employee the key is to learn how to run your business and the first step is to adopt the proper business mindset myth number three I'm a creative not a manager you took the s and started your own business so you could create not to manage other people managing conjures up scenarios where you never get to do the fun stuff again instead you're just trying to push other people to do the work you wanted to do so here's the belief system doing everything yourself is the only way to ensure quality and to save money no one else can do it as well or as efficiently as you so let's break this down let's say that you're a graphic designer even a really good one do you believe that no one else is as good is you are you the best in town best in state best in country or maybe even best in the world okay well probably not not that good right so that means there are other people who are at least as good as you if not better than you and by hiring them their work would be better the problem is you can't afford to hire them and to make money that's usually a sign that you're undercharging a quick test is to do this ask yourself how much would it cost to pay someone else to do comparable work there should still be enough money to pay them and you and have 30% profit margins after you paid for everything let's take a closer look so if you send out a bid or proposal that only covers your production cost then whatever you spend to produce the goods which is cogs cost of goods sold that means you would break even if you do it well and often times what happens is you don't run it well so you actually spend more time producing the work so you're going to lose money do this consistently enough and you'll go broke so if we look at it a lot of us will send out a bid the cost to produce something based on what it costs us to produce the production cost but we're really missing something here we're not accounting for management the overseeing of the work and overhead this could include rent utilities software licenses things of that nature the things that you need to pay for in order to be able to do the work work that is the true cost or is it what about profit without profit you can't account for uncertainty or you can't build a better future for yourself and for your loved ones so now when we had profit in we're counting for the true cost and this is how you should be bidding let's talk about delegation for a minute there's this belief that okay because you're the best in your company company of one you know how to do everything most efficiently and to the best of any body else and so when you hire someone they might be at best what 50 60 70% of what you're able to do we kind of look at that and say well why would I pay someone to do the work when I still have to manage them and they're still not doing all the work that I need aren't I losing out in productivity and that's true if you hire one person but something my business coach helped me to understand is when you hire more people let's say three people the total productivity that you're getting from hiring three people is 150% the capacity of what you're able to do now here's the cool thing when you hire people and you manage and delegate the work to them that frees up a lot of your time to do other more important things so let's take a look at that so when you have free time that affords your ability to do some planning marketing business and personal development you can finally finish that book that you've been meaning to read or to send out some new business emails the best it just gives you options as to how you spend your time again Peter duer wrote In the book The effective executive that your primary job is to consolidate the largest amount of discretionary time to do and think of the only things that you can do and no one else can and why is that important because you can make more money but you can't make more time time as it turns out is the most valuable non-renewable perishable resource treat it accordingly and even if you hire a team you can also like to only work on the projects that you care the most about so one final note here anytime you can pay someone else less money to do something that you don't need to do for less money than you're worth you should hire them otherwise you're losing money for the company and being a bad Steward of the company to illustrate let's take a look at this let's just say your EHR your effective hourly rate is $100 an hour just for this example so if you wind up doing your own bookkeeping and do the production work and the editing of your projects then you're costing the company the difference between your EHR and what it cost for you to pay someone else so for this illustration maybe the bookkeeper cost 25 bucks an hour so you're losing $75 an hour for the company every time you do work that a bookkeeper can do besides bookkeepers do a much better job of managing books than you do if you're anything like me and let's take a look at production art so the difference between the $100 that you're worth or what you could charge out for and what you would pay a production artist in this case $30 an hour you're now costing your company $70 an hour so let's make the decision to hire people who could do the work probably better than you can do for less money than what your effective hourly rate is myth number four you don't know what kind of talent you need sometimes you have more client work than you can handle these are good problems to have but that means you'll spend late nights early mornings and you'll have no time with your family burning the candle from both ends stretch so thin things start falling through the cracks this can lead to long-term burnout and other times it's just crickets and no one's calling you do you need someone on a part-time basis as a contractor or fellow freelancer or do you need a full-time employee to be Allin on the journey with you so whenever you hire people there are also some compliance rules and requirements you need to follow so pay attention to this part if you're an employer in the US there are federal requirements that will apply to everyone but there are also other requirements that may differ from state to state so let's understand worker classification before you even start building your team you need to think about what types of workers you need to hire there are two main types of workers to think about here independent contractors versus employees an independent contractor owns their own business and usually enters into a contract track with employers to perform a specific project typically on a short-term basis an employee on the other hand works on a regular basis for an employer they work at a specific time and place set by you the employer they receive training use your tools and work related resources do work that is integral to your business is subject to a large degree of control by you and is generally paid a salary or hourly wage as you might already know it's becoming more common than ever for businesses to bring on on contractors Recent research from Gusto found the number of businesses using contractors has been growing 11% year-over-year in part thanks to a tighter labor market and high inflation on average there's now one contractor for every five employes now you might think it's less expensive to hire an independent contractor since contractors typically don't get paid overtime receive benefits pay time off and there are typically no payroll tax obligations Plus there's often more flexibility in bringing out independent contractors to work with on specific projects with you rather than working for you full-time however there are compliance and legal requirements about when someone should be considered an employee versus an independent contractor this is the common area where new business owners get tripped up and it can have a big negative implications if you get it wrong the IRS offers specific guidelines on whether a worker should be considered an independent contractor or an employee here's the big question how how much control do you have over this person's work and hours versus how much Independence do they have here's how the IRS looks at it one behavioral do you control or have the right to control what the worker does and how they do their job two Financial do you control the business aspects of the worker's job example how they're paid whether expenses are reimbursed who provides tools and supplies Etc are there written contracts or employee benefits like insurance or vacation pay will your relationship continue is the work being performed as a key aspect of your business there's no magic number of things that makes someone a contractor versus a full-time employee it's about looking at the whole picture and all the factors a good resource to check is the irs's form ss8 be sure to also check your state and local resources on this matter let's get consider some exemptions here if you decide you need to bring on an employee rather than an independent contractor you need to figure out if they're exempt or non-exempt an exempt employee is excluded from Rules set by the fair labor standards act the FL LSA they don't receive overtime and may not be entitled to a minimum wage a non-exempt employee is not excused from the fair labor standards act rules they need to receive overtime pay if they work more than 40 hours per week There's a common misconception that if you pay someone a salary they're automatically labeled as exempt spoiler alert this isn't true exempt status is linked to a person's salary and duties how much Independence they have over their work here are three conditions folks need to meet in order to be labeled as exempt as outlined by the Department of Labor one salary level test you have to get paid above a certain salary threshold for the year employees must be paid a salary of at least $844 per week that's $$ the fair labor standards act flsa requirements are explained on the US Department of Labor website they can help you determine if your employees are exempt or nonexempt from earning overtime don't forget if you start hiring people in other states you need to be compliant with regulations in those States as well here are some starting points to look for note you need to think about potential requirements at the federal state and local level the wage and hourly requirements you need to know about minimum wage requirements over time meal and rest breaks recordkeeping requirements Etc time off and leave you need to understand what you're offering for paid sick leave personal time off PTO Paid Family Medical Leave Etc benefits you need to understand if your employee is in a state with State mandated requirement benefits or if you're required to offer Health dental vision Etc if smbs don't ensure they're compliant there can be heavy Financial pen penties for non-compliance anywhere from thousands to hundreds of thousands of dollars and they grow based on the number of employees you have in your business for example if you misclassify an employee as a contractor you may need to cover any unpaid wages and applicable taxes myth five your talent pool is limited to the US well Co broke down the geographic bearers and not just across the United States but countries the pandemic forced companies worldwide to adopt remote work models so hiring International contractors became a natural extension of this new way of working companies realized they could effectively work with Talent across borders the use of global contractors is rising recent data from Gusto found the number of companies using international contractors has grown 11% from July 2023 to July 2024 why are most businesses hiring International contractors hiring abroad helps us small to medium businesses find Talent on on a budget especially in a historically tight labor market 86% of small businesses do it to manage costs 58% of small businesses hiring globally do it because they can't find Talent at home onboarding paying and managing contractors abroad is thankfully easier than you think now you might be worried about tax compliance and if your contractor fills out the Federal w8b Form and you keep it on file you may be able to avoid having to withhold taxes from their pay paycheck you might be worried about extra admin cut down on extra admin by consolidating all of your payment Tools in one place you might be worried about figuring out how to pay International contractors there are two types of services one is very basic just money movement others like Gusto will handle money movement plus also help you with tax compliance onboarding and contractor management while many snbs hire Global contractors some might also need to hire Global full-time employees a Serv called an employer of record can help you do that by handling payroll HR and Global compliance so you have to create a new business entity abroad or become an expert in international hiring before I go I want to thank Gusto for sponsoring this video their support means we can continue to bring you relevant business content to grow your business Gusto is an all-in-one platform that helps business owners with everything they need to take care of their teams that includes payroll benefits like health insurance and retirement HR and Team Management tools and compliance interested in learning more about hiring International contractors Freelancers or employees see how you can pay them quickly accurately and compliantly with gusto okay so you're ready to hire your first employee what do you need to do our friends at Gusto put together a handy guide and checklist with everything you need to take care of so that you can hire someone the right way learn how you can do it compliantly while giving them a good experience so you look professional it's one platform helping you to hire onboard pay and manage your employees so you can focus on growing your business go here for more [Music]