How can creative businesses deal with rising costs?
Businesses across the UK are facing soaring costs. Dan Martin asked Bristol Creative Industries members how they are coping, their advice for other creative companies and what the government should do to help.
Jason Smith, managing director, Fiasco Design:
“As a small business we feel more vulnerable to these turbulent economic times. We’ve experienced a rise in studio rental costs and overheads, whilst simultaneously seeing cashflow become more volatile compared to previous years. We made the decision to increase salaries across our whole team (and rightly so), but it means we have to be mindful of operating with increased costs and the implications that come with them.
“We’re using the opportunity to get our house in order; looking at previous and current spending habits to make smart savings where possible. It’s also worth putting time aside to research what financial help is out there, for example South Bristol Enterprise Support offers some great schemes. Having support like that could be a vital lifeline for some.
“Much like the height of the pandemic, we’re trying to help keep the creativity community alive, offering comfort and support where we can to other businesses. Not to mention, of course, our own team who are going through this in their own way.
“Some ideas on what the government should do to help:
A reduction in business rates could be a good idea, and reconsidering business improvement district schemes.
Introduce the option to defer a single VAT payment if needed which would help take pressure off potential cash flow issues.
Look into ways SMEs could be supported with reducing corporation tax, National Insurance payments or offering help with employment assistance programmes.
Offer corporation tax relief for companies that can prove they’ve increased (all) employee salaries by a minimum of 5-10%.”
See Fiasco Design’s Bristol Creative Industries profile here.
Sarah Woodhouse, director, Ambitious:
“We are carefully monitoring rising costs. We are still very much in growth mode so it’s a balance. To ensure prudent financial governance we’ve labelled our planned expenses for the year as ‘must haves’ and ‘nice to haves’. We’ve pushed any big spend into the second half of the year so we can see how the year plays out.
“In terms of advice, forecast your expenses and have a system to avoid any surprises. Have a contingency fund in place for unforeseen costs. Avoiding all spend is impossible, sometimes you do have to speculate to accumulate and if the spend helps you win new business or grow a profitable area of the business then it’s an investment in the future of your business.
“Don’t stop communicating, marketing, and investing in PR. Use this opportunity to get ahead of the competition and gain share of voice (and in time, market share). Use the time to build traction in services and sectors that are bucking market trends and performing well.”
See Ambitious’ Bristol Creative Industries profile here.
Piers Tincknell, co-founder, Atomic Smash:
“Rising costs are affecting us across the board, from rent to salaries and beyond. It means that more than ever we need to be on top of our numbers and measuring productivity internally.
“In digital, it’s a very difficult balance offering competitive prices to clients whilst also paying ever rising industry standard salaries. We look to compensate our team in more ways than just salaries, through health insurance, access to coaching, 35 hour weeks instead of 37.5 which is usually standard, learning and development budgets, volunteering days and more.
“The government could really help businesses by subsidising business rates, stepping in and capping rent increases from landlords, capping energy costs and topping up National Insurance contributions for businesses.”
See Atomic Smash’s Bristol Creative Industries profile here.
Paul Honey, managing director, Strange:
“To help our staff we have a work from home bonus scheme. We started it during lockdown and it has always been a great benefit to have, but this year we decided to integrate it with our B-Corp impact assessment. Through an auditable process, we have documented the estimated electrical, gas and water usage for each staff member. We then use this data and current utility tariff data to calculate utility costs and CO2 emissions at an employee level. We then pay each staff member a quarterly work from home bonus and at the same time offset their CO2 emissions.
“Our people are prioritised over profit, so we’re always looking for ways that we can help. Whilst staff officially benefit from a hybrid work set up, we only gather physically if it really makes sense as commuting and working in an office can be expensive. A flexi-time system allows people to work the hours that best suit their circumstances and can help reduce costs such as childcare.
“There are other things that have helped to. For example, we’ve made sure everyone has good up to date technology at home which is much more energy efficient, and we’ve made sure the quarterly work from home bonus not only helps fund utility bills, but also helps contribute to other costs.
“I think the government could do a lot to help SMEs. Of course, they could look at measures like temporary cuts in the VAT repayable to HMRC (a little like they did to support tourism and hospitality during COVID) to help the industry, but really their primary focus should be ensuring energy markets function properly, avoid an energy market failure at all costs and get control of inflation.”
See Strange’s Bristol Creative Industries profile here.
Jessica Morgan, founder, Carnsight Communications:
“Rising costs are very much on my radar – we’re talking about them at work, we’re seeing them in practice and we’re wondering how much we can absorb for how long. Unfortunately, the government seem largely absent from conversations around what can be done to help – particularly for those who are most squeezed.
“As a small business owner, I’m focusing on ensuring I can keep in annual payrises in light of unprecedented inflation rises and also trying to help the team in small ways that are affordable and sustainable. The pandemic has definitely changed the way I look at my business finances and what to invest in (and not).”
See Carnsight Communication’s Bristol Creative Industries profile here.
Claire Ladkin, founder, All About the Cooks:
“It’s the uncertainty, the air of doom, gloom and despondency and not knowing where we stand which makes things most difficult. Optimism is what an early stage start up thrives on.
“Having just raised investment we are planning for growth – recruiting and investing in our people and processes. Obviously we want to reap the benefit of that landing in buoyant times. Should we soldier on regardless? Instinct tells me yes, although we should be prepared to be dynamic and pro-active.
“Times of change can work both ways. We suspect that more home-cooks will want to supplement household income by monetising their talents. We can really help them do that and that feels very satisfying. And maybe the ‘hunkering down’ mindset will make people more inclined to socialise at home, which might also benefit us.”
See All About the Cooks’ Bristol Creative Industries profile here.
Janusz Stabik, managing partner, GDYA:
“We’re seeing agencies doing recession planning. Pre-pandemic, a lot of creative businesses carried on working until the s**t hit the fan, and then they were forced to make a change. Now they’ve been through the pandemic and they had to make changes really quickly. They had to cut costs, they had to go through the P&L and they potentially had to pivot the brand and the proposition of the business really quickly just to survive.
“Then they saw that they were sat on a successful business and now with all the news in the media about a recession they’re ahead of the curve.
“Many of them are preparing and thinking what should we do when a recession hits? How should we pivot the business? What can we do with our costs? What can we do with our pricing? Which industries are going to be hard hit if there is a recession? Which industries are going to flourish?
“Our advice is to workshop it with everybody in the team. Where are the risks within the business? Where are the risks in terms of the marketing, delivery and costs?
“Equally, where’s the opportunity? There is an opportunity with recession. A lot of agencies pivoted into e-commerce during the pandemic because everybody was stuck at home buying stuff.
“Have a one page plan for what you’re going to do. Execute it with the confidence that you did when you implemented the changes during the pandemic that made your business thrive during that downturn.”
See Janusz Stabik’s Bristol Creative Industries profile here.
Joanna Xenofontos, founder, JX Branding:
“I’m not able to take on an office due to the high cost of rent and bills. As a self-employed individual and having just moved to Bristol. I find it hard to meet other creatives and it’s impossible to launch my business in a physical manner to help me build a team. It means I have to outsource to other creatives, often in other parts of the world where they charge less. This makes it challenging to grow a business.
“To deal with the challenges, I’m using co-working spaces some of the time. This allows me to be around other creatives and cuts the cost of offices and meeting rooms.
“Another way is working on contracts rather than freelance projects. This way I work with a team, the contract jobs pay well and I don’t have to do all the admin. I’m still self employed but with fewer management tasks.
“This does have disadvantages though; less flexibility and because I usually work in confidence, I’m not able to share the work for more exposure and to attract new clients.
“I think the government should provide more funding to start-ups in the creative industry. A solution could be that the government builds office spaces that are available to be shared and rented from creative agencies or individuals. Rather than renting directly from an independent party, the government provides the space so the rent and bills are lower.
“The government should better embrace creatives who want to launch their own business in the UK. This can be beneficial for the government as they are making less through freelancers (taxes etc) than companies that have a team.
“That’s the reason that many of us stay in freelancing. It’s very hard to have a sustainable business due to high costs.”
See Joanna Xenofontos’ Bristol Creative Industries profile here.
Simon Winter, founder, Winter Design:
“We’ve well and truly adopted “better than hybrid” working. Our team all work from home all of the time (part of our updated climate strategy) and it works so well for us. We now don’t have the burden of rising office space costs and because none of us have to commute, we’re not being hit as hard by rising fuel costs.
“Healthy cashflow is so important in times like these. A cashflow forecast helps you to plan for potential bumps in the road; when we first did one of these it was like somebody had switched a light on, such helpful visibility. It might not work for all businesses, but for us working from home 100% of the time has been a total game changer.”
See Winter Design’s Bristol Creative Industries profile here.
Simon Lodge, founder, Ubuntu Studio:
“Like most business owners, my company is driven by rudimental economics: bring in equal (preferably more) money than goes out. Naturally, there’s always a push-pull effect going on, however over the years, costs have risen in places I believe to be positive—from wages reflecting respect for people, to equitable taxation based on success.
“The crux of today’s issues, however, lies in the areas that have long been ill-managed by governments and businesses alike: energy, real-estate, and the treatment of suppliers, to name but a few. Until we address these head-on, we will remain in a perpetual state of ‘crisis’.
“This is a complex topic because it goes to the heart of one of the biggest issues facing businesses and consumers alike: we’ve created a society expectant that things will cost less than they’re worth to produce.
“We see it across industries—from agriculture (where I can buy meat cheaper than a cup of coffee) to energy (where until recently, the true cost of burning fossil fuels was paid for by our planet rather than our wallets). Until we address the systemic issues that past governments have simply papered over, this won’t be the last cost of living crisis we face.”
See Ubuntu Studio’s Bristol Creative Industries profile here.
If you’re a Bristol Creative Industries member and you’d like to add a comment on the cost of doing business, email Dan.
Bristol Creative Industries is the membership network that supports the region's creative sector to learn, grow and connect, driven by the common belief that we can achieve more collectively than alone.
