There are many great things I took away from my MA in Creative Entrepreneurship from UEA (http://www.uea.ac.uk/hum/mace/courses/ma-creative-entrepreneurship). The course leader, Ian Chance, is a charming man with a lifetime worth of experience in the field.
He’s also wickedly funny.
One of the things he taught us was to have our cabbages budget. As well as our champagne budget.
The idea behind the ‘cabbages budget’ was to determine what the bare minimum was you could survive on as an artist. I can’t quite remember where the term came from, but it was something like getting the cabbages from the market at the end of the day and eating them with curry powder when things were really bad.
The ‘cabbages budget’ was waking us up to just how little you could survive on, if you had to. What was the bare minimum it would cost you to keep ticking forwards.
This is relevant at the moment as I am facing a summer where I currently don’t have very much work, so I’m wondering where I can trim the fat.
Luckily, I’ve already worked out my ‘cabbages budget’ so I can just pull it out and get an idea of what my bare minimum requirements are. This helps me to ‘keep the faith’ (see previous posting Nerves of Steel). It allows me to figure out that I probably have just enough money saved that I could get through the next four months if no other work came up.
But then as a creative entrepreneur you never know what lurks around the corner. A bit fat juicy contract could be waiting for me next week. I just don’t know. So I’ve got my ‘cabbages budget’ to tie me over while I market/network/prospect to look for the next opportunity.
Should the windfall come, I’ve also got the ‘champagne budget’ already worked out so I know how I would spend the surplus (including a hefty chunk going into savings for the next time the well is low).
Budgeting gives you peace of mind. It helps you to plan and it helps you to keep an eye on the bigger picture.
But having just one budget isn’t enough. You need at least two: your ‘cabbages budget’ and your ‘champagne budget’. You might even have one more which sits between them and is the ‘in-between’ budget. It’s up to you. But you need a budget so you know how much you need to earn.
Your budget should include all your monthly expenses both for living and for your art. You should also have a separate annual budget where you list all the annual expenses you have (professional associations, holidays, Christmas, courses etc). Then total that annual amount up and divide by 12. 1/12 of that figure also has to go into your monthly budget.
Make sure there is a savings figure in there as well. You don’t want the well to run completely dry and you need to plan for periods of time where you may not be able to work or where there is no work to be had, so try to include a small savings component into your budget.
This means that even your ‘cabbages budget’ is going to take into account the bigger picture of what you need to keep the doors of your creative business open. Your budgeting and planning needs to be looking several months ahead to ensure that you can stay in business.
Most small businesses fail because of cash flow issues. One of the strongest tools you need, besides your creativity, is the ability to keep your finances in order.
These are not skills which generally come easily to creative people but they must be learned. (See Pathway Four: Business Skills for more).
If you haven’t already done so, take a piece of paper and do up your ‘cabbages budget’ (including your 1/12 of your annual costs). Now you know the bare minimum you need to survive and keep practicing your art. This is your bottom line and provides a minimum goal for you.
There’s nothing like a goal to keep us focussed. Your cabbages budget allows you to aim for a higher target, your ‘champagne budget’ but know that even if you fall short of it, as long as you are bring in your ‘cabbages budget’ amount you can stay in business. This peace of mind allows you to view situations more clearly.
Planning for your business success is not a one-time affair. You must revisit these budgets, at least annually, and make sure that they meet your current needs. Part of planning for success is also planning to avoid failure.
Do you have any tips on budgeting you want to share? Click Comment below and let me know!