Multiple Business Lines

Many creative businesses have more than one business line.  For instance, many interior designers own a retail store; stationers provide graphic design; event designers are also florists; and photographers shoot video.  I wrote last time about making each of these creative businesses very distinct from the other.  In this post, I would like to go even further: each of your businesses must be able to stand on its own and you must act in each as if the other did not exist.

Last point first: if you try to mush everything together (it is one company after all), you will wind up robbing from Peter to make Paul look good and vice-versa.  For instance, if you are an interior designer and operate a retail store, you might be tempted to not charge your usual designer percentage on the items you sell the client from your retail store AND to discount your design fee because you are counting on selling the client many items from your retail store.  Inevitably, your client buys the items somewhere else or makes you severely discount the items you sell from your store.  You lose on both counts.  However, if the same designer acted as if each of her other businesses did not exist, there would not be a problem.  She would charge her percentage on all items and not discount her fee or her items beyond what is usual and customary.  Just because you have another business line does not change the necessity of that business to have its own integrity.

And without forcing each of your businesses to justify its own existence, you will probably talk yourself into a money pit, or worse, threaten your core business.  For instance, if you are florist that has a retail shop and an event business, you might be tempted to view the minimal money you make on events as a way to offset overhead at the retail shop.  You might be right, except, in the vast majority of cases, you will have to bring in extra staff and/or pay overtime for events, find appropriate workspace and not be able to garner enough buying power with the event business in the flower market to make a real difference in your overall cost of flowers. Again, you lose on both counts.  Your event business would not exist without your retail business and your retail business suffers at the hands of the event business.

All of this is not to say that there are not reasons, beyond financial, to justify a business.  Sometimes a (core) business may make little money or even lose some (or a lot).  Take a look at just about every fashion label out there: couture loses a fortune but drives mass and licensing.  However, it is fools play to not have the discipline to assign a value the not or not-so-profitable business line brings to the profitable.  The graveyard of creative business is littered with those that justified their activities in the name of brand value.  Without the discipline of forcing each line in your creative business to stand on its own with SOME assumption of the value of one to the other, you will not have the ability to know when to say when or, better, when enough is enough.

For those of you with multiple business lines, it is easy to say one hand washes the other.  Please just remember: at the end of the day each hand still has to be clean.