Balancing Profit and Creative Fulfillment | Nick Turske Elemental Media

PROFITABLE TALKS...

In this conversation, Nick discusses his experience with Profit First as a creative entrepreneur. He highlights the challenges of finding profitability in the creative industry, such as high costs and the need to balance creative fulfillment with financial success. Nick mentions that he has implemented some aspects of Profit First, including having a separate profit account and running quarterly estimates. He also talks about the temptation to pull from the profit account and the importance of maintaining a cushion for the business. Nick and his partner have a shared goal of buying commercial property, and they see the profit account as a means to save for that. Overall, Nick appreciates the analytical side of business and enjoys working with numbers.

PROFITABLE KEY TAKEAWAYS

• Profitability is a challenge in the creative industry due to high costs and the need to balance creative fulfillment with financial success.
• Implementing Profit First principles, such as having a separate profit account and running quarterly estimates, can help creative entrepreneurs manage their finances.
• Maintaining a cushion in the profit account is important to handle unexpected expenses and invest in future business goals.
• Creative entrepreneurs should find a balance between taking on profitable projects and pursuing work that aligns with their creative vision.
• Analytical skills and comfort with numbers can be valuable for creative entrepreneurs in managing their finances.

Ready to turn your PASSION into PROFIT?!? Let's get CREATIVE ➡️
https://www.coregroupus.com/profit-first-for-creatives

Transcript

Nick (00:00.098)
pop up so I'm just in my car outside of the shooting this bunch of weird props behind me but whatever

cb (00:06.77)
No worries. So as I think Jeremy explained, we're writing profit first for creatives. And I was reaching out to our clients that had some exposure to profit first, whether they considered it implemented it successful, not successful. So I just have a few questions to ask you along those lines. So

What is your experience with Profit First? Let's start with that.

Nick (00:40.994)
So just for my clarification, is Profit First, like just the, it's the model that Core kind of brings to all of us, right?

cb (00:49.106)
Well, it's the model that Mike McAlewitz outlined in his book, Profit First, with the separate accounts and the profit allocation, you know, those things.

Nick (01:03.63)
Okay, I'm not sure I've actually talked too much directly with anybody about those specific principles But I mean the I mean just let's Yeah, I had heard of it before

cb (01:11.123)
Okay.

cb (01:15.132)
Had you heard of Prophet first?

cb (01:20.497)
Okay. So what about it intrigued you?

Nick (01:25.13)
I mean, I think the thing that would intrigue most business owners, just the idea of being able to actually find your best way to actually profit and have a successful journey instead of just spending in business. I think that's kind of just, it seems like a bit of a broad answer, but the title of it all, right? Like being able to actually find profit first, it was the intriguing part. I mean...

With our business, when we first started out, we were spending a lot just from investing in gear or projects itself. We were finding in that beginning phase that we weren't really taking a lot home at the end of the day. So it kind of was just that idea of how do we change that? We're not doing this purely just so we can spend money. We need to find a reason for spending all our time doing this.

cb (02:17.14)
Right.

cb (02:22.959)
So as a creative entrepreneur, what challenges do you think specifically there are around profit?

cb (02:35.902)
I'll just leave that question there.

Nick (02:37.378)
Sure. Yeah. I think when a creative gets into this industry, there's often a misconception about how easy it is to actually make enough money to see profit. And what I mean by that is everyone thinks, oh, it's creative. It's 10,000 plus thousand dollar projects, 10 hundred thousand dollar projects. But what most people don't talk about

a lot of the times is that there's a lot of cost involved with doing that. You know, like you might have a 50 grand job that your team of internally two people's taking on, but now you're hiring editors, you're getting props for those projects, you're get your renting gear. And now if you don't budget accordingly, you might have that 50 grand job that's happening in one month, you might be spending 48,000 of it walking away with two grand, which is just like sad if you end up in that position.

I think that's the thing that a lot of, you know, if you do it just by yourself and you go, well, I'll do all the work, then you then just don't realize just how much labor intensive that is. If you try to say, you know, I'm not going to rent a car, you're going to use my own, I'm going to do all the editing, I'm going to shoot it, I'm going to produce it, do all of that side. Now you're burnt out and you can't take another job. So it's really hard to find that balance of what is, what do you charge?

to make it so that way you can actually make the work that you wanna make as well as not burn yourself out and still make a profit at the end of the day. It's kind of like a fine balance to do all of that.

cb (04:15.314)
Yeah, so you're trying to balance three things. One, the budget constraints of what the client will pay you, profit, making money on it. And then you said something kind of interesting, or making the work that you want or doing the work you want. So kind of elaborate on that and how that plays into it.

Nick (04:25.643)
Yeah.

Nick (04:40.162)
Hmm. Yeah, I mean, the interesting thing about going into a creative industry is I feel like you won't find anybody who is doing it that says, all I really cared about in this industry was the money. Like we all got into, you know, we all get into the creative world because we all want to make something that we enjoy and we all want to do creative things. So, I mean, I know I've found myself at times we can't like, I know, at least for me, I need

cb (04:56.063)
Right.

Nick (05:10.546)
just getting a ton of money isn't going to actually make me feel like it's going well. If the work isn't fulfilling in some way, like I would rather start taking on some jobs that fulfill me creatively more than only with the ones that are going to pay the bills more than anything. I think that's a really interesting mental piece that comes to being a creative entrepreneur because you like need to trick yourself sometimes into...

You're like, oh, this is a lot of money. We're just going to power through it. We're going to be all right at the end of the day. And it's weird that you have to kind of convince yourself into more money sometimes if the project isn't fulfilling for you.

cb (05:52.394)
So you've had that happen where you took on work because it was good money or good profit, but it wasn't really what you wanted to do creatively.

Nick (06:03.186)
Many, many times, it happens frequently, actually.

cb (06:08.37)
And so how do you reconcile that? How do you balance that?

Nick (06:13.938)
It's, um, it's, it's honestly, that's a good question. Cause it's, I'm still kind of figuring it out. Um, cause you know, a client comes in and says, you know, on the creative side, they wouldn't say this, but the way I can interpret it is I hear not a lot of work, pretty easy stuff. We can kind of easily assembly line it, but it might be two months of, we know we're not going to touch the creative vein.

It's kind of hard. It is hard to say no to those jobs still because you know, you know, I mean just General business stuff right like you know You just you can do the math yourself like this one client could be three months worth of expenses Just in one or it could be more for a two month job could be six months right there So it's really I think where we are right now is

cb (07:02.195)
Right.

Nick (07:08.162)
finding the balance between the jobs that we're just kind of holding our ground on and saying, no, we won't compromise. This is what we need, you know, even if the cost is more than what we would actually be initially comfortable quoting, but just needing to kind of put our foot down, like we're not just going to show up and do this less than what we know we can do it.

cb (07:30.506)
So are you saying that you have given up profit on jobs in order to maintain your creative integrity?

Nick (07:40.367)
On a couple we have, yeah. And it's not ideal when we have to do that.

cb (07:48.038)
Right, right. So have you have you said no to jobs just because they wouldn't fit all three of those things?

Nick (07:58.162)
Many times we've had to say no to jobs. I mean, we've actually said no to a lot of jobs that we know would have been highly creative, but we just knew like this is not, like budgetarily it's not gonna work. Like we just, we can't produce the product that makes sense for the budget that they have. We've said no to a lot of those.

cb (08:18.934)
Okay. So talking about ProfitFirst, have you attempted to implement any of it in your business?

Nick (08:26.11)
Um, I would, I don't have like all of the, uh, ideologies memorized. It's, could you like run me through a couple of the ideas behind it?

cb (08:37.014)
So the essential is to have separate bank accounts where, I mean, the principle behind it is the idea that if the money's there, you'll spend it. And allocating your profit first when you make the deposit and then spending the rest.

So you're locking in the profit upfront.

Nick (09:10.906)
Oh, I mean, yeah, that's, we kind of do that with, at least right now, it's pretty much the way that we've run the business.

cb (09:21.27)
Okay. So you have a separate profit account or a savings account that you put profit in upfront.

Nick (09:30.62)
Yep. We've got an account that we, it's basically just like a high interest rate savings account that we'll deposit money into.

cb (09:40.966)
And so how do you determine what your profit is going to be? Is it just job by job?

Nick (09:47.819)
Usually right now we're doing job by job, but I will run kind of quarterly estimates at the moment because we know for the most part, three to four months out, we have at least an idea of what leads might we get, what jobs are locked in and may complete by then, what jobs are we negotiating about to finish? I usually have a pretty good gauge. So I'll run numbers usually once a quarter just to get a sense of I'm projecting about this much.

profit based on project spend and everything. And then usually at the end of the quarter, I'll kind of go back and look, you know, what was our projected, what was actual, and then usually per project is where I will then actually move those numbers into the different accounts.

cb (10:32.214)
Okay? So you're not doing it at the outset of the project.

Nick (10:39.026)
At the, I'm, I'm doing my estimates beforehand, but once the project, it is per project. Once they like, you know, we have 10 projects. I complete two of them. I will do those two individually. At that point. Yeah.

cb (10:42.387)
Okay.

cb (10:53.983)
Got it.

So have you ever found yourself tempted to pull from that account to finish a project?

Nick (11:02.594)
Yeah, that's a good question. Yes. Many, many times I am tempted to go in, well, we've got this, you know, we have this money, right? I can just move over $2,000 and we're good to go. And there have been some occasions where we have pulled a little bit, just, we just knew it would, in a way, it was an investment that we were making.

cb (11:17.61)
Right.

Nick (11:30.518)
We have, you know, there were some projects where the client would have been big client for our portfolio. And we knew like, we can't get an extra thousand dollars from them. But I know if I spend that money, in turn, we the exposure that we'll be able to push will be more than that thousand dollars that we would have had. And that's not something that we just loosely do. Like it takes a lot of thought and actual strategy to think through.

How are we going to use this content? What's the portfolio piece? How much can we talk about it? And only have done it maybe two or three times in that to act. And it's worked every time where we've been able to prove that product that we then ended up putting some money into it worked out. But the temptation definitely is real for a lot of the other ones that we just, it's like, well, it's not going to be worth it at the end of the day.

cb (12:20.063)
Yeah.

cb (12:25.097)
So when you're talking about...

pricing and is most of your work bid and you have other people that you're bidding against?

Nick (12:35.286)
Mm-hmm.

Nick (12:39.119)
I'd say right now it's probably like 30% bid and 70% repeat clients that just, you know, we've done a bunch of projects, they reach out. We got a new one. Give me a quote.

cb (12:55.35)
And you, when you're building that quote, obviously build in the profit percentage that you want.

cb (13:05.075)
You mentioned, so have you worked with Jeremy on Profit First?

Nick (13:12.559)
Uh, not directly.

cb (13:16.612)
Okay. Jeremy is your relationship manager, correct? Or is it... Okay. So, tell me a little bit more about that. What could he help you with in regards to Profit First?

Nick (13:32.63)
Uh, I mean, honestly, uh, that's a good question. Just, I think, um, if we just talk, like, we just don't talk about it that much. So it'd be, I think if maybe during our quarterlies, we just spent more time on it, but honestly, that's probably more on me cause I, I just kind of burned through our quarterlies, but, um, probably just if we made a point in our agenda to talk about.

either what we've done, even in the past quarter, how much did we put away for that? That's just being basically a piece of the agenda.

cb (14:13.718)
Okay. And so at the end of a quarter, end of a year, do you distribute that amount that's in profit or what do you do with it?

Nick (14:25.03)
So as of right now, we haven't done really distributions at the moment. We've, we actually, a lot of what we were doing, we knew this is why we brought on Core initially, because we just, we kept getting hit with a huge tax burden because we'd had all that profit. And we just didn't, I didn't have the knowledge to know what to do, how to reduce the tax burden and we were even, we were a partnership.

before working with Core when we, and then now we switched over to an S-Corp, which has made everything else a lot better. So I mean, honestly, this will probably be the first year that we actually do look at the profit distributions more seriously versus seeing it honestly as a burden that we're just now eating and paying ourselves.

cb (15:15.222)
So right now that profit for you, that profit account is really just a cushion, a contingency thing, working capital. Yeah. Okay. You're speaking in the we, do you have a partner?

Nick (15:24.99)
Absolutely. Yep.

Nick (15:32.69)
Yep, yep, I have one partner.

cb (15:34.858)
Are they on board with Profit First? Do they know even what it is?

Nick (15:39.694)
I've not really discussed it with them. It's funny, I just kind of handle the financial stuff and then tell her like, yeah, it's going well or if we need to get more jobs or whatever it is. I just kind of tell her that side of it.

cb (15:45.674)
Okay.

cb (15:53.47)
Okay, because I was curious in a partnership, you know, if people aren't equally yoked on the concept, if it causes friction, like, you know, there's this money in the account, why don't we, you know, why don't we take it out? But you haven't run into that.

Nick (16:02.423)
Mm-hmm.

Nick (16:09.162)
Mmm.

Nick (16:13.118)
No, we communicate quite a bit just about where the bank account is. We have a pretty consistent knowledge of it. And we're both kind of like right now, you know, one of our goals, we're trying to buy commercial property right now. So we both know that we're kind of saving up a little bit of that money, both knowing that we want to be able to put, you know, a payment on a building versus it just saying like, why aren't we taking this? Like why is it just sitting there?

cb (16:44.339)
Okay, so is that light for studio space or what do you... Yeah.

Nick (16:48.53)
Yeah, yeah, we, we have an office that we rent from right now, you know, anyone who's rented for five years and then you do the math and I've spent 60 grand on renting and but on top of that, the community that we live in, it's one of those areas that a lot of people say they have to leave to do creative work here. But we've found we're located equal distance between Detroit and Chicago. So we're actually

a hub where we can do work in Detroit and Chicago. And then if you go north, we have another bigger city called Grand Rapids, which also has a huge creative hub there. And what we've found is that a lot of the creatives that leave end up either doing work for people like us as they freelance with us, they come back, or they go somewhere, get jobs, it's too expensive to live in Chicago, New York, the whole story, it's way harder to the point where I kind of wanted to buy a building.

to be able to allow for a kind of creative collaboration space that we can kind of bring more of that community back and then kind of insert it back into our own local creative economy.

cb (17:58.39)
Okay. I'm gonna close with a question that's kind of rephrasing the first question I asked and hopefully you don't remember your answer. So when you were looking at ProfitFirst, when you first heard about it, what problem were you trying to solve?

Nick (18:07.576)
Sure.

Nick (18:17.002)
Hmm. Yeah. So the problem I was trying to solve was just, uh, let me start that over. The problem I was trying to solve was really first having a cushion was actually the first goal we were trying to solve. We did not want to have the company operating on a job to job basis. Um, and then secondarily, which was a little bit perpetuated by COVID.

cb (18:40.886)
Okay.

Nick (18:46.494)
I think as for most people when income became uncertain, it also perpetuated that now us as people beyond just the company need to know that when we can pull that profit out, we want our efforts to be rewarded. Even if we're not doing 20 jobs all at once, we still need to be rewarded for putting in hours and hours and hours of work.

cb (19:14.718)
Yes. We're not nonprofits. Yeah. That's what I say that if you have a passion and you're living that passion, but you're not making a profit, you're a philanthropy, which is fine. But most of us don't have the economic ability to...

Nick (19:22.094)
Exactly.

cb (19:43.906)
be a philanthropist full time and you know making sure that you make a profit is critical to the long-term success right so I find that so well I said I was done I'm going to ask you one more question do you handle all the finances do you feel like you have a

Nick (20:03.53)
Sure.

cb (20:12.774)
an aversion to dealing with numbers or are you comfortable with them?

Nick (20:19.806)
I'm comfortable with them. I enjoy it. I actually really enjoy looking at the numbers and projecting and just doing, like I have no aversion to it.

cb (20:21.683)
Okay.

cb (20:31.794)
Okay. And your partner, would she answer the same way?

Nick (20:36.398)
She... I wouldn't say she has a...

cb (20:44.059)
I lost you on the sound.

Nick (20:52.237)
Um, there we go. But yeah, she's, she doesn't have an aversion to it just as much as she doesn't enjoy it. She's not a statistical numbers person and she's very much hardcore creative. And I'm much more of an analytical creative, which I don't think those two things really make sense combined, but I, I enjoy analytics and numbers.

cb (21:00.682)
Okay.

cb (21:14.366)
No, I think that makes perfect sense. I kind of think, and I hate to simplify things, but I think that creativity and analytical, the whole right brain, left brain thing is more of a continuum. And that some people are hardcore creatives where the idea of a spreadsheet gives them

great anxiety. Like it, and, and when you, and when you force them to create a spreadsheet, it doesn't make any sense. I mean, it's like, right. And then there are folks like you and me, which are kind of straddling the fence in between, you know, I'm not as creative as a lot of people, but I'm also comfortable with the, the analytical side.

Nick (21:44.709)
Exactly.

Nick (21:52.725)
Right.

cb (22:14.058)
So I think that's kind of a paradigm that I've seen where most business owners in the creative space have some analytical capacity. They identify as I'm a nine or a ten on the creative scale.

Nick (22:35.429)
Mm-hmm. Yeah, I mean, it's something that I tell my business partners names Esther. I tell her all the time that I swear week to week I go back and forth and whether or not I want to stop doing all the creative or I want to stop doing all the business because I enjoy both. Like I love business strategy and analytics and all of that side of things. Like the brief key, our business part of what we do, we're not just media production people.

We're marketing specific media production where we kind of like to do a little bit of the same job as a marketing agency. So we don't just go, here's our cool idea. We like to say, who are we talking to? How can we make sure your video is effective? How can we know it's distributed correctly? How do we make sure that when we produce you something, we know it doesn't just go into nothing and then disappear? So

That's kind of where that additional, my enjoyment of analytics and statistics is like, I like to know and prove things. I don't like to just say things and have ideas. I want to know they're going to work. And that's kind of, I think, where the numbers piece, I'm all like, I just like looking. I like looking at numbers sounds weird, but it's not incorrect.

cb (23:53.042)
No, but I think that someone like Esther, I have a colleague that is highly creative and I'll sit down with him and he'll come up with something and I'm like, where the hell did you come up with that? Like, how does you, I mean, and those true creatives are really inspiring in a lot of ways, but then it's kind of like trying to get them to implement it.

or follow through with it or whatever, keep it in a budget are real challenges for them.

Nick (24:33.717)
Oh yeah, and she actually doesn't have the issue. If something tragic happened and I got hospitalized for a minute and she had to take it over, she could. She just doesn't enjoy it. And when we look at where the two of us sit, it just makes more sense for like, I'm gonna let you, like, because she is that type of person where we go, we need to come up with an idea in the next 20 minutes. She's like, all right, here's three ideas. And I'm like, I'm still telling myself my first one is bad before even wanting to talk about it.

cb (24:45.703)
Right.

cb (25:01.683)
Right.

Nick (25:03.373)
So she does that piece and that's where we just, you know what makes sense? You do that, I'll put numbers to it, figure out how we make sure we can make and then it just, it makes the most sense, but she could do it. She just would be really mad at me that she had to. Ha ha.

cb (25:17.93)
Well, you have been very generous with your time. I appreciate it. I think the way this Riverside works is it will continue uploading the video from your phone for a while. So whatever it's doing, don't stop it. And I will, I hopefully will include you in your story in the book, but I will discuss that with you before we do that. And of course give you editorial authority on it. So.

Nick (25:28.703)
Okay.

cb (25:47.722)
Thank you very much. Have an awesome day. Ta ta.

Nick (25:48.389)
Cool. Yeah, thank you. You too. Bye.