Most creative companies start with little more than an idea and a determined will to carry it out. They are usually underfinanced and very often fail within the first two years of trading.
Various initiatives can be utilised to help small start up companies. Some essential ingredients to initial sustainability can be itemised as;
All start up businesses involve risk and creative businesses are riskier than most, therefore financial support through traditional institutions is extremely difficult to obtain. Larger, well planned start-ups may have access to venture capital although this option can be very costly. Smaller, one and two person organisations are left to fend for themselves or garner support from relatives or friends.
One of the biggest problems faced by small companies, especially in creative industries is poor cash-flow. Most of these companies live from hand to mouth, often with the principals of the companies foregoing wages in order to sustain the company through short term crises. Cash-flow becomes of crucial importance and even if the business is well managed, poor paying clients can bring a small company to bankruptcy even though it may be trading profitably.
In order to stimulate creative businesses at a grass roots level it is imperative to nurture a climate of advance part payment for creative services and promote the good practise of prompt payment of invoices. Any entrepreneurial culture has to have the support of local and national laws that can be cheaply and easily employed to ensure small businesses receive the cash-flow they need to survive.
Access to markets, facilities and local networks are all related to the scale of the local creative economy. The larger the economy, the more attention it receives from outside markets and the more facilities can be shared among a greater number of clients. There is ‘critical mass’ which, once reached will attract other similar businesses and become self sustaining. In order to achieve this ‘critical mass’ it is necessary to deal with the stimulation of a multitude of creative areas simultaneously.
Company failures are a part of experimentation and entrepreneurialism. Some lessons can only be learned effectively by making mistakes. The creative process itself is one of trial and error, often having to push ideas further than they are supposed to go in order to find new horizons. Mistakes are a natural part of this process. Failure is to be expected and not treated too harshly as nothing in the process of learning is ever wasted
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