Site icon Jake Ludington

3 Things Every Creator Should Know About Their Business

I took a decade-long detour from being a creator to work on creating tools and processes for streaming video platforms, culminating in four years building out Google TV. Earlier this year, I stepped away from the streaming video space to focus on tools and services for artists and creators, as part of a newly formed Web3 team inside WeTransfer. This new role has caused me to reflect on many of the challenges I faced running creator companies and realizing how little has changed in my decade away from working full time as a blogger and podcaster.

Sure, there are new platforms to pay attention to, like TikTok, but the core fundamentals of running a creator business still come down to understanding the following three principles:

How You Make Money

How you make your own living as a creator will be a little different depending on what your primary platform is and where you are in the evolution of your business. When I was creating full time, I was primarily writing a free email newsletter and additional free blog posts. My general marketing funnel was to write useful free articles that (ideally) ranked well in search results, acquire some percentage of blog post readers as newsletter subscribers, and introduce the newsletter subscribers to useful products and paid content in the form of ebooks.

During the peak years I was a full time creator, my revenue was distributed this way:

I recently watched a great video from Colin and Samir where they interviewed Reed Duchscher, the business manager for YouTuber Mr. Beast. In that video, Duchscher references a creator income breakdown down by Paddy Galloway, which notes that the average successful creator has a revenue mix that looks something like:

While the percentages are different, the revenue opportunities aren’t meaningfully different from my time as a full time creator. What’s not well represented here is the importance of building out revenue streams you control, so that things like changes in the way YouTube ranks your content or being de-platformed don’t put you out of business. This means that you should be focused on moving from subscribers and followers on platforms like YouTube, Instagram, and TikTok, to direct relationships through things like email subscriptions, memberships through services like Patreon, and merchandise, like ebooks in my case or drop-shipped physical goods where it makes sense.

How Much Money You Spend Each Month

Spending is an area creators need to pay close attention to because this is what will ultimately make or break your ability to create full time. Beyond whatever you spend to create your content, you also should be keeping track of how much you spend on basic expenses like, Rent/Mortgage Payment, Electricity and Gas, Internet Service, Phone Bill, Food, Health Insurance, Car Payments and Gas, Clothing, Travel, and Savings.

Hypothetical Creator Expense Breakdown

The list of potential expenses is by no means comprehensive, but it’s a good starting point to make sure you capture the big stuff. If you’re only looking at how you make money and not where you are spending it, you can’t see the full picture of how your business is doing. It’s also worth noting that portions of most of those items can be written off as business expenses that will reduce your tax liability at the end of the year.

As your revenue grows, be resistant to spending more. Do you really need a place that causes you to double your monthly rent? Will a bigger car payment improve your experience of getting from point A to point B that much better or are you trying to create an appearance of success?

It can be tempting to reward yourself with an expensive purchase after a month where you generated extra revenue, but that can also lead to a future shortfall, particularly if your content niche is cyclical, which leads to the third portion of this revenue equation.

Note that I included Savings as a monthly expense because setting aside some money, even if it is a small amount, will help you in the long run. That savings could get you through an unforeseen lean month. It could allow you to make a future purchase or outsource some work down the road. Or it could be something you put away so that years from now you can choose not to work.

Are You Making Money Month-Over-Month?

This is the real test of whether or not you are successfully growing your creator business. When your net inflow each month is meeting or exceeding your net monthly expenses, you’ve got a viable business.

This doesn’t mean you should expect your revenue to consistently go up month-over-month. In my own time as a creator, I focused largely on the consumer tech space. The middle of summer was a time of year when reader engagement dropped while big portions of the world went on summer vacation. January and February were often lower revenue advertising months as companies adjusted their budgets after the pre-holiday spending spree of November and December.

Knowing these market cycles can help you forecast when you might need to carryover money from the previous month to meet your budget. It can also help you plan where to focus your attention. In my own case, doing some consulting in the summer was a good approach to keep my revenue consistent while people were away from their computer screens. Launching an ebook focused on how to use the latest tech gadgets right after the Christmas helped increase direct sales while offsetting the revenue declines.

How much money you make in a month will depend greatly on where you are in building your creator business. How much money you spend each month will play a role in how much you need to work and whether you’re preparing yourself to weather the unknown. Finding an equilibrium and ultimately figuring out how to make more than you spend sets you up for building a viable creator business that can support you for years to come.

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