Save and outlast your competition

Outlasting competition sounds very compelling. Everyone dreams of a successful, long-term career, right?

But saving? Saving is boring.

It will probably never make you rich. You can't save money that you don't have. And, heck, many other creatives don’t save either.

So why should I?

As you can probably deduce from my sarcastic tone: the case for saving is a boring but important one. The dull and repetitive side of business often builds the foundation on which your creativity can truly thrive.

Back to the title. A thriving career is one that is sustainable. One that allows you to outlast the competition.

Why? You might ask. What's the point in outlasting the competition?

The answer isn't necessarily the competition itself. Rather, it's about giving your creative entrepreneurship the room and time it deserves to fully unfold. Room for a lifelong adventure that takes you to the places you've always dreamt of visiting.

The world of creative finance is full of old clichés like the starving artist or, even worse, get-rich-quick gurus selling the idea that anyone can get rich quick without sacrifice.

The case for saving is boring, but it's boringly effective.

I can't pack that into a catchy metaphor or dramatic story.

Or can I?

The case for saving

The truth is that the creative career is often a volatile one.

Characterised by irregular income, long project cycles, late payments and high chances of failure, the creative career will regularly throw knives at you when you least expect it to.

If you can't catch the knife, the story ends. It's as simple as that.

50% of creative businesses fail within 5 years

So you need the ability to catch these knives. Think of this knife-catching ability like a health bar. Each knife deducts a certain percentage from your health. But when your health bar reaches 0% - you're gone.

Now imagine this: you're 1 year into your creative career. You've already put lots of time and energy into your offer and are on your way to sign a very big client. But you didn't watch your health bar.

And then... life happens. A knife comes flying right at you. It's about to completely deplete your health. What now?

That's right. You have no health left to absorb this impact. It's too late to crack a health potion. There is only one option: take the hit and quit your dream.

This may sound like an exaggerated metaphor - but going bankrupt is real.

A measly 36% of creatives have sufficient savings to cover 3 months of expenses.

One late payment, one misfortune or one unexpected cost can undo years of hard work and end your career. I'm not saying this to be dramatic, I'm just making clear that I have personally seen many creatives struggle due to financial setbacks.

Illness, accidents, defaults... You can't just improvise your way out of these situations. When the taxman comes knocking on your door, there's no way back.

If only there was a way to absorb these setbacks? A way to stay in the arena while others are forced to leave. Something that can regenerate health and prepare for unfortunate events.

Meet saving. A special potion that tops up your health bar.

Case made.

An opportunity to grow

Saving isn't just about preparing for unfortunate events. It can be a true catalyst for creativity and growth, too.

First of all, saving creates peace of mind. It sparks a deep feeling of security that enables you to navigate difficult times with calmness and determination. It literally reduces anxiety and stress. Peace of mind is knowing that when times are tough, you are equipped to weather the storm and find a way out.

Secondly, savings can fund smart investments in new skills, products, people or gear. Smart investments are those you're fairly confident will yield a positive return on investment in the long run.

Lastly, savings purchase freedom. Many creative entrepreneurs think they are free, but aren't, because they have no option but to say yes. Being able to say no is one of the creatives' biggest achievements. See Charge more, work less.

In short: outlasting your competition is not just about navigating setbacks. It's also about making strategic investments in your skills, gear, freedom and peace of mind.

How to save (4 rules)

Now, for the practical side of this guide. Don't take these rules as absolute truths, rather, as general principles. This isn't financial advice.

In its essence, saving is incredibly simple: spend less money than you make. Put some of this “margin” in a separate bank account and voila, saving complete. That could be the end of this guide.

In practice however, things are a bit more challenging. Especially if you‘re just starting out. How do I start when I have nothing? How much should I save? How fast should I save? What can I use my savings for?

Rule #1: Thou shalt separate finances

You are not your business.

One of the biggest mistakes I see is using a single bank account for everything. Personal and business. This is a dangerous path. You’ll soon find yourself absolutely confused about… everything. Mistakes will be inevitable. On top of that, because it’s all in a checking account, you’ll think that you can spend all of it too.

In order to build a long-term creative career, open a separate checking and savings account for your business. The objective?

Fill up the health bar of your business as quickly as possible.

There’s just one simple principle. You can’t use your business accounts for personal expenses, nor the other way around. This is crucial. Think of your business like a separate entity that you control:

In order to outlast the competition, you’ll need clarity on the financial health of your business. So separate your finances. Track what is coming in and what is going out. Save the rest (kind of), see rule #2.

And consult a financial advisor.

Rule #2: Thou shalt save on every occasion

There are two ways to go about saving. One of them has worked incredibly well for me, and I'd argue it's the better option in almost every regard.

First option: Saving after expenses
Second option: Saving before expenses

If you've ever tried to save money at the end of the month, after expenses, you've probably already figured out that there isn't much left to save. This isn't a surprise. It's Parkinson's law in action.

Expenses tend to rise with income and threaten to absorb it almost entirely.

This is why I save a fixed percentage of my income before expenses. In practice, this means that every time a project comes in, I reserve part of the project's income for savings before it's even started.

For example:

If a project of 5.000 comes in, save 1.000. You're then left with 4.000 to pay for your expenses including your own wage. If a project of 10.000 comes in, save 2.000, and so on.

20% is a good average. But adjust it to your own unique situation. You'll want to set this percentage as high as realistically possible without underpaying yourself or compromising the business.

There's something incredibly powerful about this way of saving.

It limits the amount of money you can freely spend and forces you to think smartly about your expenses
It forces you to save each time money comes in, rather than saving what's left
It motivates you charge more because your price must include the opportunity to save

Saving a fixed percentage of each and every project isn't greedy. It's being a smart entrepreneur who thinks long-term.

Rule #3: Thou shalt save at least 6 months of expenses

This is one of those rules based on an arbitrary number. Six months could as well be 4 or 12, depending on your personal preference.

I've personally found 6 months to be the sweet spot. It's enough to cover a serious downturn such as illness or an unexpected event like COVID. It allows you to continue to pay for your expenses (office, software, wage) even when no money is coming in.

These 6 months worth of expenses include everything: software, rent, investments, materials, subscriptions, taxes as well as your wage.

If your expenses are, for example, 50.000 per year, aim to save until you have at least 25.000 set aside. This may sound like an impossible amount. But follow rule #2 and you'll get there sooner than you think.

Lastly, an important part of this rule is "at least".

Sometimes, you may find yourself wanting to purchase some new gear. Or, launch a new project which requires you to spend some money. The more you save, the bigger your freedom to make these investments with minimal risk.

Rule #4: Thou shalt (almost) never compromise

Outlasting competition requires discipline.

This is why the last rule is probably the most important one. Savings are meant to bridge setbacks and fund smart investments. Not serve as a magic money pot that you can tap into at any time.

I'll keep this one very short. Make one deal with yourself. Never touch your savings unless you:

use them to fund setbacks that were unavoidable
use them to make smart investments that make more money over time.

If you're the type of person that regularly pulls money out of your savings account to buy clothing, luxury goods or fun activities, that's okay. Do what works for you. But create a separate savings account specifically for this purpose.

Never compromise the purpose of your savings account.

Play the infinite game

James P. Carse talks about “finite” and “infinite” games.

Finite games are played with a fixed set of rules and are limited in time, such as football. The team who scores the most points after 90 minutes wins the game.

Infinite games are games with changing rules and no time limit. There is no winning. There’s only ahead or behind.

A finite game is played for the purpose of winning, an infinite game for the purpose of continuing the play

Business is an infinite game. Rules change. A career is a lifelong adventure full of surprises. You may change course, abandon projects or create new ones. Saving is just one of the tools that enable this freedom.

No matter your definition of success, the paths you take or the knives you’ll catch, continuing to play the game with creativity and peace of mind is what truly counts.

Outlasting your competition isn't about winning. It's about having the freedom to create impact while doing what you love. As long as you wish.

Want to outlast your competition?

Save and play the infinite game.