Field Guides / Growth

What should I look at in my last twelve months before I change anything?

Before you change your offer, your marketing or your niche, look at where the last twelve months of revenue came from: how many clients, what each spent, what you kept, which work repeated or came by referral, and what each client cost you in time. Then answer the other half: what you're known for and how your last five clients would describe you. Finish with one page that sorts every client against your floor per day: protect and grow the ones above it, and reprice, restructure or let go of the ones below.

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Why do owners change direction without looking at the last twelve months?

Owners change direction on a feeling because creative businesses lean on what they think and feel, and very little time goes into the data. A twelve-month audit puts the data first, before any new system, offer or marketing plan.

The work you think the business runs on and the work the numbers show are often two different things, and the money is often coming from an area that takes less effort than you'd assumed. It happened to me. Years ago I ran a coaching programme as a side project next to the production work. When I looked at the numbers, that side project was generating a significant share of the annual revenue. I shifted my focus from production to coaching because the data said so.

How to run the twelve-month audit: the method, step by step

The twelve-month audit is a set of questions about every client and job from the last year. Use twelve months, or eighteen if you're about to make a big change.

1. Get the year onto one page. Every client, how many jobs, what they spent, and what you had to do to earn it. Pull it from your accounting software, or a spreadsheet if your books aren't there yet.
2. Count where the money came from. How many clients, total revenue, and how much you kept. Rank every client from most revenue to least. If the year was $150,000 across ten clients, was that ten clients spending roughly the same, or one or two spending $20,000 or $30,000 and the rest making up the difference? Then count repeat engagements and referrals. The blind spots sit here: clients who could be repeat work if you asked.
3. Set time against revenue. For each client, count all the work it took: production and post, and also the pre-production and client management, which is the part that catches people out. Find the low-rate clients who soak up most of your time, and the ones that gave the highest return for the least effort (a $5,000 job might have been a one-day shoot and an easy edit). The audit's final column is profit per day, which the Client Profitability Calculator works out. Then put your floor per day under it: what a day has to clear to cover your overheads (the arithmetic is in Why knowing your numbers lets you price with confidence). You're finished when every client has a margin-per-day figure next to its revenue.
4. Break the revenue down by type of work and by sector. Production, freelancing, post, full end-to-end jobs, then the kinds of businesses paying you. Look for the sector that sticks out.
5. Answer the questions about the work itself. Which work did you enjoy most, and is it the highest-yielding commercial work, meaning clients will pay for it and there's a market?
6. Work out what you're known for. Ask what people hire you because of. General video production is a crowded market. Telling great stories isn't a specialism, it's a point of entry: it's like a baker saying they're great with flour. Clients don't pay for a DP, a fancy camera and a set of lenses. They pay for what the film does for their bottom line. If a sector cluster shows up, How to choose a niche for your video business takes it from cluster to one sentence.
7. Ask your last five clients to describe you, and check your testimonials. Do you routinely ask for written and video testimonials, and have you tracked what they brought in? The email is below.
8. Write down where you want to be in three to five years. Revenue, time worked, the projects, and life outside work. Then check that your business purpose is clear in your marketing and that you know exactly who your target client is. For years my own plan was a revenue figure and a number of projects, and I kept hitting an income ceiling because I was doing everything myself and the plan was too loose. The audit is done when the one-page summary further down is written.

How to ask your last five clients how they'd describe you

Asking your last five clients to describe you is the easiest way to find out how the market sees your business. Keep the questions short and about the last job: what they liked, why they use you, how they'd describe you.

How to sort your clients once the audit is done

The twelve-month audit ends with every client sorted against your floor per day. Protect and grow the clients above the floor. Reprice, restructure or let go of the clients below it.

Rank the clients above the floor by margin per day and aim each one towards your target, the floor plus the profit you want. More of the top clients' work at that rate is the fastest path, and existing clients and their referrals are the easiest sales there are. Clients below the floor are being carried by the others: reprice them, restructure how the work is delivered, or let them go, because keeping them as they are is choosing to work for less than it costs you. Some you may need to push off the ledge yourself. If one client carries most of the year, read When one big client owns your video business first.

A worked example

One owner I coached loved travel filming. When he ran the audit on our guidance, he found that about 68 per cent of the previous year's revenue had come from construction films.

The story doesn't come with totals, so here it is in round numbers: on a $150,000 year, 68 per cent is $102,000 from construction, and travel and everything else share the other $48,000. Before anything moves, margin per day on the construction clients confirms whether the 68 per cent is profitable work. If it is, the summary page might read like this (an illustration).

The mistakes that undo it

The twelve-month audit fails in three predictable ways.

• Answering from memory. The feeling and the records often tell a different story. If you don't know the margin on a job, build it from the cost base (crew at real day rates plus direct costs) rather than typing in a guess. A guessed margin makes the whole ranking soft.
• Treating turnover as the result. The money you generate isn't the money you keep, and the money you keep is what counts.
• Following the work you love without checking the market. You might love music videos, but if there's no money in it, enjoyment won't change that.

The rule of thumb for a twelve-month audit

Every client gets a margin per day and a place above or below your floor per day before you change your offer, your marketing or your niche.

The benchmark: twelve months of records (eighteen before a big change), every client ranked by revenue and by margin per day, five client descriptions in their own words, and one page that sorts every client above or below the floor.

Hold yourself accountable

Which of these have you taken on or put in place recently?

• You've ranked every client from the last twelve months by revenue, and again by margin per day.
• You know how many of last year's jobs were repeat work and how many came from referrals.
• You've asked your last five clients how they'd describe you, and have their answers in writing.
• You've sorted every client above or below your floor per day, and decided what to do about each one below it.

Your one move this week

What's the one thing you can commit to implementing this week? If you're not sure, start here.

Put the last twelve months on one page: every client, how many jobs, what they spent, and whether the work was repeat or referred. Work out what share of the year came from your top two clients. Then send the last-five-clients email.

One thing executed every week creates 50 strategic moves a year.

Related tools and guides. Client Profitability Calculator, Why knowing your numbers lets you price with confidence, When one big client owns your video business, How to choose a niche for your video business, How to get more from referrals and networking, How to grow revenue from the clients you already have.