The Creative Entrepreneur

Posted in Vol 12 No 3 by bsaab on September 3, 2009

Seven misconceptions about the way we work

What do a self-employed architect, a game designer, and a new-media consultant have in common? They’re all part of the Creative Economy, they’re likely to be proprietors, and they don’t get the recognition they deserve. They’re under-counted, underestimated and under-served — because they are the victims of serious misconceptions.

Promoting the Creative Economy requires a new understanding of creative businesses.

Misconception #1: The Creative Economy is about the arts. Yes, actors, musicians, and visual artists are included, but it doesn’t stop there. The Creative Economy consists of those industries that have their origin in individual creativity, skill, and talent, and that have a potential for wealth and job creation through the generation of ideas, products, or services. How this gets interpreted at a local level varies. In the Berkshires, for instance, tourism and the arts are indeed the backbone of the economy. But in another tourist destination, Essex County, the top Creative Economy clusters include design, research and development, and advertising. The key is in the name: creative. Jobs whose stocks in trade are creativity and innovation are likely to be part of the Creative Economy.

Misconception #2: The Creative Economy centers on nonprofit organizations. In fact, according to a 2008 study of Boston’s North Shore, the Creative Economy represents 10 to 12 percent of that region’s private sector (non-government) employment, providing jobs for nearly 20,000 people through more than 2,000 enterprises. That’s larger than the share of biotech (2 percent) and manufacturing (7 percent) industries within the metropolitan Boston economy.

It is when one combines the impact of the Creative Economy with that of self-employed proprietors and entrepreneurs that this overlooked yet powerful economic engine really picks up steam. In 2006 (the most recent year for which data are available), proprietors represented one out of five jobs in Massachusetts. These are the sole practitioners, husband-and-wife teams, and micro-businesses that are part of our daily business lives. While exact numbers of proprietors among design professionals are not available, one statistic suggests that proprietors are a significant presence in the practice of architecture: among the members of the Boston Society of Architects, there are 475 sole practitioners and 200 firms of two or more employees. Proprietors are flying below the radar for a number of reasons. They may have an Internet business or a home-based enterprise with no physical visibility, especially in towns where the prohibition on home-based businesses has never been changed. They may not have filed a DBA, so that their town or city does not know they exist. Their customer base may not be local, so they have little incentive to join a chamber of commerce or other community business group. And they have few advocates to speak for them.

Misconception #3: If proprietors were important, they’d get more attention in state economic reports. The truth is that, astonishingly, we’re not counting proprietors (who account for one in every five jobs in Massachusetts, remember) at all in state economic reports. That’s because proprietor data are filed only with the individual’s federal tax return each year. When proprietors are considered, the doom-and-gloom story of statewide job losses becomes one that actually offers hope in grim economic times. The number of proprietors in Massachusetts grew 33 percent between 2001 and 2006, an average of more than 35,000 a year. That number was large enough to counter the loss of wage-and-salary jobs and result not in the 2.6 percent decrease in the number of jobs reported in the media for that period, but a 2.3 percent increase!

Although data beyond 2006 are not yet available, it is more than likely that both the number of proprietors and the growth rate of proprietors in many industry sectors are increasing during the current recession. It is during recessions that many laid-off wage-and-salary employees test the waters of entrepreneurship, some out of necessity, some taking advantage of their unemployment to realize a long-held dream.

Becoming a proprietor and joining the Creative Economy is not only an increasingly viable employment option for individuals, but also a source of economic growth for Massachusetts.

Misconception #4: Proprietorships, especially those in the Creative Economy, are not “real” businesses. According to the recently released study Proprietor Employment Trends in Massachusetts: 2001 to 2006, which was also the source of the one-in-five statistic above, proprietors who work alone outnumber those with wage-and-salary employees. This is not to dismiss proprietors with employees; they grew by nearly 28 percent between 2001 and 2006. These are not necessarily one-person, kitchen-table hobby operations. They are small companies who choose not to incorporate for a variety of reasons, frequently taxes. Among them may well be the next killer iPhone application, the next Design Within Reach, or the next Sundance award-winner. More important, not to consider creative entrepreneurs as having real businesses is to buy into a misconception with significant consequences for how local, state, and federal governments allocate resources.

Misconception #5: Most proprietors are people temporarily freelancing until they can get a real job. Those who believe this are missing a dramatic and permanent shift in how we work. There are several factors driving this, the most compelling of which is the Internet. With a desk and a laptop, an individual can now run a global business from home. This could never have happened 20 years ago. Computing power and Internet accessibility have created a “portable economy.” When the restrictions of physical locale are removed, entrepreneurs can collaborate with many more people, extend their customer reach, and draw on a far broader base of resources. They can also work in new patterns. Tina Brown, the former editor of Vanity Fair and founder of The Daily Beast website, refers to the “gig economy” as one in which people don’t hold a single job, but take on assignments or gigs, much as a musician does. Somewhat related to this, the self-employed are increasingly adopting the Hollywood model used in filmmaking — people with the specific skills and talents needed for a project come together for that assignment and then disband.

Misconception #6: People in the Creative Economy are, well, “different.” In some ways, they may well be. But even if they don’t want to be grouped with the “suits” of the business world, artists, designers, and advertising copywriters have a lot in common with their peers in traditional corporate environments: they need business skills and they need political support for their business endeavors. Because the Creative Economy and proprietors are underreported and underestimated, it’s not surprising to find that they’re also under-served. Little research has been done to identify the economic impact of these companies, and no research has been conducted to identify their needs. But, as the director of the Enterprise Center at Salem State College, working with entrepreneurs and small businesses, I have a unique vantage point. I see talented people daily who are seeking skills they need to run their business. I hear them talk about the premium they, as individuals, must pay for healthcare, the limited options they have for retirement savings, their need for tax relief and for better access to credit.

Misconception #7: There’s little you can do. There’s a lot you can do, and it may start by recognizing that you yourself, or the businesses you work with, are part of the Creative Economy. Creative entrepreneurs can form coalitions and associations to advance and support legislation and policy changes that will support their endeavors. Through organizations such as the Creative Economy Association of the North Shore, you can individually and collectively raise awareness of the Creative Economy’s contributions as a sector and of the need to nurture the micro-businesses that contribute to the industry’s vitality. These kinds of businesses have historically received little recognition at the government level.

The growth of the Creative Economy and the increase in proprietor employment in Massachusetts are phenomena not to be taken lightly in their own right. In combination, they tell us we’re looking not at a transitory fad, but at a permanent sea change in how we work. Technology has empowered the creative entrepreneur and opened the floodgates to new opportunities for self-employment. Becoming a proprietor and joining the Creative Economy is not only an increasingly viable employment option for individuals, but also a source of economic growth for Massachusetts.

There is a new recognition of this within the Commonwealth. Massachusetts recently established the Creative Economy Council, chaired by the Secretary of Economic Development, and is the first state in the country to have a Creative Economy Director. The Massachusetts Cultural Council has also been very active in the promotion of this business sector. But the ultimate success of the creative industries in this state depends upon the energy of individuals. We need more voices in the choir. Join in, and help get the word out.

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  1. Letters « ArchitectureBoston said, on November 30, 2010 at 9:33 am

    […] you for the article “The Creative Entrepreneur” [Fall 2009]. I appreciate your recognition of the often-overlooked importance of creative […]

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