Success & value

Over on Seth Godin's blog, Seth writes a quick post regarding the concept of value. It's an interesting read, but more importantly goes to the idea of what we all strive for within the voice over business (or any business). That is, success.

You see, success is the addition of value to any given work effort or enterprise, and despite what a lot of people think, that does not necessitate being busy all of the time. If you want to be successful, you need to add value to whatever it is that you're doing, and Seth's post raises a very important point as to how you ought to be doing it in your voice over business.

Financial Accounting for Voice Actors

I can't believe that I actually have to talk about it, but after reading a very interesting post on one of the better-known voice acting boards, it's obvious that some folks aren't too well versed in the topic. On the one hand, that's not too surprising... if we were really into that kind of stuff, we'd probably not be voice actors. On the flip side, if you're trying to run a Voice Over business, then I think some basic accounting needs to be understood.

Let me make one thing perfectly clear: just because someone paid you for a product or service does not mean that you generated a profit!

I'll repeat myself: sales of a product/service do not equal profit. You've generated revenue from a sale. These are your sales, and can only be considered revenue after it has been earned and realized (meaning that you delivered the product/service and got paid).

Sales revenue usually implies multiple sales over a period of time. However, even in a single instance we can apply some accounting to show you just where your profit is. You take your sales and you find the difference between that and whatever returns from sales and allowances you had to apply. This gives you your Net Sales In other words:

Net Sales = Sales - Sales returns and allowances

Seems simple, right? We don't count revenue for something that was returned or allowances made to consumers. BTW: this is considered to be your Sales Revenue.

Next step. Let's figure out our Gross Profit. Hey, we're finally using the term "profit" so that's how much we've earned, right? Not quite, but we're getting there. Your Gross Profit is defined as:

Gross Profit = Net Sales - Cost of Goods Sold (which include whatever it costs the business to make the sale and other direct costs attributed to this act)

So now we know how much profit we have, right? Yeah, but that doesn't really tell us how much we actually get to keep. You see, there are other things which we have to consider, such as our operating expenses. Deduct that and you get your Net Income, which is your bottom line for the business (i.e., tells you whether or not your business is generating money or losing it... from a high level of perspective). Put another way:

Net Income = Gross Profit - Total Operating Expenses

Now it's possible to fib on the numbers with some creative accounting to make your Net Income look better than it is (just ask the folks at Arthur Andersen and Enron), but for our purposes this model will suffice.

So the next time someone trys to use sales as a means of profit, you'll know how to stop them dead in their tracks before it affects your understanding of the situation, or worse yet, the financial health and viability of your voice over business from a financial standpoint.

It might be time to take a SWOT at your VO Business

No... that's not a spelling error you just saw.

If you think about it, there have been a LOT of articles that have come out lately about looking at your business, figuring out whether or not your VO business is an actual business or a hobby, whether or not your brand is dead, understanding the producer's puzzle, the top ten mistakes that you can make, and even about concentrating on the business's share of wallet vs. share of market.

All written by professional voice actors who are known in the business, who are very talented, and who are all absolutely correct.

But are these articles actually dealing any issues you face with your business? The short answer is yes, but the long answer is that you probably don't realize it. I'm here to help you with that.

How?

Well, let's take a SWOT at your business.

Again... that's not a misspelling.

A SWOT is a strategic planning analysis tool that is used on projects or business ventures (like your's). For those who've never had to use one, let alone think of the phrase "strategic planning", there's no need to worry this is pretty simple. We just want to think about your business's Strengths, Weaknesses, Opportunities, and Threats. In other words:

Now I'd love to take credit for this little idea, I really would. Albert Humphrey came up with the idea while at Stanford, but the important thing isn't how SWOT came to be, but how we can use it in our business activities. This requires us to be very honest with our analysis (or to bring in someone we trust if it's known that we'll have observational bias) , to identify an objective for our business, and then to list out the following:

• What are our Strengths? What attributes of the organization are helpful to achieving the objective?
• What are our Weaknesses? What attributes of the organization are harmful to achieving the objective?
• What Opportunities do we face? What are the external conditions that are helpful to achieving the objective?
• What Threats do we face? What are the external conditions which could do damage to the business's performance.

I'm sure you're thinking "this is great, but what can it actually do for me?" Well that's also pretty simple if you think about it. Once we've identified an objective for our business, then identified the specific quadrants of a SWOT analysis, we need to examine the following:

• How are each of our Strengths used, and how can we further capitalize on them?
• What is necessary to improve on our Weaknesses?
• What is the benefit from each Opportunity, and how can they be leveraged toward a positive outcome for the business?
• How can be mitigate the Threats?

To use an example, Keith David is known to use the following method of SWOT analysis while auditioning a piece of copy. He'll look at the specs and cross off each descriptive word that he feels is part of his nature (identifying the Strengths). He then looks at what remains and picks a few that he wants to concentrate on as his choice for his read (identifying and focuses on his Weaknesses in order to improve them). This affords him the Opportunity to take the copy in a direction which is he may not be accustomed to, or at the least uses often. By doing so, he's showing himself to be a more versatile actor and reducing the Threat of not booking the job.

Obviously this is a very simplistic example, but we can take the model and use it for more complex matters, such as running one's own voiceover business.

The fact is that we use these strategies nearly every day, but most of us have never identified them or seen the relationship identified by a SWOT analysis. With some luck, I hope that a few folks reading this will find a way to take the principle and to successfully use it in their own ventures, whatever they may be.

Cheers!