Being an influencer sounds like a dream. So it’s no wonder 86% of young Americans aspire to be social media influencers, according to market research. There are lots of wannabes, but not many have actually made it. Only 12% consider themselves to already be influencers. An even smaller percentage of people truly are. For every PewDiePie, there’s a streamer with zero followers who Mr. Beast takes pity on.
If being a major influencer was easy, everyone would do it. What most aspiring influencers fail to recognise, however, are the skills an influencer needs to build as they climb the ladder of success. Skills they aren’t taught and are rarely talked about.
When you’re building a channel, your success is in your hands. Creators get used to grinding. They spend all their time creating content and perfecting their craft, learning new skills like photography, editing, and tips and tricks for the latest apps. Any time not spent creating is devoted to engaging with an audience.
In the early stages, before you’re monetised and generating income, doing all those things is crucial. And yet, they eventually will hold you back once you’re generating significant income. You train yourself to be an efficient and effective solo artist. But what happens when you need to scale? You can’t ignore opportunity cost.
Consider Logdotzip, an influential Minecraft creator and Semaphore client. For years, he spent all his free time creating content and building his channel. But it was his first hire, an editor, who helped him reach a new level as a creator. Suddenly, he was able to use the time he previously spent editing videos to do what he does best – making them.
That meant more time for inspiration, which led to more videos, and more revenue flowing in. He continued investing in his team and today employs 29 people, which he expects will double in 2022. The team he has in place meant he could conceptualize a new channel called Craftee, the fastest growing channel on YouTube. It grew to one million subscribers in just one month, without him needing to write scripts or even be the person on camera because he had the right team.
Structure a business the right way
As your revenue grows, you’re going to need to eventually structure your activities as a real business. It’s not the most glamorous aspect of an influencer’s daily life, but influencers who don’t do it will have far more risk, less income, and a lower ceiling.
Start by setting up an LLC, preferably working with a financial advisor. If any legal issues arise because of your content or business activities, you’ll want to protect your personal assets. As your business grows and revenues reach about $100K per year, it’s time to file for an S-Corp to benefit from its tax advantages.
After your business entity is set up, you’ll want to start operating as any business would. Open a business bank account, and get a credit card for your business. Create a business PayPal account for accepting and paying money related to your business. Look into insurance to protect your business, like commercial insurance if and when you get a company car, a personal umbrella policy, general liability, life insurance, and workers’ compensation when you hire someone full-time.
And because you’re a business, you’re going to need to track your revenue and expenses month to month. The first step is keeping a general ledger to record all business-related transactions. To help you keep track, consider a scanning app for large purchase items because paper receipts fade and you want to have an electronic record in case of an audit.
Don’t forget to track home office expenses, which can even include ones many don’t think about like mortgage and utilities because a portion can be tax-deductible. Mileage, cell phone(s), meals, equipment, internet, and software subscriptions are other important expenses to track for tax season.
Plan for taxes
Speaking of taxes, successful influencers have the worst of all worlds when it comes to them. You not only need to worry about your personal taxes but your business ones as well, which are more extensive than other types of small businesses.
Remember to pay your estimated federal and state taxes on time. For next year those dates (US) are 15th April, 15th June, 15th September, and 15th January 2023. Prepare 1099 forms for contractors paid more than $600 in a year.
As your business continues to grow, you’ll need to do even more accounting. Things like bank reconciliation, cash flow forecasts, invoicing, payment runs, and more.
Are you an expert in any of those activities? Most of our clients haven’t even heard of them. Unless you’re a CPA, chances are there will be a steep learning curve as you grow your business. It makes tax time far more complicated than working as an employee, where you only need to worry about your payroll and withholding, retirement plans, and standard or itemised deductions.
Create new revenue streams
The most successful influencers sense new opportunities and create them. Once a proper business structure is in place, creating new revenue streams enables an influencer to accelerate their growth trajectory.
For many influencers, the first source of income is often when their social media channels are monetised on platforms such as YouTube, TikTok, Facebook, etc. As views and engagement grow, those channels attract the attention of brands.
Sponsorships then become a source of income for influencers with significant followings. Offering sponsorships within videos and on social media channels monetises the audience an influencer has built. However, it’s important to remember not to sell yourself short. Consult benchmarks like Influencer Marketing Hub, but also consider how valuable an audience is for a brand and price sponsorships accordingly. Top-tier influencers don’t sell themselves short.
Brand deals take relationships with brands a step further. In many cases, influencers become the faces of a brand, join a brand’s events, or participate in product launches. These deals add extra layers of complexity, but also provide far more opportunities than a simple sponsorship would. Although larger brand deals are often mutually beneficial for both brand and influencer, remember your value and consider any opportunity costs, such as not being able to work with any competing brands and the amount of time they will take.
Licensing deals take influencers from digital channels to physical stores. Creating physical products gives an influencer’s passionate audience a new way to support their favorite creator, and unlocks a new lucrative source of passive income. Consider skincare influencer Hyram Yarbro’s recent global launch of his new Selfless by Hyram skincare line in partnership with Sephora. His products are now sold in 663 Sephora stores in more than 20 countries.
Top influencers know that developing business acumen matters just as much to long-term success as creating quality content. While social media fame is often fleeting, they’re focused on building companies that will stand the test of time. Once you learn how to do that, your empire awaits.