A couple of posts ago, I recounted in my forum travels how a poster wanted to "simplify the ca-ca" in the hopes of receiving a list of ten easy steps in starting a successful design firm [insert skeptical laughter here]. A bit further along in the thread another poster asked me to elaborate on this line within the body of my initial reply: "I neglected a few key business applications that I thought I could afford to skip." I thought it was worth re-opening some of the painful, torturous wounds I received during my "hard knocks" business training to retell it a second time here, if only to help another Creative Kinsman from meeting my blissfully naive fate. Learn. Enjoy. Learn. Did I mention Learn? I think I did.
For starters, I didn't see myself as a business. I saw myself as a freelance designer. There is a difference. How you see yourself is very important. I never thought of myself as a business entrepreneur in the formal sense so I never distinguished that definable distinction. You must see yourself as a businessman/woman first, designer second.
Next I didn't draft a business plan. You can google online for any number of sample plans but in a nutshell, a business plan is a descriptive outline that details your operating costs, marketing objectives, mission statement, capital, overhead and other projections. If you want to apply for any government, private grants or looking for investors into your company, you'll be required to have one of these on hand anyway. If upkept regularly it also keeps your business priorities aligned.
I had these from the beginning, but I should mention that you should always work on CONTRACT. Never work without one. GAG, AIGA, Creative Latitude and other great resources have a myriad of extremely useful templates for you to download and tailor to your needs.
Establish the proper business accounts. That includes keeping the books. If you work from home a separate phone line and address (P.O. Box for example) dedicated to your business is advisable. You don't want every Tom, Dick and Jane you give your business card to know where you live. Keep work and home separate even if they reside in the same space. Plus, by establishing a good business proposal you'll have an understanding of your overhead and the capital you'll need to maintain your day to day expenses. I didn't have a business proposal so I miscalculated my overhead capital which led to problems further down the line.
It's been said that one should ideally have about three years of overhead capital saved up. Some have done well with a year, some with less than that. What you need to calculate is, when you hit those valleys, and they will come, do you have enough reserves saved up to weather the storm until you reach your peak again? This includes your overhead for your marketing campaigns, as well as business cards and any other direct mail or physical promotional pieces you regularly replenish. So even athough you might do well enough with a few months of reserves, having about three years of overhead saved in the coffers creates a more comfortable safety net.
Even though I had the presence of mind to have one from the onset, now's a good time to add that it pays to bank on a good accountant who is familiar with all the latest tax laws. Also choose one who is available anytime throughout the year—accountants aren't only good for tax time. Turbo Tax may appear to save you a few bucks in the beginning, but you may unwittingly end up losing far more than that in the long run in unclaimed or poorly returned taxes. Invest in an accountant for the same reasons a business client should invest in your professional services over some inexpensive logo making software.
I didn't study or establish my market. A client was a client was a client to me. Not so. Clients and their businesses have different needs and thus they spend accordingly. A smaller business won't invest in design and advertising as a more modest or commercial or trade oriented business who might have a clearer appreciation or need for the power of advertising towards their market.
Also, take care not put all your eggs in one proverbial basket. I had a few really good clients—all downtown. What do you think happened after 9/11? They all were either gone or restructured or moved and I was eventually factored out of the equation as a result. And because I didn't have a formal studio near GZ I couldn't collect on any of the restitution that some of the other businesses were receiving. I was just plain screwed. And who could've honestly seen that coming? But if I had structured my business properly and planned for the future instead of living in the success of the moment, the losses I incurred would've probably been more tolerable. There were other factors as well that came into play, all at just the right time to contribute to my inevitable downfall. Kismet is something else. Recovery has been one long haul. Perhaps if my foresight were as keen as my hindsight, it might not have been so. Learn from this if anything else, kiddies.
I knew next to NOTHING of effective sales techniques. I simply lacked the confidence to apply them with success. Learn how to negotiate. Buy How To sales books. Take courses. I can't stress it enough. Designers I've found seem to lack in spades in this area for the same reasons as I. I enjoyed a good deal of word of mouth referrals and that requires no salesmanship at all by comparison. Learn to network. When the well ran low I had no networking base established and had to start over. Creatives will either accept whatever offer is on the table or walk away. A good salesman will find a way to negotiate a good deal and still somehow come out on top.
I didn't promote myself. That pretty much speaks for itself. Because I enjoyed word of mouth referrals I didn't need to do much in that area. When the well ran low I was feeling the hurt. So I essentially lived for the moment and didn't plan ahead for the future, lesson learned. By far the best and easiest form of promotions are joining the design competition circuit—that is, entering work already completed for recognized industry annuals like HOW, Print, CA, Rockport, etc. The added bonus of this is if you are selected you can add "award winning designer" to your name and a list of accolades to your site.
Most important, know the value of what you're worth. When I started out many of my blunders came by way of what I believed were discounted rates which I believed would attract more business. Not so. All I did was sell myself short. Joining design forums like About GD, HOW, About DTP, the GDF to name a few was the best decision I ever made. I learned a great deal business wise there, mostly how I don't have to sell my left arm to make a good living. This is another reason why I am oh so against spec work of any kind. That is NOT good business. It's NO business. Who works for free? I found out first hand that giving away services in the hopes that the exposure will land me some "real" business only revealed my own naivete and lack of professional experience. And it rarely works. Not good odds to bank on.
That's sort of the long and short of it. There's a LOT of work involved and no measure of guaranteed success even if you manage to avoid all of my pitfalls (there's still the little issue of supply, demand and salary demands of your region, global competition, "life," etc.) but hopefully it will lead to less startup upchucks than mine.
For starters, I didn't see myself as a business. I saw myself as a freelance designer. There is a difference. How you see yourself is very important. I never thought of myself as a business entrepreneur in the formal sense so I never distinguished that definable distinction. You must see yourself as a businessman/woman first, designer second.
Next I didn't draft a business plan. You can google online for any number of sample plans but in a nutshell, a business plan is a descriptive outline that details your operating costs, marketing objectives, mission statement, capital, overhead and other projections. If you want to apply for any government, private grants or looking for investors into your company, you'll be required to have one of these on hand anyway. If upkept regularly it also keeps your business priorities aligned.
I had these from the beginning, but I should mention that you should always work on CONTRACT. Never work without one. GAG, AIGA, Creative Latitude and other great resources have a myriad of extremely useful templates for you to download and tailor to your needs.
Establish the proper business accounts. That includes keeping the books. If you work from home a separate phone line and address (P.O. Box for example) dedicated to your business is advisable. You don't want every Tom, Dick and Jane you give your business card to know where you live. Keep work and home separate even if they reside in the same space. Plus, by establishing a good business proposal you'll have an understanding of your overhead and the capital you'll need to maintain your day to day expenses. I didn't have a business proposal so I miscalculated my overhead capital which led to problems further down the line.
It's been said that one should ideally have about three years of overhead capital saved up. Some have done well with a year, some with less than that. What you need to calculate is, when you hit those valleys, and they will come, do you have enough reserves saved up to weather the storm until you reach your peak again? This includes your overhead for your marketing campaigns, as well as business cards and any other direct mail or physical promotional pieces you regularly replenish. So even athough you might do well enough with a few months of reserves, having about three years of overhead saved in the coffers creates a more comfortable safety net.
Even though I had the presence of mind to have one from the onset, now's a good time to add that it pays to bank on a good accountant who is familiar with all the latest tax laws. Also choose one who is available anytime throughout the year—accountants aren't only good for tax time. Turbo Tax may appear to save you a few bucks in the beginning, but you may unwittingly end up losing far more than that in the long run in unclaimed or poorly returned taxes. Invest in an accountant for the same reasons a business client should invest in your professional services over some inexpensive logo making software.
I didn't study or establish my market. A client was a client was a client to me. Not so. Clients and their businesses have different needs and thus they spend accordingly. A smaller business won't invest in design and advertising as a more modest or commercial or trade oriented business who might have a clearer appreciation or need for the power of advertising towards their market.
Also, take care not put all your eggs in one proverbial basket. I had a few really good clients—all downtown. What do you think happened after 9/11? They all were either gone or restructured or moved and I was eventually factored out of the equation as a result. And because I didn't have a formal studio near GZ I couldn't collect on any of the restitution that some of the other businesses were receiving. I was just plain screwed. And who could've honestly seen that coming? But if I had structured my business properly and planned for the future instead of living in the success of the moment, the losses I incurred would've probably been more tolerable. There were other factors as well that came into play, all at just the right time to contribute to my inevitable downfall. Kismet is something else. Recovery has been one long haul. Perhaps if my foresight were as keen as my hindsight, it might not have been so. Learn from this if anything else, kiddies.
I knew next to NOTHING of effective sales techniques. I simply lacked the confidence to apply them with success. Learn how to negotiate. Buy How To sales books. Take courses. I can't stress it enough. Designers I've found seem to lack in spades in this area for the same reasons as I. I enjoyed a good deal of word of mouth referrals and that requires no salesmanship at all by comparison. Learn to network. When the well ran low I had no networking base established and had to start over. Creatives will either accept whatever offer is on the table or walk away. A good salesman will find a way to negotiate a good deal and still somehow come out on top.
I didn't promote myself. That pretty much speaks for itself. Because I enjoyed word of mouth referrals I didn't need to do much in that area. When the well ran low I was feeling the hurt. So I essentially lived for the moment and didn't plan ahead for the future, lesson learned. By far the best and easiest form of promotions are joining the design competition circuit—that is, entering work already completed for recognized industry annuals like HOW, Print, CA, Rockport, etc. The added bonus of this is if you are selected you can add "award winning designer" to your name and a list of accolades to your site.
Most important, know the value of what you're worth. When I started out many of my blunders came by way of what I believed were discounted rates which I believed would attract more business. Not so. All I did was sell myself short. Joining design forums like About GD, HOW, About DTP, the GDF to name a few was the best decision I ever made. I learned a great deal business wise there, mostly how I don't have to sell my left arm to make a good living. This is another reason why I am oh so against spec work of any kind. That is NOT good business. It's NO business. Who works for free? I found out first hand that giving away services in the hopes that the exposure will land me some "real" business only revealed my own naivete and lack of professional experience. And it rarely works. Not good odds to bank on.
That's sort of the long and short of it. There's a LOT of work involved and no measure of guaranteed success even if you manage to avoid all of my pitfalls (there's still the little issue of supply, demand and salary demands of your region, global competition, "life," etc.) but hopefully it will lead to less startup upchucks than mine.
1 comment:
Very helpful post. Absolutely bookmarked.
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