Design Companies

[sreeves]

Hello,

I am the Creative Director of a design company in Glasgow. We start in 2003 and we ready for the next step.

I just wanted to do some research and ask other design companies. How did you get to that next stage, did you get a loan, did you increase your prices, etc.

Any information would be good.

Cheers
Stephen

[Coding Monkey]

What is the "next step"? You mean employ more people, increase turnover, double profits?

[sreeves]

yes, we want to employ more staff and turnover are biggest in my mind.

[multilingual]

Borrowing money increasing prices cannot really help you to grow unless you have a specific plan of action for the best use of these tactics.

The only obvious step you can take is to get out and find more customers, but that is just a matter of leg-work and networking.

Just out of interest, if you got a loan, what would you spend it on?

JB

[sreeves]

well My biz partner wants to expand the current sales team and add an other developer.

[multilingual]

Ouch. Borrowing money to pay wages. :?

I always feel that business growth should be organic and any new employees should be taken on as and when the business dictates.

If you want to expand the sales team and take on another developer then your income should be high enough to justify it without a loan. (In my opinion)

You will be paying out in wages and also paying back the loan, so it will hit you hard when the loan money runs out. I would suggest that you push your current sales team a bit more or look at other ways to increase the income before borrowing money to employ staff.

Like I said, just my opinion

:)

JB

[sreeves]

No I agree, your on the same page as myself. I am against a loan but I just wanted to check if other companies disagree as well.

[MinuWeb]

one paragraph from the canned reponse I received from Peter Jones (dragons Den)

"You chose Advertising, marketing and sales as where you’d spend the money first; once you have your money, investing it in those things that make the business a viable opportunity is key. Choosing to invest in the advertising, promotion, sales and marketing of the business is a wise move. After all, if people don’t know about your business you aren’t likely to have a business for very long! Sales generate revenue and the ability to support further advertising, promotion, marketing and selling. This, in the early days, is where I would want to see the investment channelled. I’m glad for you that you see the wisdom in this too; selecting areas of the business that can generate income for the business is a smart move indeed."

[uksbc]

i think any way you can have organic growth without raising money through loans is the way to go!

in any kind of design field the market is heavy with competition. i think the way to move to "the next step" is to make yourself stand out and be different in your industry and then market that

the last thing you need when trying to grow is the worry of being saddled with a big debt. it just adds to the pressure of your business which has enough stress and pressure to begin with!

good luck mate

[William Wilson]

Are you maxed out at the moment?

If that's the case hiring additional designers is practical. If on the other hand work is thin on the ground. I suggest using free time to market your business why borrow. If you can't sell your services then select a sales person very carefully otherwise it could be borrowed money down the drain.

[CG Effect]

Pay freelancers, designers can work from home on their own gear saves you having to buy extra gear for new staff. Are there any freelance sales guys out there?

[billhilton]

Definitely, definitely, definitely go the freelance route. What's the point of doing wage slips, NI contributions and the rest when you can pay a freelance a one-off fee and let him handle the rest?

Several 'agencies' I know are exclusively virtual - they have a talented pool of freelance designers, coders, copywriters they call on when work needs doing. The great thing about the virtual agency system, apart from the relative lack of paperwork, is that when things are slack you're not paying loads of people to sit around and scratch their backsides.

The downsides are that you have to find people you trust, and you can't stand there over their shoulder watching them work. You have to be very clear and specific when negotiating payment and project milestones.

Unless you're interested in running a top-end agency - and I'd advise against it, as a lot of them are struggling right now - you should be able to run a large, successful design business from your kitchen table. Invest time and effort in finding good freelancer designers - God knows, there are plenty out there.

I think the creative business has changed. Going down the traditional route - hiring an office, hiring equipment, hiring staff - is going out of the window, and those businesses that have gone down that route are beginning to be priced out of the market by virtual agencies who just don't have the same overheads. As you'll know, the thing that sinks most failed businesses is interrupted cashflow during slack periods or shortly after startup. If you're borrowing money to hire staff, you're going to need quite a high cashflow to service the debt and rent all the space and gear your staff need. Run a virtual operation, and you only need generate enough to pay yourself.

Oh, and don't listen to the bank.