Articles by Day: May 4, 2010
What does it take to go from freelancing to building a design firm like Go Media?
Do You Really Want to be a Studio?
Before you embark on your journey to build a design studio, you should stop and ask yourself an important question: “Do I really want the responsibility of a full studio (firm) rather than staying a small 1-3 man shop?” In your mind you may be assuming that larger = better. But this is definitely not always the case.
For instance, you may assume that more employees will equal greater profitability. But what happens when you’re slow? Payroll doesn’t stop just because your work load slows down. Also, if you’re the boss – how do you think your daily job will change when you have 10-15 employees? Will you even have time to design anymore? Or will you spend most of your days in meetings, corresponding and managing?
And what happens when you have a bad employee (they’re not all roses.) Are you prepared to deal with, and possibly fire trouble employees? Talk to other small business owners about their day to day struggles. Make a budget – what’s the overhead of employing 10 people at a reasonable wage?
I’m not saying you shouldn’t grow your freelance shop into a studio, obviously, that’s what I did! But I also had a background in management and a real passion for business. And even feeling like I was WELL equipped to build a firm, it’s been a very long and difficult journey.
So before you go any further, just stop and take a moment to consider all the pros and cons of growing your solo operation into a studio.
Ok, so assuming that you haven’t been scared off by all the negative stuff, why exactly would you want to hire a bunch of designers and build a studio? Go Media’s main impetus was that we wanted to share our daily lives with other artists that would inspire and push us. There is just something a lot more fun about a design collective than being a one-man-shop.
I was completely on my own for several years and found it completely depressing. Also, there is greater efficiency when you have job specialization. And, assuming you ARE very busy – there IS the opportunity to make more money. One really cool thing that I’ve discovered about Go Media is that crazy amazing things happen that I never would have ever dreamed of. Those life experiences are priceless. Without my staff to dream them up and execute on them, I never would have experienced them. I’m very appreciative of the different perspectives, ideas, and energies they bring to the company.
Money Money Money
What steps need to be taken once you’ve decided to grow your business into a studio? First and foremost you need the money. And I don’t suggest taking out loans or hiring with the anticipation of getting more work. Hiring new staff should only take place when you’re so slammed with work that you need them – desperately. That and you should be relatively sure that the work load isn’t going to drop off suddenly. How many new projects are lined up for the near future? If you’re unsure about your workload for the next few months, I suggest outsourcing your overflow until you’re sure you will have enough work for your new employees.
It’s Not All About Design
If you don’t already have a good lawyer, accountant, and payroll service, you’re going to want to find them and form good relationships with them. Your lawyer and accountant are extremely important advisors for your business. You should feel very comfortable and confident in your lawyer and accountant. They should feel like trusted family friends. Don’t just pick one from a list on Google. If you have friends or family with good contacts, meet them first. And then meet a few more for good measure. Basically, you are interviewing the people that will have a major impact on how you structure and run your growing company. I hired and fired several lawyers and accountants before I found the ones that I now trust.
“But Bill,” you ask “what if I can’t afford them yet? Lawyers and accountants are expensive!” Well, if you can’t afford them – you’re not ready to build a studio! I suggest going back to evaluate your pricing, business systems, how you find new work, etc. It’s called organic growth! You only grow when you can afford all the things that go along with growing.
Artificial growth is when you go take out loans and spend money before you’ve earned it. Basically, you’d be gambling on the fact that even though you cannot afford lawyers and accountants NOW, you’re going to get a loan, hire them anyway, and hopefully, before the loan is due you’ll figure out how to make more money. Hhmmm… sounds risky to me. I suggest focusing on making the money first, and growing second.
Suit & Tie Stuff
Once you have a lawyer and accountant that you trust, you should sit down with each of them and discuss your planned growth. They will advise you on how to structure your business, legally and financially. Typically your accountant will have a payroll service that he trusts and works with. Go Media is set up as an S-Corporation and we are on a cash basis accounting system since we don’t have any inventory. These are pretty typical for a design firm.
Along the way there will be a thousand little problems that will surely make you question whether or not you’ve made the right decision to grow your solo design operation into a full blown studio. At the end of the day, you just have to battle through them like anything else in life. One thing that was a major issue that I hadn’t really accounted for was the amount of time it takes to manage.
The time I could spend designing was reduced to virtually nothing the first year that we expanded the staff to over 10 people. Even with a sales/project manager and a full time accountant/customer service rep – I was still inundated with questions, problems, and correspondence to deal with. As I was the primary sales person, I also had to spend significantly more time selling now that I had 8 people to supply with work instead of just 3.
Fortunately, the longer you keep a group of employees together the better they become. They learn the systems, improve at their jobs, get better at working together and require less and less management.
If I did it all over again there isn’t too much I would change. Whatever mistakes I made were good learning tools. If I had to give advice to others making that leap in growth, I think I would just suggest that you take it slow. Don’t be in a huge rush. Take it in steps a little smaller than what you want. You’ll benefit from holding yourself back – I promise!
The Next Step
So, what are the next steps for Go Media? Right now we’re feeling really comfortable as a 12 person firm. We still have some lessons to learn and some systems to refine before we’re ready for our next growth spurt. We’re working really hard to expand our circle of influence and dialing in our business model. There is a lot of growth ahead for Go Media, but right now it’s the internal growth that we’re focused on. We still need to get smarter and more efficient.