Week 02 - Business models, studios, estimating, invoicing and budgets

Weekly Learning Objectives

You will be working towards achieving the following learning outcomes detailed in Brief 1:

LO1: Research – select and deploy appropriate research methodologies to inform the needs within a project.
LO4: Distil – position a creative strategic insight that has been distilled and refined through an informed investigation.
LO9: Communicate – communicate effectively in a range of contexts and situations to specialist and non-specialist audiences.
L10: Manage – demonstrate applied planning and organisational skills to support self-directed project work and inform ongoing professional development needs.


Studio and Entrepreneurship

Business foundations - Week 2 lectures
Test and rehearse

In this lecture, we investigate the classic business models utilised by entrepreneurs and how these support growth from start-up, sole traders through to global PLCs.

AGENCY, COLLECTIVE, STUDIO, FREELANCER


Lecture 1 - The Business of Design - Looking at different models for design practice

ustwo / Adventure - Agency

Ustwo is a digital product studio situated in the heart of Shoreditch. , the Adventure arm, is run by Neef their practice and he creates a lot of design, discovery and software development for digital products.

They have also diversified and started launching some of their products and are renowned for their games like Monument Alley and DICE, which is a ticketing platform for concerts and gigs but ultimately all focused around a design-centred mindset.

They’ve also launched a games team and an investment arm as two separate businesses alongside the main studio group.

Company structure
There is two parts to the business. The Adventure Arm/Games side of the business and the studio business which is run as an agency.
The core team is designers, developers, and researchers. They also have a coach who project manage the team and ensures that the approach goes smoothly. They have also opened Malmo studio.


Lisa Armstrong, Lovers - Collective

A creative supergroup, design collective based in London working internationally, with an arm in New York. Responsible for the successful coordination and delivery of all client projects, which span rebrands to films, books, website, campaigns

Background and company structure
Lovers was set up by Alex Ostrowski, because he noticed the best creative talent was leaving those agencies to go solo because they were disillusioned by the mundane everyday projects and wanted to only work on projects that they really wanted to. They have a huge network of freelance Lovers, which come together on a project-by-project basis, depending on the skill set needed or the challenge at hand. This network includes designers, art directors, strategists, filmmakers, illustrators, and artists.

Client Base
They kick start ideas and work with a number of clients such as Tate, and the British Film Institute and we’re also helping international clients like Google and Greenpeace.

Lovers Project tracker

Lovers have introduced their own project tracker which has been specifically designed to keep the project online with the brief.

What I really loved is it also monitors team and client happiness. I love this idea that they are checking up on their staff welfare. I’m sure happy staff = happy job satisfaction.


Studio Moross - studio

Studio Moross is a design studio based in Stockwell in South London. Founder Kate discusses how the company is structured, how employment works and some of the goals that they have in the running of their practice. The main sectors they work in are predominantly design but are split into two departments.
The Design Department - which is design, art direction, branding and illustration
The Video Department - which is more motion design, live show design, broadcast design, music videos, adverts, and social media content

Company structure
Kate runs the company as its Creative Director. She’s assisted by a project manager, two designers, an illustrator, an animator, and three motion designers.
They also have a permanent intern (a graduate on placement) and a work experience position which is placements are for two weeks for a young person who needs to gain some industry experience.

Supporting staff
An accountant, a financial adviser (who advises on the company decisions and investments). An HR adviser to help with employment contracts. We have a UK and US agent for jobs that are more public facing, jobs that maybe have my name on them. They also have an agent/business partner in Japan, an IP lawyer and a team of freelancers for specific projects.

The business structure
They operate a 35-hour week. They discourage overtime and get people to leave the studio at 6 pm. Any overtime is paid, (this has to be approved by management first).

They pay and buy lunch for everyone, every day, and sit together to eat.

They have a bonus scheme where the staff share a percentage of company profits, regular pay reviews, (to match the industry equivalents) and staff can get extra holiday and other benefits.

Fee structure - The fee structure into four simple groups

  1. Pro rata jobs - where every hour or minute a staff member works, they get paid. That could rate between £225 an hour, which is what I charge, to £60 an hour, which we might charge out for an artwork or an intern, it depends on the member of the staff and the skill set. This is calculated by the salary of that staff member, the overheads and costs it costs to run the studio, to keep everyone happy and warm and fed, and then a profit margin.

  2. Fixed-rate jobs - Jobs where we would make a budget for the job, for the client, based on our experience of previous jobs, and we have to be as accurate as possible 4 to ensure that we don’t go over budget, or under budget in case we are inaccurately charging. But we use our pro rata rate, so the rates per person per hour to calculate the cost of the job. Then we have

  3. Silly money jobs - These are big brand jobs that I might work on or put my name to, where the usage or exposure is perhaps more than the service of the time it takes to do the work itself. The client has to pay more for that time, and then also more to use that work, say for example worldwide for a whole year. It could be a job where our name, or my name, is associated with that brand so I’m giving them a bit of my intellectual property if you like, to be associated.

  4. Non-profit jobs - Not for financial gain. These are charity jobs, swaps, trades, and favours. Where a new business, charity or friend might need our support we want to support or might be a musician or an artist that they think has potential and we may want to build a relationship with them in the future.

Timeline and process of a project

Kate explains that approx 80% of our clients are repeat business, from people that have enjoyed working with them and have commissioned them again.
When a project comes in, they ask a lot of questions at the early stage. These include budget, schedule, brief, how long the work is going to be used for, where it’s going to be used? They may rewrite the brief or negotiate the budget. This might take a few cycles to get this approved. Then they exchange paperwork and set up our first invoice to be paid. (THIS IS A VERY IMPORTANT NOTE TO REMEMBER!) They then have an internal meeting and briefing and will assemble the job based on skills and experience in the team.

Before the job is presented to the client they talk about their work and share it publicly with the other team members. Then it gets sent to the client and get client feedback.
They have a mini wrap-up and discuss how it went financially, and emotionally, between the team.


Theo Inglis - Freelancer

Theo is an individual, independent designer and writer running my one-person studio. His background is from commercial, packaging, and branding. He graduated in 2012 and spent three years working as a designer creating branding and packaging of FMCG, (fast moving consumer goods), for leading packaging brands like Unilever.

He talks about his responsibilities which are the same as a small business studio where he still has to - find new business, sort accounts, studio management, production, marketing (promoting yourself) and finance (chase invoices).

He gives an example of his freelance work that he pitched for. Although this project didn’t come off, this lead to an introduction to another opportunity.


References - The Panel

AGENCY UsTwo Adventure: Neef Rehman, Community Manager

COLLECTIVE Lovers: Lisa Armstrong, Creative Producer

STUDIO Studio Moross: Kate Moross, Founder

FREELANCE Theo Inglis, Freelance Designer Writer


Finances - Estimating and budget management & how do I know what to charge?

If I’m being totally honest, this is the bit I am rubbish at. I hate asking people for money, even though I know cashflow it is the core fundamental of running a business. But I also know from watching the lecture material, that you can’t run a successful business on great design alone, you have to back it up by putting professional practices in place.

Where to start?!…

Talis Resource Lists

I visited the AIGA website to see the resources available. While I already run a business, which started off as my freelancing and I am now a Limited company (but still just me run as a consultancy), I haven’t really implemented ‘best practices’.

This website has resources that are tailored to creative services for small businesses hopefully I can plan, manage, and operate my practice more effectively.

Key points for ‘best practices for my business, to implement

  • Standard Form of Agreement for Design Services This is a great contract which outlines standard agreement of the design services and what this enables and basic terms and conditions. Although this is 70 pages I need to be able to crunch this down into a 2pp/4pp document.

    Pros - looks more professional, ability to justify costs, legal safety net
    Cons - Times to set up, do I need to get a lawyer involved (copyright), is it worth doing for smaller jobs, will clients read it (and if they don’t does that matter?!)

  • The process of setting fees - This is where I need to consider my business expenses and how to justify them. Enabling this by, target market, competitive landscape, the value you offer, and industry standards. Conducting market research, analysing costs, and reviewing the rates charged by other design companies can help inform my fee structure and set my business on the right path (plus 20% profit). Do I price hourly, daily or by project?

    Pros - Properly setting up my fees can ensure I’m generating enough revenue to cover operational costs. Then I can see if I can afford staff, pay myself a profit share or invest in new machinery, skillset. Fee structure and being transparent to clients may help with their budgets and their growth, enabling a longer working relationship and growth. This could also enhance my reputation and attract new clients.
    Cons - A price too high may put clients off, too low may attract the wrong type of client, and local competitors might see what I charge and undercut. Don’t charge hourly - may attract the wrong type of business.

  • Project estimating “The difference between a good estimate and a bad estimate is the difference between profit and loss.”
    Making sure all projects are broken down into phases. These can include:
    Preproduction, briefing, research, concept development, design development, and early client input. Cover how many revisions (x2 sets) an inital timeline and what the client should expect on delivery - print, logos packaged etc graphics supplied and in what format.

    Pros - By setting out terms and conditions in estimating you can make sure the project runs smoothly, looks professional, runs on time, when payment is due (deposit and final payment) sending deliverables and what to expect.

    Cons - Need to make sure WE deliver under our own terms.

Process of setting fees - reminder to cover

  1. To stay in business keep overheads down (get clients before fancy premises)

  2. Make sure to cover yourself for complex projects - get a commitment in writing, deposit up front, consider a timeframe so the project doesn’t overrun, and then breakdown and detail caveats to cover yourself for unseen stipulations where you can add additional costs. (Re-touching images, additional revisions etc).

  3. Know your value - check market conditions so you are charging enough!


References:

Talis resources:
The process of setting fees | Eva Domain Bruck, available at
https://content.talisaspire.com/falmouth/bundles/5cd424db69df505bd5634ef4

How To Run A Creative Business: In-depth breakdown w/ Melinda Livsey | The Futur - Chris Do
https://www.youtube.com/watch?v=D8BN2YSyYkg

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Week 03 - Legal and IP Frameworks

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Week 01 - Planning, strategy and Management