How NOT to run your own design business

[jlknauff]

As individuals, we are fortunate to have a low barrier to entry in our industry when working freelance or even starting our own company. Unlike a company such as a trucking company or a manufacturing company which may require several hundred thousand dollars if not more, you can often start a design company such as a web design or graphic design firm, with very little money. Unfortunately, it's easy to run this type of business the wrong way - especially when you’re new to running your own company. On the other hand, with a little knowledge, you can avoid a lot of the more common mistakes and increase your chances of still being in business this time next year.



1. Never work on spec. While it may seem tempting, especially when you don't have many (or any) clients yet, it's a quick way to paint yourself into a corner. When you take on a project on spec, you tie up one of your most valuable resources - your time, which you could be using to find real clients that understand the value of your services. Another problem with spec work that many new designers are blindsided by is the fact that even if you agree on a price before hand, many of the people that will ask you to work on spec are also the same people that are completely comfortable asking you to accept a lower price once you've completed the work.

2. Don't whore yourself out. You should never be afraid to walk away from a project just because you need the money. Now, of course there will probably be some amount of flexibility in your pricing until you establish a reputation for your company, but you ensure that you charge a reasonable price, which will depend on your skills, experience, and location.


3. Present yourself as a professional. You may have an appearance that's well outside of how corporate America would expect you to look, but you still need to conduct yourself in a professional manner. Be polite. Speak clearly and avoid slang. If your sentences are peppered with words such as "like" "dude" "man" or "dawg" you should practice avoiding them in business conversations and correspondence.

4. Present an image of success. People want to do business with other successful people. You don't have to tell anyone that the only employees in your company are you and your buddy, but on the same note, you shouldn't exaggerate details either.


5. Network with other business owners. When you first start out, you probably won't have the budget for direct mail or television advertising, and even if you have a solid understanding of SEO it will take six months or more to see measurable results from your own SEO campaign. When you network though, you get face to face with other business owners and can forge some outstanding business relationships.


6. Keep accurate financial records. This helps you better manage cash flow and save money at tax season.

7. Always work with a contract. If you don't, it's very easy for a client to walk away and you options are a bit limited since you probably don't have the time or money to push a lawsuit,

8. Always collect a deposit before beginning any work. Even with a contract in place, a client can walk away if their own business goes south and all you have is a potential lawsuit. The less time you spend in the courthouse, the more time you can spend making your new company more successful.


Ok...it midnight & I'm tired, so that all you get for now. I'll get back on here and add/edit this post over the weekend.

[Jriddim]

thanks very informative!!!.........want more more!!!

[greyghost]

Very good first post for this new section!

I'm sure I'll add some of my sage advice later too. But not at 1:15 in the morning.

[budafist]

I'm trying to run a business, and while I demand a deposit before beginning, my bf who is the other half of the business doesn't do this. He spends too much time and practically works for free. He thinks that it is worth it if the clients tell all his friends how great he is, but all they do is pay him too little too. But what can you do?

[DC1]

clients tell all his friends how great he is

Great idea. One Question: How much actual, paying, business has this gotten? Alternative: Get a list of contacts you can call right now, using their name. People who do hire and are or soon will be in the market. These are detailed, quality leads. Second, get an articulate, specific, benefit-laden testimonial.

If they haven't the time or ability to provide such a testimonial, don't trust they'll somehow change in referral situations. Secondly, what exactly are they saying? More likely they're ending it with "...and the moron did it for free."

What makes a better story? The great graphic design. Or how your "great negotiating skills" drove down the price to zero/next to nothing? How often do you yourself talk about the great bargain you got at a store or garage sale, or whatever. You think this isn't going to make it into the story they're telling all their friends?

There's a business book, "Beware the Naked Man Who Offers You His Shirt." If they can't pay, it's the likely symptom of not having the work-producing networks which make word-of-mouth beneficial. And if they won't pay, the word of mouth is going to reflect their estimation the work isn't worth paying for as well. It is far from likely, if they couldn't be bothered to pay, they'll somehow be bothered to refer you.

One individual asked for a free package design for their beer product. So I said fine. Send me some proof you have an advertising budget, inventory, contracted distributors. Just the bare minimum required as some sketchy evidence of a going concern. Never heard from them again.

[jlknauff]

If they can't pay, it's the likely symptom of not having the work-producing networks which make word-of-mouth beneficial. And if they won't pay, the word of mouth is going to reflect their estimation the work isn't worth paying for as well. It is far from likely, if they couldn't be bothered to pay, they'll somehow be bothered to refer you.Interesting point. I've never thought of that before (probably because I don't usually believe the BS that most people tell me) but I believe it's 100% correct.

[budafist]

I guess it's because he HAS done work in the past for free that he is willing to do stuff for minimal pay. While we can't discuss pricing on here, let's just say he charges these guys around 30% what I would feel comfortable charging.

I'm not going to argue with him about this though, he's my bf and I love him and if he enjoys doing these jobs for a pittance, then he can do them all he likes. However, he knows that I have contracts that he can send out and I can negotiate on his behalf, he just chooses not to. I think maybe this is the way with self taught designers/artists. They just don't realise what they are worth.

[Ned]

2. Don't whore yourself out.

No, that was my last job. I got into design so I could stop doing that. :D

[budafist]

I think I got into design so I could!

[Broacher]

>>He thinks that it is worth it if the clients tell all his friends how great he is, but all they do is pay him too little too. But what can you do?<<

He thinks it's worth it... to be known as someone who will work for less pay than is fair? Yeah, I can see how that kind of free publicity would move your career. In what direction, is another question. Design as a wholesale commodity... when it works as a business, it's never for the benefit of the creative.

>>he's my bf and I love him and if he enjoys doing these jobs for a pittance, then he can do them all he likes<<

None of my business, but lots of yours: he's your business partner? Do you realize what this will do for your half of the business, long-term? This might be a recipe for more than just business failure.

Unless you're really wealthy to begin with, and giving away money (by undercutting) is just a fun thing to do. In which case, I have some other, more fun suggestions on how to achieve this.

[budafist]

Let's just say we're 2 freelancers working under the same name. We have day jobs - when he comes home, he used to draw his own characters for fun. Now he comes home he draws for other people. The only 2 differences is that he doesn't draw his own characters as such anymore and he gets a little money for it. When he's so busy he has to choose which projects to take, he can charge more. That's what he thinks...

[jlknauff]

And with that mindset, that's exactly how it will stay. Until he can treat it as a legitimate business, you're stuck with the current size, revenue and type of clients.

[greyghost]

Well, here is what I do:
I've stopped "whoring" myself out as much as I can. I no longer offer discounts. I have a sign over my desk that has my base prices, and those prices stand. No matter what the sob story is.

I also have three contracts. I have the short, tiny little baby contract for the client that just wants business cards. I see no reason to throw the 8-page AIGA contract at them. I have a three-page contract that I created as a smaller version of the AIGA contract, and then I have MY adaptation of the big contract - where I have ADDED to it to cover me butt with the BIG clients.

I feel you have to have base prices. They can't go up and down, you can't look hungry for work ever. Ever. You have to project the image of being so busy, so successful, that they know they are dealing with a great artist. That in turn justifies your prices - because it makes it clear you are worth what you are asking because other people are willing to pay it to get your high-quality work.

[JustAGuy]

So true greyghost. Continuing the theme: Once you start "whoring" yourself, you can't turn into a "pimp".

[JustAGuy]

I did an internship at a company where they would take the assignment for x Hours an y euro's. Sometimes they knew upfront thast the number of hours was too small, but they did it anyway, because they didn't want to lower their hourly rate.

I also heard from a lot of people that they take you a lot more serious if you ask a reasonable price (market-average or something) then ask a 1/3.

[aid4design]

3. Present yourself as a professional. You may have an appearance that's well outside of how corporate America would expect you to look, but you still need to conduct yourself in a professional manner. Be polite. Speak clearly and avoid slang. If your sentences are peppered with words such as "like" "dude" "man" or "dawg" you should practice avoiding them in business conversations and correspondence.


Aww but dude. This just be how we do yo. Come on dawg, the way you put your rap down cant possibly affect your image, or price. Can it? ;)


Sorry, had to. This is a great topic by the way. I cant believe I missed that this section got started until today.. I will be here, I assure you. Running your own business is not easy and we all need to lean on each others experience and knowledge every now and again. :D


oh and here's my addition to the list..

When going to meet a new client, do not dress for the job you have, dress for the job you want to have. Yes a suit may be too corporate, but jeans and a wife beater will just make you look like a redneck. (not that there's anything wrong with that.)

[greyghost]

My addition to the list:

Use proper grammar and sentence structure when writing emails to clients. Use full sentences, capitalize where needed, punctuation. Look intelligent and professional.

And above all, always keep your cool. We artists can take things personally, and we shouldn't. Roll it off. You know it could look better done your way, but the bottom line is making the client happy. Right?

[rainbow2bryte]

great tips guys-

just wanted to say THANKS!

[rainbow2bryte]

I also have three contracts. I have the short, tiny little baby contract for the client that just wants business cards. I see no reason to throw the 8-page AIGA contract at them. I have a three-page contract that I created as a smaller version of the AIGA contract, and then I have MY adaptation of the big contract - where I have ADDED to it to cover me butt with the BIG clients.


hope this is cool, i'm asking a Q in relation to your post-
is the AIGA contract a standard others use, or are you supposed to adapt your own or both??? This is all new to me and a bit overwhelming.
coo, thanks!