Magazines like Fast Company or Inc. glamorize the adventure of running a business, but I think it’s a pain in the ass. It is in direct opposition to the creative process of design. Many designers are happy with a steady challenging job in a work environment that they enjoy, where they can avoid the steady drip-drip-drip of ensuring the lights stay on. I’ve always set my sights on growing my studio while still being a creative director who can spend most of my time creatively directing.
It wasn’t too hard in the beginning. Being freelance or a solo employee working from home makes the numbers pretty obvious—you figure out what you need to live. Adding employees, an actual office space, equipment, finding new clients, and keeping the monthly wheels of business turning, means more and more of the day is spent doing paperwork.
Over time, I developed these working ideas to make running a design studio easier, generate more revenue with less supervision, and avoid micromanaging accounts.
Spend money to make money
Paying rent never made much sense to me. Comparing a month’s rent to a month’s mortgage made a case for ownership. When we moved from our first rented studio space into the townhouse on Kalorama, the monthly difference was only $300, and we tripled our workspace. Owning the townhouse and later the office building to house the studio has resulted in security during economic crises (after all, we’re the landlord) and generated millions in rent and appreciation. Even if AURAS Design isn’t here, the building will still be a great asset.
The same goes for bringing services in-house. While other studios spent money sending out for photostats, typography, color separations, and photography, we learned how to do it ourselves and bought the equipment to do it right. Simple cost/benefit analysis proved that it added to our bottom line when we absorbed another vendor product. Turning an outside expense into an internal billable product isn’t just about making money.
Producing in-house typesetting, transparency scanning, and film output generated hundreds of thousands in new revenue while adding higher quality and shorter production time without demanding dedicated staff. Learning to create video, motion graphics, and websites added to our capabilities without requiring specialized equipment. Building out a small conference space that doubled as a photography studio required equipment that paid for itself the first time we held a seminar or photoshoot.
Don’t race to the bottom
There’s never been a way to gauge what a project is worth when bidding for design. The client is usually close-lipped about their budget, and it’s rare to see a competing proposal even after the winner is selected, even if you get the job (and I’ve tried!).
Being the cheapest is seldom the deciding factor. There are so many unknown variables that it is better to write a proposal based on our capability and the scope of the project than to think a low bid is the answer.
When we make a proposal, we use a generic hourly rate used for guesstimating. We arrived at the figure by adding salaries and overhead and then doubling it. We commit to a fee that guarantees everything is included. It makes proposals much easier to bid, and there is less drama when things become difficult because we think it’s our job to control the process.
If you really, really want to get a project, go ahead and bid low. Odds are it won’t make any difference. We have offered to do jobs pro bono and have been rejected. If a new client does select you because your bid was the lowest, expect them to suspect there must be some catch to the deal—they figure you’re either lying about your competence or you’re going to screw them on the final bill. Anyway, they’ll just go hunting for another cheap bid next time.
When work is slow or the economy tanks, it exacerbates the urge to bid low on projects, but there’s no truth to the saying, “We lose a little on each sale, but we make it up in volume.”
The devil is in the details—so avoid the details
Nickel-and-diming—the steady damage from a thousand cuts is the worst possible interaction between a business and a customer. Everyone has a pet peeve about something with an extra charge tacked on at the billing. It ticks me off that some restaurants refill soft drinks for free, and others charge by the glass without letting you know. When companies charge a 3% fee for using a credit card or have hefty “handling & shipping” fees, it ruins the pleasure of the transaction.
It isn’t about unexpected generosity (although the first time you got a big bag full of french fries at Five Guys, it made an impact) but meeting promises. If a job goes out of scope without comment or we underbid, that’s on me. After all, the goal is to build a client relationship, so why piss off someone over a bunch of extra line items?
When we offer a proposal, the scope and deliverables are clearly defined and include all production fees. There are no extra charges for multiple rounds of comps, proofing corrections, rush, or overtime added at the end. Sometimes the job is complicated, and we underestimate the time it takes, but sometimes a job goes very smoothly, and we benefit from that. Specifying a timeline for producing deliverables on our end and getting a prompt response from the client is essential for meeting deadlines. However, even if they are unreliable, we still do whatever it takes to meet their drop-dead date.
The same is true of our billing. We create a single page rate for a recurring publication that includes nearly all pre-press work—only art fees are extra. The clients don’t want to see the sausage being made; they just expect to pay the price that they agreed to. We want to achieve trust with them that keeps them with us.
Always have a run-flat model One thing I learned from working for restaurateurs is that it’s easy to become overly confident about success. That influences all the calculations for estimating a big project. If it’s a big success, no one drills down on the numbers, but if it fails, overestimating revenue and underestimating costs isn’t just a failure—it can mean bankruptcy.
Planning for a run-flat isn’t the worst-case scenario—it’s a red flag that something drastic has to be done, even if it means pulling the plug. Most people plan for success, not for failure. Our launch of [FPO] Magazine did not produce the kind of subscription base we hoped for, but it did meet our run-flat model. We knew we had to stop publishing when the renewal rate was too low. Our worst-case scenario? We would recoup the amount we spent on [FPO] by generating new clients. In the end, we made back most of our expenses—but it took five years.
Risk is just opportunity without information
Nothing is certain, but making rash decisions is the definition of risk. When we bought the building on Georgia Avenue, downtown Silver Spring was in decline. Everybody told us how brave it was to make this move. I always said it wasn’t courageous; it was smart. We worked the numbers for the purchase and renovation and realized that at worst, even if the building was empty except for the third-floor studio, AURAS’ revenue could more than carry the monthly “nut.” Plus, we knew that Montgomery County had made reviving the downtown a priority, and the building was two blocks from the Metro. Location, location, location.
Don’t work for your clients; work with the people who work for them
Our client might be a publisher or an association, but our allegiance is to the people we work with every day. Making them a success makes us a success, and if they are good at what they do, they move on to bigger and better positions—and bring AURAS along with them. It’s a lot less effort to get work from people who want to work with you, and when they bring AURAS along to a new job, they see AURAS as an asset they can provide. There’s an added benefit that the previous company will continue to use our services, expanding our client list.
Making yourself indispensable to the people you work with makes it easier to keep a client in the face of competition that might offer cheaper rates or even free work as an incentive. One publication we have produced for over a decade was offered a free redesign and a lower cost for each issue, but they continued to work with AURAS because they knew that we were worth the cost. The effort to break in a new studio staff or argue over invoices is not worth the hassle when you are satisfied working together.
Micro happiness makes macro happiness
Happy people do better work. Creating a happy environment is about inspiring people to do their best and making them comfortable and secure. Unhappy people don’t focus and always have a chip on their shoulder, making life uncomfortable for fellow workers. Perks and benefits matter to the kind of people that you want around. Paying them a fair salary and having their back is part of that commitment.
It might not be the most brilliant business move, but I have hired people that I want to be around. It doesn’t mean they have no sharp edges, but they contribute to a fun and productive workplace, take responsibility for their assignments, and get to know their clients, spreading happiness all around.
Take everything personally
In You’ve Got Mail, Joe Fox, mega-bookstore owner, has put Kathleen Kelly’s children’s bookstore, The Shop Around the Corner, out of business and tells her, “It wasn’t personal.” She replies, “What’s that supposed to mean? Whatever else anything is, it ought to begin by being personal.”
It takes an emotional effort to keep business personal. It is easy to treat your people like they are just numbers on a spreadsheet, or losing a big project for unknown reasons is just so much water under the bridge. Signing your name to a proposal is making a personal promise to do the best you can and ensuring you’ll take responsibility even if things go south.
I’ve turned down work from companies whose politics or mission I can’t tolerate. Maybe I missed redesigning the NRA’s American Rifleman or NEWSMAX magazine, but I sleep well at night.
AURAS Design has been a small business built on vision, daily work, and personal interactions with staff, vendors, and clients. Making every day a little better for everyone involved should matter.
Over the last four decades, running AURAS has been the most fun when we focused on the work and reserved time for planning for the future. Retaining an excellent staff, keeping clients who value our partnership, and simplifying the bidding and billing process have been the key to making AURAS my happy place.
Whenever the end arrives, a wall of trophies will be thrown away, the furniture and equipment will be sold or junked, and archives will be tossed in the trash. All that will be left is how much you enjoyed the ride and how you affected all the people you met along the way.
