Stay on top

Although it's probably a clich, the following still runs true. Those blessed with flair and creativity often lack the solid business skills necessary to survive in a competitive world. Having a wealth of great ideas won't get you far if you can't manage budgets, billings, wages and deadlines.

The need to grasp all aspects of business life has rarely been more paramount. The annual British Design Innovation valuation survey recently revealed industry turnover fell by 6.5 per cent from £4.6bn in 2005 to £4.3bn in 2006. Results suggested that smaller companies and freelancers might be most affected by the downturn, with employee numbers down overall by 8.4 per cent.

Although these figures may seem discouraging, over half of the companies surveyed are still made up of five or fewer employees, just the type of small, flexible businesses best able to adapt and prosper if the going gets tough. All successful companies share common traits that elevate them above others. You must build your business on hard work and dedication.

The essentials
"For your business to flourish you must appreciate that this is an arena where those who succeed are highly motivated, have a shrewd business sense and aren't afraid of a working all hours," says John McFaul, creative director of McFaul. "Right now it's almost 8pm and I haven't stopped typing since arriving at the studio at 8am. Accounts, emails, quotes, organising meetings, sorting receipts, chasing invoices, badgering agents, backing up, etc. It's important to be pro-active. The work will not come to you. You've got to go and get it."

Like a healthy marriage, you need commitment and communication skills. Knowing what your clients want, understanding briefs and taking on board the thoughts and input of staff are all vital. "Communication is the key to running a tight ship," says Ross Imms of brand identity specialist A-Side Studio. "We meet each morning and discuss schedules for the day, week and month ahead. Any creative hurdles are tackled as a team, with everyone's ideas and opinions considered and discussed."

Knowing your role in the team is important even if smaller staff numbers mean job titles become blurred and everybody mucks in. "There is a certain amount of crossover within any small company, but try to have as defined a role as possible," says Russell Townsend of Birmingham-based studio Clusta. "This will help the studio process and give your clients the most effective use of your time and their budgets.

The delegation and definition of individual roles will naturally become easier as the business grows. "In the early days you're likely to do everything yourself, especially if you start up on your own," says Jim Richardson, managing director of Sumo, a graphic design agency in Newcastle. "If the business is a success then you'll hire other people and slowly hand over responsibility for different parts of the business to other people."

iLovedust's Mark Graham has seen his graphic design studio follow a similar path. "It used to be that we all mucked in as much as possible, but now we have six people we have defined our job roles and responsibilities," he says. "Designing is still a process we all get involved in, but now we assign more work to people-specific skills, such as hand drawing, animation and branding."

"Everyone needs to know what their responsibilities are, otherwise you assume someone else is dealing with it," adds Ian Tatham of graphic design studio TwelveTen. "Someone needs to be overseeing the workflow, which doesn't need to be a specific job as such, especially in a small studio, but if someone who is a busy body and can keep it together takes on that role it can be vital in achieving deadlines etc."

Organisation is key
Once studios start to grow and take on new staff, and hopefully new clients, many will consider appointing a studio manager to oversee proceedings. "Studio managers are essential," says Wire co-founder John Corcoran. "They allow the delivery team to focus on what they do best rather than worrying about everything falling apart around them. We used to do everything in-house, but have found that it is easy to get soft on deadlines when designers are aiming for their own version of perfection. By bringing in a good project manager, you can have five times more projects on the go and become more objective about satisfying the client."

Dawn Foote, managing director of brand communications agency Katapult, has clearly seen the benefits. "Studio managers, project managers, account managers - they are there to ensure projects are delivered on brief, on time and to budget. That's an integral part of any business," she says.

Taking on new staff will also mean a degree of red tape, covering areas such as employment law, which will need to be addressed along with hiring, firing and chasing difficult clients. "We have an office manager with an HR background who deals with appraisals, health and safety, stationery, managing the premises, chasing naughty clients if bills are overdue and the administration side of the accounts," says Foote.

When your business starts to grow you may also need to consider calling in specialists so your time can be spent working in areas more suited to your skills and knowledge. This help may cost you financially, and go against early instincts when every penny made meant survival, but the hours freed up can be invaluable and save you money.

"There comes a point when a good accountant will help take your business to the next level, so shop around to make sure you find one that's going to understand your business and look for creative ways to manage your finances efficiently," says Imms. "We keep our income and expenditure spreadsheets updated, which prevents a mad rush at the end of the year. It's also motivating to know exactly what's in the bank."

"Get a good lawyer, accountant and bank manager - if you can find all three then you are halfway there," Townsend advises. "Outsource anything you are unfamiliar with or could cause problems - tax, leases, health and safety etc. Just because you are creative doesn't mean you can ignore the rules."

If you want to keep your financial affairs in-house, the best advice, Corcoran suggests, is to keep things uncomplicated. "We keep cash-flow simple. Every two weeks we look at how much we have in the bank, how much people owe us and how much we owe others. As soon as we have doubled our six-month cash buffer we invest it in our own projects. It has kept us interested and cash rich for nearly ten years now."

Managing change
If your studio has grown organically from a one-man spare room business, knowing what to charge a client can be tricky. Remember you now have responsibilities beyond just paying yourself a wage, with staff, rent and overheads to consider. You don't want to undersell yourself or your staff, but equally you want to avoid pricing yourself out of the market.

"Any business is primarily a commercial venture, so it's important to work out a pricing structure that suits you and your clients," says Imms. "We have an hourly rate and a day rate - we price each job so that it works for the client's budget and we're always up front about where their money is going. For new clients we draw up a contract outlining what work we are undertaking, payment terms and conditions, which can prove time consuming but is good studio practice. Time sheets are the best way of monitoring flaws in your process; they highlight wasted time and will help when quoting for future jobs."

Managing time is an area sometimes underestimated, and although long hours and tight deadlines are likely, they should not be the norm. "You need to be on top of your hours in the studio, both design and account management, after all as a service company you are selling time," says Townsend. "Be realistic with timescales. Telling your clients you can get something done when you know you can't will not help your reputation. The same goes for fees. If it's not practical to make profit from the job, don't take it on unless you feel it will be a credible and valid addition to your portfolio."

Taking on more work and bigger clients requires forward thinking and a degree of forward planning. "Now our agency is bigger, we plan our workflow so we can handle everything in-house," says Richardson. "If we aren't sure about long-term workflow, we will employ people on short-term contracts. Most of the time these lead to full-time contracts, but it gives us a chance to staff up without worrying about spiralling costs or messing people around."

Carl Rush, creative director of design and art direction agency Crush, is not afraid to call-in help, budgets allowing. "We regularly use freelance illustrators, photographers, technical geeks, writers, visualisers etc if the budget's there," he says. "Never try and do a job that a pro could do better. But if the budget's not there, you may as well go for it!"

For many, the key to keeping clients happy is to keep staff happy and create a balance between business and creativity. "Your staff are the company, so keep them happy as much as possible," says Rush. "Be reasonable, be honest, praise them when they do great work and don't get hung up on personal differences, because we are all different. Have a laugh in the studio, don't take yourself too seriously, make sure you have fun in the work you do, go to the pub, have work nights out, but don't go out with your workmates all the time."

"At Clusta we all socialise together regularly, as opposed to the once-a-year Christmas party," says Townsend. "That way, office issues, clients and creative challenges often get discussed when we're in the pub, which makes for a tight and generally relaxed team."

Part of the balance between business and creativity is creating an office space that enhances both while maximising what little space you might have. "To get a space to work for you, you need to plan it carefully and have plenty of imagination," says Foote. "Katapult has existed from an attic room, converted railway station studios, a Victorian loft and a Georgian house. Each one needed to be planned."

"Our studio is semi chaotic and semi organised," adds Graham. "I prefer to work in a tidy area, but that doesn't go for other members of the studio, so it has to be a balance of the two."

Ultimately, following the advice of these successful studios will go some way to help you achieve success of your own. "We've seen design companies pop up out of nowhere in a flash office with glass desks and expensive chairs and seemingly evaporate," says Imms. "Our business is built on good ideas, careful planning and plenty of patience. It's been a decade of slow, sustainable growth since the seeds of our company were sown. We've learned some harsh lessons along the way, but we're still here enjoying design and the rewards of running a creative studio."

Business Link could provide all the practical advice you need to get your business off the ground

Although there are no clear rules in business, finding your role in a studio, playing to people's strengths and learning to delegate will always reap rewards. Thankfully, tried-and-tested company structures already exist for you to adapt with substantial help and advice available online.

"Business Link provides the information, advice and support you need to start a business and keep it going," says Janice Sandwell, Business Link's enterprise manager. "It helps anyone who is thinking of starting a business to grow, and supports businesses to deal with problems, challenges and opportunities."

Thousands of resources and links are available offering a range of expertise from across the private, public and voluntary support business sectors. "A free online tool takes you through a series of quick questions," Sandwell continues. "It then produces an action plan to help get your business off the ground, listing key tasks - from choosing your business name and deciding the right legal structure to writing a business plan and finding your premises. The organiser also helps you to set target dates for the completion of tasks and save the action plan to revisit when you're ready to move on to the next action."