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A business plan itself is part of a larger strategic planning
process. In the previous article, we discussed the first half of
your plan, including the following sections:
Now we're ready to draft the remaining sections of the business
plan. These include the following:
For this part of your plan, identify and research each of your
competitors carefully. What other services out there are similar to
your own? When you pitch a project, who do you come up against? If
you've targeted new clients, identify who they're buying from now.
When you've identified eight to ten competitors, spend time on
their Web sites and use search engines to find news articles about
them. Research how your competitors have structured their firms,
analyze how they promote and price their services, and identify
their major accounts. (For more information about competition,
positioning, and differentiation, see the earlier article on
Keep in mind that you may face a different group of competitors
for each type of service that you provide. It's also important to
note that if you're launching a new company and you're unable to
identify any competitors at all, it's possible that a market does
not exist for the service that you want to offer.
When you've gathered detailed information about your
competitors, evaluate their strengths and weaknesses and compare
them to your own. Be brutally honest. You goal is to be able to
explain what's new or different about your services. In what way
are yours better than those offered by the competition?
When you've identified your key advantage, describe how you'll
be able to sustain it over time. Also think about ways to defend
it. Can you put up barriers of any kind to make it harder for
others to copy your success? For creative firms, this could include
the development and protection of various types of intellectual
property. For example, interaction design firms might register
utility patents for software applications that they've developed.
Another strategy could be to negotiate exclusive relationships with
firms that provide services that are synergistic to your own. It's
smart to build defensibility into your business model whenever
Also, if you have competitive advantages that can be maintained
over time, they may lead to growth opportunities. Think about how
your services might evolve. Could they be augmented in some logical
way? Could they be expanded into a broader and more comprehensive
offer to your clients? If you're interested in increasing the size
of your company, that's a very important objective and it must be
clearly reflected in your planning.
You've already thought about what you want your target mix of
clients and services to be. Now you need to determine the
combination of marketing and sales activities most likely to bring
in the work that you're hoping for. If you've been in business for
a while, you should have a number of loyal client relationships.
This means that a portion of your studio's capacity will be filled
with repeat business. Beyond that, you need to calculate the amount
of new business that must be generated in order to reach your
overall goals. Think about what can be accomplished through general
promotional activities and what will require personal one-on-one
selling. Plan out a promotions program that's as comprehensive as
you can make it. This might include such activities as:
These potential components are discussed in more detail in the
earlier article on marketing. For each activity, plan a realistic
budget and timeline. As a reference for budgeting: in public
companies, it's common for ten percent of total annual expenses to
be related to marketing and sales.
If your promotions program includes direct mail, you might
consider buying mailing lists to identify new prospects. Industry
associations often sell lists of their members. Trade publications
sell lists of their subscribers. Product companies sometimes offer
lists of customers who have submitted warranty registration cards.
There are also research companies that sell lists for most
industries, based on SIC codes. Buying a list can be expensive, so
make sure that it's very targeted and the contact information is as
current as possible. One of the leading providers is:
For your marketing plan to be complete, it must address every
step in the new business development cycle:
In the long run, you're building relationships rather than just
selling. People buy from companies that they like. Clients will
place more trust in you if you demonstrate a solid understanding of
their issues and an ability to partner with them in a way that
makes the most of their internal capabilities. It's smart to view
your company as a portfolio of customers. You want to be a
proactive marketing partner, not simply a creative vendor. Clients
must be able to rely on you for expert insights and brand
stewardship, particularly when there is staff turnover on their
side of the relationship.
The marketing portion of your business plan must end with a list
of action items. For each activity, set a firm deadline and assign
personal responsibility to yourself or another member of your new
business development team. If accountability is not established at
the individual level, it's quite possible that no progress will be
made. Beyond accountability for specific activities, you must also
think about personal accountability for results. Develop metrics to
judge marketing performance. These vary from company to company, so
you need to define what's most important for your own firm. Your
metrics might include such things as market share, account growth,
and client loyalty.
Remember that your marketing plan is not carved in stone. On a
regular basis, you need to fine tune it to make sure that each
action is helping to accomplish your overall goals. This means that
you need to be able to monitor the impact of marketing expenditures
on sales results. You need to apply quantitative and analytical
skills to make sure that your marketing activities are effective
and producing an acceptable return on the time and money being
invested in them. Your project tracking and financial management
system must give you the ability to match data on past marketing
expenditures by creative service or client industry with the
related sales and profit results. This lets you analyze the
profitability of each component so that you can redirect spending
toward opportunities with higher potential.
For this section of your plan, write a general description of
your process for producing client work. That is to say, once you
land new projects, how do you go about completing them and what
controls do you have in place for keeping them on track? There are
two aspects to this—an ongoing quality control system for
maintaining high creative standards, and a project management
system to keep the work on schedule and on budget. Describe the
typical size, budget, and duration of projects. How many projects
can be done simultaneously? Describe your system for coordinating
company-wide workflow and traffic.
If you use a lot of outside resources, explain what you
outsource and why. This is a critical issue because it indicates
how dependent your success will be on others. Most design firms
draw upon a large network of outside services. The quality and
reliability of the relationships that you have with freelancers and
vendors will shape your business. You must be able to effectively
collaborate with synergistic firms and seamlessly tap into their
services on an as-needed basis.
Describe the size and structure of your company's staff. List
the key skill sets needed for your firm to be successful and the
number of people that you currently have in each role. Include a
management profile of yourself. Describe your primary role and the
relevant skills and qualifications that you bring to it.
Staff recruitment, retention, and advancement are critical
issues for your firm. Design is a people business and the quality
of your staff is vital to your success. Low skill levels and high
turnover would make it hard for your firm to produce good work and
provide continuity to client accounts. How will your firm attract
the best and brightest and provide an environment where they can
realize their potential?
Think about how the firm's staffing needs will change over time
as your services evolve. If your plan is for the overall size of
the firm to increase, what opportunities will there be for internal
advancement? Which future positions are most likely to be filled
though outside recruitment? List the sequence of hires and the
anticipated salaries. As creative firms grow, it's common for
design and production staff to be sorted eventually into teams that
provide different services or work with clients in different
industries. This expanding staff structure will require effective
leaders. Senior employees who grow into leadership roles might even
have potential to become the next generation of ownership. It may
seem odd to think of this in the early years, but every business
owner needs to have a clear exit strategy.
One final note about increased staff size: your human resources
plan might include the eventual hire of a new business development
person. This raises important issues about incentive compensation,
the delegation of key responsibilities, and the changing role of
the founder. This transition is discussed in the earlier article on
working with a sales rep.
Think about the physical space, equipment, and software needed
to produce your work. Describe the size and configuration of the
space that your company occupies. Start with the spaces needed for
design and production, then factor in conference rooms, a reception
area, a kitchen, bathrooms, adequate storage, et cetera. Best case,
the space that you occupy should be easy to expand or contract in
response to changing business needs. For design firms, another
important issue is whether or not the location and condition of the
premises project the right image. Do they communicate the right
message about your brand and the quality of the services that you
provide? Now describe the equipment and software that the company
needs for hands-on design and production, and to facilitate
collaboration and knowledge sharing. Don't forget the information
systems that are needed for overall business and financial
The final section of your business plan will consist of detailed
projections of income and expenses for the next three years. These
must reflect all of the assumptions and decisions that you've made
in the preceding pages. If your company is a startup, begin with a
detailed budget of the ramp-up expenses. Then, once you're open for
business, estimate how much time will pass before the company
begins to produce a profit. Together, these indicate how much
startup capital will be needed. Don't underestimate. The standard
advice for an entrepreneur is that launching a new company will
take longer than expected and will require twice as much capital as
anticipated. Make sure that every planned expenditure is closely
integrated with strategy.
Your financial plan needs to cover three years of operations. If
you're already in business, your forward projection should be based
on past trends, adjusted to reflect your assumptions of what will
change. Prepare detailed projections of sales, costs of sales,
overhead, and anticipated net profits. To organize all of these
numbers, prepare a spreadsheet that follows the standard format for
profit and loss reports as discussed in the earlier article on
financial management. In many business plans, the projections are
on a quarterly basis. However, they're more useful if they're
presented as monthly numbers because that's how the actual activity
will eventually be tracked.
Be specific about your monthly sales projections. Don't just
drop in arbitrary totals. Develop those totals in a logical way by
estimating how many projects of each type will be active in each
period. Be specific about labor as well. Since payroll is the
largest expense for most design firms, you need to estimate how
much of your labor will be project-related and lead to client
billings. Under normal circumstances, billable labor will represent
roughly two-thirds of the total payroll. The remaining,
non-billable portion of your payroll will be absorbed as overhead.
(This issue is discussed in more detail in the earlier article on
OK, now you have a first draft of your plan. Writing a business
plan is always an iterative process. The document will go through
several rounds of revisions and refinements. To help with this
process, seek out people with more experience to review your draft
and provide you with feedback. Develop an informal “business
advisory board” that includes your accountant and attorney, and
perhaps your banker, insurance agent, and an industry consultant as
If you've been in business for a while, you might also want to
consider assembling an informal “customer advisory board.” You
probably won't share the full document with any of them, but it's
smart to speak to key customers individually to gain insights into
their needs. Discuss possible ways to tailor your services and
resources to better meet those needs.
For additional advice on business planning, take a look at the
information available from the following sources:
Writing a business plan document has been the first step in the
planning cycle. You've defined your company's vision and mission.
You've identified goals and determined the best methods for
achieving them. Now you need to implement the wonderful plan that
you've developed. Great execution is what makes companies
Along the way, monitor and measure your progress and update the
plan as needed. It's at this step in the process that many firms
fall down. It's all too easy to be overwhelmed by daily details and
gradually lose sight of the big picture. Revisit the information
and assumptions in your plan at least once a year. Make revisions
to take advantage of new opportunities and to adjust for changes in
your situation. Use and maintain your business plan as a living
Shel is a graphic designer who is active on the business side of professional practice. He has solid experience managing the operations of leading creative firms and guiding them through periods of accelerated growth and rapid change. He has served as director
of operations for MetaDesign San Francisco and as vice president of operations for Clement Mok. He provides management consulting services to a range of creative firms in both traditional and new media. Shel has served on the national board of the Association
of Professional Design Firms and as the president of AIGA San Francisco. He has written and lectured on many topics related to design management and teaches Professional Practice at the Academy of Art in San Francisco, the California College of Arts, and the
University of California.
If your design firm is already operating successfully, why write a business plan after the fact? Discover how the document itself is part of a larger strategic planning process.
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