My wife Andy and I started Paper Leaf in 2009. We were not bad at design (I think we’re pretty damn good now), but we were really green at business. In some ways, our naivety was a bit of a blessing; had we known what we know now, we probably would have talked ourselves out of starting the business. And that would have been a mistake–we love what we get to do.
Regardless, there are a number of blunt realities we faced (and still do face) and things we’ve learned in running Paper Leaf that we either never anticipated, or never really bought in to if we read it elsewhere. Here are some of the big ones.
If you want to be a designer, you don’t want to start a design business. Be a freelancer or work for someone else. When we started, we were pretty much two freelancers and thus were doing a lot of actual production design. Now? I spend my time in meetings, meeting people, doing employee reviews, invoicing, writing proposals, and more. Looking at my Harvest report for last month, 34% of my time has been on billable work; the other 66% has been unbillable admin/business development stuff.
I’m fine with that–I love the business side of design–but if you want to be producing design work the majority of the time, you should realize that starting an agency might take you down a different path.
2. No matter how skilled you get or how big your agency grows, you’ll still get frustrating feedback and difficult clients and projects.
You will get fewer frustrating projects as you get better at your job; as you become a better communicator; and as you attract better clients. But even huge agencies like Pentagram have difficult clients, and they’re basically the undisputed heavyweight champs of design.
Not every project will be great. But if you learn to communicate, keep getting better at your craft, learn how to identify red flags early on, and trust your gut, you can mitigate the bad projects.
It’s just a fact. We’re in the business of trading time for money; if you want to take on more work, you need to bring people on to help with that. When you bring people on, you add salary, software, hardware, and other costs.
You need to make sure you’re running the numbers and are making your hiring decisions based on those, not gut feel. I can’t say enough about tracking time with Harvest and running reports when it comes to this.
We’re getting more specialized at Paper Leaf, but I’m still doing a variety of jobs like everyone else in the office. That means I need to maximize my time; I still need to work some evenings and weekends; and so on. Prepare to be overworked for a while, but you should plan on solving that problem. Working ridiculous hours is detrimental on many levels.
Set up a business organization chart early on if you plan to grow, add your name to all the positions you’re covering (which could literally be all of them), then work toward replacing yourself one position at a time.
What to charge is one of the most frequently asked questions in our community, and with good reason–it’s a tough nut to crack. There isn’t a one-size-fits-all solution. Chances are, though, you’re not charging enough.
We upped our rates a while ago, but it wasn’t based on feel. It was based on good, ol’ fashioned math. A mentor of mine broke it down to me like so:
We want to be able to pay an average salary of $50,000 to every employee in our company. When we factor in items like: sick days, average percentage billable time per employee, holidays, stat holidays, overhead costs, and more, it essentially boils down to this: we need to charge $120/hour to generate enough revenue to meet that average salary goal.
Math. Who knew?
We do a lot of project-based work, and we have a constant influx of new project requests from new clients. What does that mean? We are constantly needing to prove our value, knowledge, and expertise to clients. And that’s how it should be. Clients should be cautious, just like you should be cautious when you’re spending tens of thousands of dollars.
Listen to your prospective clients, understand their fears and concerns, and mitigate them.
Landing your biggest contract? Awesome. Going on vacation and turning on your phone to five panicked voicemails, then having to delete images off a server via your iPad in Pearson airport? Not so awesome.
It really is a rollercoaster. You’ll get surprise gifts and words of thanks from some clients; other clients will yell and swear at you over the phone. Appreciate the former. Maybe don’t work with the latter anymore.
8. You will hire good people (I hope); you will help them grow and improve; they will eventually leave.
And that last part will suck. It will not feel good in the short term when people move on, but the long-term benefits of having good people, and genuinely trying to help them grow, far outweigh the shitty parts. Some employees will be with you for a long time, and that will be great–just be prepared that they won’t all be like that.
No matter how diligent you are, eventually this will happen. Sometimes it’s intentional, sometimes it’s unintentional, but it’s always frustrating. There’s not much you can do, outside of having a good contract, honoring your part in it, and continually following up until you get paid.
Don’t threaten to break any knees. Nobody is scared of a designer’s keyboard muscles anyway.
We started ultra lean, which was helpful when we made a measly $40,000 our first full year. But as we’ve grown, we’ve had to spend money on a ton of items: new iMacs, costly design software, backup solutions, insurance, furniture, various applications, accountants, salaries, and so on. The key is determining whether the value of what you’re buying outweighs the cost. This doesn’t include necessities like chairs. You kind of need chairs.
Also coffee. Don’t cheap out on coffee.
Communication has two sides: listening and talking. A lot of people miss that first one. If you’re not a clear communicator, you’ll learn fast if you’re going to succeed. You need to communicate exceptionally well with clients, contractors, employees, accountants–everyone.
Being a great production designer isn’t enough, so don’t focus squarely on it.
12. Those processes you made fun of at your last job? You’ll end up implementing at least a few similar ones.
When you start, you can get by with few documented processes, no policies, and so on. But as you grow and bring people on, that stuff has to be written down somewhere. The more moving parts you add to the machine, the more complex it gets. Processes, meetings, and documentation are the oil to a smooth-running project engine. It’s important not to get bogged down in inefficiencies, but it’s equally important not to just wing it.
Don’t let these points dissuade you from starting a design agency (or any other business, really). That’s not the point. Being the captain of your own ship is an amazing feeling, and if you think you’re up for it, do it. It’s worthwhile to know, though, that the road isn’t always smooth. The more prepared you are, the more enjoyable the journey.
This post was republished with permission from Jeff Archibald. Read the original here.