Dave Carlson

I have always been an entrepreneur at heart. I think as designers we love the challenge of using our creative talents to solve business problems. So about 11 years ago, I wanted the challenge of running an agency vs. just freelancing. I freelanced for about 4 years before I started my agency and hired my first employee. Then it became serious, because now I am not only responsible for my own salary, I had to find enough business to cover my employee too, which I did and took on that challenge whole-heartedly. So much so, that two years later, I began hiring my third and fourth, fifth, six, etc employees. Then I entered a whole new ball game and for a creative guy who never went to college (design or business school) this just became my entry into the school of Hard Knocks.

So before you jump right in with exciting dreams of building a big, famous, kick butt design agency, maybe you should ask yourself these soul searching questions:

Your personality

1. Are you patient with people you rely on?
2. Are you able to work through emotions (yours and your potential staffs’)?
3. Can you stay focused on your long-term agency goals?
4. Are you ok not designing as much or not at all?
5. Do you enjoy the challenge of finding and closing new business?

Your finances

1. Are you good at managing your money today?
2. Do you have someone more qualified to manage the accounting of your agency?
3. Do you have enough current business or cash reserves to weather the slow months?
4. What would your initial business start-up needs be? Then what would your costs be for each?
5. Would you enjoy managing the business and expenses to make a profit every month?

Your location

1. Are you in a good location where you could acquire more business than you currently have today?
2. Are there networks, groups or organizations that you can attend to introduce your new agency to.
3. Are you working from home or do you need to lease an office?
4. Are you looking for space to grow in? Then assume 250 sq ft per employee+recepetion+conference room.
5. Where do you want to be located one year from now?

Your target client

1. Do you know what type of work you want your agency to do or focus on?
2. What projects or industries are you most passionate about?
3. Will your passion for working certain projects or in specific industries bring enough business to match your personality, financial needs, and location?
4. Do you know where to find the right clients?
5. Do you know where to find talent with similar passions?

Dave Carlson | The Agency Route
The Vyant Group | DegreesInc | Team Author

This week we’ve had talk of money (accounting, book keeping, having and not), location and equipment. Picking the easiest, I’ll take the money and run.

For starters, the UK has the Better Payment Practice Campaign. Check out their code “The Better Payment Practice Group was established to promote a better payment culture within the UK and urges all firms to adopt a responsible attitude to paying on time.” Novel concept.

Money Articles

In the coming posts we’ll be discussing the subject of money. Often. While you’re waiting, here’s a few we found.

DiVITA Speaks!!: Budget for a Business

Lifehacker: Geek to Live: Automate your finances
Everyone has their own money personality and systems they use to keep their dollars and cents in order, but I thought I’d share some of the methods I’ve developed over the years.

Simplify This: Who needs a bookkeeper?
Most small businesses of a certain size can certainly benefit from a fulltime bookkeeper, however not all of them require one, especially the smallest of businesses.

Online Book Keeping Assistance

There are a ton of online payment, book keeping, accounting sites on the internet. I don’t have an opinion of any, so if you do, feel free to respond.

Blinksale (free account)
The easiest way to send invoices online. Blinksale is perfect for anyone who needs to invoice clients for services or products sold. Blinksale is an excellent choice for attorneys, accountants, designers, IT professionals, software developers, journalists, contractors, engineers, architects, videographers, and more. Basically, if you need to send invoices, Blinksale can work for you.

FreshBooks (limited free account)
The Fastest Way to Invoice Your Clients. FreshBooks is an online invoicing and time tracking service that saves you time.

TechCrunch Article: FreshBooks pushes the envelope in online billing

SimplifyThis (invitation only beta)
SimplifyThis is an intuitive web-based service to easily invoice your customers and get paid faster online. No more forgotten invoices, no software to install and no help manuals to read. Use this from home, from the library, or from any other computer on the internet.

Side Job Track (free)
Web-based job tracking, invoicing, reporting & project management software for the part-time independent contractor.

Wesabe: Take Control of Your Money
Take control of your money, find the best values in your area, and reach your financial goals by joining the Wesabe community.

What Are You Worth?

On every design forum the same question gets asked, “how much should I charge?” In the equation, it’s always useful to get a ballpark on how much they’re worth (taking into account where they are, their experience level, how fast they work, etc).

Ask Dr. Salary
Salary is a mysterious topic but it doesn’t need to be. I’ve started this blog to simplify salary in ways that can help both employees and hiring managers to understand and communicate about compensation with grace and ease.

CBSalary.com | Salary Calculator

Indeed.com | Salary Search
Search salaries from over 50 million jobs in the past year

Monster | Salary Center

PayScale
Salary Survey, Salaries, Wages, Compensation Information and Analysis. Get accurate, real-time salary reports based on your job title, location, education, skills and experience.

Salary.com
Job salaries - Performance reviews - Compensation software

SalaryScout.com
Negotiate with knowledge

WageExchange.com
Salary Survey, Wages, Compensation data

Taxes

When it comes to money, taxes can’t be denied.

Australian Tax Office | Business

Australian Government website | Tax matters
List of government websites relating to different aspects of taxation.

Taxpayers Australia
Aims to educate taxpayers via the media, educational publications and seminars on issues relating to *tax* and superannuation.

Tax Returns Australia
The safe, simple way to submit your personal tax return online.

Business Link (UK) | Taxes, returns & payroll

IRS (US) Small Business/Self-Employed Virtual Small Business Tax Workshop
This extensive workshop is designed to help new and existing small business owners understand and meet their federal tax obligations.

If you have resources to suggest, go ahead and send them over. Depending, I’ll add them to our resources and BoDo’s del.icio.us.

Until the next
Resourceful Friday,
cat

WHEW! We made it to the end of the Starting Out and Setting Up Series. You’re ready skill-wise, taking it personally, honey has the money, and the clients, oh my! Location has been decided, you’re equipped and accounting for your actions. Right?

If that’s so, on with the hat tipping

What’s ‘hat tipping’ you ask? It’s where we review a series in its entirety, while thanking those who took the time to get back to us. It’s also where we acknowledge that it takes time to respond to requests such as ours.

If you’d like to take the time for a future series, contact Cat. There’s always a series in the works she can attach to you.

Starting at the beginning …

First up was the Series Introduction where Mark McGuinness opened with a quote.

In Are You Ready? Tammy Lenski had a comment to share. We then went over to Daniel Schutzsmith’s Graphic Define for even more.

On the experience side of Are You Ready?, we asked the question, was Jay ready? We found out how Leslie was ready, Neil made ready, Alina’s ready, Stefan was ready and Cat wasn’t.

In Taking it Personally, we borrowed Seth Godin’s point, which we followed with Ten Traits of Successful Business Owners.

On the experience side of Taking it Personally, Stefan’s determined, Leslie’s been practicing, Neil’s backpacking, Alina’s evolving, Danita has no regrets, Jay bites, and Cat’s bossy and barks.

In Alina’s In-sights, Alina took it further with Corporate Grinding.

In Clients, Oh My! we discussed the feasibility of starting out with none, one, four or more.

On the experience side of Clients, Oh My! we found that Leslie was covered, Neil was covered too, Stefan had it made, Jay’s been lucky and Cat’s been roaming about.

In keeping in the spirit of the series, Ask jay settled on five quick tips for getting new clients.

In Where’s the Money, Honey? it dipped into serious talk.

On the experience side of Where’s the Money, Honey? Chris discussed his money management, Stefan and Leslie did too. But Neil, he had no money, honey.

In Location, Location, Location we mulled over the pros and cons of working in or out. Writer ME “Liz” Strauss shared her location of choice, with a reminder that “it’s supposed to be fun.”

On the experience side of Location, Location, Location, Abhijit was happy at home, Leslie was dedicated, Neil was located, Jay’s domainly SOHO and Cat’s now online.

So, How Equipped Are You? By opening doors, cupboards, and drawers, we scrambled to put together a new business wish list.

On the experience side of How Equipped Are You?, Neil was equipped, Leslie was steady, Jay started out with loads of tools and Cat didn’t need as much.

We went back to the money issue with Who’s (ac)Counting now? This is where we put together another list. We’ve been told lists are good.

On the experience side of Who’s (ac)Counting Now? Neil’s into numbers, Stefan’s into services, Leslie recommends accountants and Jay minds her own business. Then there’s Cat, with a box.

On a roll, Ask jay came in with Seven ways to get organised.

We ended with the results of the Niblets Series poll, announced in the beginning.

In the coming months we’ll enlarge on each of the issues touched on in the Starting Out and Setting Up Series. Until we do, in alphabetical order, we’d like to thank those who helped make this series a success.

Abhijit Nadgouda | Freelance Software Professional
iface Consulting

Alina Hagen | Visual Communication Designer
Alina Design | Creative Latitude | BoDo Author | Alina’s In-sights

Chris Tomlinson | Visual Communication Designer
Gonik Design & Print | Gonik Blog

Danita Reynolds | Principle/Creative Director
Creative Expertise | NO!SPEC

Dr. Tammy Lenski |
I Can’t Say That! | Lenski Strategic | BoDo Author | Creative Conversations

Leslie Burns-Dell’Acqua | Creative/Marketing Consultant & Coach
Burns Auto Parts–Consultants | Burns Auto Parts blog | Podcast | Book

Mark McGuinness | Coaching Creative Professionals
Wishful Thinking | BoDo Author | Creative Coaching

ME “Liz” Strauss | Business Writing
Successful Blog | Letting Liz Be | Liz Strauss.com | The Blog Herald | Performancing.com | BoDo Author | Write with ME

Stefan Bean | President/Creative Director
Pulse Creative Partners, Inc. | BoDo Author | Bean’s Biz

Thomas (Tom) Stephan | Director of Something Clever
BoDo Author | Dyer Straits

An lastly,
The BoDo Team
cat - nt - jay

Back in the beginning we posted a poll to find out about our readers. In part because we’re nosy. In part because we’d like to target future posts.

With 113 people participating in the poll, the results are …

• Self taught, four plus years in the business = 27%
• Design grad, four plus years in the business = 20%
• Design grad, two to four years in the business = 17%
• Self taught, two to four years in the business = 11%
• Self taught, one to two years in the business = 6%
• In-house designer thinking about taking the leap = 6%
• Design grad, one to two years in the business = 4%
• Basic photoshop, illustrator, etc., skills = 3%
• Enrolled full time or part time in a design school = 3%
• Design grad, some professional experience = 2%
• A few design courses under the belt = 2%

Thanks for joining in,
The BoDo Team
cat - nt - jay

Dear jay,

I started working with my first client last year, and I have been so overwhelmed with projects they have given me, that whatever little record keeping I was doing, started sliding very quickly. I’ve got to the point where I’m depending on my client’s bookkeeper to alert me about outstanding invoices. Just last week, I got an overdue bill from a printer I have not paid as well. Then the next day, my client tells me I have double-billed them, and I’ve already spent the money!

Help! How do I get control of my finances?

Well, well, well … we are in a fine pickle aren’t we? As a designer you no doubt have all your design practices in place: Job bags/cards, backups , etc. As a business owner you also must have your administration processes in order, or as you have found, things get very messy, very easily.

1. Consult your accountant

No matter what country you live in, you must be able to explain your business transactions to your tax man. You’re required to keep records relating to income, expenditure and taxes. Being a sole trader will mean you have different obligations, than if you are a partnership, LLC or Pty Ltd company. Your accountant will advise on what records you need to keep as well as any other legal obligations you may have. Using accountants as book keepers, however, can be very costly for you and frankly, a waste of their time. So hand over organised records, not a shoebox!

2. Set up your procedure

Sit down with a pencil and paper and think about all the interactions you have with a client and other bodies that might generate a financial transaction: Invoicing and receiving payments from a client, recording bills and making payments for other services and transactions.

Are you going to bill clients monthly and/or ad hoc? How are you going to accept payments? How often are you going to visit the bank to deposit cheques? How often do you have to pay utilities? How are you going to pay them?

How do invoices relate to your job ticketing system? Is the invoice number going to be same as the job number? If it is, how do you identify part payments (eg deposits)?

Make a list of each of your weekly and monthly tasks and how long you think you will need to perform each one. Make sure you allow yourself time to complete each task, so that you are only dealing with paperwork once. For example, if you receive a client’s payment, you need to go get your copy of the invoice, enter the payment into your recording system, and file your invoice away: Not just scribble something on an envelope and chuck it in a drawer.

Make sure you set up a schedule that you know you can maintain. The aim here is to develop good habits while you are not too busy designing, so that once you are, you have a system in place. Consider hiring the services of a bookkeeper for a couple of hours to help you set up: Ask your accountant for a recommendation.

3. Get a diary

Now you know what you are going to do and when, set up your diary to record appointments, payment dates, document lodgement dates, etc. Backtrack and add reminders if there is work that you have to do to prior to any of your dates. Don’t forget to add in your personal appointments!

Whether it is a soft cover bound book or a PDA, you will need to take it with you everywhere, so get something portable.

Before giving a client a timetable for a project, look at your diary and make sure you are also taking into account your administration schedule. Clients will not be offended if you tell them that you will not be able to start on their project till a given date and time. You do not have to tell them that you have to do your banking!

4. Choose your system

Now that you have your schedule worked out, you can decide on your recording system. If you only need to calculate and lodge a tax return once a year, then you will probably find a simple cash transaction system will suit you just fine.

You could use a cash book with pages marked out for income and expenditure, an Excel worksheet or simple software like MS Money or Quicken. Make it as simple as possible, but make sure you are recording all the information about each transaction that your accountant has advised.

As your business grows, you may need more extensive software, such as QuickBooks or MYOB. These will also be appropriate if you find you want to track your receivables (money owed to you), payables (money you owe) or projected cash flows.

If you find that you really cannot (or do not want to) keep up, then consider hiring a book keeper. If you already have a system in place, they will find their job quicker and easier and therefore, less costly for you. Depending on the number of your transactions, you may only have to hire them for a few hours a month.

5. Visit your bank

Make an appointment to talk to an Accounts Manager at your bank regarding the kinds of accounts and services they offer to small businesses. Do not forget to ask about online and automatic banking systems. These can be real time savers and usually worth the small charges.

6. Keep an eye on changes

As a business owner, you need to stay abreast of changes in business laws and regulations: Ignorance is rarely accepted as an excuse. You do not have to become an expert or read all the business journals available at your book store. It could be as simple as glancing through the headlines of your local paper’s business section once a week or setting up a feed to their online version.

If you have any real concerns about an effect on your business, do not be afraid to contact your appropriate professional advisor.

7. Check out your tax man’s website

Believe it or not, you will find lots of helpful information in the small business section of your tax man’s website: Some examples USA: IRS, UK: IR or AUS: ATO. Great time savers are online lodgement and payment services: Your tax man should have a range of options from which to choose. Don’t forget to also check out the Money Matters sections in our Resources under M - N.

Good luck!

Until the next
Ask jay

You too can Ask jay!

In the previous post we jotted down a list of expenses to start you off. Below, Neil, Leslie, Stefan, Jay and Cat talk about the practicalities of the money side of business.

Neil’s into numbers

During my office era, we had our accountant do everything. We focused on the business of design. Our accountant focused on crunching numbers. When we set the business up, one of the first things we did was start a relationship with a bank and set up a separate business account.

Today, I’m a one-man show and do my bookkeeping with QuickBooks Pro. It’s easy and I can generate all sorts of reports, do my invoicing, time sheets and such. Come tax time, I run out the general ledger, profit and loss statements, etc and my accountant takes it from there.

Neil (nt) Tortorella | Marketing Manager
Tortorella Design | The Marketing Mind | Creative Latitude | BoDo Team | Marketing Minute

Stefan’s into services

When I looked at the fact that the time I spend doing my own payroll amounts to quite a bit of non-billable hours, the choice for me was really pretty simple. Since we are a smaller firm, payroll services are really inexpensive and they’ll even take care of sending the taxes.

However, we do have an accountant that handles our year end tax preparation and will help with reconciling the account as well as any taxes associated with business income. Other than that, I still manage my own payables and receivables using Quickbooks.

Stefan Bean | President/Creative Director
Pulse Creative Partners, Inc. | BoDo Author | Bean’s Biz

Leslie recommends accountants

I have separate accounts and I do my own bookkeeping, but I have a background in it. I use QuickBooks and I recommend it to others. I also recommend getting a good accountant. They can save you loads of money–much more than they cost. If a creative simply will not follow this advice, I recommend TurboTax for tax preparation (it integrates well with QB and is relatively easy to use).

Also, I firmly believe that a creative should spend as much of her/his time doing what s/he does best, not screwing around with stuff they aren’t so good at, with the intention of saving money. An accountant and a bookkeeper are great tools to help a creative be creative and not get bogged down with stuff s/he doesn’t do well.

Leslie Burns-Dell’Acqua | Creative/Marketing Consultant & Coach
Burns Auto Parts–Consultants | Burns Auto Parts blog | Podcast | Book

Jay minds her own business

Putting time aside to get through the administration tasks is vital for every business owner. Even if you hire staff to take the drudgery off your hands, you have to know how your profitability and cash flow are going at any time.

I use MYOB for my accounts: It has all the features I need and my accountant imports the end of year file straight into their software. At least once a fortnight, I make sure my accounts are up to date and everything in my red tray (the repository of all my paperwork) is processed and filed away.

My diary has all the important dates: payment and document lodgment dates clearly marked with leadup reminders for those that need me to do some preparation.

Jeanette (jay) Wickham | Systems Manager
FastCoconut.com | NO!SPEC | BoDo Team | Ask jay

Then there’s a Cat in a box

I started out with a box.
When the box was full,
it was time to get a new box,
a bigger box,
or handle the accounts.

Kidding.

I’m pretty bad at money management. Luckily, along with my “if you don’t have it don’t spend it” policy, I have a “if you don’t have the mindset, hire someone who can” philosophy.

When I got to the point where the stress of keeping up with designing, clients, staff, marketing, accounts, etc., was overwhelming, I knew I had to do something creative. I paid to have an employee trained on MYOB. Problem solved. Mostly.

Catherine (cat) Morley | Project Manager
Creative Latitude | NO!SPEC | Katz-i | FastCoconut.com | BoDo team

The recap of the Starting Out and Setting Up Series is on Friday. YEAH! It’s over! [dancing a jig here] Apologies. We’ll stop screwing around and get on with an introduction to the second Ask jay, where she also deals with the money issue.

Until then,
The BoDo Team
cat - nt - jay

On Monday we had Where’s the Money, Honey? And we’re betting you thought that was that on the subject. Problem is, dealing with money in business never ends. There’s budgets, taxes, and, did we say taxes?

Determining how much it will take

How do you know how much money you’ll need to start up? Easy. Draft a budget. Okay … maybe not so easy, but you’ve got to start somewhere. Fire up your spreadsheet software of choice and start crunching numbers. It might not be a pleasant chore, but it’s a necessary one.

Start by making yet another list

• Target salary (be realistic)
• Rent, or house payment (or percentage)
• Auto expenses (include petrol and upkeep)
• Furniture payment or rental
• Accounting fees
• Insurance
• Legal fees
• Taxes
• Loan payments
• Bank charges
• Computer payments
• Software and upgrades
• Dues and subscriptions
• Reference books
• Internet charges
• Marketing expenses
• Office supplies
• Postage
• Telephone
• Utilities
• Travel

Digital spreadsheets enable you to play with numbers. They also force you to take a realistic view of your situation.

It’s a good idea to draft pro-forma (projected) budgets for three and five years. In that mix goes projected revenue and additional expenses.

If you are not confident in your abilities when it comes to business accounting, one way to improve is by taking a short course at your local college, government funded business start-up group, or Chamber of Commerce. If you learn best on your own, check out what’s available at your local bookstore, or at an online bookstore such as amazon.com.

The Internet has hundreds of online courses on offer. Some free, some for a small fee. Although we don’t have the time now, we’ll get into those at a later time. Promise.

Next up, the BoDo team, visiting authors and guests will share how they’ve handled the money aspects of running a design business.

Until then,
The BoDo Team
cat - nt - jay

We’ve just presented a list of equipment and supplies needed for a new start-up. Below you’ll read how dinosaurs and younger were equipped.

Neil’s equipped

I stated my business before the computer age. As such, equipment needs were significantly different. I started out with a drafting table, my trusty T-square, some triangles, an X-Acto knife and some layout pads. In those days, it didn’t cost nearly as much to start out as it does today. The office area had the usual stuff – desks, phones, paper clips, etc.

Once we got into the outside office, we needed some more stuff. We bought our first computer, a Radio Shack deal, and a printer. We also bought a really neat new thing that had just hit the market … a fax machine. (How old am I?) I bought it because we needed to get a proposal out quickly to a client in another state and we didn’t even have time to overnight it. By the way, we got the gig and it more than paid for the fax machine.

As for leasing, borrowing and begging, I did set up a $15,000 line of credit that we used occasionally to cover overhead when cash flow went slow. We also leased a car and had an American Express account for the business. We did a lot of travel back then and AMX helped us keep all those expenses under control.

A few years into the business (second office era) we bought another computer. It was a PC with something like Windows 1.0 on it. We also bought a postscript printer. The cost? Just a bit over ten grand for the lot. We used it for project management, typesetting (PageMaker 1.0), typing copy to go to the type house … and playing silly games. We were even online via CompuServe (pre-AOL). We used that to make travel reservations and communicate with the type house.

Neil (nt) Tortorella | Marketing Manager
Tortorella Design | The Marketing Mind | Creative Latitude | BoDo Team | Marketing Minute

Leslie’s steady

For my business, I didn’t need anything more than a computer, the Internet, and a printer, so equipment wasn’t a significant issue. For many creative, though, equipment is a huge hurdle. Take photographers–a decent digital system will easily run them tens of thousands of dollars. And they need constant updating. Again, I suggest planning your projected equipment costs then finding good sources for funding (business loans or savings). If you are a minority (including a female) and/or if you are willing to open your office in certain areas, you can get significant assistance financially (in the USA).

Leslie Burns-Dell’Acqua | Creative/Marketing Consultant & Coach
Burns Auto Parts–Consultants | Burns Auto Parts blog | Podcast | Book

Jay’s into tools

Cliche alert! ‘It’s important to have the right tool for the right job.’ Fortunately, because of the length of time in the business, we’ve managed to accrue all the office requisites needed to perform efficiently. Photocopiers, faxes, scanners, printers, computers (pcs and macs), filing cabinets are all at hand. Reserve supplies of consumables (such as paper, inks etc) are maintained for that last minute presentation.

It’s important to stay current with software, but not necessarily the latest versions. We stay aware of new and emergent software that can enhance our productivity. We test ‘evaluation’ versions and keep abreast of reviews.

Since jay’s often out of her office or in someone else’s, portability is the key: Her diary, mobile (cell) phone and laptop go everywhere. The laptop can connect to the Internet via a cable network, wireless or phone line and even acts as a fax machine at times.

Jeanette (jay) Wickham | Systems Manager
FastCoconut.com | NO!SPEC | BoDo Team | Ask jay

Cat’s not

As previously mentioned, I came into the business by sliding in on a client’s whim. For equipment, I had the computer but not much else. During the first couple of months (when I needed to print or scan), I made arrangements with the local university.

After each project (but only after being paid), I’d add more of what was needed. A scanner here, a printer there, faster computers, external hard drives, modems (when Brunei finally got Internet).

When buying large purchases, that’s one rule I’ve made and stuck to. If the money is not physically there, it doesn’t happen.

Catherine (cat) Morley | Project Manager
Creative Latitude | NO!SPEC | Katz-i | FastCoconut.com | BoDo team

Next up, Who’s (ac)Counting Now? That’s right. We’re back to serious considerations. The conversation of money. Ok, not money. But what you need to do, in part, that has to do with money.

Until then,
The BoDo Team
cat - nt - jay