Creative work and skills are and always will be in demand. If you’re a creative entrepreneur and are considering starting a design business of your own, there are a few things to take note of and prepare for.
The road to entrepreneurship is not an easy one—we’ll start there. But know that every setback is just a part of the journey. If you aren’t making mistakes, you aren’t approaching the success you set out to have.
You might have a few questions and feel a little unsure where to begin. We jump into all of those questions in the video above, and more below.
Know the Common Mistakes to Avoid Them
Like we mentioned earlier, mistakes are inevitable. But, lucky for you, we can tell you which common mistakes to avoid based on our experience.
One of the easiest mistakes to make—and this happens frequently in early-stage businesses—is to not get paid upfront.
If you’ve been hired to work on a specific project, there’s an expectation you’ll get paid. But if you don’t set any payment parameters or contract, there’s a good chance your payments will come in late, or not at all. And you definitely don’t want that.
We recommend collecting a 50% deposit upfront before any work gets started. That way your client’s buy-in is validated, and there’s a guarantee the other half will come. You can do this by collecting 25% halfway, and the remaining 25% upon final delivery, or setting up a NET30 payment. There are different ways to slice up payments, but point blank: collect 50% upfront.
Discuss budgets with your client. We know money is not always an easy topic to touch on, but it’s important, especially if you’re being hired for work. Figure out how much your client can spend, and price accordingly. Once you know their budget, you can put a proposal together and estimate the total cost of the effort.
Be Optimistic, But Also Realistic
Another common mistake entrepreneurs make is not having an exit scenario in mind. While it’s great to be hopeful that everything will work out, you need to be prepared in case that doesn’t happen.
It doesn’t all have to end negatively, though. There’s a chance your creative business could be acquired, and you’ll need to think of an exit strategy in this case, too.
Think about every time you sit down at the movie theater. You’re excited to see a brand new movie, but you’re also looking for the nearest exit, mapping out the best route to leave in case of an emergency.
You’ll also want to make sure you’re frugal with money at the start. It’s easy to get excited over that first big paycheck, but stick to those humble beginnings. Keep your expenses low to avoid any problems down the road.
Sales is Everything
Your cashflow is ultimately your business’ lifeline. Without it, you’ll severely struggle.
Two integral skills you will need to learn are bidding and negotiating. If negotiating isn’t your forte, don’t worry—it will come with practice. (We also have plenty of content to help you learn more about how to bid and negotiate that you can find here.)
There are two ways to make money in your design business. The first is to bid high. Not absurdly high where the client rejects the bid, but high enough to ensure your business will make a profit from the work.
The second way is to spend less money on the production. Say you get a $100,000 job, but it costs $99,999 to produce. It’s really a $1 job. Find areas where you can reduce expenses to ensure you get paid accordingly for the engagement.
When it comes to bidding and negotiating, confidence is key. It’s a fundamental sales technique that does way more for you than your portfolio can. When you can clearly communicate that you believe in yourself and your business, clients will, too.
Figure Out Who Your Customers Are
The services you’re providing fulfill a specific need for your customers. So who are they? Are your clients larger, Fortune 500 type companies? Or are they smaller, local businesses?
Identify your target customers and the types of clients you want to produce work for. Familiarize yourself with their pain points, and how your design business can provide a solution for each unique case.
Clients want to know that their problems can be alleviated with your expertise and services.
Pricing Your Work
Pricing creative work is sometimes difficult to determine, especially if you’re just starting out. It can be even more confusing if you have a team to account for.
One thing you’ll want to avoid is hourly billing. Hourly billing doesn’t take into account potential errors (which will happen), revisions, and any other accidents that may come your way.
We recommend going with a fixed-price, value-based approach, taking into account hours, manpower, tools, and any other resources it may take to get the job done. In the video above, Chris breaks down how to estimate the cost of a project for a production company.
If you want to learn more about value-based pricing, check out this video here.
Start and Run Your Design Business
Now that you know what mistakes to avoid, how to plan for the future, sell your services, and communicate your value, you’re ready to build the design business of your dreams. And if you still need more, check out the video above.