4 heads studio business plan

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4 Heads Studios …

4 Heads Studios
Business Plan for design firm start-up
2010

MAX GAINES
CHARLES MAK
TAI YUO KUO
YUSUN JANG

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  • 1. BUSINESS PLANPRATT GRAD COM.DDESIGN MANAGEMENTDES 640 01FINAL PROJECT(DESIGN FIRM STARTUP)ANDY BRENITSFALL 2010GROUP MEMBERSMAX GAINESCHARLES MAKTAI YUO KUOYUSUN JANG
  • 2. TABLE OF CONTENTSA. VISION STATEMENT 02B. MISSION 03C. FACILITIES 06D. STAFF 08E. MARKETING 11F. FINANCE 27G. CLOSING STATEMNT 39
  • 3. A. VISION STATEMENTFour Heads Studio is a small design firm based in New York City.Our Objective is simple: Delivery the youth audience to you and yourbrand. Four Heads Studios is dedicated to providing our clients withstrategic planning, cross medium design, creative solutions and cut-ting edge consulting to help business understand, tween, teen andyoung adult market. We specialize in Millennials the generation bornbetween 1980 and 1995.B. MISSION> MISSION STATEMENTFour Heads Studio is a small design firm based in New York City.Our specific goal is orient our services towards the Millennials, thegeneration born between 1980 and 1995. They are today’s holy grailof marketing for brands because of their disposable income, brandloyalty and their tech savvy skills which allow them to not only trainolder generations, but to be reached with ease, at least in theory. Yetthey are a generation misunderstood by business today and simplewritten off as the “entitlement generation”.Four Heads Studio is dedicated to providing our clients with strategicplanning, cross medium design, creative solutions and cutting edgeconsulting to help business understand, tween, teen and young adultmarket.Typical design studios are well equipped to fight yesterday’s battles.They have the tools and the mindset. But we will be different.FourHead Studios respects the design traditions of the past, butunderstands the present while constantly looking towards the future.We are well prepared to fight the battles of today and tomorrow forour clients.Our team will put all of our heads together (literally) in order to pro-vide a quality product and service to out client. With a strong under- 02
  • 4. standing of the current landscape, our creative thinking and planningallows us to position ourselves as a design leader.Above all, our goal is to maintain a productive and financially soundworkplace to better serve our clients and keep our staff motivated.To our employees we offer an exciting, comfortable & healthy work-ing environment full of growth, productivity and potential; A library ofresources and tools for better productivity; A rejection of compart-mentalization – a standard found in typical working environments.Our main office space along with departments will be free and openallowing for ideas to flow easily from one person to the next. Andwindows… lots of windows.To our clients we will offer a strong healthy workforce of creativeindividuals. Homogeny is the enemy of creativity. Four Heads Studiooffers multitalented, unique individuals with varying discipline andbackgrounds working together (put our heads together) to help ourclients see the big idea and meet the needs of today’s ever changingyouth market. 03
  • 5. > LOGOPOSITIVE NEGATIVE> BUSINESS CARD 04
  • 6. > STATIONARY 05
  • 7. C. FACILITIESLease $ 6,000 / two monthsRegistering Business $ 325Website domain name $ 15 / yr SUB TOTAL 1 $ 6,340Principal / Creative Director MacBook proSr. Designer MacBook proITEM AMT EACH TOTALMacBook Pro 2 $ 2,000 $ 4,000Mac Pro 1 $ 2,500 $ 2,500LCD monitor 1 $ 200 $ 200 2 $ 500 $ 1,000Keyboards 2 $ 20 $ 40Mouse 2 $ 15 $ 30Chairs 8 $ 50 $ 400Tables 5 $ 200 $ 1,000Office copy machine 1 $ 700 $ 7003lines and 4 telephones $ 110 SUB TOTAL 2 $ 9,980 GRAND TOTAL $ 16,320 06
  • 8. > FLOOR PLAN 07
  • 9. D. STAFF> BIOS OF FOUNDING MEMBERS MAX GAINES Max hails from the land of Philadelphia PA (USA). A natural process facilitator, Max’s areas of specialties include, but not limited to: street art, fine art, photog- raphy, youth orientated design. CHARLES MAK Having years of experience in Adver- tising Design, Charles Mak brings to Four Heads Studio an understanding of advertising and developing a vision for clients. He understands the core of design begins with understanding the clients needs.TAI YUO KUOYork from Taiwan with an backgroundin industrial design, graphic design, andadvertising. He is excellent at cross-cultural design between Asian andwestern market. Specialties include isalso including strategy making, creativethinking, and market analyze.YU SUN JANGYusun is specialized in branding, il-lustration, printing, and motion graphicswith various professional experience inseveral years. She originally from SouthKore and has excellent sensibility aboutAsian arts and culture. 08
  • 10. > ORGANIZATIONAL STRUCTUREThis firm will base it’s structure around the “Coaching Model”. Thecoaching model recognizes that true creativity can only be encour-aged and directed; it cannot be specified, ordered or demanded. 12In this model the coach (principal) has overall responsibilities forwinning. The team (employees) has specific performance responsi-bly. There is no question about the authority and who gets to set thedirection and strategy. But there is recognition that the coach staysmostly on the sidelines and the team members make most on-the-spot decisions. 12> INITIAL POSITIONSCREATIVE DIRECTOR & PRINCIPLEResponsible for directing all work including, but not limited to, audi-ence promotions and advertising and design concepts. May overseeprint production, graphic art, and desktop publishing. Assists with au-dience research and develops creative briefs and design concepts tomeet business objectives. Requires a bachelor’s degree with at least7 years of experience in the field. Familiar with a variety of the field’sconcepts, practices, and procedures. Relies on extensive experienceand judgment to plan and accomplish goals. Performs a variety oftasks. Leads and directs the work of others. A wide degree of creativ-ity and latitude is expected. 11SENIOR DESIGNERAdept at taking briefs and well have a lot more client liaison experi-ence. A senior designer should have developed those famous prob-lem solving abilities to a degree where each design project is not seenin isolation. But rather, they will also be able to look at the ‘biggerpicture’ in a creative or advertising campaign. Managers Junior De-signers and Web Developer. Works closely with Marketing Specialist,Copywriter and Office Manager. Reports to Creative Director. 9 09
  • 11. > POSITONS TO BE GRADUALLY ADDEDJUNIOR DESIGNER Middleweight Designers should usually already have some kindof professional portfolio. They will probably have mainly worked onparts of larger campaigns and a few smaller projects of their own.They will be able to take design briefs and implement them, but willstill generally be overseen creatively by a Senior Designer and Cre-ative Director. 9WEB DEVELOPERPrimarily responsible for HTML, HTML 5, CSS development andJavaScript coding with skills in various other desktop publishing soft-ware useful in web and / or interactive development. Others are onlyresponsible for creating the concepts in Photoshop, before handingover the graphics to web developers to hand code. Works closelywith Junior & Senior Designer. Typically overseen creatively by aSenior Designer and Creative Director. 9MARKETING SPECIALISTResponsible for designing, creating, and delivering marketing pro-grams to support the growth and expansion of company productsand services. Develops sales presentations and provides reportsbased on information collected such as marketing trends, competi-tion, new products, and pricing. Requires a bachelor’s degree in areaof specialty and 2-4 years of experience in the field or in a relatedarea. Familiar with a variety of the field’s concepts, practices, andprocedures. Relies on experience and judgment to plan and accom-plish goals. Performs a variety of tasks. A wide degree of creativityand latitude is expected. Typically reports to Senior Designer. 11COPYWRITERWrites, proofreads and edits copy brochures, print and other docu-ments. May assist in estimating production costs, overseeing workdone by external suppliers, and preparing the marketing program.May require a bachelor’s degree in a related area and 0-2 years ofexperience in the field or in a related area. Has knowledge of com-monly used concepts, practices, and procedures within a particularfield. Relies on instructions and pre-established guidelines to performthe functions of the job. Works under immediate supervision. Primaryjob functions do not typically require exercising independent judg-ment. Typically reports to Senior Designer. 11 10
  • 12. F. MARKETING> SITUATIONAL ANALYSISThe role of a designer has changed. At the same time the market-ing world is attempting to make sense of their new relationship withcostumers. In the old world designers were expected to produce alogo, stationary, business cards, subway posters and perhaps clevermarketing campaign. Essentially they where called to “pretty upthings”. But this no longer is enough in the new era.For brands today’s holy grail of marketing are Millennials. The big-gest mistake brands make, however, is to think they can reach themthrough technology. They are more informed and more concernedabout the world around them than any other previous generation.They are also more conscious of when someone is trying to “sellthem something.” Today for brands to be successful they must careabout something else other than themselves. A clever marketingcampaign is simple not enough. The fastest way to reach Millennialsis not through facebook, twitter or youtube alone, but through theirhearts and minds by adding meaning to their lives. 2Therefore the mission of Four Heads Studios will be to not only pro-vide strong strategic advertising, cross medium design and creativesolutions to meet our client’s objective, but to make the case for thesimple proposition that the brands we work with must do somethinggood for their communities for customers to like them. Report afterreport tell us that individuals, including Millennials, want brands tobuild a better not just to build better widgets. 2Four Heads Studio is also well aware of the fact that brands couldgain by offering Millennials the same devotion they expect from con-sumers. A new report released by PR firm Edelaman indicates thatMillennials have a profound relationship to brands. The study showsthat brand identification is just as important as religion and ethnicitywhen it comes to personal identifiers Millennials share online. 4Four Heads Studios understand that consumer devotion is both aboon and a responsibility for a brand. Deep bonds are hard won andeasily lost. Feeling of betrayal makes the cost of winning back andold costumers is astronomical when compared to keeping an exist-ing one. FourHead Studios understands that brands that ignore or 11
  • 13. disregard Millennials do so at their own peril. 3Millennials believe brands actually stand for their core values theyclaim to represent. FourHead Studios believes brands must consis-tently deliver on these value propositions ina transparent and accountable way. The contrast between BP’sMarketing and their handlgin of the oil spill in the Gulf of Mexico is apowerful example of the costly breach of trust. 3The global economic meltdown that began in 2008 was an alarmingwake up call. The unbridled self-interest of power brokers on WallStreet and within corporate America came at an extreme cost toeveryone including Designers and Millennials. 3The AIGA Design Leaders Confidence Index for the first quarter of2010 reflects the strongest confidence yet in an economic recovery.The index rose to 103.73—up from 51 in October 2008—and is thehighest since AIGA began measuring confidence in the design econ-omy in early 2005. More than a third of respondents (36.5 percent)believe they will be more likely to hire new designers in this quarterthan last; only 15 percent felt they were less likely to hire new design-ers. And 48 percent felt their plans of purchasing new hardware andsoftware had increased compared with three months ago. 1There is plenty of energy, positivity and optimism of out there. It’ssomething corporate America should not squander. It has the powerto dramatically change our world for the better. FourHead Studiosknows that this generation has little patience for destructive corporateself-interest and nor do we. We will strive to do the absolute best tomeet our clients needs, as well as the needs of today’s generation. 12
  • 14. > VALUE ADDED POSITIONFour Heads Studios is a small design firm based in New York. Ourspecific goal is orient ourselves towards the Millennials (the genera-tion born between 1980 and 1995) today’s holy grail of marketing forbrands and yet a generation of individuals misunderstood by brands.We will be more than just be an average design studio. Designerscan no longer live in a bubble and attempt to remove themselvesfrom the world at large and consequences related to environmentallydestructive behavior. As we suffuse the world with complex technicalsystems – on top of the natural and social systems already here – oldstyle, outside in design simple wont work. Designers have to evolvefrom being individual authors of objects, or buildings, to being facilita-tors of change among large groups of people. 7Environmentally speaking design studios in the past where as bigapart of the problem as brands and their manufactories. To put itbluntly, brands simple create a never-ending stream of goods withmaterial that must be, in some cases, pulled out of the earth and willeventually end up in a landfill. For example: a coffee machine usesthree hundred kilowatt-hours of electricity during is lifetime; this isequivalent to the amount of energy generated from sixty kilograms ofoil. 7 As a leader in design FourHead Studios must simple not be arepeat of other design studios. We must be something more.Design studios help brands sell these products. In some cases theyare an interregnal part of convincing people to buy things they don’tneed with money they don’t have to impress people they don’t know.We must move beyond that. FourHead Studios must be a leader, notonly in design, but also in making environmentally conscience designdecisions. 6Our studio will make to promise to our clients and well as the indi-viduals they serve to make socially and environmentally consciencedesign decisions. For example when it comes to printed materialFourHead Studios will work directly with print houses such as Roll-ing Press an eco-friendly printing company based in Park Slope,Brooklyn. We and the brands we work with will strive to improves thequality of life while delivering goods and services. 13
  • 15. > SEGMENTATION & TARGET MARKETDemographic Segmentation: Age 
Within age, we find our target market: Commercial industries andbrands serving a youth market, i.e. Millennials as represented by thegraph below 
 14
  • 16. We are in a unique time in the history of market segmentation withthree distinct generations living today. They are: Baby Boomers (PostWWII) , Generation X & the Millennials, the generation born roughlybetween 1982 and 1992. With nearly 80 million young people fallingunder this banner they represent our target market. 8Millennials are unlike any other market. Never before has a younggeneration demanded so much attention from marketers. Loadedwith disposable income, they are the driving force in much of today’seconomy and the catalyst for change, innovation and advancement.Also when it comes to technology (Texts, facebooks, iPods) andtrends (fashion, entertainment, etc), never before has a young gen-eration been the teacher of the older generation. 8> SERVICE OFFERINGFour Heads Studio will be to not only provide strong cross mediumdesign (including, but not limited to: branding, print, interactive inter-faces, web development, social networking) strategic advertising andcreative solutions (novelty & irreverence, viral marketing, anti market-ing) to meet our client’s objectives, but make the case for somethingdifferent. Millennials speak a different language than previous gen-erations and it must be understood that traditional forms of advertis-ing simple wont work or will not be enough.Novelty & Irreverence: A perfect example of such tactics can befound in the current Old Spice “Old Spice Guy”, the Dos Equis Mostinteresting Man in the World and the Vitamin Water 10 Water In-corporated / Office of Mother Nature. Each campaign uses a bit ofhumor and irreverence to grab your attention; Novelty in a sensethere is a new commercial with the characters that have beeninvented; And Viral Marketing people use twitter and facebook tocomment (even offer up usable ideas) and spread the campaigns. Allcampaigns also utilize the concept of myth making. The charactersinvented become figures in-it-of-themselves, thus adding the brand.Simple put, you can have fun and still make money. Another exampleof viral marketing (albeit indirectly) is the J / K Wedding Video inwhich a wedding party uses the pop song Forever by Chris Browns(Jive Records) to dance down the isle. The video became an instanthit you YouTube and has received nearly 60 million views and was 15
  • 17. even mimicked on popular NBC television series The Office. Thevideo is a perfect example of how viral marketing can give a boost topublicity.We must also make the case for the simple proposition that thebrands we work with must do something good for their communitiesfor customers to like them. Report after report tell us that individuals,including Millennials, want brands to build a better world not just tobuild better widgets. 2The pricing of projects will typically estimate as a project-based cost.The project cost will be estimated by the appropriate number ofhours needed to complete the project. Generally FouHeads Studiowill charge a flat hour rate of $55.00 per hour per employee to breakeven, and $ 65.00 and up per hour per employee to profit.. To meetthe needs of are firm we are projecting a monthly inflow of capitalranging of 16,000 – 18,000 to break even. 16
  • 18. > SWOT ANALYSISSTRENGTHS- Cross cultural global design perspective- A unique positioning of the firm itself, focusing on creative solutions for firms wishing to seek a youth oriented market (millennials) could specialize us and make our studio the “go to” place.- “The new car smell”. Novelty is an advantage in this marke as we can be seen as having something other firms don’t (i.e being new and fresh)- An elegant open working environment (with lots of windows) to allow for flow of creative ideas and keep our minds at ease.WEAKNESS- The struggle to develop an awareness for a startup- Less and less time available for marketing as more and more time is devoted to finishing projects- A struggle to maintain an understanding of youth markets as they are ever changing and we are ever aging.- The positioning of our company could limit our client pool.- Less professional experience than some of our competitors.OPPORTUNITIES- A growing market (millennials) and a misunderstanding of brands on how to reach them.- Ever advances in technoloogyTHREAT- Economic recession.- A increase in the ease of use in graphic design publishing programs allowing individuals to design their own graphic designs.- Outsourcing: more and more firms are outsourcing traditional graphic design services to cheaper countries. It is important that FourHeads Studios offer to clients that which cannot be outsourced.- Competitions from other design studios offering similar services and positioning. 17
  • 19. POSITIVE N E G AT I V E STRENGTHS WEAKNESSES 1. Cross cultural global design 1. The struggle to develop an perspective. awareness for a startup. 2. A unique positioning of the 2. Less and less time avail- firm itself, focusing on creative able for marketing as more and solutions for firms wishing to more time is devoted to finishing seek a youth oriented market projects. (millennials) could specialize usINTERNAL and make our studio the “go to” 3. A struggle to maintain an place. understanding of youth markets as they are ever changing and 3. “The new car smell”. Novelty we are ever aging. is an advantage in this market as we can be seen as having 4. The positioning of our com- something other firms don’t – i.e pany could limit our client pool. being new and fresh. 5. Less professional experience than some of our competitors. 4. An elegant open working en- vironment (with lots of windows) to allow for flow of creative ideas and keep our minds at ease. OPPORTUNITIES T H R E AT S 1. A growing market (millenni- 1. Economic recession. als) and a misunderstanding of brands on how to reach them. 2. An increase in the ease of use in graphic design publish- 2. Ever advances in technology. ing programs allowing individu- als to design their own graphic designs.EXTERNAL 3. Outsourcing: more and more firms are outsourcing tradi- tional graphic design services to cheaper countries. It is impor- tant that FourHeads Studios offer to clients that which cannot be outsourced. 4. Competitions from other design studios offering similar services and positioning. 18
  • 20. ( FROM 1 TO 9 )STRENGTHS Factor Relevance/ Strategic Scale/Size Importance ImpactCross cultural global design per- 8 6 5.5spectiveA unique positioning of the firm it-self, focusing on creativesolutionsfor firms wishing to seek a youthoriented market (millennials) could 5 6.5 6specialize us and make our studiothe “go to” place.“The new car smell”. Novelty isan advantage in this marke as wecan be seen as having something 4.5 4 3.5other firms don’t (i.e being newand fresh)An elegant open working environ-ment (with lots of windows) toallow for flow of creative ideas and 4 3.5 5keep our minds at ease.WEAKNESS Factor Relevance/ Strategic Scale/Size Importance ImpactThe struggle to develop an aware- 4 7 5ness for a startupLess and less time available formarketing as more and more time 4 6 5.5is devoted to finishing projectsA struggle to maintain an under-standing of youth markets as they 4 2.5 3are ever changing and we areever aging.The positioning of our company 6 7 4.5could limit our client pool.Less professional experience than 5 3.5 6.5some of our competitors. 19
  • 21. ( FROM 1 TO 9 )OPPORTUNITIES Factor Relevance/ Strategic Scale/Size Importance ImpactA growing market (millennials) and 5 5.5 7.5a misunderstanding of brands onhow to reach them.Ever advances in technoloogy 4 3 4.5WEAKNESS Factor Relevance/ Strategic Scale/Size Importance ImpactEconomic recession. 7 8 7.5A increase in the ease of use ingraphic design publishing pro- 6 4.5 4grams allowing individuals todesign their own graphic designs.Outsourcing: more and more firmsare outsourcing traditional graphicdesign services to cheaper coun-tries. It is important that Four- 5 6.5 7.5Heads Studios offer to clients thatwhich cannot be outsourced.Competitions from other designstudios offering similar services 6 6.5 8and positioning. 20
  • 22. > MARKETING TACTICSTHE PRODUCT:Four Heads Studios will be to not only providing strong cross me-dium design (including, but not limited to: branding, print, interactiveinterfaces, web development, social networking) strategic advertisingand creative solutions (novelty & irreverence, viral marketing, antimarketing) to meet our client’s objectives. Millennials speak a differ-ent language than previous generations and it must be understoodthat traditional forms of advertising simple wont work or will not beenough.A perfect example of both novelty & irreverence tactics can be foundin the current Old Spice “Old Spice Guy”, the Dos Equis Most inter-esting Man in the World and the Vitamin Water 10 Water Incorpo-rated / Office of Mother Nature, The current K-Swiss / Kenny Powers– Eastbound & Down campaign and the Geico Car Insurance adsfeaturing actor McGlone always starting off with the question: ‘couldswithcing to Geico really save you 15 perecent…?’. Each campaignuses a bit of humor and irreverence to grab your attention; Noveltyin a sense there is a new commercial with the characters that havebeen invented; And Viral Marketing people use twitter and facebookto comment (even offer up usable ideas) and spread the campaigns.All campaigns also utilize the concept of myth making. The charac-ters invented become figures in-it-of-themselves, thus adding thebrand. Simple put, you can have fun , create memorible ads & stillmake money.Another example of viral marketing (albeit indirectly) is the J / KWedding Video in which a wedding party uses the pop song Foreverby Chris Browns (Jive Records) to dance down the isle. The videobecame an instant hit you YouTube and has received nearly 60 mil-lion views and was even mimicked on popular NBC television seriesThe Office. 21
  • 23. PRICING:The pricing of projects will typically estimate as a project-based cost.The project cost will be estimated by the appropriate number of hoursneeded to complete the project. Generally FouHeads Studio willcharge a flat hour rate $55.00 per hour per employee to break evenand $65.00 per hour per employee to profit.PLACE:The majority of services will be provided at the FourHeads Studiosoffice space. This office will be designed to appear sophisticated,modern, practical yet fun and open with lots of windows. This is veryimportant because the office of communication designers is a pieceof their portfolio and reflects their product.PROMOTION:It must be understood that graphic design firms visibility and salescome not from advertising but through networking and client refer-rals. Therefore the marketing strategy will consist of:o Press Releaseo Direct mailer to potential clientso Stage a gallery exhibition to show off the talent of our staffo Membership to AIGAo Cold Callingo Client referralso And Networking: Networking will be based on FourHeads Studios personal and professional relationships that have been and will be developed after spending time in this business. This also means finding out who the person is behind the firms we serve and try to develop a relationship beyond the superficial. 22
  • 24. PEOPLE:Firms go out business everyday – but if you stay in the business ofpeople, you’ll do just fine, for was we have seen throughout historythat no matter what people will never go out of business. Our peopleare the Millennials. FourHeads Studios must also make the case forthe simple proposition that the brands we work with must do some-thing good for their communities for customers to like them. Reportafter report tell us that individuals, including Millennials, want brandsto build a better world not just to build better widgets. 2 23
  • 25. > POTENTIAL INDUSTRIESFashionTelecommunicationsSports DrinksPersonal ComputersMusicConsumer GoodsTelevisionEntertainmentNon ProfitInsurance 
 24
  • 26. > POTENTIAL CLIENTSHewlett-Packard Company Company Profile3000 Hanover St.Palo Alto, CA 94304-1185650-857-1501Rocawear Apparel LLC1411 BroadwayNew York, New York 10018(201) 601-4283 Toll Free:(800) 839-6016Sean John Clothing, Inc.1710 BroadwayNew York, NY 10019-5254Phone:212-500-2200www.seanjohn.comChurch & Dwight Co. Inc.469 North Harrison StreetPrinceton, NJ 08543-5297Phone: 609-683-5900Obey Clothing2313 South Susan StreetSanta Ana, CA 92704714-429-1595Unilever (Axe, Lipton, Dove, etc)Unilever House, 100 Victoria EmbankmentLondon EC4Y 0YD, United Kingdom+44-20-7822-5252Jive Label Group137 West 25th StreetNew York, NY 10001United States212-727-0016 25
  • 27. Wachovia Bank301 S College StCharlotte, NC 28288United StatesPhone: 704-374-6161Boost Mobile LLC9060 Irvine Center Dr.Irvine, CA 92618949-748-3200Fuse Networks, LLC11 Penn Plaza17th FloorNew York, NY 10001United States212-324-3400www.fuse.tvHabitat for Humanity International270 Peachtree Street Suite 1300Atlanta, GA 30303United States1-229-924-69351800-HABITATKristin Brooks Hope Center1250 24th Street NWSuite 300Washington, DC 20037202-536-3200Blue Cross Blue Shield3800 Concorde ParkwaySuite 2000Chantilly, VA 20151-1127United States703-227-5300 26
  • 28. E. FINANCE> INTRODUCITON & OVERVIEWWhile estimating our start up cost for Four Head Studios we re-searched existing design firms and salaries for employees. With ourmarketing goals and research in mind, a determination was made asthe number of and positions necessary.Initially consideration was give to 10 employees but narrowed downafter finance was taken into consideration. The goal was to under-stand the numbers i.e. - the labor costs, overhead, and additionalcosts of operation. Moreover, with this approach we can see the bigpicture, the potential of Four Head Studios. This approach of workingbackwards was a useful tip from a friend who is an auditor.Below you will find the vision of Four Head Studios:Having calculated the cost of starting up, labor, and overhead, andestimating the AGI (Agency Gross Income) - the labor and overheadexpenses totaling $364,800 annually, from this we understood howexpensive running a established business would cost. We begandrastically cutting down our staff and expenses.The start-up is minimal, what is needed to start a business. With aend product in mind, have an idea financially where to cut or add.STARTUP PLAN:We used Creative Business Guide 60/6 Rule, having our principaland senior graphic designer work 60 hours a week for six months.When needed, we will hire temporary outside services such as free-lancers or developers. Our start up cost is estimated to be $16,320.For operating costs we looked at salaries of creative on AIGA’s web-site, and calculated each individual’s hourly rate based on those An-nual Salaries. Then we estimated the labor cost, which we estimatedto be $3720 per week. From that we determined our Basic Hourlyrate is $60 an hour per person. Our goal is short-term profit, so if the 27
  • 29. employees in the company are able to generate 120 billable hours aweek for a client, revenue would equal $6000. After factoring laborand overhead cost the profit is estimated to be $2,755 weekly, that isthe possibility of generating $66,120 in six months. In 2 months wecan break even with our start up costs. Principle / Owner - $80,000.00 Creative Director - $70,000.00 Web Developer - $60,000.00 Sr. Designer - $60,000 Designer (2) - $50,000 Copywriter -$45,000 Marketing (2) - $45,000 Office Manager - $45,000Four head studio’s goal six months into running our business is tolook for additional part-time staff in establishing our company. In themeantime we will keep organized financially through forms, this in-cludes estimating worksheet to the client and weekly time sheets forour own records. These forms include change order form just incaseclients make mistakes; there is profit for us to fix them. Our goal inthe first six months is to generate $2500 minimum a week, after thenwe will begin looking for candidates to hire.In two years Four Heads Studio expect to be more established,adding 4 employees. Four Heads outlook is to be then charging $70minimum for our increased quality of work and expertise in the field.This will increase our revenue and keep our employees prosperous. In two years Four Heads Studio expect to be more established,adding 4 employees. Four Heads outlook is to be then charging $70minimum for our increased quality of work and expertise in the field.This will increase our revenue and keep our employees prosperous. 28
  • 30. STARTUP COST OF DESIGN BUSINESS: $16,320( 2 employees)Lease $ 6,000 / two monthsRegistering Business $ 325Website domain name $ 15 / yr SUB TOTAL 1 $ 6,340Principal / Creative Director MacBook proSr. Designer MacBook proITEM AMT EACH TOTALMacBook Pro 2 $ 2,000 $ 4,000Mac Pro 1 $ 2,500 $ 2,500LCD monitor 1 $ 200 $ 200 2 $ 500 $ 1,000Keyboards 2 $ 20 $ 40Mouse 2 $ 15 $ 30Chairs 8 $ 50 $ 400Tables 5 $ 200 $ 1,000Office copy machine 1 $ 700 $ 7003lines and 4 telephones $ 110 SUB TOTAL 2 $ 9,980 GRAND TOTAL $ 16,320OVERHEAD / Month / YearRent $ 2,500 $ 30,000Phone Bill $ 50 $ 1,200Electricity $ 100 $ 1,200Internet bill $ 50 $ 600Heat/ air condition $ 100 $ 1,200Business insurance $ 100 $ 1,200 $ 2,900 $ 34,800We consider cutting fixed costs, possibility of virtual officeor renting parts of office. 29
  • 31. OPERATING EXPENSESSalaries of staff:2) Annual salary/ 52 weeks / 40hrs Full-time, 20hrs part-timePrincipal / Creative Director $ 35 / hr 60 hoursSr. Designer $ 27 / hr 60 120 hrs / week 480 hrs / month 5760 hrs / Year(b) Labor costsPrincipal / Creative Director $ 35 / hr 2100Sr. Designer $ 27 / hr 1620 $ 3,720 / week $ 14,880 / month $ 178,560 / YearBasic Calculation for hourly rate (weekly)Total Labor and overhead / average working hours +15% markup divide by 80 hours $ 3,720 Total Labor + $ 725 Overhead per week $ 4,445 lavor and overhead per week / 80 hours a week $ 50 per hour + $7 15% mark up $ 60 Basic billable rate Per hour, per personPrice might be slightly lower based on gathering potential custom-ers. We might consider offering Trial period discount for customers togain a relationship, instead of premium. 30
  • 32. Profit after 60/6 rule and every one gets paid: $ 60 x 120 hours = $ 7,200 revenue - $ 4,445 Overhead and labor costs weekly $ 2,755 profit after labor and overhead expenses weekly $ 66,120 profit after 6 months of work Profit with regular work hours (80 hours) a week: $ 60 x 80 hours = $ 4,800 revenue - $ 4,445 Overhead and labor costs weekly $ 355 profit after labor and overhead expenses weekly $ 8,520 profit after 6 months of workWe estimate to break even with our startup cost with 4 months mini-mum working 90 hours total a week. 31
  • 33. TWO YEARS OUTLOOK MINIMUM.ADDITIONAL STAFF AFTER TWO YEARS: ADDITIONAL $1,135(6 employees)Lease $ 6,000 / two monthsRegistering Business $ 325Website domain name $ 15 / yr SUB TOTAL 1 $ 6,340Principal / Creative Director MacBook proWeb developerSr. Designer MacBook proDesigner Mac proCopy writer LaptopMarketing LaptopOffice manager DesktopITEM AMT EACH TOTALMacBook Pro 2 $ 2,000 $ 4,000Mac Pro 1 $ 2,500 $ 2,500Desktop 1 $ 300 $ 300LCD monitor 1 $ 200 $ 200 3 $ 500 $ 1,500Keyboards 3 $ 20 $ 60Mouse 3 $ 15 $ 45Chairs 10 $ 50 $ 500Tables 6 $ 200 $ 1,200Office copy machine 1 $ 700 $ 7003lines and 4 telephones $ 110 SUB TOTAL 2 $ 11,135 GRAND TOTAL $ 17,445 32
  • 34. OVERHEAD / Month / YearRent $ 2,500 $ 30,000Phone Bill $ 50 $ 1,200Electricity $ 100 $ 1,200Internet bill $ 50 $ 600Book Keeper $ 600 $ 7,200Heat/ air condition $ 100 $ 1,200Business insurance $ 100 $ 1,200 $ 3,500 $ 42,000Benefits (optional)2 employee EPO plan $ 600 month $ 7,200 $ 4,100 $ 49,200 33
  • 35. OPERATING EXPENSESSalaries of staff:2) Annual salary/ 52 weeks / 40hrs Full-time, 20hrs part-timePrincipal / Creative Director $ 35 / hr 40 hoursSr. Designer $ 27 / hr 40Web developer $ 35 / hr 20Designer $ 35 / hr 20Copy writer $ 25 / hr 20Marketing $ 10 / hr 20 160 hrs / week 640 hrs / month 7680 hrs / YearMarketer based on commission based on clients, $10 dollars anhour, more incentive. Adds value to work.(b) Labor costsPrincipal / Creative Director $ 35 / hr 1400Sr. Designer $ 27 / hr 1080Web developer $ 35 / hr 700Designer $ 35 / hr 700Copy writer $ 25 / hr 500Marketing $ 10 / hr 200 $ 4,580 / week $ 18,320 / month $ 219,840 / Year 34
  • 36. Basic Calculation for hourly rate (weekly)Total Labor and overhead / average working hours +15% markup divide by 80 hours $ 4,580 Total Labor + $ 1,037 Overhead per week $ 5,617 lavor and overhead per week / 160 hours a week $ 40 per hour + $ 12 30% mark up $ 70 Basic billable rate Per hour, per personAdditional $10 added because quality of work and more valuedemployees in company.Profit after 60/6 rule and every one gets paid: $ 70x 160 hours = $ 11,200 revenue - $ 5,605 Overhead and labor costs weekly $ 5,595 profit after labor and overhead expenses weekly $ 66,120 profit after 6 months of workWhat if different scenario? Half capacity work: $ 70x 80 available billing Hours = $ 5,600 revenue - $ 5,605 Overhead and labor costs weekly $5 loss after labor cost and expenses, minimal risk if minimal hours. 35
  • 37. REALISTIC DETAILED ESTIMATION:Salaries $ 234,240 YearRent $ 30,000Health Insurance $ 7,200Business “ “ $ 1,200Accountant $ 12,600Phone $ 1,200Heat / Air Cond $ 1,200Electricity $ 1,200Gov. Taxes $ 17,331 $ 306,171 Annual fixed Costs / 7680 estimated billable hours $40 + 8(mark up) $50 hourly rateSalaries plus taxes $ 251,571REALISTIC DETAILED ESTIMATION: 52 weeks in a yearx 160 hours a week 8320 billable hours a year- 1040 deduct marketing hours per year because cannot bill client for own expense 7,280 billable hours - 160 hours 2week(80hrs) vacation for (x2 full time employees) - 80 hours 5 sick days(40 hrs) or days off for (x2 full time employees) - 224 hours from 7 legal holidays extended into holiday weekends,14 days (112 hrs) (x2 full time employees) - 520 hours 5 hours a week surfing web and taking breaks 6296 Total annual billable Hours 36
  • 38. FORMULA TO COVER SALARIES AND FIX EXPENSES(NOT OVERHEAD) $251,571 Cost of labor plus taxes / 6296 billable hours $40 hour per P to cover salaries and fixed expenses (not overhead) To check: 6296 billable hours a year X $40 hour per P to cover salaries and fixed expenses $251,840 Equal to slaries plus taxes hours a weekTO FIGURE OUT PERCENTAGE TO COVER OTHER EXPENSES $ 306,171 total annual fixed costs - $ 251,571 Cost of labor plus taxes $ 54,600 remaining expenses / $ 251,571 Cost of labor plus taxes .20 percent x $ 40 hourly rate to cover salaries and expenses = 8.68 per hour (best needs to be charged to break even on additional cost) $ 40 +$ 9 $ 50 Breakeven rate, to cover both salary and overhead costs + $10 20% mark up fee $ 60 per hour per person $ 60 x160 $ 9600 3100 billable hours a year - $ 5917 x $ 60 $ 3,683 profit 186,000 37
  • 39. SHORT TERM PROJECT EXAMPLE:10 page 8x10” sales brochure for RocawearTime frame: 7 days, 56 hoursOverview: Meeting with client, brainstorm, photography, copy,layout, test, touching up, productionPeople involved: principal, Sr. Designer, photographer, copy-writer, designer, marketerFee: $60 an hourGANT CHART HOURS EMPLOYEES DAY 2 DAY 3 DAY 4 DAY 5 DAY 6 DAY 7 DAY 1 TASKS INVOLVED meeting Prin, Sr.des 6 brainstorm Prin, Sr.des 23 23 research Prin, Sr.des 18 18 photograph copy Copw 4 layout Prin, Sr.des 58 21 21 16 test printer touch up Prin, Sr.des 26 5 21 finalize Prin, Sr.des 16 16 production printer 4 2 2Principle $1960 151 total billable hoursSr. Designer $1512 x $60 hourly rateDesigner $700Copywriter $100 $ 9,060 estimate for client withoutOverhead $1025 outside costs - $ 5,297 Labor and Overhead weekly $ 3,763 profit without markup off outside services 38
  • 40. G. CLOSING STATEMENTFirms go out business everyday – but if you stay in the business ofpeople, you’ll do just fine, for was we have seen throughout historythat no matter what people will never go out of business. Our peopleare the Millenials. . FouHead Studios is dedicated to providing our cli-ents with strategic planning, cross medium design, creative solutionsand cutting edge consulting to help business understand, tween, teenand young adult market. 39
  • 41. WORKS CITED1) AIGA Design Leaders Confidence Index, AIGA 2010, http://www.aiga.org/content.cfm/confidence-index, 29 October 20102) Why brands must start caring about something other than them-selves, Simon Mainwaring 2010, http://simonmainwaring.com/brands/why-brands-must-start-caring-about-something-other-than-themselves/, 27 October 20103) Millennials Have Found Religion But Will Brands?, Simon Main-waring 2010, http://simonmainwaring.com/future/millennials-have-found-religion-but-will-brands/, 27 October 20104) For Millennials Brands May Be As Important As Religion, Ethnicity,David Zax 2010,http://www.fastcompany.com/1695062/brands-and-millenials-a-deep-connection?partner=rss, 28, October 20105) William McDonough and Michael Braungart, Cradle to Cradle(New York: North Point Press, 2002), 62–686) Victor Papanek, Design for the Real World: Human Ecology andSocial Change (New York: Bantam Books, 1971): 14-16, 18-19, 25-267) John Thackara, In The Bubble: Designing in a Complex World(Massachusetts, First MIT Press, 2006) 7,8) Market Segmentation – “Millennials” Mark Brewer & Evok Advertis-ing Agency, http://www.evokad.com/millennials, 28, October 20109) Job Descriptions for Graphic Designers, Design TalkBoard 2007,http://www.designtalkboard.com/design-articles/graphic-designers.php#middle, 28 October 201010) Aquent Survey of Design Salaries, AIGA 2010http://www.designsalaries.org/salarysurvey.shtml, 20 Ocotber 201011) Salary Wizard - Job Descriptions, Salary.Com 2010, http://swz.salary.com/salarywizard/layoutscripts/ 28 October 201012) Cameron S Foote, A Creative Business Guide to Running aGraphic Design Business: Updated Edition (W.W. Norton & Com-pany, New York, 2009) 3913) Philip Kotler, Kotler On Marketing: How To Create, Win, AndDominate Markets (New York: The Free Press, 1999)14) Theo Stephan Williams, The graphic designer’s guide to pricing,Estimating & budgeting (Allworth press, New York, 2010) 40