Bell Pottinger DesignIntroductionSince the MBO of Bell Pottinger Private and the fact that Rare remains within Chime plc, the newgroup now lacks in-house design capability. Members of the team at Rare Corporate Design havebeen working for divisions of Bell Pottinger for a number of years but the level of work has increasedsignificantly in the last nine months, first as the result of maternity cover at Pelham and then the winof Kraft at Business & Brand. In addition, the team maintain the three websites under theParamount Group account and work on a number of other online projects for Sans Frontieres,Consumer and Public Affairs.The team also has its own clients who either came over as clients of Vertigo Design or have beenestablished by Matthew Gould. A full list of these can be found in Appendix 1.In the last six months, the team has generated a profit of £80,000 excluding operational costs.ProposalIn response to the current situation, this document proposes the formation of Bell Pottinger Design(BPD), a division within BPP, which will provide design services to: 1. BPP for its own collateral and pitches The team currently undertake design of group collateral including stationary, signage, invitations and banners. Design and artworking is also undertaken for pitches and this can involve anything from a PowerPoint template through to graphics and booklets as well as bespoke folder packs including the above and specific documentation. 2. BPP’s clients As well as Paramount Group, the team currently work for a number of group clients either directly or indirectly. These include the Guide to Snacking website for Kraft, a promtional document for Fortnum & Mason and personalised Weetabix boxes. 3. Own clients The team currently manages a number of external clients and these include London Speaker Bureau, Fleming Family & Partners, Insparo AM and Milio. Projects range from leaflets and brochures through to website management and online marketing. The team has also referred clients to Bell Pottinger, including the Prime Minister of Malaysia’s visit to London in 2011 (Business & Brand) and Cirrus Inns (Consumer). 4. Chime In addition to the above, the team has built long-standing relationships with Chime companies, including Good Relations, Harvard and Corporate Citizenship. It is expected that these companies will continue to utilise BPD’s services for collateral and pitches. BPD would also look to reach an arrangement with Rare over its existing online clients (including Chime and Qatar Gas). It is anticipated that divisions of Bell Pottinger Private and Chime will be charged £50 per hour, client work will be charged at £80 per hour or on a project basis.
ServicesThe following services will initially be offered by BPD:AdvertisingAnnual ReportsArtworkingBrandingBrochuresDirect MarketingExhibition designGraphic designOnline applicationsOnline marketingSearch engine optimisationWebsite developmentScalability and suppliersBPD will be launched with a small, flexible and scalable team, comprising Charlie Wigan (projectmanagement), Matthew Gould (creative) and Dimitry Volos (digital developer and artworker). Thecreative industry is based around freelancers and this will allow BPD to recruit additional resourceswhen the level of work requires. This would also be applicable to certain projects that require aparticular skillset or technical knowledge. It is anticipated that these freelancers will form the basisof a ‘bank’ from which permanent staff could then be recruited. This will ensure that costs will bekept down from the outset and ensure that additional staff have the required skills as well as beingable to work to the standards required by BPP.BPD would continue to build relationships with outside suppliers, particularly in terms of productionwhen different capabilities are required in terms of cost, deadlines and quality. Once again, a ‘bank’of production companies would be formed to ensure that clients receive the best possible solutionto their requirements.OperationsIt is anticipated that BPD will launch with the initial team of three plus one freelancer and anadditional workstation would be required to ensure capacity. BPD has negotiated the rental of 3Macs from an existing supplier, a PC would be required along with the Pelham Mac for the spareworkstation. Three Blackberries would also be required and BPD would expect to pay the associatedcosts of being a division within BPD.ServicesBPD’s services will include:
Presentation design – e.g. master templates can be created for each of the group companies and added to the intranet to ensure consistency across BPP pitches. Graphic design – graphics for use in presentations or client reports, as well as one-offs for use in BPP pitches. Print design – brochures can be designed and artworked for use in pitches or to market the group. Event collateral – this will include invitations (printed or emailable), menus, event marketing materials and exhibition design. Print Management – the majority of printing is currently carried out by Moore Printing. BPD would seek to agree on a preferential rate with Moore for group work. Branding – this will include a full branding service including logo design, typography, corporate guidelines and stationary. Website design – although Bell Pottinger Digital also provide this service, it is anticipated that BPD will focus on corporate website design, whereas Bell Pottinger Digital will focus on social media. Website marketing – as above, the company will offer corporate online marketing services based around newsletters.Budget / FinancialsBPD would seek to migrate the principals’ retained clients from Rare, including Paramount Group(£24,000 pa) and Chime (£20,000 pa). BPD would also look to retain their own clients, includingLondon Speaker Bureau, Fleming Family & Partners, Xenon, Milio, Insparo and CQS. For a full list ofcurrent clients, please refer to Appendix 1.Based on year-to-date volumes of the proposed team members, BPD could expect a Year 1 turnoverof £372,000. However, with the new company structure, BPD would expect increased revenue fromboth internal clients (majority of current work comes from Pelham, Business & Brand and SansFrontieres) and referred clients. Therefore, we estimate a first-year turnover of £440,000.The charge out rate to group clients will be £50 per hour and the current budget allows for 500hours per month. Existing client work will either be based on current hourly rates (£60 to £80 perhour) or based on project budgets. New work will be charged at £80 to £100 per hour or based onproject budgets.BPD will be financed via a retainer from of £20,000 from BPP (based on 400 hours), the Paramountretainer of £2,000 per month and the Chime website contract (£5,000 per quarter).TimingIt is anticipated that BPD will be launched on 1st January 2013.Conclusion
The proposed team members have been working on Bell Pottinger projects consistently for the lastsix months and BPD will be able to fulfil BPP’s design requirements based on the parametersmentioned in this proposal. BPD will be scalable and thus if a project requires a specialist skill oradditional personnel, it will be possible to source this from the freelance bank and charge this asrequired.Finally, we expect BPD to make a significant profit margin in addition to providing BPP with anadded-value service that will enhance pitches and presentations as well as being offered to clients tocompliment the core services of the group.
As a result of the initial conversation with BPP, the following options have been identified:Option 1Set-upBPD would be established as a division of BPP and would consist of Charlie Wigan, Matthew Gouldand Dimitry Volos with one freelancer and additional support as required. BPD would sit within BPPand pay all operating costs for a total of 5 desks.Company structureBPP - 70%Charlie Wigan - 15%Matthew Gould - 10%Dimitry Volos 5%IncomePelham Bell Pottinger - £60,000Business & Brand - £60,000Sans Frontieres - £60,000Other group - £60,000Group clients - £80,000External clients - £80,000Chime clients - £40,000Total - £440,000RenumerationCharlie Wigan - £60,000 per annumMatthew Gould - £50,000Dimitry Volos - £30,000Associated costs - £25,000Total - £165,000Freelance - £40,000Operating costsProperty - £37,200Equipment - £6,000Professional - £6,000Other - £10,000Recharges - £27,600Total - £86,800
Total costs - £291,800Total profit - £148,200Profit margin – 33.7%If BPD hit this target, 30% of the net profit (£44,460) will be paid to the team in quarterly bonuses(£11,115).Adjusted profit - £103,740Adjusted profit margin - 23.6%If the target is exceeded by £100,000 or more, 40% of the profit beyond £100,000 will be paid to theteam in quarterly bonuses.Option 2Set-upBPD would be established as a division of BPP and would consist of Charlie Wigan, Matthew Gouldand Dimitry Volos with freelance support as required.Company structureBPP - 100%IncomePelham Bell Pottinger - £60,000Business & Brand - £60,000Sans Frontieres - £60,000Other group - £60,000Group clients - £80,000External clients - £80,000Chime clients - £40,000Total - £440,000RenumerationCharlie Wigan - £70,000 per annumMatthew Gould - £60,000Dimitry Volos - £35,000Associated costs - £30,000Total - £195,000Freelance - £40,000Operating costs
Property - £37,200Equipment - £6,000Professional - £6,000Other - £10,000Recharges - £27,600Total - £86,800Total costs - £321,800Total profit - £118,200Profit margin – 26.9%If the target is exceeded by up to £100,000, 25% of the net profit will be paid to the team inquarterly bonuses. If the target is exceeded by £100,000, 40% of the profit beyond £100,000 will bepaid to the team in quarterly bonuses.Option 3Set-upBPD would be established as a freelance division of BPP and would consist of Charlie Wigan,Matthew Gould and Dimitry Volos with support as required.Company structureBPP - 51%Charlie Wigan - 24%Matthew Gould - 15%Dimitry Volos 10%IncomePelham Bell Pottinger - £60,000Business & Brand - £60,000Sans Frontieres - £60,000Other group - £60,000Group clients - £80,000External clients - £80,000Chime clients - £40,000Total - £440,000Operating costs (£86,800) would be paid by BPP, which would then be repaid by BPD at the end ofthe year. In addition, BPD would pay a £80,000 per annum dividend to BPP in recognition of the 51%shareholding.