Andrew is the founder of Ginger Design, based in Fredericton, NB. Ginger provides ahead of the curve creative services; unparalleled customer experience; supports community based activities and has fun doing it.
Andrew has first hand experience in building professional service based business for the modern world.
As a designer turned Marketing Agency Principal, I'd recommend going out and actively looking for job opportunities where you will learn the additional skills you require. Once you get past your first few hires, your job becomes a whole new gig. You will need to know how lots of different things work. For instance, I was lucky to have worked in the printing industry, traditional software dev industry, a design agency and a marketing agency. I got to see first hand how all of these businesses work, which has made it much easier to oversee a company that works in all of these fields. 75% of the things your business will do is already figured out and this can prevent you from having to reinvent 500 wheels . The other 25% is the part where your innovate and do something new.
Of course, there is no predefined path you should take and I always encourage entrepreneurs to follow their gut, but if you are going to get some work experience, be very strategic about it and what you are going to learn, especially If it is very specialized, such as the music biz . It definitely beats to its own drum. (Sorry, had to)
I've most definitely experienced this issue first hand a few times, and I struggled to find an answer. I finally did get a sense of how to tackle this by going out and meeting with founders of engineering and other professional service firms. The product is quite different (not to mention billable rates...) however, the model is very much the same.
I would always avoid taking financial risk to fund growth, unless you have a contract in the pipe to cover the salaries, overhead and even the profit margin all lined up, in which you really really need to hire correctly and be seriously organized.
As a rule of thumb, every billable resource has be billing at 85% of their work day, everyday. This is incredibly hard to achieve when setting up your agency, as there are countless processes that need to go in place to achieve this. Your first 5 or so hires all need to be billing at 85% before you start taking on overhead staff. Taking on overhead staff too early WILL limit your ability to scale.
If you have a team all billing appropriately , it becomes quite easy just to have two staff working the extra 15-20 hours per week to cover the additional outputs you require. Only make the hire once you have the business in place, solid internal processes figured out ahead of time and have gone through a billing cycle or two so the additional salary won't eat up your cash flow.
It really all comes down to getting your model down to an art. It is more often far easier to work with what you have to become more profitable than to scale. And if you are looking to scale before you have at least 3 months cash in the bank, I'd be very cautious about growth.
This was the stuff I never wanted to hear, but really really needed to hear.
Also, if we are talking about your first hire, first look at ways to offload a lot of your overhead time suckers. (Invoicing, book keeping). If you are billing enough and charging a fair rate, it won't be long before you have the cash in the bank to handle the risk. If not, you are leaking money somewhere. Find the hole and plug it, fast. Before you make your first hire, I recommend reading "The E myth". This will help prepare you to ward off some of the perils of your first hire.
No topics selected.0