How do you scale your business, from 2 to 20 and beyond? A creative company's approach: Part 2

For those of you who have not read my first article on this topic, please do so before reading Part 2. It sets the tone for some specifics I am going to talk about in this next article.

So now that we have our groundwork in place--the right thought leadership, positive revenue growth, the right clients, and a reason to expand--we can begin to scale up. It is important to note that the topics below are not in any specific order of execution.

1. Hiring Strategy: It's not as easy as just hiring a designer or support staff at your company. You must weigh each decision to hire a new team member with equal importance to your company. Let's say your goal is to be big enough to support 20 staff members. Each member will play a role in the success of your business, whether they answer the phones and cut payroll or manage a project.

You must, even early on, develop a hiring strategy that you and the other leaders at the company can agree on. How do you interview? What questions do you ask? What type of potential team member is the right fit for your vision? And will you base decisions on past performance and references, or will you base them on your gut instinct and what potential you think the person might have? Perhaps it is a little bit of both. Whatever the need is for hiring, having a strategy in place first will save you and your potential staff members a lot of headaches and will ensure interviews are focused to complement a streamlined process.

2. Firm Capabilities: Once you're established and ready to grow, you must revisit the capabilities you offer to your clients. As a creative shop starts out, it usually takes on a lot of projects it is not always qualified to complete. A newer shop is going to get hit with a lot of requests that will span the spectrum, and while building a base from these types of projects is OK, eventually you have to look in the mirror and concentrate on your very best offerings.

Also, as you hire new people, each team member will contribute to the capabilities offering, and so focusing on what the firm is good at and what made you successful in the first place, is a critical step in the growth process.

For a creative firm, capabilities are essential. You are only as good as the work you push out the door to many potential clients. And for those clients that come through a referral, don't assume that you won't have to demonstrate your capabilities to them.

-Take a look at that last 12-18 months, categorize your work, and rate the successes versus the failures. You should end up with a nice list of projects that demonstrate your strong points and should represent your "bread and butter" client work.

-Once you have honed in on your true strong points, sit down with the other leaders at your company and make decisions on how these strong offerings can be managed internally.

-For the weak offerings, brainstorm ways to increase success for those capabilities you wish to continue to offer to new and existing clientele. You should answer internal questions like, why do we want to improve these capabilities, what does the market look like for these moving forward, are we going to be able to hire staff to support these capabilities, and so on.

-Develop a capabilities report outlining your findings from the above discussion, and make sure that for each service offering, you have a plan for acquisition, execution and evolution.

Once you have your final capabilities in check, and you have a plan to support them, your small firm will be on a good track to continue to move forward. What happens if you don't go through this exercise? Well, it's pretty easy to understand that as part of a proactive growth program at any company, you must know in your gut what offerings are appropriate for the market, what will grow your company, what offerings will generate positive revenue and what capabilities your staff can support.

3. Thought Leadership: Are you a designer or a business person? Or both? If you start a firm with a partner, and you divide the "Creative" and "Business" responsibilities from the get-go, you will likely see success much earlier. This is how Killswitch has grown so rapidly over the past 6-7 years and why we have been successful. Seems simple right? Well it is, and it isn't. Not only do these two people need to respect each other and their "halves" of the business, but they have to be able to bring to two parts together as a whole. The creative has to match the business offering and promises, and the business offerings should not sell the creative short. In other words, if you are a higher-end shop creatively, you don't want your "business" side of the firm making cold calls and selling web design door-to-door right? The business market model has to match the creative approach to accelerate success and to build a brand with not only the perception of high-end, but also one that can deliver the goods. The business offering that goes out can only be successful on its own if the creative matches.

But for those of you who do not have the 50/50 split I describe above, than you have an even bigger challenge. You must identify what your are best at. If it is design, you will need business guidance, and if it is business, you will need design guidance.

What I am really getting at here, is figuring out what you are best at and how you fit within the thought leadership as you begin to scale your firm up is a critical exercise to go through. If you haven't done an audit on yourself, and you think your hiring strategy and firm capabilities are in check, you need to look in the mirror and make sure that your business, the hiring strategy and the offerings can be supported by your thought leadership alone, when you are singularly in-charge of a creative firm.

Knowing this helps you hire the right people, and it helps you find the right clients which I will talk about next.

4. Client Acquisition Strategy: I know this sounds rather technical for an element within a creative firm, but it is so important. When you are starting out, you take on any client you can find, especially if you start younger and without a reputation or past firm experience like we did here at Killswitch. You learn the hard way which is sometimes the best way to learn. You get knocked down, time and time again, but as long as you get back up, there will be a reward.

If your small firm is about to embark on a growth phase, you must develop a client acquisition strategy. This can be a plan that outlines the type of clients you will go after, based on the capabilities we discussed earlier. How will you approach cold clients? How will you approach referral based clients? How will you approach clients who invite you to bid on an RFP? And the list goes on.

There are 6 major client categories Killswitch has identified, and they apply to all the industries out there.

1. Cold Clients: Clients who you engage on your own when there is no work on the table at that time.
2. Cold RFP Clients: Clients who you engage to bid on an RFP that was not sent to you as an invitation only.
3. Cold Referral Clients: A client who is referred to your firm through someone who recommends you who has not necessarily worked with you.
4. Referral Clients: A client who has been referred to you by a client you have worked with and have a relationship with.
5. Existing Bid Clients: A client who you have worked with, who comes back to you to do more work through a bid process.
6. Existing Clients: A client who you have worked with, who comes back to you to do more work, without a bid process in place.

As you go through the list above, the clients get riper and riper. Obviously each category has its plus and minuses, and I won't go into each now, but the bottom line is that as part of your strategy you must make some decisions about which of these categories you will contend in. You should have an acquisition plan in place for each, because each demands a different type of engagement.

In addition to determining the client categories in which your firm will work, you must also think about industry. Which industries fit the firm the best? This is another question easily answered from your capabilities exercise. If you can hit a few industries and make them your sweet spot, you will grow quicker than you imagined. Just make sure you have enough in the tank in the event you lose clients. Some industries, as just exhibited in the recent recession, can stop sending money all at once, and that is something that you want to protect your firm from.

5. Internal Structure: Once all the strategy and discussion is in place, the bare-bones structure of your firm must be addressed. This problem is probably the single biggest issue I hear from small business owners, both in and out of the creative industry. How do I structure my business? Well, if you go through the above exercises, you should have an idea of the positions you need to create at your firm and the type of people that will best fill those positions.

Each business has a model that hopefully works for them, whether they have 20 people or 2,000. And the size doesn't matter that much actually. As the company gets bigger, there are just more tiers and layers of accountability. Some creative firms choose to be heavy on the account manager/designer position, while other firms like Killswitch that are more evenly split between creative and web development have two over arching structures in place: one for managing the creative side of the business, and one that manages the web development/sofware side of the business.

Development:
-Principals oversee development managers, development managers oversee developers, developers execute development.

Creative:
-Principals oversee designers, designers execute their projects.

Projects:
-Principals oversee project managers, project managers oversee clients and projects.

Admin:
-Principals oversee human resource staff, human resource staff oversee employee needs.

Client Acquisition:
Principals oversee new client acquisition.

Hiring Strategy:
Principals oversee new hiring strategy, human resource staff supports hiring strategy.

Obviously the above descriptions over simplify things a bit. Within each are additional layers of description which define how each role is executed, but the important thing to take away is that all tiers have equal importance and equal input on all stages of a project depending on what capability area they are working in, and that is essential for a small firm like Killswitch.

It is important to not over complicate your structure. Even for smaller shops, it's important to have these tiers defined so that everyone has a clear understanding of responsibilities.

6. Paperwork, Paperwork, Paperwork: Do you have an employee handbook? Do you require any legal documents like an NDA or Non-Compete for your employees? Do you have a sick-leave policy? Are you even sure you are following the laws of the state with which your firm resides?

One of the most overlooked things by creatives who scale their business up is the legality of hiring and firing. If you are scaling up, you should have things in place to cover the interests of your business, and you should meet with a human resources consultant to ensure all laws are being followed. Having these documents is for the benefit of everyone involved.

7. Finances: Uncle Sam is in control when it comes to scaling any business up. Your business is likely taking risks when hiring people, especially in this climate. Having enough funds in the bank to back up these risks is essential.

Creative businesses, like many others, have one major form of traditional revenue.

- Client Receivables: The money that is on its way to your doorstep from those projects you just completed can be most easily broken down into "per-project income" and "retainer income." Both will support just about 100% of the revenue at your firm, and for many, I am only speaking the obvious. For some firms who offer additional products or other services for sale, there may be a 3rd called "recurring customer income," but for purposes of this article I am not going into that.

So while these are obvious, there is one area that time and time again business owners fail to realize (especially those in the design industry) and that is good ole' cash in the bank. Savings, savings and more savings is the best alternative strategy to ensure your scaling up doesn't bite back. There is no magic number here, but most businesses should try to save up to 3 months of monthly costs and have that in the bank at all times, and if you're scaling up from your current monthly expenses, I would recommend having at least another 2 months saved at the new budgeted monthly amount. That means if you operate on $100,000 per month and you are expanding 20% you should have $300,000 in the bank plus another $240,000. This could be in the form of saved client receivables, a line of credit, or even a loan. Whatever the form, if you are going to scale up, make sure you have money to back it up. In this climate, it may not seem reasonable to require this type of rainy day fund but it is a discussion that must be had during the process of expanding your firm.

8. Expansion Plan: All of the points thus far should be articulate in a singular document, a plan that outlines your expansion and everything that comes with it. There may be things as you draft this plan that you will see are unique to your specific scenario that need to be addressed. Issues such as office space and presence or other issues like planing out how you will set up interviews. You may also find that you have already addressed everything. No matter what happens, bringing this all together will help streamline execution, and will allow you to communicate more easily to those in the company as to how the strategy is rolled out.

Obviously for certain people, there will be areas that I have not covered. The points above are simply meant to be a guide and are not all inclusive.

Feel free to email me through our general email address if you have any questions or need help figuring out how to get things off the ground with your new venture.

How do you scale your business, from 2 to 20 and beyond? A creative company's approach: Part 1

The question of scalability in the business space, especially the start-up environment is a daunting task for creatives. Whether you are a start-up that has 5 people or 500, business structures must be in place, and you must be committed to trying things and failing early on.

In our industry, there are so many talented designers and web programmers out there, each with his or her dream of being their own boss. And while the freelance community supports this methodology well, building your business from being a designer in the living room, to becoming a business owner that manages multiple facets of the service offerings, client requests, budgets, payroll and so on, is not an easy task.

One of the most critical facets of building a creative shop that can scale is ensuring that no matter what structure is in place, the staff can be flexible within their job descriptions. In other words, team members must wear many hats at a small firm, and so having a team backing you up that can not only serve many roles, but also can take on new responsibilities through promotion and other benefits, is absolutely critical for scalability's success. As a small business, if you cannot promote those from within, you can never scale up with any certainty that as the owner you won't be micromanaging everyone, every day.

In addition to the ingredients of the structure, i.e. the employees, business operations and thought leadership, the structure itself must scale or be flexible enough to allow for new positions to be adopted as the firm grows from a smaller shop into a more mature creative machine.

Over the years here at Killswitch we have tried different structures. Some have included managers, some have not. Some give employees equal input on many facets of a project, or an operational problem. Some include project managers or in other scenarios, development managers that manage different aspects of the operational and development portions of a project. And over the years we have grown into a model that works for our level of firm and clientele.

But there is still always a lot of room for improvement.

And there should be with any small business, not just a creative firm. The most important thing to remember if you are a new creative starting out, and looking to build your shop up, is not to worry about the things that are not going to be with you tomorrow. Concentrate on the big picture items, and that should serve you well to ensure the details of your client's project are being taken care of.

For the back story on how Killswitch grew, I would recommend reading this article first, and then coming back to this one, as it offers a more clear back-drop for what I am talking about here.

Below I have outlined the most important things I have learned over the years in scaling a creative business, from getting it off the ground to maintaining it, and everything in between.

1. When you first start out, you have to understand that you will make mistakes. If you are a creative person, you probably do not have a business background, so from the start, be comfortable with the fact that you're probably not going to just step on your own toes, but you may at times, step on a few clients' toes as well. The most important thing you can know when you first start is that you must learn from these mistakes the very first time you make them.

2. Your business never gets big enough, and you never get busy enough to ignore the work that is being sent out. Even at a firm of 10 or 15 people, work can squeak out that the owner or managing partner never sees, especially when there is more than one owner. Control the flow of outbound information, design, and anything else that will impact your brand. This point is especially important in an early growth stage company. Work that is not up to par early on can have a worse impact than many think. Some of those early client connections will be the ones that bridge you to your next project and next tier of success.

3. Work, work, work. If you expect only to do good design work and be successful, you've got another thing coming. Designers are a dime-a-dozen these days. At Killswitch, we receive between 3 and 4 resumes per day from creatives. Clients have so many options for their projects, and so it is important that the design strategy and execution not only be good, but that you distinguish yourself from the rest. This could be a service that you offer, in addition to design. It could be the way you manage a client, or it could even be the thought leadership you employ if you are a slightly larger company. The bottom line is that your work is never enough in the small business space. You should always have to offer more.

4. As your business grows, your bank account should too. Just because you are a designer, and you now have a studio with employees, payroll, deadlines, and all the other things that come along with this, doesn't mean you should be living like you were in college. Quality of life, when you are a small business owner, comes with a lot of stress, but should also come with plenty of rewards if you are doing things right. This is a topic that is overlooked a lot in this industry. The saying goes that if you do something you love, the income and quality of life that you desire will follow. Well, that is just not true. You must decide where you want to be, and how you want to live and work towards those goals, whether they are financial, or a mix, it doesn't matter. Just don't forget to think about this as you grow your business and client base.

5. Think about your employees first and your clients second. This statement might sound a bit off, but in many circumstances, you must consider the impact a project has on your talent, especially in this industry. Cultivating a small business is as much about building a talent pool as it is building a client base. Killswitch was fortunate early on to land some big accounts, and while those have lead us to where we stand today in many regards, there are things that would be done differently now when it comes to employee impact and so on. Creative firms will lose some great talent no matter how well you manage your employee morale, but you should try to make sure it is never because they are burnt out on a project or a client. Staffing and other strategies can be used to ensure that employees don't get burnt out on one client or project, and I would recommend using everything in your arsenal to ensure this does not happen

6. When your company is more established, and you have operating income and the freedom to make a great hire, do it, and do not hesitate. More importantly, when you hire someone, make sure they are not just qualified for your position, but are better at what they do than you are. While being a small business owner and creative professional can make it hard to hire someone more talented or experienced than you are, this strategy will never let you down. By surrounding yourself with great talent, you will see your business grow quickly.

7. Secondary to the point above, and my concluding point... put the power in the hands of your staff. Allowing your staff to make the recommendations and to have a voice is a very critical practice, especially at a smaller, more collaborative studio. At the end of the day you might be surprised at how much better the outcome is for your client. The real power here, is that as your staff become more active in the business and critical decisions, the easier it will be for you to scale up and hire more team members.

Many of these points help contribute to the base that allows you to scale. Once the base is in place, read Part 2 for specific strategies to execute that will help you succeed in scaling up

Feel free to email me through our general email address if you have any questions or need help figuring out how to get things off the ground with your new venture.

Have the Changes in Employee Culture Predicted and/or Contributed to the Rise of Social Media?

It may not be an obvious exercise to connect the changes in employee culture over the past 30 years and the current rise of social media, however when you look at the general patterns and focal points for both, you begin to see that the changes that began to take place some 30 years ago, may have played a key role in developing the environment we find ourselves in today.

Back when our parents grew up, the culture supported the idea that your "career" would be only with a handful of employers. People went to college or a technical school, graduated and then became part of the American culture, where it was not uncommon for people to spend 15, 20 or even 30 years with a single company. Some earned a living wage at first, and worked their way up, while others worked in the same job for their entire 30+ year career.

It's not hard to understand why that culture was different. They had pensions, employee loyalty incentives, retirement programs that were calculated based on their life-long commitment to the company and so on. People worked 9-5 jobs, with very little technological interference, and the majority of their 8 hour day was behind a desk or out on service or sales calls. Communication with clients and with your colleagues in the company was face-to-face just about all the time, and that was the way the culture accepted these types of professional positions.

Life was good, and people felt stable at one job. They felt stable having only maybe a handful of different bosses over their entire service at the company, and they accepted the fact that the American Dream was to own a home and raise a family where people conversed around the dinner table. They didn't just accept it, but the majority of Americans defined their life by their career and company choice. They were who they worked for, and the culture of their friends and family usually surrounded a single or only a handful of brand names.

Oh my, how times have changed, right? Just about everything from the past has been completely rewritten for today. And while we have not rewritten history, in many cases we have rewritten culture's acceptance of many of the points I make above.

We live no longer in a culture where someone will spend their entire career at a single company. In fact, our leaders now encourage us to work for different companies. We do not accept a destiny where we have one or two professional experiences and then retire.

Why? Well the answers are both simple and complex. The simplest, pensions, at least those that were once intact in some of the strongest industries are no longer. Thanks to Social Security and company views on retirement, the retirement card has been leveraged on the employee. No longer does the employer have to worry about taking care of their staff after they retire. The American dream of owning a house and staying in it, is well, gone. Not just because of the recent economic climate, but because people don't stay in one place due mostly to their employment choices. The use of newer technologies simply does not allow us to benefit from the previous generation's single career lifestyle nor does technology support that model. And one of the simplest reasons of all: people just want to do new things.

And so, over the years people began to change their outlook on what a career is defined as. Some argue that it was the academic community who pushed new professionals into a mindset of "many jobs = more experience = better rounded candidate for the next job," while others argue that the companies themselves, as times changed, in fact thrived on turn-over in the company, because turn-over allows for fresh thinkers. When you lay people off, or help people move on to other opportunities, many have argued that you actually create more opportunity for a hiring company to bring in fresh talent and that outweighs the talent you are losing. Whatever your opinion on this, it is clear that most professionals these days will not spend more than 5 years in a single position or in many positions in a single company.

And so the need for social media was born.

As people shifted to a more mobile mindset, and as career advisors, coaches and other industry leaders have pushed professionals to seek multiple opportunities over the course of their career, what has happened is that our career culture has become one where people are driven to do reach new heights professionally, but most importantly they want to reach those new heights for new companies which are within new networks of people.

And with this new mindset in place, there was a need for connectivity like never before. No longer could you see the same people in an office for 30 years and go home and see the same neighbors. It was becoming crystal clear that the days of living within a single network were over. And so people began to move, their career titles changed, their networks of colleagues changed, and the house that they went home to every night changed, sometimes over and over and over again.

As people's networks began to change, our drive to stay connected to people played a critical role in the rise of social media and the supporting networks. LinkedIn, Facebook and many others have been proving this notion for several years now. Not only do we want to stay connected to those we already know, we want to build new networks. We want to not only tweet, but we want to now rank twitter users so that we can see who has the best reliability in giving us reliable and trustworthy data. The social networks have now turned into networks that not only allow people to stay connected, but connect people to places, and that validates those people in our networks by allowing the community to decide who has the best opinions and information to share. These types of services are providing us with the ability to do things that previously were only done face-to-face.

Clearly this new way of staying in touch with our friends, colleagues, business associates and family members is not going to change anytime soon. For a moment though, think about what it would be like to stay in the same job for 30 years, to connect with the same people every day, and to see the same neighbors when you arrive at your driveway every night. The world seemed so much smaller back then, and now, it would seem that there is no limit to how we connect, or who we connect with.

The changing of a professional culture may not have predicted the rise of Social Media, but it surely is one of the major factors in contributing to the need for it. While we wait for that next opportunity to arise, and we get excited about adding yet another position title to our LinkedIn page, or another colleague or friend on Facebook, remember that it didn't always use to be this way.

The days of someone living and working within a single network are almost completely gone, and I hope that for the next generation, connectivity does not completely cancel out the need for a friendly face-to-face meeting or chat at the office water cooler.