Business planning is an intimate business. "How long is your cashflow forecast?" is the equivalent of "Can I measure your inside leg". For anyone who fears that the process might show up a kink in their management accounting, Hugh Mason offered readers of newdesign magazine a painless tool to run a rule over their financial credentials.
Over the last couple of years, Pembridge has helped scores of small and medium sized design studios to grow. Though passionate about design and the impact it creates for clients, the studios' designs for their own futures often seem much more sketchy.
And it's not just the future that's fuzzy. Many also seem unsure about how their businesses measure up now. Sure - the work comes in and the work goes out. They strut their stuff in front of prospective clients. They are assessed by procurement people, banks and investors. Yet they don't know how to measure their own progress. They're like contestants in a never-ending beauty parade who don't know their vital statistics.
Once upon a time, I ran a broadcast TV company like that. We won awards, entertained millions and had a happy crew. But as "the business person" at the top, it was surprisingly lonely. I met competitors from time to time, but it was hard to say really what set us apart. I had a sense we were paying staff the going rate and charging market fees, but I couldn't say for sure. We won some pitches and we lost others, but whether overall we were doing better or worse than everyone else? there was no way of knowing!
In all the rush, I didn't take time to understand where our strengths and weaknesses lay, or what to do about them. Looking back, we lurched from one job to another, made some money, then often seemed to lose it on winning the next one. Sounds familiar? If so, I bet this does too. I put off writing a business plan because it seemed a lot less fun than winning new business.
All that changed when I came back from the honeymoon I'd paid for on a credit card. The bank manager suggested gently that perhaps I should "start making money for yourself, not just for your clients."
But how? The key was handing over "the projects" to others and for me to start "minding my own business". I took control and began to plan and monitor growth for the business, not just the projects. I got access to data that showed how we compared with the competition. I worked out where we were looking flabby and did something about it.
For the business, it was like joining a gym, counting the arm curls and timing the runs. For me personally, it was also the start of a career change. I became a business mentor when I realised I was more interested in what it takes to make a creative businesses fit than I was in doing the creative work itself.
So in 2001, I co-founded Pembridge with a group of successful entrepreneurs who have been there and done it before. We provide finance and advice to help build and realise value in creative businesses spanning Design, Music, TV, Advertising, PR and more. And we put our money where are mouths are, investing over £25m since we set up shop.
We feel confident about those investments because we have created a system that we call Vital Statistics to help us and individual companies to understand where they really stand. It works like this:
- Individual businesses enter basic data about themselves online, and fax to us their last two years' accounts
- We spend half an hour on the phone going through a structured interview with a director or partner in the firm
- We create a confidential report that shows the business how it compares with similar others like it, where its strengths and weaknesses might lie, and where it can get support to grow.
We keep the individual data on each business confidential, but we share the big picture and the know-how that emerges to benefit everyone. The overwhelming majority of design studios seem to be held back by:
- a lack of clarity about their own marketing (what makes them distinct)
- a lack of confidence in controlling cash inside the business (management accounting), and
- a lack of understanding that the business growth issues they face have already been solved by others.
Vital Statistics has been supported by numerous Trade Associations including the Design Business Association, and numerous public bodies around the country provide financial support to make receiving a Vital Statistics report either free or heavily subsidised.
Growing a successful design business isn't easy and it might mean facing up to a few home truths. But the issues you face have almost certainly been been solved before and public support to address them may well be available. The level of support varies in each region: for details contact: vitalstatistics@pembridge.net.
