Peachpit: What's the biggest misconception that designers have about starting their own business?
Shel Perkins: That design ability is the only required skill set.
Peachpit: As a creative professional yourself, what is the most surprising thing you've learned so far about running a business?
Shel: The big surprise came at the start, when I learned that my design degree had not fully prepared me for the business realities of the profession.
Peachpit: What is the biggest money pit for creative pros? What expenses are most likely to catch people unaware?
Shel: Lots of different overhead expenses can get out of hand. However, payroll is the largest expense by far in design firms. This means you must bring in a steady stream of appropriate new assignments and manage your team in such a way that it maintains a high percentage of billable hours. If you don’t do that, simple cuts to overhead won’t solve the problem.
Peachpit: Has the advent of social networking made working as an independent business professional easier or harder?
Shel: Social networking is very helpful in terms of staffing opportunities, but it’s not how large client organizations select agencies.
Peachpit: Your book has a whole section on legal issues. If you could offer only one piece of advice in this area, what would it be?
Shel: Oh, that’s a tough question. Designers must deal with a wide range of important legal issues. There’s a lot that can go wrong. A good starting point would be copyright law. Most designers should know a lot more about it. Every creative services company should also establish an ongoing relationship with an intellectual property attorney. I guess that’s two pieces of advice!
Peachpit: What's the biggest difference between managing a small “mom and pop” design firm and a large design company?
Shel: Mom and Pop have no choice but to wear a lot of hats. In a big firm, the hats get sorted out. I’ve worked with companies of all sizes and I’ve seen successful firms go through some classic growing pains. It’s important to have systems in place that are scalable. It’s also important for the founder to build a team with a wide range of skill sets, and then delegate effectively.
Peachpit: The economic climate right now is pretty terrible. What things should people carefully consider before thinking about starting a business in a down economy?
Shel: First, think about your career path and do an honest assessment of your skills and interests. If you’ve been laid off, the best goal for you might be to find another staff position. Not everyone is cut out to be an entrepreneur. If you do launch your own company, you’ll be on a steep learning curve. For your venture to be successful, you’ll have to develop skills in new areas, including marketing, contracts, finances, leadership, and more. Are you up for that?
Peachpit: Why did you decide to write Talent Is Not Enough and who is your book for?
Shel: I wanted to create an expert resource for students and working professionals alike.
The design community needs more information on internal business issues, particularly for people who are just starting their careers. The majority of young designers now enter the profession as graduates of design degree programs. Most colleges do a good job of nurturing talent, teaching technical skills, and guiding the development of portfolios. However, many degree programs do not teach professional practices. The unfortunate result is that many graduates hit the streets each year with good portfolios and lots of enthusiasm but absolutely no idea how to determine pricing, negotiate fair contracts, and avoid common tax problems. It takes more than talent to sustain a design career. Long-term success requires both creative ability and business acumen.
In the working world, it has been traditional for designers to acquire business skills the hard way — by making mistakes. Many new design firms go out of business after just a few years, not because anything is wrong with the quality of the creative work being produced, but because of inadequate business practices. Sometimes it’s hard for design entrepreneurs to know where to turn for reliable advice. Professional practice insights are not often shared directly between competitive firms, and small companies often can’t afford the services of outside business advisors. Because of this, creative firms tend to re-invent the wheel when it comes to daily business practices. This can lead to serious problems for innocent designers who inadvertently re-invent some key aspect of labor law or tax accounting. Not only is this trial-and-error approach wasteful and unnecessary for individual companies, but, in a larger sense, it holds the entire profession back.
Peachpit: This is the second edition of your book. What things have changed — and what advice is different — from your first edition, written in 2006?
Shel: You won’t see dramatically different advice, just more of it. For this second edition, I revisited all of the original chapters and added updated information wherever needed (including updated IRS information, quite a few additional details about copyright and trademark law, and lots of updated URLs throughout the book). On top of that, I added 60 pages of entirely new content (and a dozen additional diagrams) on these important topics: managing cash flow, planning your facilities, hiring student interns, managing large projects, and forecasting your firm's workload and finances.