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4 heads studio business plan

4 Heads Studios
Business Plan for design firm start-up
2010

MAX GAINES
CHARLES MAK
TAI YUO KUO
YUSUN JANG

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4 heads studio business plan

  1. 1. BUSINESS PLAN PRATT GRAD COM.D DESIGN MANAGEMENT DES 640 01 FINAL PROJECT (DESIGN FIRM STARTUP) ANDY BRENITS FALL 2010 GROUP MEMBERS MAX GAINES CHARLES MAK TAI YUO KUO YUSUN JANG
  2. 2. TABLE OF CONTENTS A. VISION STATEMENT 02 B. MISSION 03 C. FACILITIES 06 D. STAFF 08 E. MARKETING 11 F. FINANCE 27 G. CLOSING STATEMNT 39
  3. 3. A. VISION STATEMENT Four Heads Studio is a small design firm based in New York City. Our Objective is simple: Delivery the youth audience to you and your brand. Four Heads Studios is dedicated to providing our clients with strategic planning, cross medium design, creative solutions and cut- ting edge consulting to help business understand, tween, teen and young adult market. We specialize in Millennials the generation born between 1980 and 1995. B. MISSION > MISSION STATEMENT Four Heads Studio is a small design firm based in New York City. Our specific goal is orient our services towards the Millennials, the generation born between 1980 and 1995. They are today’s holy grail of marketing for brands because of their disposable income, brand loyalty and their tech savvy skills which allow them to not only train older generations, but to be reached with ease, at least in theory. Yet they are a generation misunderstood by business today and simple written off as the “entitlement generation”. Four Heads Studio is dedicated to providing our clients with strategic planning, cross medium design, creative solutions and cutting edge consulting to help business understand, tween, teen and young adult market. Typical design studios are well equipped to fight yesterday’s battles. They have the tools and the mindset. But we will be different. FourHead Studios respects the design traditions of the past, but understands the present while constantly looking towards the future. We are well prepared to fight the battles of today and tomorrow for our clients. Our team will put all of our heads together (literally) in order to pro- vide a quality product and service to out client. With a strong under- 02
  4. 4. standing of the current landscape, our creative thinking and planning allows us to position ourselves as a design leader. Above all, our goal is to maintain a productive and financially sound workplace to better serve our clients and keep our staff motivated. To our employees we offer an exciting, comfortable & healthy work- ing environment full of growth, productivity and potential; A library of resources and tools for better productivity; A rejection of compart- mentalization – a standard found in typical working environments. Our main office space along with departments will be free and open allowing for ideas to flow easily from one person to the next. And windows… lots of windows. To our clients we will offer a strong healthy workforce of creative individuals. Homogeny is the enemy of creativity. Four Heads Studio offers multitalented, unique individuals with varying discipline and backgrounds working together (put our heads together) to help our clients see the big idea and meet the needs of today’s ever changing youth market. 03
  5. 5. > LOGO POSITIVE NEGATIVE > BUSINESS CARD 04
  6. 6. > STATIONARY 05
  7. 7. C. FACILITIES Lease $ 6,000 / two months Registering Business $ 325 Website domain name $ 15 / yr SUB TOTAL 1 $ 6,340 Principal / Creative Director MacBook pro Sr. Designer MacBook pro ITEM AMT EACH TOTAL MacBook Pro 2 $ 2,000 $ 4,000 Mac Pro 1 $ 2,500 $ 2,500 LCD monitor 1 $ 200 $ 200 2 $ 500 $ 1,000 Keyboards 2 $ 20 $ 40 Mouse 2 $ 15 $ 30 Chairs 8 $ 50 $ 400 Tables 5 $ 200 $ 1,000 Office copy machine 1 $ 700 $ 700 3lines and 4 telephones $ 110 SUB TOTAL 2 $ 9,980 GRAND TOTAL $ 16,320 06
  8. 8. > FLOOR PLAN 07
  9. 9. D. STAFF > BIOS OF FOUNDING MEMBERS MAX GAINES Max hails from the land of Philadelphia PA (USA). A natural process facilitator, Max’s areas of specialties include, but not limited to: street art, fine art, photog- raphy, youth orientated design. CHARLES MAK Having years of experience in Adver- tising Design, Charles Mak brings to Four Heads Studio an understanding of advertising and developing a vision for clients. He understands the core of design begins with understanding the clients needs. TAI YUO KUO York from Taiwan with an background in industrial design, graphic design, and advertising. He is excellent at cross- cultural design between Asian and western market. Specialties include is also including strategy making, creative thinking, and market analyze. YU SUN JANG Yusun is specialized in branding, il- lustration, printing, and motion graphics with various professional experience in several years. She originally from South Kore and has excellent sensibility about Asian arts and culture. 08
  10. 10. > ORGANIZATIONAL STRUCTURE This firm will base it’s structure around the “Coaching Model”. The coaching model recognizes that true creativity can only be encour- aged and directed; it cannot be specified, ordered or demanded. 12 In this model the coach (principal) has overall responsibilities for winning. The team (employees) has specific performance responsi- bly. There is no question about the authority and who gets to set the direction and strategy. But there is recognition that the coach stays mostly on the sidelines and the team members make most on-the- spot decisions. 12 > INITIAL POSITIONS CREATIVE DIRECTOR & PRINCIPLE Responsible for directing all work including, but not limited to, audi- ence promotions and advertising and design concepts. May oversee print production, graphic art, and desktop publishing. Assists with au- dience research and develops creative briefs and design concepts to meet business objectives. Requires a bachelor’s degree with at least 7 years of experience in the field. Familiar with a variety of the field’s concepts, practices, and procedures. Relies on extensive experience and judgment to plan and accomplish goals. Performs a variety of tasks. Leads and directs the work of others. A wide degree of creativ- ity and latitude is expected. 11 SENIOR DESIGNER Adept at taking briefs and well have a lot more client liaison experi- ence. A senior designer should have developed those famous prob- lem solving abilities to a degree where each design project is not seen in isolation. But rather, they will also be able to look at the ‘bigger picture’ in a creative or advertising campaign. Managers Junior De- signers and Web Developer. Works closely with Marketing Specialist, Copywriter and Office Manager. Reports to Creative Director. 9 09
  11. 11. > POSITONS TO BE GRADUALLY ADDED JUNIOR DESIGNER Middleweight Designers should usually already have some kind of professional portfolio. They will probably have mainly worked on parts of larger campaigns and a few smaller projects of their own. They will be able to take design briefs and implement them, but will still generally be overseen creatively by a Senior Designer and Cre- ative Director. 9 WEB DEVELOPER Primarily responsible for HTML, HTML 5, CSS development and JavaScript coding with skills in various other desktop publishing soft- ware useful in web and / or interactive development. Others are only responsible for creating the concepts in Photoshop, before handing over the graphics to web developers to hand code. Works closely with Junior & Senior Designer. Typically overseen creatively by a Senior Designer and Creative Director. 9 MARKETING SPECIALIST Responsible for designing, creating, and delivering marketing pro- grams to support the growth and expansion of company products and services. Develops sales presentations and provides reports based on information collected such as marketing trends, competi- tion, new products, and pricing. Requires a bachelor’s degree in area of specialty and 2-4 years of experience in the field or in a related area. Familiar with a variety of the field’s concepts, practices, and procedures. Relies on experience and judgment to plan and accom- plish goals. Performs a variety of tasks. A wide degree of creativity and latitude is expected. Typically reports to Senior Designer. 11 COPYWRITER Writes, proofreads and edits copy brochures, print and other docu- ments. May assist in estimating production costs, overseeing work done by external suppliers, and preparing the marketing program. May require a bachelor’s degree in a related area and 0-2 years of experience in the field or in a related area. Has knowledge of com- monly used concepts, practices, and procedures within a particular field. Relies on instructions and pre-established guidelines to perform the functions of the job. Works under immediate supervision. Primary job functions do not typically require exercising independent judg- ment. Typically reports to Senior Designer. 11 10
  12. 12. F. MARKETING > SITUATIONAL ANALYSIS The role of a designer has changed. At the same time the market- ing world is attempting to make sense of their new relationship with costumers. In the old world designers were expected to produce a logo, stationary, business cards, subway posters and perhaps clever marketing campaign. Essentially they where called to “pretty up things”. But this no longer is enough in the new era. For brands today’s holy grail of marketing are Millennials. The big- gest mistake brands make, however, is to think they can reach them through technology. They are more informed and more concerned about the world around them than any other previous generation. They are also more conscious of when someone is trying to “sell them something.” Today for brands to be successful they must care about something else other than themselves. A clever marketing campaign is simple not enough. The fastest way to reach Millennials is not through facebook, twitter or youtube alone, but through their hearts and minds by adding meaning to their lives. 2 Therefore the mission of Four Heads Studios will be to not only pro- vide strong strategic advertising, cross medium design and creative solutions to meet our client’s objective, but to make the case for the simple proposition that the brands we work with must do something good for their communities for customers to like them. Report after report tell us that individuals, including Millennials, want brands to build a better not just to build better widgets. 2 Four Heads Studio is also well aware of the fact that brands could gain by offering Millennials the same devotion they expect from con- sumers. A new report released by PR firm Edelaman indicates that Millennials have a profound relationship to brands. The study shows that brand identification is just as important as religion and ethnicity when it comes to personal identifiers Millennials share online. 4 Four Heads Studios understand that consumer devotion is both a boon and a responsibility for a brand. Deep bonds are hard won and easily lost. Feeling of betrayal makes the cost of winning back and old costumers is astronomical when compared to keeping an exist- ing one. FourHead Studios understands that brands that ignore or 11
  13. 13. disregard Millennials do so at their own peril. 3 Millennials believe brands actually stand for their core values they claim to represent. FourHead Studios believes brands must consis- tently deliver on these value propositions in a transparent and accountable way. The contrast between BP’s Marketing and their handlgin of the oil spill in the Gulf of Mexico is a powerful example of the costly breach of trust. 3 The global economic meltdown that began in 2008 was an alarming wake up call. The unbridled self-interest of power brokers on Wall Street and within corporate America came at an extreme cost to everyone including Designers and Millennials. 3 The AIGA Design Leaders Confidence Index for the first quarter of 2010 reflects the strongest confidence yet in an economic recovery. The index rose to 103.73—up from 51 in October 2008—and is the highest since AIGA began measuring confidence in the design econ- omy in early 2005. More than a third of respondents (36.5 percent) believe they will be more likely to hire new designers in this quarter than last; only 15 percent felt they were less likely to hire new design- ers. And 48 percent felt their plans of purchasing new hardware and software had increased compared with three months ago. 1 There is plenty of energy, positivity and optimism of out there. It’s something corporate America should not squander. It has the power to dramatically change our world for the better. FourHead Studios knows that this generation has little patience for destructive corporate self-interest and nor do we. We will strive to do the absolute best to meet our clients needs, as well as the needs of today’s generation. 12
  14. 14. > VALUE ADDED POSITION Four Heads Studios is a small design firm based in New York. Our specific goal is orient ourselves towards the Millennials (the genera- tion born between 1980 and 1995) today’s holy grail of marketing for brands and yet a generation of individuals misunderstood by brands. We will be more than just be an average design studio. Designers can no longer live in a bubble and attempt to remove themselves from the world at large and consequences related to environmentally destructive behavior. As we suffuse the world with complex technical systems – on top of the natural and social systems already here – old style, outside in design simple wont work. Designers have to evolve from being individual authors of objects, or buildings, to being facilita- tors of change among large groups of people. 7 Environmentally speaking design studios in the past where as big apart of the problem as brands and their manufactories. To put it bluntly, brands simple create a never-ending stream of goods with material that must be, in some cases, pulled out of the earth and will eventually end up in a landfill. For example: a coffee machine uses three hundred kilowatt-hours of electricity during is lifetime; this is equivalent to the amount of energy generated from sixty kilograms of oil. 7 As a leader in design FourHead Studios must simple not be a repeat of other design studios. We must be something more. Design studios help brands sell these products. In some cases they are an interregnal part of convincing people to buy things they don’t need with money they don’t have to impress people they don’t know. We must move beyond that. FourHead Studios must be a leader, not only in design, but also in making environmentally conscience design decisions. 6 Our studio will make to promise to our clients and well as the indi- viduals they serve to make socially and environmentally conscience design decisions. For example when it comes to printed material FourHead Studios will work directly with print houses such as Roll- ing Press an eco-friendly printing company based in Park Slope, Brooklyn. We and the brands we work with will strive to improves the quality of life while delivering goods and services. 13
  15. 15. > SEGMENTATION & TARGET MARKET Demographic Segmentation: Age 
 Within age, we find our target market: Commercial industries and brands serving a youth market, i.e. Millennials as represented by the graph below 
 14
  16. 16. We are in a unique time in the history of market segmentation with three distinct generations living today. They are: Baby Boomers (Post WWII) , Generation X & the Millennials, the generation born roughly between 1982 and 1992. With nearly 80 million young people falling under this banner they represent our target market. 8 Millennials are unlike any other market. Never before has a young generation demanded so much attention from marketers. Loaded with disposable income, they are the driving force in much of today’s economy and the catalyst for change, innovation and advancement. Also when it comes to technology (Texts, facebooks, iPods) and trends (fashion, entertainment, etc), never before has a young gen- eration been the teacher of the older generation. 8 > SERVICE OFFERING Four Heads Studio will be to not only provide strong cross medium design (including, but not limited to: branding, print, interactive inter- faces, web development, social networking) strategic advertising and creative solutions (novelty & irreverence, viral marketing, anti market- ing) to meet our client’s objectives, but make the case for something different. Millennials speak a different language than previous gen- erations and it must be understood that traditional forms of advertis- ing simple wont work or will not be enough. Novelty & Irreverence: A perfect example of such tactics can be found in the current Old Spice “Old Spice Guy”, the Dos Equis Most interesting Man in the World and the Vitamin Water 10 Water In- corporated / Office of Mother Nature. Each campaign uses a bit of humor and irreverence to grab your attention; Novelty in a sense there is a new commercial with the characters that have been invented; And Viral Marketing people use twitter and facebook to comment (even offer up usable ideas) and spread the campaigns. All campaigns also utilize the concept of myth making. The characters invented become figures in-it-of-themselves, thus adding the brand. Simple put, you can have fun and still make money. Another example of viral marketing (albeit indirectly) is the J / K Wedding Video in which a wedding party uses the pop song Forever by Chris Browns (Jive Records) to dance down the isle. The video became an instant hit you YouTube and has received nearly 60 million views and was 15
  17. 17. even mimicked on popular NBC television series The Office. The video is a perfect example of how viral marketing can give a boost to publicity. We must also make the case for the simple proposition that the brands we work with must do something good for their communities for customers to like them. Report after report tell us that individuals, including Millennials, want brands to build a better world not just to build better widgets. 2 The pricing of projects will typically estimate as a project-based cost. The project cost will be estimated by the appropriate number of hours needed to complete the project. Generally FouHeads Studio will charge a flat hour rate of $55.00 per hour per employee to break even, and $ 65.00 and up per hour per employee to profit.. To meet the needs of are firm we are projecting a monthly inflow of capital ranging of 16,000 – 18,000 to break even. 16
  18. 18. > SWOT ANALYSIS STRENGTHS - Cross cultural global design perspective - A unique positioning of the firm itself, focusing on creative solutions for firms wishing to seek a youth oriented market (millennials) could specialize us and make our studio the “go to” place. - “The new car smell”. Novelty is an advantage in this marke as we can be seen as having something other firms don’t (i.e being new and fresh) - An elegant open working environment (with lots of windows) to allow for flow of creative ideas and keep our minds at ease. WEAKNESS - The struggle to develop an awareness for a startup - Less and less time available for marketing as more and more time is devoted to finishing projects - A struggle to maintain an understanding of youth markets as they are ever changing and we are ever aging. - The positioning of our company could limit our client pool. - Less professional experience than some of our competitors. OPPORTUNITIES - A growing market (millennials) and a misunderstanding of brands on how to reach them. - Ever advances in technoloogy THREAT - Economic recession. - A increase in the ease of use in graphic design publishing programs allowing individuals to design their own graphic designs. - Outsourcing: more and more firms are outsourcing traditional graphic design services to cheaper countries. It is important that FourHeads Studios offer to clients that which cannot be outsourced. - Competitions from other design studios offering similar services and positioning. 17
  19. 19. POSITIVE N E G AT I V E STRENGTHS WEAKNESSES 1. Cross cultural global design 1. The struggle to develop an perspective. awareness for a startup. 2. A unique positioning of the 2. Less and less time avail- firm itself, focusing on creative able for marketing as more and solutions for firms wishing to more time is devoted to finishing seek a youth oriented market projects. (millennials) could specialize us INTERNAL and make our studio the “go to” 3. A struggle to maintain an place. understanding of youth markets as they are ever changing and 3. “The new car smell”. Novelty we are ever aging. is an advantage in this market as we can be seen as having 4. The positioning of our com- something other firms don’t – i.e pany could limit our client pool. being new and fresh. 5. Less professional experience than some of our competitors. 4. An elegant open working en- vironment (with lots of windows) to allow for flow of creative ideas and keep our minds at ease. OPPORTUNITIES T H R E AT S 1. A growing market (millenni- 1. Economic recession. als) and a misunderstanding of brands on how to reach them. 2. An increase in the ease of use in graphic design publish- 2. Ever advances in technology. ing programs allowing individu- als to design their own graphic designs. EXTERNAL 3. Outsourcing: more and more firms are outsourcing tradi- tional graphic design services to cheaper countries. It is impor- tant that FourHeads Studios offer to clients that which cannot be outsourced. 4. Competitions from other design studios offering similar services and positioning. 18
  20. 20. ( FROM 1 TO 9 ) STRENGTHS Factor Relevance/ Strategic Scale/Size Importance Impact Cross cultural global design per- 8 6 5.5 spective A unique positioning of the firm it- self, focusing on creativesolutions for firms wishing to seek a youth oriented market (millennials) could 5 6.5 6 specialize us and make our studio the “go to” place. “The new car smell”. Novelty is an advantage in this marke as we can be seen as having something 4.5 4 3.5 other firms don’t (i.e being new and fresh) An elegant open working environ- ment (with lots of windows) to allow for flow of creative ideas and 4 3.5 5 keep our minds at ease. WEAKNESS Factor Relevance/ Strategic Scale/Size Importance Impact The struggle to develop an aware- 4 7 5 ness for a startup Less and less time available for marketing as more and more time 4 6 5.5 is devoted to finishing projects A struggle to maintain an under- standing of youth markets as they 4 2.5 3 are ever changing and we are ever aging. The positioning of our company 6 7 4.5 could limit our client pool. Less professional experience than 5 3.5 6.5 some of our competitors. 19
  21. 21. ( FROM 1 TO 9 ) OPPORTUNITIES Factor Relevance/ Strategic Scale/Size Importance Impact A growing market (millennials) and 5 5.5 7.5 a misunderstanding of brands on how to reach them. Ever advances in technoloogy 4 3 4.5 WEAKNESS Factor Relevance/ Strategic Scale/Size Importance Impact Economic recession. 7 8 7.5 A increase in the ease of use in graphic design publishing pro- 6 4.5 4 grams allowing individuals to design their own graphic designs. Outsourcing: more and more firms are outsourcing traditional graphic design services to cheaper coun- tries. It is important that Four- 5 6.5 7.5 Heads Studios offer to clients that which cannot be outsourced. Competitions from other design studios offering similar services 6 6.5 8 and positioning. 20
  22. 22. > MARKETING TACTICS THE PRODUCT: Four Heads Studios will be to not only providing strong cross me- dium design (including, but not limited to: branding, print, interactive interfaces, web development, social networking) strategic advertising and creative solutions (novelty & irreverence, viral marketing, anti marketing) to meet our client’s objectives. Millennials speak a differ- ent language than previous generations and it must be understood that traditional forms of advertising simple wont work or will not be enough. A perfect example of both novelty & irreverence tactics can be found in the current Old Spice “Old Spice Guy”, the Dos Equis Most inter- esting Man in the World and the Vitamin Water 10 Water Incorpo- rated / Office of Mother Nature, The current K-Swiss / Kenny Powers – Eastbound & Down campaign and the Geico Car Insurance ads featuring actor McGlone always starting off with the question: ‘could swithcing to Geico really save you 15 perecent…?’. Each campaign uses a bit of humor and irreverence to grab your attention; Novelty in a sense there is a new commercial with the characters that have been invented; And Viral Marketing people use twitter and facebook to comment (even offer up usable ideas) and spread the campaigns. All campaigns also utilize the concept of myth making. The charac- ters invented become figures in-it-of-themselves, thus adding the brand. Simple put, you can have fun , create memorible ads & still make money. Another example of viral marketing (albeit indirectly) is the J / K Wedding Video in which a wedding party uses the pop song Forever by Chris Browns (Jive Records) to dance down the isle. The video became an instant hit you YouTube and has received nearly 60 mil- lion views and was even mimicked on popular NBC television series The Office. 21
  23. 23. PRICING: The pricing of projects will typically estimate as a project-based cost. The project cost will be estimated by the appropriate number of hours needed to complete the project. Generally FouHeads Studio will charge a flat hour rate $55.00 per hour per employee to break even and $65.00 per hour per employee to profit. PLACE: The majority of services will be provided at the FourHeads Studios office space. This office will be designed to appear sophisticated, modern, practical yet fun and open with lots of windows. This is very important because the office of communication designers is a piece of their portfolio and reflects their product. PROMOTION: It must be understood that graphic design firms visibility and sales come not from advertising but through networking and client refer- rals. Therefore the marketing strategy will consist of: o Press Release o Direct mailer to potential clients o Stage a gallery exhibition to show off the talent of our staff o Membership to AIGA o Cold Calling o Client referrals o And Networking: Networking will be based on FourHeads Studios personal and professional relationships that have been and will be developed after spending time in this business. This also means finding out who the person is behind the firms we serve and try to develop a relationship beyond the superficial. 22
  24. 24. PEOPLE: Firms go out business everyday – but if you stay in the business of people, you’ll do just fine, for was we have seen throughout history that no matter what people will never go out of business. Our people are the Millennials. FourHeads Studios must also make the case for the simple proposition that the brands we work with must do some- thing good for their communities for customers to like them. Report after report tell us that individuals, including Millennials, want brands to build a better world not just to build better widgets. 2 23
  25. 25. > POTENTIAL INDUSTRIES Fashion Telecommunications Sports Drinks Personal Computers Music Consumer Goods Television Entertainment Non Profit Insurance 
 24
  26. 26. > POTENTIAL CLIENTS Hewlett-Packard Company Company Profile 3000 Hanover St. Palo Alto, CA 94304-1185 650-857-1501 Rocawear Apparel LLC 1411 Broadway New York, New York 10018 (201) 601-4283 Toll Free: (800) 839-6016 Sean John Clothing, Inc. 1710 Broadway New York, NY 10019-5254 Phone: 212-500-2200 www.seanjohn.com Church & Dwight Co. Inc. 469 North Harrison Street Princeton, NJ 08543-5297 Phone: 609-683-5900 Obey Clothing 2313 South Susan Street Santa Ana, CA 92704 714-429-1595 Unilever (Axe, Lipton, Dove, etc) Unilever House, 100 Victoria Embankment London EC4Y 0YD, United Kingdom +44-20-7822-5252 Jive Label Group 137 West 25th Street New York, NY 10001 United States 212-727-0016 25
  27. 27. Wachovia Bank 301 S College St Charlotte, NC 28288 United States Phone: 704-374-6161 Boost Mobile LLC 9060 Irvine Center Dr. Irvine, CA 92618 949-748-3200 Fuse Networks, LLC 11 Penn Plaza 17th Floor New York, NY 10001 United States 212-324-3400 www.fuse.tv Habitat for Humanity International 270 Peachtree Street Suite 1300 Atlanta, GA 30303 United States 1-229-924-6935 1800-HABITAT Kristin Brooks Hope Center 1250 24th Street NW Suite 300 Washington, DC 20037 202-536-3200 Blue Cross Blue Shield 3800 Concorde Parkway Suite 2000 Chantilly, VA 20151-1127 United States 703-227-5300 26
  28. 28. E. FINANCE > INTRODUCITON & OVERVIEW While estimating our start up cost for Four Head Studios we re- searched existing design firms and salaries for employees. With our marketing goals and research in mind, a determination was made as the number of and positions necessary. Initially consideration was give to 10 employees but narrowed down after finance was taken into consideration. The goal was to under- stand the numbers i.e. - the labor costs, overhead, and additional costs of operation. Moreover, with this approach we can see the big picture, the potential of Four Head Studios. This approach of working backwards was a useful tip from a friend who is an auditor. Below you will find the vision of Four Head Studios: Having calculated the cost of starting up, labor, and overhead, and estimating the AGI (Agency Gross Income) - the labor and overhead expenses totaling $364,800 annually, from this we understood how expensive running a established business would cost. We began drastically cutting down our staff and expenses. The start-up is minimal, what is needed to start a business. With a end product in mind, have an idea financially where to cut or add. STARTUP PLAN: We used Creative Business Guide 60/6 Rule, having our principal and senior graphic designer work 60 hours a week for six months. When needed, we will hire temporary outside services such as free- lancers or developers. Our start up cost is estimated to be $16,320. For operating costs we looked at salaries of creative on AIGA’s web- site, and calculated each individual’s hourly rate based on those An- nual Salaries. Then we estimated the labor cost, which we estimated to be $3720 per week. From that we determined our Basic Hourly rate is $60 an hour per person. Our goal is short-term profit, so if the 27
  29. 29. employees in the company are able to generate 120 billable hours a week for a client, revenue would equal $6000. After factoring labor and overhead cost the profit is estimated to be $2,755 weekly, that is the possibility of generating $66,120 in six months. In 2 months we can break even with our start up costs. Principle / Owner - $80,000.00 Creative Director - $70,000.00 Web Developer - $60,000.00 Sr. Designer - $60,000 Designer (2) - $50,000 Copywriter -$45,000 Marketing (2) - $45,000 Office Manager - $45,000 Four head studio’s goal six months into running our business is to look for additional part-time staff in establishing our company. In the meantime we will keep organized financially through forms, this in- cludes estimating worksheet to the client and weekly time sheets for our own records. These forms include change order form just incase clients make mistakes; there is profit for us to fix them. Our goal in the first six months is to generate $2500 minimum a week, after then we will begin looking for candidates to hire. In two years Four Heads Studio expect to be more established, adding 4 employees. Four Heads outlook is to be then charging $70 minimum for our increased quality of work and expertise in the field. This will increase our revenue and keep our employees prosperous. In two years Four Heads Studio expect to be more established, adding 4 employees. Four Heads outlook is to be then charging $70 minimum for our increased quality of work and expertise in the field. This will increase our revenue and keep our employees prosperous. 28
  30. 30. STARTUP COST OF DESIGN BUSINESS: $16,320 ( 2 employees) Lease $ 6,000 / two months Registering Business $ 325 Website domain name $ 15 / yr SUB TOTAL 1 $ 6,340 Principal / Creative Director MacBook pro Sr. Designer MacBook pro ITEM AMT EACH TOTAL MacBook Pro 2 $ 2,000 $ 4,000 Mac Pro 1 $ 2,500 $ 2,500 LCD monitor 1 $ 200 $ 200 2 $ 500 $ 1,000 Keyboards 2 $ 20 $ 40 Mouse 2 $ 15 $ 30 Chairs 8 $ 50 $ 400 Tables 5 $ 200 $ 1,000 Office copy machine 1 $ 700 $ 700 3lines and 4 telephones $ 110 SUB TOTAL 2 $ 9,980 GRAND TOTAL $ 16,320 OVERHEAD / Month / Year Rent $ 2,500 $ 30,000 Phone Bill $ 50 $ 1,200 Electricity $ 100 $ 1,200 Internet bill $ 50 $ 600 Heat/ air condition $ 100 $ 1,200 Business insurance $ 100 $ 1,200 $ 2,900 $ 34,800 We consider cutting fixed costs, possibility of virtual office or renting parts of office. 29
  31. 31. OPERATING EXPENSES Salaries of staff: 2) Annual salary/ 52 weeks / 40hrs Full-time, 20hrs part-time Principal / Creative Director $ 35 / hr 60 hours Sr. Designer $ 27 / hr 60 120 hrs / week 480 hrs / month 5760 hrs / Year (b) Labor costs Principal / Creative Director $ 35 / hr 2100 Sr. Designer $ 27 / hr 1620 $ 3,720 / week $ 14,880 / month $ 178,560 / Year Basic Calculation for hourly rate (weekly) Total Labor and overhead / average working hours +15% markup divide by 80 hours $ 3,720 Total Labor + $ 725 Overhead per week $ 4,445 lavor and overhead per week / 80 hours a week $ 50 per hour + $7 15% mark up $ 60 Basic billable rate Per hour, per person Price might be slightly lower based on gathering potential custom- ers. We might consider offering Trial period discount for customers to gain a relationship, instead of premium. 30
  32. 32. Profit after 60/6 rule and every one gets paid: $ 60 x 120 hours = $ 7,200 revenue - $ 4,445 Overhead and labor costs weekly $ 2,755 profit after labor and overhead expenses weekly $ 66,120 profit after 6 months of work Profit with regular work hours (80 hours) a week: $ 60 x 80 hours = $ 4,800 revenue - $ 4,445 Overhead and labor costs weekly $ 355 profit after labor and overhead expenses weekly $ 8,520 profit after 6 months of work We estimate to break even with our startup cost with 4 months mini- mum working 90 hours total a week. 31
  33. 33. TWO YEARS OUTLOOK MINIMUM. ADDITIONAL STAFF AFTER TWO YEARS: ADDITIONAL $1,135 (6 employees) Lease $ 6,000 / two months Registering Business $ 325 Website domain name $ 15 / yr SUB TOTAL 1 $ 6,340 Principal / Creative Director MacBook pro Web developer Sr. Designer MacBook pro Designer Mac pro Copy writer Laptop Marketing Laptop Office manager Desktop ITEM AMT EACH TOTAL MacBook Pro 2 $ 2,000 $ 4,000 Mac Pro 1 $ 2,500 $ 2,500 Desktop 1 $ 300 $ 300 LCD monitor 1 $ 200 $ 200 3 $ 500 $ 1,500 Keyboards 3 $ 20 $ 60 Mouse 3 $ 15 $ 45 Chairs 10 $ 50 $ 500 Tables 6 $ 200 $ 1,200 Office copy machine 1 $ 700 $ 700 3lines and 4 telephones $ 110 SUB TOTAL 2 $ 11,135 GRAND TOTAL $ 17,445 32
  34. 34. OVERHEAD / Month / Year Rent $ 2,500 $ 30,000 Phone Bill $ 50 $ 1,200 Electricity $ 100 $ 1,200 Internet bill $ 50 $ 600 Book Keeper $ 600 $ 7,200 Heat/ air condition $ 100 $ 1,200 Business insurance $ 100 $ 1,200 $ 3,500 $ 42,000 Benefits (optional) 2 employee EPO plan $ 600 month $ 7,200 $ 4,100 $ 49,200 33
  35. 35. OPERATING EXPENSES Salaries of staff: 2) Annual salary/ 52 weeks / 40hrs Full-time, 20hrs part-time Principal / Creative Director $ 35 / hr 40 hours Sr. Designer $ 27 / hr 40 Web developer $ 35 / hr 20 Designer $ 35 / hr 20 Copy writer $ 25 / hr 20 Marketing $ 10 / hr 20 160 hrs / week 640 hrs / month 7680 hrs / Year Marketer based on commission based on clients, $10 dollars an hour, more incentive. Adds value to work. (b) Labor costs Principal / Creative Director $ 35 / hr 1400 Sr. Designer $ 27 / hr 1080 Web developer $ 35 / hr 700 Designer $ 35 / hr 700 Copy writer $ 25 / hr 500 Marketing $ 10 / hr 200 $ 4,580 / week $ 18,320 / month $ 219,840 / Year 34
  36. 36. Basic Calculation for hourly rate (weekly) Total Labor and overhead / average working hours +15% markup divide by 80 hours $ 4,580 Total Labor + $ 1,037 Overhead per week $ 5,617 lavor and overhead per week / 160 hours a week $ 40 per hour + $ 12 30% mark up $ 70 Basic billable rate Per hour, per person Additional $10 added because quality of work and more valued employees in company. Profit after 60/6 rule and every one gets paid: $ 70 x 160 hours = $ 11,200 revenue - $ 5,605 Overhead and labor costs weekly $ 5,595 profit after labor and overhead expenses weekly $ 66,120 profit after 6 months of work What if different scenario? Half capacity work: $ 70 x 80 available billing Hours = $ 5,600 revenue - $ 5,605 Overhead and labor costs weekly $5 loss after labor cost and expenses, minimal risk if minimal hours. 35
  37. 37. REALISTIC DETAILED ESTIMATION: Salaries $ 234,240 Year Rent $ 30,000 Health Insurance $ 7,200 Business “ “ $ 1,200 Accountant $ 12,600 Phone $ 1,200 Heat / Air Cond $ 1,200 Electricity $ 1,200 Gov. Taxes $ 17,331 $ 306,171 Annual fixed Costs / 7680 estimated billable hours $40 + 8(mark up) $50 hourly rate Salaries plus taxes $ 251,571 REALISTIC DETAILED ESTIMATION: 52 weeks in a year x 160 hours a week 8320 billable hours a year - 1040 deduct marketing hours per year because cannot bill client for own expense 7,280 billable hours - 160 hours 2week(80hrs) vacation for (x2 full time employees) - 80 hours 5 sick days(40 hrs) or days off for (x2 full time employees) - 224 hours from 7 legal holidays extended into holiday weekends,14 days (112 hrs) (x2 full time employees) - 520 hours 5 hours a week surfing web and taking breaks 6296 Total annual billable Hours 36
  38. 38. FORMULA TO COVER SALARIES AND FIX EXPENSES (NOT OVERHEAD) $251,571 Cost of labor plus taxes / 6296 billable hours $40 hour per P to cover salaries and fixed expenses (not overhead) To check: 6296 billable hours a year X $40 hour per P to cover salaries and fixed expenses $251,840 Equal to slaries plus taxes hours a week TO FIGURE OUT PERCENTAGE TO COVER OTHER EXPENSES $ 306,171 total annual fixed costs - $ 251,571 Cost of labor plus taxes $ 54,600 remaining expenses / $ 251,571 Cost of labor plus taxes .20 percent x $ 40 hourly rate to cover salaries and expenses = 8.68 per hour (best needs to be charged to break even on additional cost) $ 40 +$ 9 $ 50 Breakeven rate, to cover both salary and overhead costs + $10 20% mark up fee $ 60 per hour per person $ 60 x160 $ 9600 3100 billable hours a year - $ 5917 x $ 60 $ 3,683 profit 186,000 37
  39. 39. SHORT TERM PROJECT EXAMPLE: 10 page 8x10” sales brochure for Rocawear Time frame: 7 days, 56 hours Overview: Meeting with client, brainstorm, photography, copy, layout, test, touching up, production People involved: principal, Sr. Designer, photographer, copy- writer, designer, marketer Fee: $60 an hour GANT CHART HOURS EMPLOYEES DAY 2 DAY 3 DAY 4 DAY 5 DAY 6 DAY 7 DAY 1 TASKS INVOLVED meeting Prin, Sr.des 6 brainstorm Prin, Sr.des 23 23 research Prin, Sr.des 18 18 photograph copy Copw 4 layout Prin, Sr.des 58 21 21 16 test printer touch up Prin, Sr.des 26 5 21 finalize Prin, Sr.des 16 16 production printer 4 2 2 Principle $1960 151 total billable hours Sr. Designer $1512 x $60 hourly rate Designer $700 Copywriter $100 $ 9,060 estimate for client without Overhead $1025 outside costs - $ 5,297 Labor and Overhead weekly $ 3,763 profit without markup off outside services 38
  40. 40. G. CLOSING STATEMENT Firms go out business everyday – but if you stay in the business of people, you’ll do just fine, for was we have seen throughout history that no matter what people will never go out of business. Our people are the Millenials. . FouHead Studios is dedicated to providing our cli- ents with strategic planning, cross medium design, creative solutions and cutting edge consulting to help business understand, tween, teen and young adult market. 39
  41. 41. WORKS CITED 1) AIGA Design Leaders Confidence Index, AIGA 2010, http://www. aiga.org/content.cfm/confidence-index, 29 October 2010 2) Why brands must start caring about something other than them- selves, Simon Mainwaring 2010, http://simonmainwaring.com/ brands/why-brands-must-start-caring-about-something-other-than- themselves/, 27 October 2010 3) Millennials Have Found Religion But Will Brands?, Simon Main- waring 2010, http://simonmainwaring.com/future/millennials-have- found-religion-but-will-brands/, 27 October 2010 4) For Millennials Brands May Be As Important As Religion, Ethnicity, David Zax 2010, http://www.fastcompany.com/1695062/brands-and-millenials-a-deep- connection?partner=rss, 28, October 2010 5) William McDonough and Michael Braungart, Cradle to Cradle (New York: North Point Press, 2002), 62–68 6) Victor Papanek, Design for the Real World: Human Ecology and Social Change (New York: Bantam Books, 1971): 14-16, 18-19, 25- 26 7) John Thackara, In The Bubble: Designing in a Complex World (Massachusetts, First MIT Press, 2006) 7, 8) Market Segmentation – “Millennials” Mark Brewer & Evok Advertis- ing Agency, http://www.evokad.com/millennials, 28, October 2010 9) Job Descriptions for Graphic Designers, Design TalkBoard 2007, http://www.designtalkboard.com/design-articles/graphic-designers. php#middle, 28 October 2010 10) Aquent Survey of Design Salaries, AIGA 2010 http://www.designsalaries.org/salarysurvey.shtml, 20 Ocotber 2010 11) Salary Wizard - Job Descriptions, Salary.Com 2010, http://swz. salary.com/salarywizard/layoutscripts/ 28 October 2010 12) Cameron S Foote, A Creative Business Guide to Running a Graphic Design Business: Updated Edition (W.W. Norton & Com- pany, New York, 2009) 39 13) Philip Kotler, Kotler On Marketing: How To Create, Win, And Dominate Markets (New York: The Free Press, 1999) 14) Theo Stephan Williams, The graphic designer’s guide to pricing, Estimating & budgeting (Allworth press, New York, 2010) 40
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4 Heads Studios Business Plan for design firm start-up 2010 MAX GAINES CHARLES MAK TAI YUO KUO YUSUN JANG

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