Operations

"Nickels are precious, Mike." I almost laughed in his face. This was one of the nuggets of wisdom I received from one of my mentors, long ago.  He always insisted that we hold tightly to every nickel and dime we had in hand, or had earned but not collected. I used to think this was an extreme point of view, but experience has shown it to be valid.  Because so many years have passed, I might say it a bit differently today: Dollars are precious. Particularly when it comes to managing our cash. (more…)

Ever have that feeling that you brought too much stuff, and now you're stuck with it? Last week, we likened Overhead to a heavy load that a firm must carry alongside direct salary costs. Baggage, if you will. Sometimes, we over-pack.  Then, we must carry all that stuff until we do something to lighten the load. (more…)

Imagine the firm's Overhead Rate as a burden placed on its back as it goes about the business of doing its work. How much is the firm built to carry? The man who taught me the most about design firm management was absolutely relentless about reducing our Overhead Rate. He would not rest if it wasn’t in the vicinity of 1.0.  If it increased to 1.20, he would become incensed and storm around the office, berating people about their non-billable time and overhead expenses. Anything approaching 1.50 was nothing but mismanagement to him. (more…)

Someone at the bakery had been cooking more than pastries. The deeper they looked, the bigger the theft appeared to be. I know, I know—it’s not going to happen to your firm.  Your firm is solid, and you trust everyone in it. What could go wrong, anyway? (more…)

This month of March is that unpredictable, yet hopeful time between winter and spring.  A time for students to take a break before continuing on with their school year.  For gardeners, a time of preparation. A kind of starting over.  Beginning again. I'd like to spend this month in similar fashion.  I want to go back to the beginning in terms of thinking (mine, at least) about the design business.  Back to the basic, and yes, elementary. You may feel a bit like these kids in the picture, forced to review their times tables.  My posts are brief out of respect for how little time we all have, so I prefer to break things down to bite-sized and simple. You more advanced scholars may not be as challenged this month, so for extra credit, feel free to peruse the Key Indicators, and le...

Over the years, I've presented a number of workshops on financial management for design firms, and I have often sensed a skepticism in my audiences about making a design firm consistently profitable. I think there may be a prevalent mindset that the design profession just isn’t very profitable.  Case in point— the old joke that asks what a practitioner would do were he or she to win the lottery— the punch line being that the practitioner would just continue working until the money ran out. I've had people tell me that you just can't make this business profitable.  Period. (more…)