When you’re running a design business, it’s always important to keep track of your profit margin. But sometimes increasing profit can be difficult. Today, I’d like to share 9 small changes you can make today that will boost your design business’ profitability immediately.
Change #1 – Charge by the project, not by the hour
You’ll be amazed at the difference in profit that you see when you decide to charge for your design work by the project instead of the hour. As one wise designer once put it: “When you charge by the hour, you get paid less money the better and more proficient you get.”
The key to successfully billing by the hour is including a buffer for unforeseen changes or additions. If extra work comes along, you’ve already accounted for it and if not, it’s just profit gravy. It’s a win-win solution.
Change #2 – Outsource certain parts of your projects
Every time you sit down to design, you have to weigh your worth versus the time it will take you to complete any particular task.
If it would take you 6 weeks to design a logo, for example, and you could be doing something else more quickly and efficiently, maybe it’s worth your money to hire another designer who can do a better job and do it more quickly. This turns you into a contractor, but can free up your time for more lucrative design projects.
Change #3 – Focus on repeat business
It’s always easier to keep current clients than to search for new ones. It’s cheaper too. Which means the more work you can do for current clients – the more repeat business you can find – the higher your profit margin will be.
Change #4 – Identify the top 20% of your clients
There’s a widely accepted rule in business: that 80% of your profits come from 20% of your work. If that holds true with your design business, you need to identify your top 20% of paying clients. Once you identify them, treat them well, work hard to make them happy and try to get on a repeat work schedule with them.
Change #5 – Ask for client referrals
Here’s a no-brainer. But so many of us forget to do it – or we shy away from it. Asking for referrals is a perfect way to increase profits. Referrals save you marketing money in finding new clients and thus allow you to rake in more cash per new project.
Change #6 – Cut expenses
You may think that having an iPad to display your portfolio at a client meeting will get you more clients – and you might be right. But every purchase you make needs to be heavily scrutinized and evaluated to make sure you’re only spending where necessary and cutting expenses when possible.
Change #7 – Know where your money is
We designers are creative people. So don’t ask us to manage finances, fill out accounting ledgers, or do our own taxes. We don’t get it and we don’t like it. But any designer who doesn’t keep track of where there money is, might as well not be in business.
Change #8 – Position yourself and your company
One key way to make more profits is to have better marketing. And the best way to start marketing your design business more effectively is to position yourself and your company.
What do I mean by positioning? Find a specialty and market yourself as the best one around. Decide what you will be known for and then run with it. Will you be the best web designer around, the best WordPress developer, the best app and icon designer? Decide your position and then market your position.
Change #9 – Develop a mission statement
Lastly, one small change you can make today in order to boost your design business’ profits immediately is to develop a mission statement. You mission statement should reflect the ultimate goal of your business. By staying focused on your mission statement and your goals, you’ll be able to save more, spend less, and increase profitability.