Written by Nathan Haymes

Head of Production, Polynaut Studios

The
Business of Design for Australians August 4th, 2017

AUTHORS NOTE

Im writing this document for those that might be in the same posi-

tion I was 8 months ago. While there are many resources out there for

design businesses, not many of them focus directly on the Australian

market. I made many mistakes along the way to where I am now, all of

which were easily avoidable. I hope that whoever reads this gets the

advice I always wished for.

The
Business of Design for Australians August 4th, 2017

TABLE OF CONTENTS

GRAPHIC DESIGN 3
Sole Trader...............4

BUSINESS STRUCTURES 4 Partnership..............5

Company..................6

Costs..........................................7

A Business Plan 7 Clients........................................7

Portfolios..................................8
Understanding Business....8

Building An Identity 9 Branding.......................................9

Social Media...............................9

Pricing 10

References 11
The
Business of Design for Australians August 4th, 2017

GRAPHIC DESIGN
Relying on D esign is a way of communicating ideas in a visual and
meaningful way. Designers do so through the use of text,

creative talent images and animation. Graphic Design is also a form of busi-
ness.

isnt good In order to create a successful design business, you have

to become an expert in a particular field of Graphic Design.
enough Becoming an expert in something allows you to set yourself
apart from others.

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Business of Design for Australians August 4th, 2017

BUSINESS STRUCTURES
E ven if youre planning on going solo, its vital that you un-
derstand how business structures in Australia function. Design
This follows the notion; design is not art, it is a business. You
offer services to clients.
is not art
These various business structures will assist you in not only
it is a
understanding your own business but, the clients you serve
as well.
Business

Sole Trader
A sole trader is the simplest form of business structure and is relatively easy and inex-
pensive to set up. As a sole trader you will be legally responsible for all aspects of the
business. Youll generally make all the decisions about starting and running your busi-
ness and you can employ people.
(Small Business Development Corporation (WA), n.d.)

Sole Traderships are the simpliest business structure. Its a requirement for single-person oper-
ations, as you need an Australian Business Number (ABN) to operate a business within Australia.

If youre not trying to sell your business and its a short-term operation, the Sole Trader structure
is your best choice.

Advantages Disadvantages
Theyre simple to setup and operate. You are liable for everything, meaning
your personal assets (car, house, comput-
You retain complete control of your assets
ers, furniture, etc.) are at risk if things go
and business decisions.
wrong.
You can use your individuals Tax File
Number (TFN) to lodge your Tax Returns.
You dont have to pay Payroll Tax, Super-
annuation or workers Compensation.
Easy to change your business structure as
it grows.

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Business of Design for Australians August 4th, 2017

BUSINESS STRUCTURES

Partnership
A Partnership involves two or more people going into business together with a view to
making a profit. Each Partner can share responsibilities and control or, you can opt to
being a limited partner who maintains no control.

(Small Business Development Corporation (WA), n.d.)

Partnerships are simple and inexpensive to setup, however they are not a separate legal entity.
Meaning, there is a greater risk involved if things go wrong. The partners involved in the business
will be held liable. There are two kinds of partnerships; general and limited.

General partnerships have all the partners involved in the day-to-day management.

Limited partnerships are formed by up to 20 people, with atleast one general partner who controls
the day-to-day management. This general partner is liable for debts and the passive partners are
called limited partners.

If youre starting up a design firm, be careful with partnerships. They have the potential to be very
dangerous for small budget operations, especially with the involvement of friends. Partnerships
can be very difficult to sell and often the goal of a small business is to sell it on. If you are not con-
cerned about selling in the future, a partnership will work well for you.

Advantages Disadvantages
Simple and inexpensive to set up. A Partnership is not a separate legal entity.
Each partner is fully responsible for debts
Shared control and management with
and liabilities incurred by other partners.
other partners.
Potential for disputes over profit-sharing,
Relatively easy to dissovle the partnership
control and business direction.
and recover your share of capital.
Changes of ownership can be difficult and
Partners are not employees, so you dont
can often involve establishing a new part-
have to pay Superannuation and Workers
nership.
Compensation for them.

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Business of Design for Australians August 4th, 2017

BUSINESS STRUCTURES

Company
A company is a separate legal entity and can incur debt, sue and be sued. The com-
panys shareholders (the owners) can limit their personal liability and are generally not
responsible for company debts.

(Small Business Development Corporation (WA), n.d.)

A Company is the most complicated form of business but, it offers a method of distancing yourself
from any losses as the company you create is a separate legal entity (virtually, its own person).

The setup and maintenance costs are higher than other business structures. Each company must
have at least one director, who is responsible for the companys business activities.

If youre forming a design firm with some colleagues, a company (in our opinion) is the best option.
It allows you the least amount of financial risk, as none of your personal assets are at risk. The
structure also supports ways to avoid internal conflicts easily.

The company business structure has been used so often that it is also the most respected. It com-
mands the idea that you know what you are doing. While the up-front costs can be steep, it pays off.

Advantages Disadvantages
Limited liability for shareholders. Significant setup and maintenance costs.
You will need a name, legal documents, a
Well understood and accepted structure. Company ABN, etc.

If you have a net loss in a year, this can Complex reporting quires. You will need a
be offset against your company tax in the Registered Tax Agent at the end of each
future. Fiscal Year.

Easy to sell and pass ownership. Cant distribute losses to its shareholders.

Profits can be reinvested into the compa-

ny or paid to the shareholders as dividens.

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The
Business of Design for Australians August 4th, 2017

A BUSINESS PLAN
A key component to a functional beginning is a business plan. Your busi-
ness plan outlines everything (a quick Google Search will assist you in We must
finding templates); start-up costs, operating costs, what services you offer,
etc. understand
A business plan is a corner stone of your journey. If you are not able to put
your ideas on paper, how can you put them into practice? This again diverg-
business
es from graphic design being purely art and recognizes that you must have
business knowledge to succeed.
to succeed

Costs
Money plays an important role in setting up a business. Putting an exact
figure on this is difficult. Polynaut Studios started with less than $10,000
put into the business and we managed. We started with; 2 computers
(~$2,000 ea.), 3 tables, 2 chairs and the Adobe Suite.

The most important rule of thumb; running a business costs money. You
will have to sacrifice your income at times and that is part of starting out.

A lot of people over-state how dangerous it can be starting a small business. Its often put: Make
it through 12 to 18 months and youll be fine. However, Gilfillan (2015) found that the amount of
businesses had grown by 19,700 (1.0%) from 2014 to 2015. Gilfillan (2015) also discovered that the
exit rates (businesses closing) fell from 14.3 per cent (2012-13) to 12.9 per cent (2013-14). The
paper that Gilfillan (2015) wrote is a great read on how small businesses are doing.

Clients
Your first client is always the most difficult one to find. You have no his-
tory, no referals and no list of past work. Put yourself in the clients shoes
and consider why they would choose you over someone else.

A lot of peoples instinct is to undercut jobs or to provide a service faster

then others can. Enns (2010, pp. 119) talks about using Pro-Bono work
to generate expertise in a field you may not know much about. However,
you must inform the client of this. This lowers the expectations and al-
lows you more freedom in the work. Youd be surprised how many clients are open to this.

Avoid sites like Fiverr, Upwork and Freelancer. This is not Pro-Bono work, as clients have high ex-
pectations but, offer very little money. The end goal is to continously increase your prices until you
are told no.

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Business of Design for Australians August 4th, 2017

A BUSINESS PLAN
Portfolios A lot of designers and animators are set back by building their
portfolios. We can all create vibrant works of art but, remember we
are here to run a business.

Clients will respect work that you do for other businesses, as that
work has value. Showing clients that your work has been utilizied
by others is critical. There are two ways to accomplish this;

You can do actual work for clients. Whether it is through a Pro-Bono situation or not, the best way
to build a portfolio is working for clients. Alternatively, create pieces of work that look like they are
for clients. Dont use your own branding, invent companies and do knock-offs. If it looks profes-
sional, clients will see it that way.

Enns (2010, pp. 93) discusses the need to write as creative professionals. This can best be accom-
plished through case studies. A case study outlines the methods you took to complete a piece of
work. It helps both you and the client understand the solutions to problems they may face.

Understanding Business
While the other three items covered in this section are often talked about,
understanding the fundamentals of business is overlooked.

It is vital for us as professionals, to understand how businesses func-

tion. We offer B-to-B services. That is to say; we provide services to
those that provide others with services and products.
The Futur (2016) covers this topic very well. If we can grasp the value of
a clients company, then we are able to determine how much we should
be pricing them. This does not come from a point of greed but, one of risk. The larger the client, the
greater the risk involved in the work we do.

Enns (2010) continues this line of thought, discussing the need to diagnose a clients problems.
We can only diagnose what we understand. We work for other businesses and therefore, we must
learn about how they function.

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The
Business of Design for Australians August 4th, 2017

BUILDING AN IDENTITY
E very business needs an identity, including your own. Graphic Designers
either use their own name (in smaller operations) or build an identity of their
own.
Walk
Building your own identity is a great way to practice your foundational knowl- the
edge of design. It will give you work for your portfolio and help show clients you
trust in your own designs. Walk
Branding
Branding is what all of our clients seek from us. Whether it takes the
form of a logo, brochure or video. Many designers forget about their
own brand.

Originally, we wanted to call Polynaut Studios, Ani-mate (a tip of the

hat to our Australian roots). We were sold on this name for a day before
deciding it was terrible. A witty (arguably) name is not a brand.

In order to stand out from the competition, you must become a brand.
An idea that is easy to communicate to others. Working your way
through this process early on will help immensely. You will discover how branding functions, gain
early work for your portfolio and place yourself above the competition.

Social Media
Even with the strongest of brands, exposure is the largest challenge.
Here are some tips on how you can handle social media;

Provide Value (2017, The Futur, C.D.).

Diversify your platforms. Dont post the same content to each
platform (2017, The Futur, C.D.).
Use Behance more, as it provides a great place for potential clients
to find you.
Be consistent in what and how you post. Your content should be
consistent to provide followers with an expectation (2017, The Fu-
tur, C.D.).
Talk to people about Social Media. The average Joe knows best,
as they are your primary consumer on Social Media.

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The
Business of Design for Australians August 4th, 2017

PRICING

Price T
he most common question from new Graphic Designers we get is; How
much should I charge for a logo?

the There is no one size fits all solution as many factors should be taken into
account during an evaluation of price. These factors are always changing

Client and so too should the prices you give your clients.

You can start with calculating a yearly salary for your-

self ($52,000 p/a); which breaks down into a weekly
Quality
salary ($1,000 p/w); which breaks down into an hourly
figure (~$26p/hr). While this figure is valuable, dont
stop there.
Pick Two
Once you have your wages sorted, consider who the
client is. The prices that you can charge a corner store Price Speed
vs. a corporate agency are vastly different. This idea
is often seen as greedy. A smart business decision is not an intense or selfish desire for wealth. A
corporate agencies branding carries much more weight than a corner stores. If a logo is offensive
or badly drawn, think of the lengths a company like Facebook would go to in order to replace it.

After you factor in your wages and your client you must now add on a profit margin. It can be slim
when you start (e.g. 5%). Enns (2010, pp.123) argues that healthy profit margins minimise prob-
lems and help grow businesses. Your profit margins will decrease as a relationship with a single
client extends. Ideally, you will have the largest profit margins at the beginning of a relationship.

With these three rules in place, you must endeavour to talk about this openly. Enns (2010, pp. 106-
111) outlines the necessity for us to bring up money early. This avoids us over-investing into the
clients needs and sorts out if the job is worth it for both parties.

Design is not art, it is a business. Making smart business decisions is not greedy or evil. Our cli-
ents do it. They find cheap options, minimize their costs and maximize their profits. Why should
we not be allowed to do the same thing? Polynaut Studios has sacrificed on cost in order to win
over a client and it never paid off for us. A lack of a profit margin meant that any issues we ran into
were catostrophic without further involvement of the client. Without discussing our prices early, we
over-invested into the clients ideas.

To conclude, you cannot price a logo easily. The many factors involved make it difficult to give
straight answers. If you do your research and understand the clients, pricing will become natural.

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Business of Design for Australians August 4th, 2017

REFERENCES
The Futur, C.D. (2016, October 21). How to price design services & make more money.
[Video file]. Retrieved from https://www.youtube.com/watch?v=RKXZ7t_RiOE&t=2s
The Futur, C.D. (2015, October 7). How to start & run a design business.
[Video file]. Retrieved from https://www.youtube.com/watch?v=wd0ejVP_g78
The Futur, C.D. (2017, July 26). Feeling overwhelmed information overload ep. 6 w/ melinda
livsey.
[Video file]. Retrieved from https://www.youtube.com/watch?v=RpY4t_oAXHg
The Futur, C.D. (2017, July 20). Grow your business have clear goals ep. 5.
[Video file]. Retrieved from https://www.youtube.com/watch?v=II7vYSnq2P8
The Futur, C.D. (2017, July 10). How to charge more for a logo deep dive ep. 4.
[Video file]. Retrieved from https://www.youtube.com/watch?v=b2wSN1w5QH4
The Futur, C.D. (2017, July 17). Overcome fears, insecurity, feeling overwhelmed & start posting
on social media.
[Video file]. Retrieved from https://www.youtube.com/watch?v=pYxILzVu35A
The Futur, C.D. (2017, June 28). Can you charge to diagnose a creative problem?.
[Video file]. Retrieved from https://www.youtube.com/watch?v=-hTVXeA5TVs
The Futur, C.D. (2017, June 21). How to run a creative business: in-depth breakdown w/ melinda
livsey.
[Video file]. Retrieved from https://www.youtube.com/watch?v=D8BN2YSyYkg
Government of Western Australia, Small Business Development Corporation. (n.d.). Choosing a
business structure.
Retrieved August 2, 2017, from
https://www.smallbusiness.wa.gov.au/business-advice/business-structure/busi-
ness-structures
Enns, B. (2010). The win without pitching manifesto. Nashville, USA: RockBench Publishing Corp.
Waring, G. (2010). How not to commit business suicide. AU: Palmer Higgs.
Gilfillan, G. (2015). Statistical snapshot: count of small businesses. Parliament of Australia.
Retreived from http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/
Parliamentary_Library/pubs/rp/rp1516/Count

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