On a Serious Note
Few business improvements on how we will continue to run our design firm.
During the past 4 years of our commercial existence, we’ve done quite well in terms of acquiring new clients and steadily increasing revenues, which has helped us invest in new talented individuals and incubate few projects of our own. During this time we’ve been known to extend payment due dates, which have tremendously helped our growing clients whose businesses range from 50,000€ revenue/year to 10,000,000€/year. On the other side of the spectrum, we’ve been also known to be strict in contractual terms, because during the intensive time we we work on a given project (2-4 months) a lot of things can change and usually do. The contract helps us steer the ship clearly towards the coast when the weather gets rough.
Looking back at our financial performance one of the biggest setbacks have been delayed payments. Once these delays, big or small, pass their planned due date — their value and worth drops drastically. Not that 100 Euros are not worth 100 Euros after a certain time — but any financial delay in a small business causes tectonic delays in planned investments and spendings. A small business with big responsibilities cannot afford setbacks of this nature.
The undeniable fact is that running a design firm is marked with various challenges. At the end of the day these challenges are rewarding, however one of the factors that drives growth and extends stability is cultivating a healthy cash flow — a major issue that most professional service businesses have to deal with.
As we continue designing for current and new clients in 2013, we have decided to tackle few things differently when it comes to running a healthier business. Starting first and foremost with tighter project payment deadlines and stricter rules in meeting those deadlines, by us and clients alike. You see, no matter how cool we are to have a beer with, we’re not a charity business or a financial institution that gives out grants or incorporates grace periods. We’re a business, and at the end of the day we have to pay rent, payroll, payroll taxes, pensions, corporate tax, cleaning, utilities, just to mention a few. And believe us, these entities never wait for us even for a day, hence the reason we cannot extend payment due dates.
Specifically speaking, each new project will have a timeframe that will clearly state delivery dates expected from us and payment dates expected by the client. What this means exactly? — Example: A project is expected to be delivered in 3 months with 4 milestones in between. The project starts with an initial payment (Date 1), 2 Milestones are completed on Date 2 (Payment expected, Date 2 as well), 4th Milestone is complete on Date 3 (Payment is expected on Date 3). If there is a delay by the client on milestone approvals, we will still expect the payment on the pre-agreed upon payment plan.
Delays in approvals by the client will have consequences in payment terms. Likewise, delays caused by us will result in self-penalties while rewarding the client. We believe these stricter procedures will clear the way and help us deliver what we do best. Our business is that of a service, we do not sell products, our solution is the by-product of our service — we increase the value and revenues of each business/organization we work with through our outstanding creative solutions & success must be reciprocal.
(Wrriten by Valon Sopi, Principal @ BOLD on March 16th, 2012).