Through the Easter holidays our group have decided to meet up so that we can make all of our decisions for the business and bring our research together. It also allows us to get our presentation done so that we will be prepared.
Me - Legal requirements needed for the business, also what type of business we will be, for example as plc or ltd.
Danielle - In charge of making the powerpoint, what makes our business unique (USP) and looking up how much we should be charging.
Mel - Looking up the costings for the business, start up costs including fixed and variable costs, also looking into the competition.
Sarah - Location, where we would have our business and how much our rent would be. Also looking at external printers, what would work best for us.
Ant - Website hosting and different banks, which would be best for our business account and loan.
After doing my research on the legal requirements for our business, I found that we would need a music license if we wanted to listen to any music or the radio in our studio, therefore I looked into how much is would cost to get it for a year.
Gas and Electrics.
To work out how much we would be paying ourselves in our salary, I decided to look into how much a Designer in Leeds would be earning. Because we are a new business I thought that it would be better if we had a lower salary to start with, whilst still having enough to live comfortably. This is the results I found for looking up what a designer would earn, we worked out what we would pay ourselves per year on what a starting designer would earn. Therefore we decided that we would pay ourselves £22,500 a year before tax.
Danielle asked around different branding and website design businesses so that she could find out how much they charged per hour. She found that a lot of them charged about £100 per hour. Although I think that it is subjective towards what kind of work we will be designing. Me and Mel have been working out the costings, and found that the break even point in the business is £129,600, this means that if we are wanting to make a profit in the first year we will need to be making more than £129,600. If we charged £90 per hour we would break even exactly, although this isn't taking into account VAT, or giving any lee way on quieter times.
If we are open from 9am till 5pm, we will not be working 8 hours solid, baring in mind lunch, and breaks, or unplanned events, we decided that we would consider having 6 solid hours a day, 5 days a week. Also considering holidays in the year, and just being generally slower business wise, therefore working 48 weeks a year.
£129,600 divided by 48 weeks a year is £2,700.
£2,700 divided by 5 days a week is £540.
£540 divided by 6 hours a day is £90.
Therefore this is what we would need to charge to break even.
Just breaking even isn't the goal for Sublime, we are looking to make a profit. Therefore because our turnover is over £77,000 per year we will have to be VAT registered. I think that it will be better for our company to charge our VAT straight to the clients, rather than us losing more money. Adding the 20% VAT charge to the clients means that we will be charging £110 per hour, generally.
£90 times 1.2 (20%) is £108, although we decided to round it up to get £110 per hour.
If we do charge £110 per hour, work 6 hours a day, 5 days a week, and 48 weeks a year we would have a turnover of £158,400.
We worked out how much our start up costs would be and pay with that using our loan, and investing the rest of the loan as capital in the business. We also calculated out monthly costs and added these to our total salary outgoings to find out total outgoings cost. Working out our estimated turnover plus what we would receive from people using our hosting services means out net profit is £160,400.
Our Net profit minus our outgoings gives us our gross profit.
£160,400 minus £129,600 is £30,800 gross profit.
This is capital which will be reinvested back into the business at least for the first year, which will contribute to paying for our resources company benefits, also pitching to potential clients.
As a private limited company we will need to have a directer and secretary therefore we decided that Danielle would be our director, and I would be the secretary, which means Danielle would be in charge of the time management in the company so we would have structure, and I would be in charge of looking after the money and going to different meetings. Although we have a directer and secretary, everyone at Sublime would have their own responsibilities, and would all have equal shares in the business of 20%, which means we would all get the same salary.
Mel found a really useful publication that helps to explain more about businesses and how they work and if you are setting up the things you need to do. After doing the costings me and Mel went through this publication and summerised each section so that we could create some of the content for our presentation. I then decided to write short bullet points about why we are a public limited company, this will show people some of the reasons why we chose this, whilst in the presentation I will be more specific about it, as I think that it is important that people know why we are a private limited company rather than partnership, sole trader, public limited company ect.
Launching our studio.
Draw up a detailed and honest business plan that identifies gaps in the market and how we would fill them.
Look for complimentary skills in our team and protect ourselves with legal binding articles of association, for the agreed rules of how to run the company.
Funding options for our company will be…..
Before starting we will need to register our studio, obtain the necessary licenses, alert the local and national tax offices, and get the right insurance.
Begin looking for studio, check the tenant’s obligations carefully.
Consider project specification, usage and rights, turn around time, overhead costs, your expertise and how much you want a job before calculating the fee.
We will initially quote on an hourly rate, with all additional time and expenses build in the final fee.
In our payment terms we will include cancellation fees rejection fees and termination clauses.
We will not underestimate the importance of cash flow; we will ask for staged payments and invoices to be agreed.
Booking keeping is a legal requirement to get to grips of what’s coming in and out; we will file all paperwork and receipts in an organised system.
We will employ Toby the accountant to help us save money and navigate us through the tax mind field.
Being More Efficient.
Time is money, we will work out a plan of how to manage our studio and projects before tackling any of the creative work.
Successful studios demonstrate an excellent project management so we are going to put a system in place that will help us get each job done to brief and to the deadline.
We are going to avoid clashing deadlines, preferably we are going to plan our schedule, so that major deadline will fall about every two weeks, this will ensure work will be completed to a high standard, and keep the work flow manageable.
Create Gantt charts to prioritise tasks, cost of the project and the estimated time it will take.
We will keep regular communication with our clients, suppliers and each other to lessen the chances of bad surprises.
The key to winning new work is being able to spot design opportunities and successfully communicate our vision to perspective clients.
We will arrange regular studio promotions to keep up moral and word of the business, which will be more chances of finding new clients.
We will all have a responsibility of finding new work and clients, which will be beneficial us financially & as a studio as a whole.
We are going to contact people who we already know, so we are going to contact possible clients and let them know what we are doing and our contact details.
Dealing with clients.
We are going to make sure we try and retain our clients when we develop at database as these will be a long-term relationship that we will try to arrange regular meetings with to keep up to date with their business & ideas.
No two clients are the same. We are going to listen to what they want and gain a sense of what they are all about to make our studio irreplaceable.
We are going to set up events quarterly, and invite our clients for refreshments to get to know them on a personal level so therefore we can secure repeat business.
We will always be looking to exceed our clients expectations as we can’t rely on repeat business.
Build a Perfect Team.
We will only employ people that better than us and have different skill sets than our team present.
We are going to have many employee benefits in place from, krispy crème in Monday morning briefings, to monthly bowling tournaments. But also we will have clear detailed policies in place, such as sick leave and maternity leave to make sure all our staff are disciplined.
The colour scheme of our studio is going to be lime green as this is known as a calming colour and boosts creativity.
We are going to create a comfortable office atmosphere that is affordable so employees can concentrate.
We will foster a team spirit by doing regular employee activities stated in our employee benefits. This will create a good working environment and atmosphere.
Advantages of Private Limited Company.
Offers a financial security as the company’s shareholders are only liable for any debt the company accrues according to the levels of their own investment and no more.
The company has a separate entity to the owners which means if anything happens to them for example retire or die, the company will still continue to exist and operate. This offers security for the employees and other shareholders.
The Directors are also usually the main shareholders of the Company. Therefore both the ownership and control of the business remain in their hands. Decisions can be made quickly and easily, with little fuss, allowing for a more successful business management platform.
Whilst I was doing this, Danielle was preparing and designing the presentation showing where we would be in 1-3-5 years time. Ant was doing the logo and branding for our studio. Mel was helping me with the costing and content for the presentation. And Sarah created the lime characters and wrote our manifesto. This was a very productive day, a lot got done in the day and it was a good idea for us all to come in during Easter to sort out our presentation. After doing this we are ready for our presentation, although we will be running through it so that we can establish what each of us will be saying about Sublime, and running through what we should be saying so that we can convey everything necessary without being too thorough and boring people.