![\"quitting-business\"](\"https:\/\/rewardingtoil.com\/wp-content\/uploads\/2015\/03\/quitting-business.jpg\")
As a part of my marketing process for Rewarding Toil I spend a lot of time on LinkedIn reviewing design firm websites. Sadly, the frequency with which my research leads to 404 page is far too great. Design firms go out of business with sobering regularity. <\/p>\n
When I consult with my clients, I use a methodology I\u2019ve developed called \u201cthe 5Ms<\/a>.\u201d I evaluate a firm\u2019s health from five different perspectives: Money, Measurement, Marketing, Management, and Motivation. Each perspective leads into important practices design firms need to establish–if they\u2019re going to avoid the path to a 404–design firm not found error. <\/p>\n Is your firm on the path to deletion? Here are five ways (essentially the opposite of the 5Ms) you might kill your design firm. <\/p>\n 1. Ignore Your Money\u2019s Voice.<\/strong> The nice thing about listening to your money is that it will never lie to you. It might not always say positive things, but it is honest. The trend line of your total equity on your balance sheet<\/a> will tell you a lot. Your percentages of expenditures have to stay in a certain range or you will bleed out. Your effective hourly rate needs to be strong. Your cash flow<\/a> (that is, the cash flow document<\/em> you use–not the cash flow experience of payroll shortages) needs to be continually evaluated. If you are not listening to your money, you are probably losing money. And of course we know where that ends up. <\/p>\n 2. Ignore the Clock.<\/strong> You need to listen to your money, but you also need to look at the clock. It\u2019s conceivable that you might find a way to quickly get more money–a great client with a generous budget could show up and hire you. But while you could theoretically increase your money supply, you will never increase your time supply<\/a>. Time is measured equally for everyone, and it moves at the same speed for everyone. In this respect it\u2019s even more important to measure your time than your money. Additionally, if you do listen to your money and it tells you that you have a problem, without measuring your time you\u2019ll have very little information to use to figure out where the root of your problem lies. But if you do measure time, keeping timesheets of all the time spent in your firm–on projects and downtime–you will have a rich source of information to begin righting the ship. But if you\u2019ve silenced this source by ignoring the clock, you may not be able to find your way off the path that leads to shutting down your firm. <\/p>\n 3. Be a \u201cFull Service\u201d Shop.<\/strong> There was a time when very large advertising agencies were able to be full service, one stop shops. But today\u2019s marketing channels are diversifying at light speed. Even large agencies can\u2019t keep up. So for a small firm, with a dozen or fewer employees, to claim \u201cfull service\u201d is highly suspect to your prospects. And the reality is you can\u2019t keep up with the claim anyway–nor should you want to<\/em>. Design firms want to say they are full service because they feel like it casts a wide net to haul in all sorts of opportunities. The problem is, it does lead to all sorts of opportunities. As a result you have to change gears from brand identity work, to print projects, to web development, to SEO, to photography, to mobile app development–and you never develop deep expertise in any of them. You become a Jack of all trades, and master of none. Not only does this diversity keep you from becoming great at any of them, you also can\u2019t ever establish repeatable processes in doing the work–so you never build efficiency. You\u2019re always having to play catch up ball on new technologies. You have less historical data (and less experience) to deliver accurate quotes. And on top of all that, a generalist firm always loses out when competing with an expert firm, so that wide net doesn\u2019t even haul in much anyway. If your firm isn\u2019t intentionally narrowing its focus<\/a>, it may get narrowed all by itself–down to nothing. <\/p>\n 4. Hire People Out of Desperation.<\/strong> If you want to rapidly speed up your way toward 404ing your firm start hiring out of need rather than through careful planning. Building your staff should be a very deliberate, carefully thought through process, especially since hires tend to come in batches. That\u2019s because there is a necessary proportion between \u201cdoers,\u201d facilitators, and leaders in your firm. And so you have to hire proportionately. If you\u2019re hiring practices get out of balance you\u2019ll just be creating more problems that you\u2019re solving by hiring in the first place. So if you\u2019re facing problems whose only solutions seem to always point to hiring more people, you probably have more fundamental problems. And if you don\u2019t fix those first, it will only lead to deletion more quickly.<\/p>\n