We need to talk about design studio budgeting
When was the last time you looked closely at your design studio budgeting? Not the year-end accounts prepared by your accountant, but the working financial plan that tells you what it really costs to run your business each month.
We’ve been doing a lot of work on design studio budgeting recently. One well established agency had followed their accountants advice to work out hourly rates by dividing working hours into the salary. We showed them how from a revenue of $650,000 they were leaving $100,000 on the table because they hadn’t accurately cost all the added things needed to employ designers.
Without a clear budget, can you confidently say pricing covers your true costs? When you quote a project, are you working from known margins, or informed assumptions?
Are you guiding business decision with you design studio budgeting?
Do you treat your budget as a strategic tool, or as an administrative exercise? A well-constructed budget should help answer practical business questions:
- Can we afford to hire another designer?
- Are we pricing projects at a sustainable level?
- Which services jobs and clients are genuinely profitable?
- How much revenue do we need to achieve our desired margin?
If your budget doesn’t help you answer these questions, is it serving its purpose?
If you want to learn more about budgeting check out our costing, pricing profit toolkit.
What is your budget telling you about your business?
Does your budgeting process reveal unused capacity, underperforming clients, or services that consume more time than they return in margin? If not, is it detailed enough to provide meaningful insight?
Studios that use budgeting effectively don’t simply track expenses; they plan profitability. They set revenue, utilisation and margin targets and review them regularly.
So, how are you currently using your budget? Is it helping you make strategic decisions, or is it something you look at only when the financial year ends?
If you need help in doing all this take a look at our costing, pricing profit toolkit.
If you want to learn more about how the DBC is helping Australian design businesses contact Greg Branson.
Greg Branson
Contact Greg Branson if you would like to learn more about the many programs the DBC offers.
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About Greg Branson
Greg’s passion is the research and development of methods that improve design management and the role of design in business.
His longevity is in his ability to change and adapt. Greg’s career as a traditionally-trained photographer; became an academic, teaching photography to design students. He co-founded and ran Mackay Branson design (for over 25 years) until, recognising an area that he loved – design management – was not an area traditionally covered in design education. This lead to him founding Design Business Council. Since then he has worked alongside hundreds of Australian creatives helping them manage their business better.
Greg has sat on the AGDA Victoria and National councils, on a number of University and TAFE Advisory Boards and helped rewrite the VCE Visual Communication curriculum.
Outside of DBC, he is a passionate analogue photographer who spends an inordinate amount of time in his darkroom. You can follow his work on instagram @gregurbanfilm
Always happy to chat, he can be contacted here.