4 heads studio business plan

BUSINESS PLAN

PRATT GRAD COM.D
DESIGN MANAGEMENT
DES 640 01
FINAL PROJECT
(DESIGN FIRM STARTUP)
ANDY BRENITS
FALL 2010

GROUP MEMBERS
MAX GAINES
CHARLES MAK
TAI YUO KUO
YUSUN JANG

TABLE OF CONTENTS

A. VISION STATEMENT 02

B. MISSION 03

C. FACILITIES 06

D. STAFF 08

E. MARKETING 11

F. FINANCE 27

G. CLOSING STATEMNT 39

A. VISION STATEMENT

Four Heads Studio is a small design firm based in New York City.
Our Objective is simple: Delivery the youth audience to you and your
brand. Four Heads Studios is dedicated to providing our clients with
strategic planning, cross medium design, creative solutions and cut-
ting edge consulting to help business understand, tween, teen and
young adult market. We specialize in Millennials the generation born
between 1980 and 1995.

B. MISSION

> MISSION STATEMENT
Four Heads Studio is a small design firm based in New York City.
Our specific goal is orient our services towards the Millennials, the
generation born between 1980 and 1995. They are today’s holy grail
of marketing for brands because of their disposable income, brand
loyalty and their tech savvy skills which allow them to not only train
older generations, but to be reached with ease, at least in theory. Yet
they are a generation misunderstood by business today and simple
written off as the “entitlement generation”.

Four Heads Studio is dedicated to providing our clients with strategic
planning, cross medium design, creative solutions and cutting edge
consulting to help business understand, tween, teen and young adult
market.

Typical design studios are well equipped to fight yesterday’s battles.
They have the tools and the mindset. But we will be different.

FourHead Studios respects the design traditions of the past, but
understands the present while constantly looking towards the future.
We are well prepared to fight the battles of today and tomorrow for
our clients.

Our team will put all of our heads together (literally) in order to pro-
vide a quality product and service to out client. With a strong under-

02

standing of the current landscape, our creative thinking and planning
allows us to position ourselves as a design leader.

Above all, our goal is to maintain a productive and financially sound
workplace to better serve our clients and keep our staff motivated.

To our employees we offer an exciting, comfortable & healthy work-
ing environment full of growth, productivity and potential; A library of
resources and tools for better productivity; A rejection of compart-
mentalization – a standard found in typical working environments.
Our main office space along with departments will be free and open
allowing for ideas to flow easily from one person to the next. And
windows… lots of windows.

To our clients we will offer a strong healthy workforce of creative
individuals. Homogeny is the enemy of creativity. Four Heads Studio
offers multitalented, unique individuals with varying discipline and
backgrounds working together (put our heads together) to help our
clients see the big idea and meet the needs of today’s ever changing
youth market.

03

> LOGO

POSITIVE NEGATIVE

> BUSINESS CARD

04

C. FACILITIES

Lease $ 6,000 / two months
Registering Business $ 325
Website domain name $ 15 / yr

SUB TOTAL 1 $ 6,340

Principal / Creative Director MacBook pro
Sr. Designer MacBook pro

ITEM AMT EACH TOTAL

MacBook Pro 2 $ 2,000 $ 4,000
Mac Pro 1 $ 2,500 $ 2,500
LCD monitor 1 $ 200 $ 200
2 $ 500 $ 1,000
Keyboards 2 $ 20 $ 40
Mouse 2 $ 15 $ 30
Chairs 8 $ 50 $ 400
Tables 5 $ 200 $ 1,000
Office copy machine 1 $ 700 $ 700
3lines and 4 telephones $ 110

SUB TOTAL 2 $ 9,980

GRAND TOTAL $ 16,320

06

D. STAFF

> BIOS OF FOUNDING MEMBERS

MAX GAINES
Max hails from the land of Philadelphia
PA (USA). A natural process facilitator,
Max’s areas of specialties include, but
not limited to: street art, fine art, photog-
raphy, youth orientated design.

CHARLES MAK
Having years of experience in Adver-
tising Design, Charles Mak brings to
Four Heads Studio an understanding
of advertising and developing a vision
for clients. He understands the core of
design begins with understanding the
clients needs.

TAI YUO KUO
York from Taiwan with an background
in industrial design, graphic design, and
advertising. He is excellent at cross-
cultural design between Asian and
western market. Specialties include is
also including strategy making, creative
thinking, and market analyze.

YU SUN JANG
Yusun is specialized in branding, il-
lustration, printing, and motion graphics
with various professional experience in
several years. She originally from South
Kore and has excellent sensibility about
Asian arts and culture.

08

> ORGANIZATIONAL STRUCTURE

This firm will base it’s structure around the “Coaching Model”. The
coaching model recognizes that true creativity can only be encour-
aged and directed; it cannot be specified, ordered or demanded. 12

In this model the coach (principal) has overall responsibilities for
winning. The team (employees) has specific performance responsi-
bly. There is no question about the authority and who gets to set the
direction and strategy. But there is recognition that the coach stays
mostly on the sidelines and the team members make most on-the-
spot decisions. 12

> INITIAL POSITIONS

CREATIVE DIRECTOR & PRINCIPLE

Responsible for directing all work including, but not limited to, audi-
ence promotions and advertising and design concepts. May oversee
print production, graphic art, and desktop publishing. Assists with au-
dience research and develops creative briefs and design concepts to
meet business objectives. Requires a bachelor’s degree with at least
7 years of experience in the field. Familiar with a variety of the field’s
concepts, practices, and procedures. Relies on extensive experience
and judgment to plan and accomplish goals. Performs a variety of
tasks. Leads and directs the work of others. A wide degree of creativ-
ity and latitude is expected. 11

SENIOR DESIGNER

Adept at taking briefs and well have a lot more client liaison experi-
ence. A senior designer should have developed those famous prob-
lem solving abilities to a degree where each design project is not seen
in isolation. But rather, they will also be able to look at the ‘bigger
picture’ in a creative or advertising campaign. Managers Junior De-
signers and Web Developer. Works closely with Marketing Specialist,
Copywriter and Office Manager. Reports to Creative Director. 9

09

> POSITONS TO BE GRADUALLY ADDED

JUNIOR DESIGNER

Middleweight Designers should usually already have some kind
of professional portfolio. They will probably have mainly worked on
parts of larger campaigns and a few smaller projects of their own.
They will be able to take design briefs and implement them, but will
still generally be overseen creatively by a Senior Designer and Cre-
ative Director. 9

WEB DEVELOPER

Primarily responsible for HTML, HTML 5, CSS development and
JavaScript coding with skills in various other desktop publishing soft-
ware useful in web and / or interactive development. Others are only
responsible for creating the concepts in Photoshop, before handing
over the graphics to web developers to hand code. Works closely
with Junior & Senior Designer. Typically overseen creatively by a
Senior Designer and Creative Director. 9

MARKETING SPECIALIST

Responsible for designing, creating, and delivering marketing pro-
grams to support the growth and expansion of company products
and services. Develops sales presentations and provides reports
based on information collected such as marketing trends, competi-
tion, new products, and pricing. Requires a bachelor’s degree in area
of specialty and 2-4 years of experience in the field or in a related
area. Familiar with a variety of the field’s concepts, practices, and
procedures. Relies on experience and judgment to plan and accom-
plish goals. Performs a variety of tasks. A wide degree of creativity
and latitude is expected. Typically reports to Senior Designer. 11

COPYWRITER

Writes, proofreads and edits copy brochures, print and other docu-
ments. May assist in estimating production costs, overseeing work
done by external suppliers, and preparing the marketing program.
May require a bachelor’s degree in a related area and 0-2 years of
experience in the field or in a related area. Has knowledge of com-
monly used concepts, practices, and procedures within a particular
field. Relies on instructions and pre-established guidelines to perform
the functions of the job. Works under immediate supervision. Primary
job functions do not typically require exercising independent judg-
ment. Typically reports to Senior Designer. 11

10

F. MARKETING

> SITUATIONAL ANALYSIS
The role of a designer has changed. At the same time the market-
ing world is attempting to make sense of their new relationship with
costumers. In the old world designers were expected to produce a
logo, stationary, business cards, subway posters and perhaps clever
marketing campaign. Essentially they where called to “pretty up
things”. But this no longer is enough in the new era.

For brands today’s holy grail of marketing are Millennials. The big-
gest mistake brands make, however, is to think they can reach them
through technology. They are more informed and more concerned
about the world around them than any other previous generation.
They are also more conscious of when someone is trying to “sell
them something.” Today for brands to be successful they must care
about something else other than themselves. A clever marketing
campaign is simple not enough. The fastest way to reach Millennials
is not through facebook, twitter or youtube alone, but through their
hearts and minds by adding meaning to their lives. 2

Therefore the mission of Four Heads Studios will be to not only pro-
vide strong strategic advertising, cross medium design and creative
solutions to meet our client’s objective, but to make the case for the
simple proposition that the brands we work with must do something
good for their communities for customers to like them. Report after
report tell us that individuals, including Millennials, want brands to
build a better not just to build better widgets. 2

Four Heads Studio is also well aware of the fact that brands could
gain by offering Millennials the same devotion they expect from con-
sumers. A new report released by PR firm Edelaman indicates that
Millennials have a profound relationship to brands. The study shows
that brand identification is just as important as religion and ethnicity
when it comes to personal identifiers Millennials share online. 4

Four Heads Studios understand that consumer devotion is both a
boon and a responsibility for a brand. Deep bonds are hard won and
easily lost. Feeling of betrayal makes the cost of winning back and
old costumers is astronomical when compared to keeping an exist-
ing one. FourHead Studios understands that brands that ignore or

11

disregard Millennials do so at their own peril. 3

Millennials believe brands actually stand for their core values they
claim to represent. FourHead Studios believes brands must consis-
tently deliver on these value propositions in
a transparent and accountable way. The contrast between BP’s
Marketing and their handlgin of the oil spill in the Gulf of Mexico is a
powerful example of the costly breach of trust. 3

The global economic meltdown that began in 2008 was an alarming
wake up call. The unbridled self-interest of power brokers on Wall
Street and within corporate America came at an extreme cost to
everyone including Designers and Millennials. 3

The AIGA Design Leaders Confidence Index for the first quarter of
2010 reflects the strongest confidence yet in an economic recovery.
The index rose to 103.73—up from 51 in October 2008—and is the
highest since AIGA began measuring confidence in the design econ-
omy in early 2005. More than a third of respondents (36.5 percent)
believe they will be more likely to hire new designers in this quarter
than last; only 15 percent felt they were less likely to hire new design-
ers. And 48 percent felt their plans of purchasing new hardware and
software had increased compared with three months ago. 1

There is plenty of energy, positivity and optimism of out there. It’s
something corporate America should not squander. It has the power
to dramatically change our world for the better. FourHead Studios
knows that this generation has little patience for destructive corporate
self-interest and nor do we. We will strive to do the absolute best to
meet our clients needs, as well as the needs of today’s generation.

12

> VALUE ADDED POSITION
Four Heads Studios is a small design firm based in New York. Our
specific goal is orient ourselves towards the Millennials (the genera-
tion born between 1980 and 1995) today’s holy grail of marketing for
brands and yet a generation of individuals misunderstood by brands.

We will be more than just be an average design studio. Designers
can no longer live in a bubble and attempt to remove themselves
from the world at large and consequences related to environmentally
destructive behavior. As we suffuse the world with complex technical
systems – on top of the natural and social systems already here – old
style, outside in design simple wont work. Designers have to evolve
from being individual authors of objects, or buildings, to being facilita-
tors of change among large groups of people. 7

Environmentally speaking design studios in the past where as big
apart of the problem as brands and their manufactories. To put it
bluntly, brands simple create a never-ending stream of goods with
material that must be, in some cases, pulled out of the earth and will
eventually end up in a landfill. For example: a coffee machine uses
three hundred kilowatt-hours of electricity during is lifetime; this is
equivalent to the amount of energy generated from sixty kilograms of
oil. 7 As a leader in design FourHead Studios must simple not be a
repeat of other design studios. We must be something more.

Design studios help brands sell these products. In some cases they
are an interregnal part of convincing people to buy things they don’t
need with money they don’t have to impress people they don’t know.
We must move beyond that. FourHead Studios must be a leader, not
only in design, but also in making environmentally conscience design
decisions. 6

Our studio will make to promise to our clients and well as the indi-
viduals they serve to make socially and environmentally conscience
design decisions. For example when it comes to printed material
FourHead Studios will work directly with print houses such as Roll-
ing Press an eco-friendly printing company based in Park Slope,
Brooklyn. We and the brands we work with will strive to improves the
quality of life while delivering goods and services.

13

> SEGMENTATION & TARGET MARKET
Demographic Segmentation: Age

 
Within age, we find our target market: Commercial industries and
brands serving a youth market, i.e. Millennials as represented by the
graph below

 

14

We are in a unique time in the history of market segmentation with
three distinct generations living today. They are: Baby Boomers (Post
WWII) , Generation X & the Millennials, the generation born roughly
between 1982 and 1992. With nearly 80 million young people falling
under this banner they represent our target market. 8

Millennials are unlike any other market. Never before has a young
generation demanded so much attention from marketers. Loaded
with disposable income, they are the driving force in much of today’s
economy and the catalyst for change, innovation and advancement.
Also when it comes to technology (Texts, facebooks, iPods) and
trends (fashion, entertainment, etc), never before has a young gen-
eration been the teacher of the older generation. 8

> SERVICE OFFERING
Four Heads Studio will be to not only provide strong cross medium
design (including, but not limited to: branding, print, interactive inter-
faces, web development, social networking) strategic advertising and
creative solutions (novelty & irreverence, viral marketing, anti market-
ing) to meet our client’s objectives, but make the case for something
different. Millennials speak a different language than previous gen-
erations and it must be understood that traditional forms of advertis-
ing simple wont work or will not be enough.

Novelty & Irreverence: A perfect example of such tactics can be
found in the current Old Spice “Old Spice Guy”, the Dos Equis Most
interesting Man in the World and the Vitamin Water 10 Water In-
corporated / Office of Mother Nature. Each campaign uses a bit of
humor and irreverence to grab your attention; Novelty in a sense
there is a new commercial with the characters that have been
invented; And Viral Marketing people use twitter and facebook to
comment (even offer up usable ideas) and spread the campaigns. All
campaigns also utilize the concept of myth making. The characters
invented become figures in-it-of-themselves, thus adding the brand.

Simple put, you can have fun and still make money. Another example
of viral marketing (albeit indirectly) is the J / K Wedding Video in
which a wedding party uses the pop song Forever by Chris Browns
(Jive Records) to dance down the isle. The video became an instant
hit you YouTube and has received nearly 60 million views and was

15

even mimicked on popular NBC television series The Office. The
video is a perfect example of how viral marketing can give a boost to
publicity.

We must also make the case for the simple proposition that the
brands we work with must do something good for their communities
for customers to like them. Report after report tell us that individuals,
including Millennials, want brands to build a better world not just to
build better widgets. 2

The pricing of projects will typically estimate as a project-based cost.
The project cost will be estimated by the appropriate number of
hours needed to complete the project. Generally FouHeads Studio
will charge a flat hour rate of $55.00 per hour per employee to break
even, and $ 65.00 and up per hour per employee to profit.. To meet
the needs of are firm we are projecting a monthly inflow of capital
ranging of 16,000 – 18,000 to break even.

16

> SWOT ANALYSIS
STRENGTHS
- Cross cultural global design perspective
- A unique positioning of the firm itself, focusing on creative
solutions for firms wishing to seek a youth oriented market
(millennials) could specialize us and make our studio the
“go to” place.
- “The new car smell”. Novelty is an advantage in this marke
as we can be seen as having something other firms don’t
(i.e being new and fresh)
- An elegant open working environment (with lots of windows)
to allow for flow of creative ideas and keep our minds at ease.

WEAKNESS
- The struggle to develop an awareness for a startup
- Less and less time available for marketing as more and more
time is devoted to finishing projects
- A struggle to maintain an understanding of youth markets
as they are ever changing and we are ever aging.
- The positioning of our company could limit our client pool.
- Less professional experience than some of our competitors.

OPPORTUNITIES
- A growing market (millennials) and a misunderstanding
of brands on how to reach them.
- Ever advances in technoloogy

THREAT
- Economic recession.
- A increase in the ease of use in graphic design publishing
programs allowing individuals to design their own graphic
designs.
- Outsourcing: more and more firms are outsourcing traditional
graphic design services to cheaper countries. It is important that
FourHeads Studios offer to clients that which cannot be
outsourced.
- Competitions from other design studios offering similar services
and positioning.

17

POSITIVE N E G AT I V E

STRENGTHS WEAKNESSES
1. Cross cultural global design 1. The struggle to develop an
perspective. awareness for a startup.

2. A unique positioning of the 2. Less and less time avail-
firm itself, focusing on creative able for marketing as more and
solutions for firms wishing to more time is devoted to finishing
seek a youth oriented market projects.
(millennials) could specialize us
INTERNAL

and make our studio the “go to” 3. A struggle to maintain an
place. understanding of youth markets
as they are ever changing and
3. “The new car smell”. Novelty we are ever aging.
is an advantage in this market
as we can be seen as having 4. The positioning of our com-
something other firms don’t – i.e pany could limit our client pool.
being new and fresh. 5. Less professional experience
than some of our competitors.
4. An elegant open working en-
vironment (with lots of windows)
to allow for flow of creative
ideas and keep our minds at
ease.

OPPORTUNITIES T H R E AT S

1. A growing market (millenni- 1. Economic recession.
als) and a misunderstanding of
brands on how to reach them. 2. An increase in the ease of
use in graphic design publish-
2. Ever advances in technology. ing programs allowing individu-
als to design their own graphic
designs.
EXTERNAL

3. Outsourcing: more and more
firms are outsourcing tradi-
tional graphic design services to
cheaper countries. It is impor-
tant that FourHeads Studios
offer to clients that which cannot
be outsourced.

4. Competitions from other
design studios offering similar
services and positioning.

18

( FROM 1 TO 9 )

STRENGTHS Factor Relevance/ Strategic
Scale/Size Importance Impact

Cross cultural global design per-
8 6 5.5
spective

A unique positioning of the firm it-
self, focusing on creativesolutions
for firms wishing to seek a youth
oriented market (millennials) could 5 6.5 6
specialize us and make our studio
the “go to” place.

“The new car smell”. Novelty is
an advantage in this marke as we
can be seen as having something 4.5 4 3.5
other firms don’t (i.e being new
and fresh)

An elegant open working environ-
ment (with lots of windows) to
allow for flow of creative ideas and 4 3.5 5
keep our minds at ease.

WEAKNESS Factor Relevance/ Strategic

The struggle to develop an aware-
4 7 5
ness for a startup

Less and less time available for
marketing as more and more time 4 6 5.5
is devoted to finishing projects

A struggle to maintain an under-
standing of youth markets as they
4 2.5 3
are ever changing and we are
ever aging.

The positioning of our company
6 7 4.5
could limit our client pool.

Less professional experience than
5 3.5 6.5
some of our competitors.

19

( FROM 1 TO 9 )

OPPORTUNITIES Factor Relevance/ Strategic

A growing market (millennials) and
5 5.5 7.5
a misunderstanding of brands on
how to reach them.

Ever advances in technoloogy 4 3 4.5

WEAKNESS Factor Relevance/ Strategic

Economic recession. 7 8 7.5

A increase in the ease of use in
graphic design publishing pro-
6 4.5 4
grams allowing individuals to
design their own graphic designs.

Outsourcing: more and more firms
are outsourcing traditional graphic
design services to cheaper coun-
tries. It is important that Four- 5 6.5 7.5
Heads Studios offer to clients that
which cannot be outsourced.

Competitions from other design
studios offering similar services 6 6.5 8
and positioning.

20

> MARKETING TACTICS

THE PRODUCT:

Four Heads Studios will be to not only providing strong cross me-
dium design (including, but not limited to: branding, print, interactive
interfaces, web development, social networking) strategic advertising
and creative solutions (novelty & irreverence, viral marketing, anti
marketing) to meet our client’s objectives. Millennials speak a differ-
ent language than previous generations and it must be understood
that traditional forms of advertising simple wont work or will not be
enough.

A perfect example of both novelty & irreverence tactics can be found
in the current Old Spice “Old Spice Guy”, the Dos Equis Most inter-
esting Man in the World and the Vitamin Water 10 Water Incorpo-
rated / Office of Mother Nature, The current K-Swiss / Kenny Powers
– Eastbound & Down campaign and the Geico Car Insurance ads
featuring actor McGlone always starting off with the question: ‘could
swithcing to Geico really save you 15 perecent…?’. Each campaign
uses a bit of humor and irreverence to grab your attention; Novelty
in a sense there is a new commercial with the characters that have
been invented; And Viral Marketing people use twitter and facebook
to comment (even offer up usable ideas) and spread the campaigns.
All campaigns also utilize the concept of myth making. The charac-
ters invented become figures in-it-of-themselves, thus adding the
brand. Simple put, you can have fun , create memorible ads & still
make money.

Another example of viral marketing (albeit indirectly) is the J / K
Wedding Video in which a wedding party uses the pop song Forever
by Chris Browns (Jive Records) to dance down the isle. The video
became an instant hit you YouTube and has received nearly 60 mil-
lion views and was even mimicked on popular NBC television series
The Office.

21

PRICING:

The pricing of projects will typically estimate as a project-based cost.
The project cost will be estimated by the appropriate number of hours
needed to complete the project. Generally FouHeads Studio will
charge a flat hour rate $55.00 per hour per employee to break even
and $65.00 per hour per employee to profit.

PLACE:

The majority of services will be provided at the FourHeads Studios
office space. This office will be designed to appear sophisticated,
modern, practical yet fun and open with lots of windows. This is very
important because the office of communication designers is a piece
of their portfolio and reflects their product.

PROMOTION:

It must be understood that graphic design firms visibility and sales
come not from advertising but through networking and client refer-
rals. Therefore the marketing strategy will consist of:

o Press Release
o Direct mailer to potential clients
o Stage a gallery exhibition to show off the talent of our staff
o Membership to AIGA
o Cold Calling
o Client referrals
o And Networking: Networking will be based on FourHeads Studios
personal and professional relationships that have been and will
be developed after spending time in this business. This also means
finding out who the person is behind the firms we serve and try to
develop a relationship beyond the superficial.

22

PEOPLE:

Firms go out business everyday – but if you stay in the business of
people, you’ll do just fine, for was we have seen throughout history
that no matter what people will never go out of business. Our people
are the Millennials. FourHeads Studios must also make the case for
the simple proposition that the brands we work with must do some-
thing good for their communities for customers to like them. Report
after report tell us that individuals, including Millennials, want brands
to build a better world not just to build better widgets. 2

23

> POTENTIAL INDUSTRIES

Fashion
Telecommunications
Sports Drinks
Personal Computers
Music
Consumer Goods
Television
Entertainment
Non Profit
Insurance

 

24

> POTENTIAL CLIENTS

Hewlett-Packard Company Company Profile
3000 Hanover St.
Palo Alto, CA 94304-1185
650-857-1501

Rocawear Apparel LLC
1411 Broadway
New York, New York 10018
(201) 601-4283 Toll Free:
(800) 839-6016

Sean John Clothing, Inc.
1710 Broadway
New York, NY 10019-5254
Phone:
212-500-2200
www.seanjohn.com

Church & Dwight Co. Inc.
469 North Harrison Street
Princeton, NJ 08543-5297
Phone: 609-683-5900

Obey Clothing
2313 South Susan Street
Santa Ana, CA 92704
714-429-1595

Unilever (Axe, Lipton, Dove, etc)
Unilever House, 100 Victoria Embankment
London EC4Y 0YD, United Kingdom
+44-20-7822-5252

Jive Label Group
137 West 25th Street
New York, NY 10001
United States
212-727-0016

25

Wachovia Bank
301 S College St
Charlotte, NC 28288
United States
Phone: 704-374-6161

Boost Mobile LLC
9060 Irvine Center Dr.
Irvine, CA 92618
949-748-3200

Fuse Networks, LLC
11 Penn Plaza
17th Floor
New York, NY 10001
United States
212-324-3400
www.fuse.tv

Habitat for Humanity International
270 Peachtree Street Suite 1300
Atlanta, GA 30303
United States
1-229-924-6935
1800-HABITAT

Kristin Brooks Hope Center
1250 24th Street NW
Suite 300
Washington, DC 20037
202-536-3200

Blue Cross Blue Shield
3800 Concorde Parkway
Suite 2000
Chantilly, VA 20151-1127
United States
703-227-5300

26

E. FINANCE

> INTRODUCITON & OVERVIEW
While estimating our start up cost for Four Head Studios we re-
searched existing design firms and salaries for employees. With our
marketing goals and research in mind, a determination was made as
the number of and positions necessary.

Initially consideration was give to 10 employees but narrowed down
after finance was taken into consideration. The goal was to under-
stand the numbers i.e. - the labor costs, overhead, and additional
costs of operation. Moreover, with this approach we can see the big
picture, the potential of Four Head Studios. This approach of working
backwards was a useful tip from a friend who is an auditor.

Below you will find the vision of Four Head Studios:

Having calculated the cost of starting up, labor, and overhead, and
estimating the AGI (Agency Gross Income) - the labor and overhead
expenses totaling $364,800 annually, from this we understood how
expensive running a established business would cost. We began
drastically cutting down our staff and expenses.

The start-up is minimal, what is needed to start a business. With a
end product in mind, have an idea financially where to cut or add.

STARTUP PLAN:

We used Creative Business Guide 60/6 Rule, having our principal
and senior graphic designer work 60 hours a week for six months.
When needed, we will hire temporary outside services such as free-
lancers or developers. Our start up cost is estimated to be $16,320.

For operating costs we looked at salaries of creative on AIGA’s web-
site, and calculated each individual’s hourly rate based on those An-
nual Salaries. Then we estimated the labor cost, which we estimated
to be $3720 per week. From that we determined our Basic Hourly
rate is $60 an hour per person. Our goal is short-term profit, so if the

27

employees in the company are able to generate 120 billable hours a
week for a client, revenue would equal $6000. After factoring labor
and overhead cost the profit is estimated to be $2,755 weekly, that is
the possibility of generating $66,120 in six months. In 2 months we
can break even with our start up costs.

Principle / Owner - $80,000.00
Creative Director - $70,000.00
Web Developer - $60,000.00
Sr. Designer - $60,000
Designer (2) - $50,000
Copywriter -$45,000
Marketing (2) - $45,000
Office Manager - $45,000

Four head studio’s goal six months into running our business is to
look for additional part-time staff in establishing our company. In the
meantime we will keep organized financially through forms, this in-
cludes estimating worksheet to the client and weekly time sheets for
our own records. These forms include change order form just incase
clients make mistakes; there is profit for us to fix them. Our goal in
the first six months is to generate $2500 minimum a week, after then
we will begin looking for candidates to hire.

In two years Four Heads Studio expect to be more established,
adding 4 employees. Four Heads outlook is to be then charging $70
minimum for our increased quality of work and expertise in the field.
This will increase our revenue and keep our employees prosperous.
In two years Four Heads Studio expect to be more established,
adding 4 employees. Four Heads outlook is to be then charging $70
minimum for our increased quality of work and expertise in the field.
This will increase our revenue and keep our employees prosperous.

28

STARTUP COST OF DESIGN BUSINESS: $16,320
( 2 employees)


SUB TOTAL 1 $ 6,340


ITEM AMT EACH TOTAL

MacBook Pro 2 $ 2,000 $ 4,000
Mac Pro 1 $ 2,500 $ 2,500
2 $ 500 $ 1,000
Mouse 2 $ 15 $ 30
Chairs 8 $ 50 $ 400
Tables 5 $ 200 $ 1,000

SUB TOTAL 2 $ 9,980

OVERHEAD
/ Month / Year

Rent $ 2,500 $ 30,000
Phone Bill $ 50 $ 1,200
Electricity $ 100 $ 1,200
Internet bill $ 50 $ 600
Heat/ air condition $ 100 $ 1,200
Business insurance $ 100 $ 1,200

$ 2,900 $ 34,800

We consider cutting fixed costs, possibility of virtual office
or renting parts of office.

29

OPERATING EXPENSES

Salaries of staff:

2) Annual salary/ 52 weeks / 40hrs Full-time, 20hrs part-time

Principal / Creative Director $ 35 / hr 60 hours
Sr. Designer $ 27 / hr 60
120 hrs / week
480 hrs / month
5760 hrs / Year

(b) Labor costs

Principal / Creative Director $ 35 / hr 2100
$ 3,720 / week
$ 14,880 / month
$ 178,560 / Year

Basic Calculation for hourly rate (weekly)
Total Labor and overhead / average working hours +15% markup

divide by 80 hours

$ 3,720 Total Labor
+ $ 725 Overhead per week

$ 4,445 lavor and overhead per week
/ 80 hours a week

$ 50 per hour
+ $7 15% mark up

$ 60 Basic billable rate Per hour,
per person

Price might be slightly lower based on gathering potential custom-
ers. We might consider offering Trial period discount for customers to
gain a relationship, instead of premium.

30

Profit after 60/6 rule and every one gets paid:

$ 60
x 120 hours

= $ 7,200 revenue
- $ 4,445 Overhead and labor costs weekly

$ 2,755 profit after labor and
overhead expenses weekly

$ 66,120 profit after 6 months of work

Profit with regular work hours (80 hours) a week:

$ 60
x 80 hours

= $ 4,800 revenue

$ 355 profit after labor and


We estimate to break even with our startup cost with 4 months mini-
mum working 90 hours total a week.

31

TWO YEARS OUTLOOK MINIMUM.

ADDITIONAL STAFF AFTER TWO YEARS: ADDITIONAL $1,135
(6 employees)


SUB TOTAL 1 $ 6,340

Web developer
Designer Mac pro
Copy writer Laptop
Marketing Laptop
Office manager Desktop

ITEM AMT EACH TOTAL

MacBook Pro 2 $ 2,000 $ 4,000
Mac Pro 1 $ 2,500 $ 2,500
Desktop 1 $ 300 $ 300
3 $ 500 $ 1,500
Mouse 3 $ 15 $ 45
Chairs 10 $ 50 $ 500
Tables 6 $ 200 $ 1,200

SUB TOTAL 2 $ 11,135


32

OVERHEAD
/ Month / Year

Rent $ 2,500 $ 30,000
Phone Bill $ 50 $ 1,200
Electricity $ 100 $ 1,200
Internet bill $ 50 $ 600
Book Keeper $ 600 $ 7,200
Heat/ air condition $ 100 $ 1,200
Business insurance $ 100 $ 1,200

$ 3,500 $ 42,000

Benefits (optional)
2 employee EPO plan $ 600 month $ 7,200
$ 4,100 $ 49,200

33

OPERATING EXPENSES

Salaries of staff:

2) Annual salary/ 52 weeks / 40hrs Full-time, 20hrs part-time

Principal / Creative Director $ 35 / hr 40 hours
Web developer $ 35 / hr 20
Designer $ 35 / hr 20
Copy writer $ 25 / hr 20
Marketing $ 10 / hr 20
160 hrs / week
640 hrs / month
7680 hrs / Year

Marketer based on commission based on clients, $10 dollars an
hour, more incentive. Adds value to work.

(b) Labor costs

Principal / Creative Director $ 35 / hr 1400
Web developer $ 35 / hr 700
Designer $ 35 / hr 700
Copy writer $ 25 / hr 500
Marketing $ 10 / hr 200
$ 4,580 / week
$ 18,320 / month
$ 219,840 / Year

34

Basic Calculation for hourly rate (weekly)
Total Labor and overhead / average working hours +15% markup

divide by 80 hours

$ 4,580 Total Labor
+ $ 1,037 Overhead per week

$ 5,617 lavor and overhead per week
/ 160 hours a week

$ 40 per hour
+ $ 12 30% mark up

$ 70 Basic billable rate Per hour,
per person

Additional $10 added because quality of work and more valued
employees in company.

Profit after 60/6 rule and every one gets paid:

$ 70
x 160 hours

= $ 11,200 revenue

$ 5,595 profit after labor and


What if different scenario? Half capacity work:

$ 70
x 80 available billing Hours

= $ 5,600 revenue

$5 loss after labor cost and expenses, minimal
risk if minimal hours.

35

REALISTIC DETAILED ESTIMATION:

Salaries $ 234,240 Year
Rent $ 30,000
Health Insurance $ 7,200
Business “ “ $ 1,200
Accountant $ 12,600
Phone $ 1,200
Heat / Air Cond $ 1,200
Electricity $ 1,200
Gov. Taxes $ 17,331
$ 306,171 Annual fixed Costs
/ 7680 estimated billable hours
$40
+ 8(mark up)
$50 hourly rate

Salaries plus taxes $ 251,571

REALISTIC DETAILED ESTIMATION:

52 weeks in a year
x 160 hours a week

8320 billable hours a year
- 1040 deduct marketing hours per year
because cannot bill client for own
expense

7,280 billable hours
- 160 hours 2week(80hrs) vacation
for (x2 full time employees)
- 80 hours 5 sick days(40 hrs) or days
off for (x2 full time employees)
- 224 hours from 7 legal holidays extended into
holiday weekends,14 days (112 hrs)
(x2 full time employees)
- 520 hours 5 hours a week surfing web and
taking breaks

6296 Total annual billable Hours

36

FORMULA TO COVER SALARIES AND FIX EXPENSES
(NOT OVERHEAD)

$251,571 Cost of labor plus taxes
/ 6296 billable hours

$40 hour per P to cover salaries and fixed expenses
(not overhead)

To check:
6296 billable hours a year
X $40 hour per P to cover salaries and fixed expenses

$251,840 Equal to slaries plus taxes
hours a week

TO FIGURE OUT PERCENTAGE TO COVER OTHER EXPENSES

$ 306,171 total annual fixed costs
- $ 251,571 Cost of labor plus taxes

$ 54,600 remaining expenses
/ $ 251,571 Cost of labor plus taxes

.20 percent
x $ 40 hourly rate to cover salaries and expenses

= 8.68 per hour (best needs to be charged to break
even on additional cost)
$ 40
+$ 9
$ 50 Breakeven rate, to cover both salary and
overhead costs
+ $10 20% mark up fee

$ 60 per hour per person

$ 60
x160
$ 9600 3100 billable hours a year
- $ 5917 x $ 60

$ 3,683 profit 186,000

37

SHORT TERM PROJECT EXAMPLE:
10 page 8x10” sales brochure for Rocawear
Time frame: 7 days, 56 hours
Overview: Meeting with client, brainstorm, photography, copy,
layout, test, touching up, production
People involved: principal, Sr. Designer, photographer, copy-
writer, designer, marketer

Fee: $60 an hour

GANT CHART

HOURS
EMPLOYEES

DAY 2

DAY 3

DAY 4

DAY 5

DAY 6

DAY 7
DAY 1
TASKS
INVOLVED

meeting Prin, Sr.des 6

brainstorm Prin, Sr.des 23 23

research Prin, Sr.des 18 18

photograph

copy Copw 4

layout Prin, Sr.des 58 21 21 16

test printer

touch up Prin, Sr.des 26 5 21

finalize Prin, Sr.des 16 16

production printer 4 2 2

Principle $1960 151 total billable hours
Sr. Designer $1512 x $60 hourly rate
Designer $700
Copywriter $100 $ 9,060 estimate for client without
Overhead $1025 outside costs
- $ 5,297 Labor and Overhead
weekly

$ 3,763 profit without markup off
outside services

38

G. CLOSING STATEMENT

Firms go out business everyday – but if you stay in the business of
people, you’ll do just fine, for was we have seen throughout history
that no matter what people will never go out of business. Our people
are the Millenials. . FouHead Studios is dedicated to providing our cli-
ents with strategic planning, cross medium design, creative solutions
and cutting edge consulting to help business understand, tween, teen
and young adult market.

39

WORKS CITED

1) AIGA Design Leaders Confidence Index, AIGA 2010, http://www.
aiga.org/content.cfm/confidence-index, 29 October 2010

2) Why brands must start caring about something other than them-
selves, Simon Mainwaring 2010, http://simonmainwaring.com/
brands/why-brands-must-start-caring-about-something-other-than-
themselves/, 27 October 2010

3) Millennials Have Found Religion But Will Brands?, Simon Main-
waring 2010, http://simonmainwaring.com/future/millennials-have-
found-religion-but-will-brands/, 27 October 2010

4) For Millennials Brands May Be As Important As Religion, Ethnicity,
David Zax 2010,
http://www.fastcompany.com/1695062/brands-and-millenials-a-deep-
connection?partner=rss, 28, October 2010

5) William McDonough and Michael Braungart, Cradle to Cradle
(New York: North Point Press, 2002), 62–68

6) Victor Papanek, Design for the Real World: Human Ecology and
Social Change (New York: Bantam Books, 1971): 14-16, 18-19, 25-
26

7) John Thackara, In The Bubble: Designing in a Complex World
(Massachusetts, First MIT Press, 2006) 7,

8) Market Segmentation – “Millennials” Mark Brewer & Evok Advertis-
ing Agency, http://www.evokad.com/millennials, 28, October 2010

9) Job Descriptions for Graphic Designers, Design TalkBoard 2007,
http://www.designtalkboard.com/design-articles/graphic-designers.
php#middle, 28 October 2010

10) Aquent Survey of Design Salaries, AIGA 2010
http://www.designsalaries.org/salarysurvey.shtml, 20 Ocotber 2010

11) Salary Wizard - Job Descriptions, Salary.Com 2010, http://swz.
salary.com/salarywizard/layoutscripts/ 28 October 2010

12) Cameron S Foote, A Creative Business Guide to Running a
Graphic Design Business: Updated Edition (W.W. Norton & Com-
pany, New York, 2009) 39

13) Philip Kotler, Kotler On Marketing: How To Create, Win, And
Dominate Markets (New York: The Free Press, 1999)

14) Theo Stephan Williams, The graphic designer’s guide to pricing,
Estimating & budgeting (Allworth press, New York, 2010)

40

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