Be responsive to the needs of your clients. Orange soda anyone?

(Published in Screen Magazine 8/22/12)

In 1989 I unofficially started my sales career.   I was duplicating radio commercials, when my boss asked me to go get fitted for a tuxedo for the next day’s sales event.  I wasn’t sure why he was asking me to do this, I had 1,000 public service announcements to duplicate and ship by the next day.  My boss explained that he wanted me to walk around and act as the host of the office.  “Just be you,” he said.  That was my first taste of sales and how important it is to simply be nice and approachable to the people you work with and want to work with.

Fast forward through six years and a variety of post-production roles at Editel/Chicago before I transitioned my hobby of building client relationships into an official sales representative role.  I only asked for one thing before I started this new job, and that was orange soda.  Yes, orange soda.  I explained to my boss that it was important for me to be responsive.  If a client had a concern about any or all of our services, I wanted to be in a position to address those concerns.  My examples of potential client issues ranged from big things like staffing and technology upgrades to having orange soda in our refrigerator.  I always kept a case of orange soda in my office at Editel as a constant reminder to be responsive to the changing needs of my clients.  Do you need a reminder?  Is it time to buy some orange soda for your business?

The Pursuit of Profit

(originally published in Screen Magazine 4/25/12)

Profit. That’s the life-blood of any business. But how do you get there?

A client once asked me how to set aside money for marketing, small equipment purchases, and other incidentals. He complained that although he was busy, there never seemed to be any money left over to grow his business. “Sixty five thirty five” I said. “What’s that, your ATM pin number?” he responded. “Nope, that should be your per-project profit margin” I said.

Many small start-up companies live their business life from day to day. And that’s just fine if you ask me. Do what you have to do to survive your first couple of years in operation. But after that, the best way to set aside cash is to set some benchmarks. The best benchmark is obviously an annual budget. But as I’ve recently learned, very few creative companies put together annual budgets. So, the next best benchmark is a per-project profit margin.

My benchmark has always been a 65% profitability mark on a per-project basis. If a piece of music is going to cost me $4,200 to produce, I believe a fair estimate would look like $12,000. If a video project will take 10 days to edit, transfer, and finish at an average cost to me of $1,500 a day, I’d like to see the estimate at approximately $45,000. The same math can be used when looking at a project’s budget from the other side. If a producer tells me they have $100,000 for the entire production, I need to find a way to exceed their expectations without spending more than $35,000. And if you’re wondering, that $35,000 is a combined daily calculation of both freelance and full-time staff directly assigned to the project.

Of course 65/35 is just a benchmark, something to shoot for. I’ve spent 110% of a job’s budget in the hopes that the work could expand my company’s capabilities and future revenue. I’ve also seen profit margins as high as 90% on occasion. In both cases, I did everything I could to make sure the client was thrilled with the outcome.

So let’s say that you’re meeting your goal of 65% profitability, what does that mean? Well to me, it means that you have 25% of profit you can allocate towards paying your rent and utilities, 20% you can use to pay administrative staff, and 10% you can invest in marketing, small equipment purchases, and other incidentals. So technically, none of that is actually profit. Oh, and the final 10%? The actual profit? Put it in you pocket. You’ve earned it.