27/05/2014

BLOG: Focusing Your Business Models

Like most founders of a creative company, I don’t have a business background.

Base evolved from my freelancing days. It was 18 months before I hired anyone and even then I still had the mind set and makeup of a freelancer. There was no business direction and we simply took on projects when other companies employed us; adding skills and staff along the way. Business and strategy were not words I put together too often.

It was a vague time. We were happy to help any company with any type of project. It was a handy way to make cash early-on, but it meant Base developed three disconnected revenue streams all working in discord. We were building our own products, we were an agency completing very general work-for-hire and we also undertook white labelling, providing technical resources for other creative agencies.

It’s fair to say that for those first three years we weren’t particularly clear on our direction. To look back at all the competing streams Base had, it’s quite impressive to have stayed alive for so long. The strategy was to develop and sell products, but this was dominated by the need to make the money to pay to do that. Soon, we became a little too seduced by work-for-hire to feed our ambition for own-product development. It devolved into one revenue stream propping up another.

The result was that we were burning revenue at the same rate we were making it, and that’s no way to get anywhere. There was very little cash in the bank to reinvest in the business, which was stifling our growth and slowing product development. We ended up in the frustrating position where our profitable, exciting projects could only move as quickly as the dull, poorly paid ones.

Happily, salvation came in the form of a business mentor. He showed us how to consider our revenue streams as if they were separate business models. Straight away it became clear that Base was stretched too thin and needed to focus. We knew that developing our own products was the one area we all truly enjoyed and while work-for-hire was bringing in a steady income it meant Base had itself become a commoditised resource. With that model, Base would only ever make money working the hours in a day and it didn’t add real value to the brand.

It’s not as if we enjoyed work-for-hire projects either. We’d fallen so far down in the design process that effectively there was little creative input. At first I felt anxious about moving to one model. I mean who likes cutting away business? But we knew it was happening for the right reasons.

The result is that Base has refined its proposition. It has given us more time to concentrate on the work that, long term, will really matter for us. The excitement about focussed opportunities has also helped us get away from that mind-set of missing opportunities – that seductive, ‘oh we could be doing this or that’ thinking. Believe it or not, that in itself has a very settling effect within the business. So there is now a very clear picture of what Base has to look like in order to support our singular business model.

Unfortunately, one tough decision we made was to cut our junior developer at the beginning of this year. It was a hard call as we are a small group, but to reposition we needed the right skills in the business and so it was best for business. Rather than make the team uneasy, as you might expect from a redundancy, it has underlined a determination in all of us to fully realise the company.

I can’t recommend enough the process of refining your business models. You need to be honest and see what aspects of your business are not only the most enjoyable, but the most stable, scalable and – most importantly – the ones you are best at. It may seem daunting but really it’s as a simple as fixing a rate, chasing that work and turning down all the other tempting, but frustrating, projects which shouldn’t really be in your business anyway!



BASE

Having recently pared down its business models, the all-new Base is now busy creating innovative digital applications or universities and transport groups alike.

Illustrated by I See Heroes 

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