Introduction
Short Hand Graphic Design is a UK start-up small business in the sphere of graphic design based on using advanced information technologies. The sphere of graphic design is an actively developing market that is attractive for not only newcomers but also for customers who purchase graphic design services and products in order to promote their own businesses (Daniels 2012). This business proposition developed for Short Hand Graphic Design aims to provide the detailed discussion of the graphic design business trends in the United Kingdom; the detailed analysis of the company’s business costs and needs; and the analysis regarding the choice of the repayment profile effective to be used in order to promote Short Hand Graphic Design’s business.
Findings and Analysis
The Graphic Design Business
Today, hundreds of graphic design companies offer their services and consultancies in the UK. The demand for the graphic design services is explained with reference to the fact that all businesses need different types of graphic design at all stages of the business’s development (Landa 2013). It is noteworthy that graphic design services can be delivered with the help of the Internet and, hence, the number of customers can be unbound to certain locations.
It is also important to add that companies are now investing in graphic design as it is one of the driving forces of the market. Customers are more likely to purchase a product or service they know about. Graphic designers help companies create unforgettable images that entice people to buy the product. From this perspective, the graphic design business is one of the most actively developing businesses in the UK.
Modern design consultancy firms and graphic design companies use advanced technologies in order to contribute to their progress and meet the customers’ requirements. Therefore, the key aspects of the graphic design business are the use of advanced technologies and innovative information and communication technologies and programmes; the focus on the customer’s needs and requirements; and the proposition of the most effective graphic design decisions associated with the modern trends in the industry ad market (Graphic design business 2012). It is possible to invest quite insignificant amount of funds into software and hardware as there various options for small companies. Clearly, new start-ups have to employ the principle of innovation and try to introduce certain novelties, as this will make the company more competitive.
Modern UK graphic design companies are mainly small businesses that provide a certain type of services in different spheres. Graphic design companies are highly profitable because of the high demand associated with the offered products. It has been estimated that the annual revenues of a small graphic design firm are about £ 150,000-250,000 (Shaughnessy 2005). In this situation, graphic designers can offer their products and services to different businesses, including media, publishing, programming, heath care industry, and other industries.
The products offered by graphic designers can be logos, covers, promotional materials and other elements of the corporate design. It can be beneficial to provide a wide range of products and services to meet the needs of potential and existing customers. Diversification of operations is important for small (as well as big) companies that want to remain competitive in the modern market. It is also important to remember about long-term relationship with loyal customers and introduce some loyalty programs. This can be support and consultancy of loyal customers, discounts and so on.
Short Hand Graphic Design Business Costs
In order to start the business in the sphere of graphic design, it is necessary to focus on the fact that the start-up costs associated with this type of business are usually minimal. At that, entrepreneurs who have a detailed plan and who have researched their market are always able to get funding from numerous sources including (but not confined to) bank loans, grants from governmental or non-profit organisations and so on (Start your own business 2014). Short Hand Graphic Design will be organised as a partnership, including two partners conducting and managing the business. The minimal costs are required to purchase the necessary hardware and software:
- Two different computers, Intel Dual CPU E2180 @ 2Ghz and Mac Pro – £2,700;
- Two A3 colour printers, ASUS colour printer and Canon imagePROGRAF iPF680/685 – £800;
- Programs and graphic design software, MS Office, Power Point, Adobe InDesign and QuarkXPress – £500.
When organising a partnership, it is necessary to pay attention to such ongoing business costs as an office rent for the first 24 months; the Professional Indemnity Insurance, website domain name and hosting costs (Graphic design business 201). The expected ongoing costs are £1,000, and the additional start-up costs are £20,000. The company formation costs are necessary to cover expenses associated with stating as the UK based graphic design company with Companies house. These expenses include the work with an accountant and with the audit professional. Having analysed the necessary expenses, it is possible to state that the company will cover all the costs while borrowing £75,000.
Focusing on the monthly loan repayment schedule for 24 months, the company will pay £3,391.7 per month, and according to the monthly loan repayment schedule for 36 months, the company will pay £2,315.44 per month (Appendix A; Appendix B). It is possible to state that the monthly loan repayment schedule for 24 months is most advantageous for the company.
Referring to the analysis of expected taxes and possible tax reliefs, it is necessary to state that the company will receive the tax relief by 20% in the third year of the development if the company develops with the increase in revenues by £15,000 annually (Appendix A). If the profits are regular and the tax relief is by 10% during the first year, the company will receive the profits in £22,000. In this case, the profit share will be determined as 70:30, and the partners receive £15,400 and £6,600 accordingly.
Conclusion
Short Hand Graphic Design is able to cover the expected costs associated with the promotion of the start-up company while borrowing the necessary sum of money from the bank. Short Hand Graphic Design can receive the necessary funding with references to two proposed repayment profiles based on the payments during 24 months or 36 months. Having analysed the business expenses and having forecasted the company’s future profits, it is possible to choose the repayment profile developed for 24 months because in this case, Short Hand Graphic Design receives the opportunity to maximize profits and return the borrowed money during the minimal period of time and with references to minimal incurred costs. Furthermore, the company will be able to gain £22,000 after the first year of development and focus on the profit share according to the 70:30 pattern.
References
Daniels, L 2012, The graphic designer’s business survival guide, AMACOM, London.
Graphic design business: entrepreneur’s step-by-step startup guide, 2012, Entrepreneur Press, London.
Landa, R 2013, Graphic design solutions, Cengage Learning, Boston.
Shaughnessy, A 2005, How to be a graphic designer, without losing your soul, Laurence King Publishing, London.
Start your own business 2014, Web.
Appendices
Appendix A: Excel: Business Case
Monthly Loan Repayment Schedule for 24 Months
Monthly Loan Repayment Schedule for 36 Months
Tax Relief Percentage
Appendix B: Power Point Presentation
Slide 1
Slide 2
