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We are exploring margins as a 
theme for this podcast this 

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season. 
And obviously there's the 

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obvious implications of profit 
margins and all of that, but 

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also margins in the more 
metaphoric sense of just having 

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breathing room to be creative 
for a team. 

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So can we dive into that a 
little bit more as well, like 

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how you manage like the passion 
side and maybe some lessons that

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you've learned from how to 
manage your margins? 

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Yeah, absolutely. 
You know, early on in my 

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freelance career, the, the 
passion was the midnight oil 

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that kept me designing until 
2:00 AM, you know. 

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And I quickly learned that as 
like when I was a being a 

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freelancer that, you know, I'm 
only designing 20% of my time. 

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The other time I'm doing 
invoicing, I'm following up with

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clients. 
I'm doing the project 

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management, the account 
management, the sales, the 

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marketing, the networking. 
And so like design really 

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quickly became a small portion 
of my day-to-day operations as a

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freelancer. 
And then as I started the 

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agency, it was the same thing 
times 4. 

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You know as we grew to four 
employees there was more to 

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manage, more numbers, more cash 
flow, more invoices. 

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And I think a large part of our 
success is that we were always 

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under promising and over 
delivering. 

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We would always give some extra 
little Easter eggs. 

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We'd always design some extra 
mock ups, throw them in to kind 

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of help sell the vision and the 
concept of the brand. 

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And you know ultimately it was a
lot of sweat equity. 

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You know, we were producing and 
producing and ultimately that 

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became part of our DNA and and 
our process that was 

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undocumented at the time to just
like this is our expectations. 

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We have these really high 
quality bars and we always need 

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to deliver in this way. 
But over time, you know, we 

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really started to audit and 
evaluate what we were doing and 

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90% of the work that we were 
actually designing day-to-day 

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ended up in a trash can or a 
dust bin on Google Drive or 

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Dropbox. 
And we never saw the light of 

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day again. 
And so we're like, how can this 

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be a little bit more 
sustainable? 

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You know, like we don't just 
want to design concepts and 

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that's part of design. 
You iterate, you ideate and 

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ideate and iterate and just 
moving through the process to 

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get to the solution. 
But ultimately, you know, we 

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were presenting 5 full blown 
brand identity concepts with 

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everything from the water bottle
mock up to the Billboard 

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campaign to the slogan, the 
tagline and charging them very 

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little for that. 
And it was just a lot of like 

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being in our young 20s like we 
we had insecurities, we had 

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imposter syndrome you know and 
and so we always wanted to put 

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our best foot forward and we saw
that it was very successful 

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doing that just giving a lot of 
work that we weren't necessarily

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building into a pricing 
structure or a business model or

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a process to manage that. 
And I think our first website 

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that we ever built like full 
custom designed prototypes and 

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full custom development was 
$500. 

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And today like that's something 
that we would charge like 75,000

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to $100,000 for. 
And we did not know that earlier

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because we didn't necessarily 
measure the process. 

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We just had one checklist on our
To Do List that was like deliver

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a website, that's what we would 
do. 

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We would just drive it and we 
delivered it. 

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But then the business started to
grow and we had more overhead, 

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you know and and it was seeing 
like, oh, cash flow is an issue.

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The timing of when do we bill 
versus when is the work being 

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done and actually being 
completed. 

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And sometimes, you know, clients
being late in their homework or 

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us being late to the table late 
to the draw, It takes two to 

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tango. 
There's mistakes that happen on 

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both sides. 
But really we would often bill 

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at the end of the project. 
So like through the 

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entrepreneurs organization, I 
was learning like, oh, I'm 

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actually financing this work for
6090 a 180 days because maybe 

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that project was two months long
and then we're getting paid 30 

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days after that. 
So that's 90 days from the start

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of it to the finish that you 
know we had to foot the bill on.

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And so we learned really a lot, 
a lot about like cash flow 

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management, the accrual timing 
of matching projects up to the 

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duration of the project to meet 
the billing and then also meet 

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the resources that we have on 
the team and to always keep 

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those resources utilized. 
And the resources being our 

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people and it's our most 
valuable asset is our talent and

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our team. 
You kind of touch base on it 

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too. 
You know, as a creative, as a 

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designer, we're often looking at
creating white space to make 

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things stand out, things room to
breathe. 

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We have margins and we have 
padding and really the padding 

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is looking at the process and 
adding a little bit of buffer of

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costs because things do go over 
time, things do get over 

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delivered. 
And so adding that little buffer

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in there gives us a little 
breathing room around our 

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expenses. 
And you know our expenses are 

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our software cost, the fun tools
that we all love here. 

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Like we all love the Creative 
Cloud, Figma, you know you name 

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it. 
Like there's a lot of costs that

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go into operating your business 
and a lot of it for us is 

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software. 
You know, our first expense is 

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people and then it's software. 
And so having that profit allows

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us to save up for expenses 
whether it's buying, you know, a

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new print plotter or some studio
lighting for the photo studio to

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have some padding to breathe and
sleep at night. 

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And really we operate off of 
this 5030 twenty rule, our 50% 

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margin is gross profit margin. 
So that's our revenue minus our 

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cost of goods sold, which is our
people. 

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The people are the costs of 
delivering the work. 

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And then the 30% of top line 
revenue should be our expense 

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target. 
So we budget for software 

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professional development 
learning R&D rent on it on our 

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studio space and then at the end
of the day we you know our 

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target is that we have 20% 
leftover for those savings and 

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growth. 
Really just. 

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Yeah. 
And try to visualize it like you

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know our team is in the middle 
of the page on that a four 

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layout and we want to have the 
proper margins for the team to 

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breathe And and with things like
inflation our cost of goods have

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gone up at home but it's also 
gone up as an employer. 

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You know I have to pay our team 
members more money just to 

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afforded a decent work life 
bounce and compensate you know 

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benefits. 
We have healthcare plans. 

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We have paid time off. 
We have retirement savings 

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plans. 
Yeah. 

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Like the total compensation 
structure really helps us 

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understand our cost of the 
people, software and the end of 

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the day, the business costs. 
And so we're able to take that 

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and formulate what is our 
profits from that model there. 

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Yeah. 
I really appreciate how you use 

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that parallel that metaphor 
between like margins and padding

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on a page or a web layout with 
managing financials. 

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I think another way I'd think 
about this is whether for 

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designers, whether you're 
working in like 2D or 3D, 

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thinking about like space, cash 
flow is really about the 4D 

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chess, right. 
It's really like adding that 

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time dimension and that can be 
the real killer. 

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That was definitely one of the 
lessons I learned from the 

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school of Hard Knocks when I was
running a studio as well of 

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like, OK, there's like the total
project size of things, but if 

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you're not going to see that for
another three months, you know, 

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how are you going to keep the 
lights on and all of that? 

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Yeah, the 4th dementia in fact, 
glad you mentioned that it's 

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that's that's the one that often
feels like we have no control 

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over the clocks always ticking, 
but cash flow has been the 

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biggest challenge by far. 
You know in the 10 years of of 

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running commence studio here. 
You know we've solved it at 

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times and for years and years 
upon times. 

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And then you know we have 
macroeconomic headwinds the last

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18 months and cash flow gets a 
little bit shorter. 

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Ideally, we try to reserve four 
months of cash on hand of our 

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total operating expenses just to
have that runway and that safety

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net. 
It's what allows maximum 

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creativity. 
When you're not sweating getting

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the checks in on time, you're 
not sweating like bleeding of a 

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project because it's not managed
properly. 

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You're able to really free up 
your mind to have those really 

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deep thinking, deep focus 
sessions on the work. 

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That truly is what we all love 
to do here.