After last weeks briefing session for the new studio brief, we were told to get into groups of four or five and complete the partnership agreement form.
I am in a group with Grace Buckley, Charlie Rotherham, Caitlin Walsh & Anna Sergison.
Completed partnership agreement form:
Questions to answer:
- What is the nature of your business?
- Where will you work from?
- What MUST you consider?
- Who is your intended market area?
- Are you a Sole trader?
- A partnership/CooP?
- A Limited Liability Company?
- A Limited Company?
- What financial things must you put in place?
- What records must you keep?
- Where will you work from?
- Working from home?
- Within another Studio (Desk space)?
- From a start up organisation?
- Renting Office space?
- What important things will you need to consider and research?
- How much do you charge?
- What liabilities do you incur?
- Will you pay taxes?
We decided that some of these questions we could decide together and some of them needed to be answered before others.
Together we answered the following questions:
- What is the nature of your business?
- Where will you work from?
- Who is your intended market area?
We have decided that we will be a design company that works primarily in the food & drink sector. This narrows our work down but still keeps it very open for us.
We have decided that we will be based in Manchester as we feel this is quite an up and coming place for design.
At the minute our intended market area is for start-up businesses. This is so that we can essentially work with them to create their branding and grow our business alongside theirs, working in a collaboration to give them a strong brand identity.
We then split off the remaining questions and added a couple more in in terms of research, looking into competitors and other design agencies in the food and drink sector to see what they are doing.
Individual Task 1
The question I took was to decide what kind of company we wanted to be. I took this question as I have done business studies for A level and understand the types of businesses and all the terms which will come along with them. I felt that this would mean it would be a lot quicker and easier for us to choose the type of business we wanted to be instead of one of the others trying to learn it all and decide at the same time.
Types of businesses:
The majority of businesses in the UK are one of three: Sole Trader, Partnership & Limited Company.
However there are a few more to consider: A co-operative, PLC & LLC.
Sole Trader/Partnership
A sole trader is someone who sets up a business on their own and deals with the day to day runnings. They invest their own money and are completely responsible for the debts of the business. This is a risk as it means that if the business goes under, the individual must still pay the debts. In turn though, the individual will get all the profits if all goes well.
A partnership is where more than one individual join together to form a business. Like a sole trader, the partners are responsible for the business and are not financially protected against the business if it fails. One partner is nominated to be the one who keeps all the finances in order, however all will have to pay if the business goes under. Each partner must also pay tax on their share of the profits.
Limited Company
A limited company is the setting up of an organisation to run the business. The good thing about an LC is that only the business is accountable for debts and if it goes under, the individuals won't have to foot a huge bill.
The majority of LC's are 'limited by shares', meaning the business is split into a set amount of shares, and the owners are those who hold the shares. These shares are distributed accordingly to the agreement of the shareholders in the initial set up of the business. If a shareholder owns shares but has not paid for them, they will have to pay the price of these shares if the business goes under, but that is all.
The shareholders are called company directors, and they are not responsible for the debts of the business, unless the law is broken.
Off this there are two kinds of limited partnerships:
- Limited liability partnerships
- Limited partnership
A limited liability partnership is where the partners are liable for the debts of the business. Their liability stops at the amount they invested into the business.
A limited partnership is where if the business has debts, they must be covered, and more often than not it means there will be an uneven input from partners. Limited partners are only liable for the amount they initially invest, but general partners are liable for all the partnerships debts.
Public Limited Company
A PLC is usually the type of business which larger businesses transfer to once they have got themselves a good place in the market and are doing well. A PLC is where the shares of the company are put out onto the stock exchange and members of the public can invest in these.
This is not an appropriate kind of business for something small.
Co-operative
The business planning side of starting a co-operative is very similar to starting any business. There are, however, two main differences in the process:
The start-up process generally involves more people in a democratic, inclusive planning process. These people will be the future members; as customers, workers, tenants or users. This means that you create the business that the members want.
There are lots of people and organisations who can help because you are a co-operative. The co-operative movement is great at helping more co-operatives start. Indeed co-operation amongst co-operatives is one of the seven co-operative principles.
After researching into these types of businesses I have come to the conclusion that we should form a limited liability partnership. I will present my research to the others in our next meeting and see what they agree with.
I decided on this because doing this kind of business means that if it were to fail, our personal affects would be safe. This could be seen as us not putting everything into the business, however it seems like the safe option to do for a first time business. It also means the business is registered, which could potentially give clients more confidence in us because sometimes things like that matter to people.
In terms of payment, from the research and my own knowledge, I know that all payment for jobs will go directly into the business and not to the individuals. This means that all the income goes straight into the business and becomes the businesses earnings. From this, we would each take a salary, which would be covered in the expenses side of our finances.
I think that this is the best way to do it, as it means we each get a definite paycheque each month. It also means that the businesses incomings and outgoings could be easier to keep track of.
As of yet, this payment technique is something I haven't discussed with the group, and will need to, to further develop how we would get paid if we were to individually work of briefs and receive some kind of payment from this.
I decided on this because doing this kind of business means that if it were to fail, our personal affects would be safe. This could be seen as us not putting everything into the business, however it seems like the safe option to do for a first time business. It also means the business is registered, which could potentially give clients more confidence in us because sometimes things like that matter to people.
In terms of payment, from the research and my own knowledge, I know that all payment for jobs will go directly into the business and not to the individuals. This means that all the income goes straight into the business and becomes the businesses earnings. From this, we would each take a salary, which would be covered in the expenses side of our finances.
I think that this is the best way to do it, as it means we each get a definite paycheque each month. It also means that the businesses incomings and outgoings could be easier to keep track of.
As of yet, this payment technique is something I haven't discussed with the group, and will need to, to further develop how we would get paid if we were to individually work of briefs and receive some kind of payment from this.
Individual Task 2
I also took the opportunity to research into other competitors in the market to see what kind of work they were doing and who for.
I first looked into Pentagram
Pentagram is the world's largest independent design consultancy. The firm is owned and run by 19 partners, a group of friends who are all leaders in their individual creative fields.
With Pentagram being such a large business, they have a large amount of work in the food & drink sector, ranging over a variety of different media and uses, as well as over a large amount of products.
Some of their work:
Pentagrams work has shown that there is a huge variety of work available in the food & drink sector, from branding & identity to designing the interior of a restaurant/bar etc.
I found that while Pentagram is a large company, a lot of the design work in this sector was for smaller/single businesses wanting a very individual identity/design for their business. There were a couple of works that are mainstream and large businesses, but the majority is lesser known businesses.
After looking into Pentagram I started looking for smaller design agencies which work in this sector.
Bluemarlin Brand Design
Bluemarlin is a design company founded in 1993 by two designers. It has grown to become a multi-national company with studios in London, New York, Sydney & Singapore.
Some of their work:
Quite a lot of the work by Bluemarlin is recognisable. Their main focus is on packaging in general over a range of products.
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