Design groups have the potential to generate significant profits if they improve productivity and reduce fixed costs, according to findings from Willott Kingston Smith’s latest Monitor survey.
The accountant’s report on the fortunes of the UK’s top 20 consultancies from October 1995 to January is positive, with design groups experiencing their highest operating profits per head since Monitor was first published four years ago.
Operating profits are up 23 per cent on the last quarter, says WKS, reflecting efforts to reduce property costs. Productivity, however, has taken a downturn as designers fail to keep employment costs in line with income.
In general, groups experiencing buoyant business are “the ones with a particular niche or who have added value to their basic design service,” WKS says.
WKS manager Steve Waring adds: “Branding and product development seem to have taken off, with clients paying more for the service.” This leads to higher profit margins than in traditional packaging jobs, he says.
Waring expects profit to keep rising, although he cautions: “There is a long way to go before real profit comes back to the sector.”