Expand or stay small? Groups make a choice

The question a lot of design group heads are asking as we launch into a busy autumn is “shall we stay small and profitable, or should we expand to meet escalating demands from clients?” These tend to be groups that have found a particular niche, have built up a strong client base and are being encouraged by those clients to build the consultancy side of the business to complement their design skills.

For these groups, expansion might mean a change of emphasis. It almost certainly means a bigger responsibility paying and managing staff and possibly a review of their premises. Suddenly, size might not have quite the appeal it first had as profits look to be eaten up by the commitments of running the business. And what if the current boom in work doesn’t continue into the new millennium?

Many design groups have already made up their minds to ride current workload pressures by simply slogging it out, expanding only minimally. Others are building their teams. It all depends on the long-term strength of their particular markets. But the general situation is one of change.

One of the most intriguing changes is that that ceramics specialist Queensberry Hunt Levien is undergoing (see “News”). On the surface it appears a drastic move to dissolve a high-profile partnership to allow one partner to spin off on his own, but it isn’t quite like that. There’s a succession question, particularly with an age gap of almost 30 years between Queensberry and Levien, but more importantly there’s the royalties issue.

If a consultancy’s main income isn’t through design fees, but through credit accrued by individual players within it, there is a potential problem. It virtually amounts to the key people paying any QHL staff out of their own pockets – a situation that can cause friction, especially if the partners have different agendas for the business, or want to leave.

QHL has made its decision, creating two trimmer teams. At the other end of the scale though we hear that marketing services megagroup WPP is on the hunt again for design conquests. Word on the street is that the latest target is screen graphics and branding as Martin Sorrell’s global empire expands and an independent group considers the benefits of being owned.

Both QHL and WPP are likely to succeed, though at very different ends of the scale in terms of income and size. It goes to show that there is no one way of running a creative business. The key thing is that consultancy leaders remain true to their own ideals, basing judgements on sound thinking rather than just opportunism.

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