Activity up but profits down, says DBA survey

Optimism that the design industry is on the up is misplaced, with designers working longer and harder for the same return, according to a Design Business Association quarterly survey.

Studios may be busier but profits are down, says the survey of performance ratios and trends, conducted by management consultant David Jebb & Associates.

More than 60 per cent of the survey’s 40 subscribing companies reported a fall in operating profit for the last quarter compared to the first quarter in 1994. Turnover remained almost unchanged, and only product design saw an up-turn in profits, for the second quarter in a row.

The increased activity may be leading to industry optimism. “With increasing workloads but reducing profitability, there is a feel good factor at work. I am very concerned over the fact that average profit performance has been weakening while studios have been busier,” says Jebb, who attributes faltering profits to “diabolically tight margins”.

Estimated fee-income per charged hour has dropped during the year. According to the survey, it took an average of about 97 minutes of chargeable time to produce ú100 of fee-income during the fourth quarter of 1994, compared with some 79 minutes during the first quarter.

Jebb warns: “Although consultancies continue to be optimistic, it’s still very much a buyer’s market. An efficient design buyer can get some very good design for not much money, and it will stay that way for the forseeable future.”

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