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July 09, 2009

How to scale a lifestyle business

paint brush paletYour company’s logo is your unique badge displayed to the world. The design firm who created your logo is one of those service businesses that are notoriously impossible to sell. They often make a great lifestyle business for the owner, but when the owner wants to quit, the business dies with them.

Design firms are typically run by designers first, and business people second (or fifth as the case may be). They treat every new project as if they have been commissioned to paint a fresco for the Sistine Chapel.

Companies that make logos are the poster child for businesses that are impossible to sell:

  • Highly dependent on their owner
  • Reliant on face-to-face meetings with clients
  • Highly customized projects with no scale or leverage
  • No systems, process or focus

Since design firms are usually un-sellable, it makes the story of Logoworks so amazing. Started in 2001 by Morgan Lynch and Joey Dempster, Logoworks was created to bring scale to the business of designing logos. Instead of relying on face-to-face meetings with clients, they rely on the Internet and phone to deal with their customers. Instead of hiring “Artists”, they dispatch teams of young, fresh-out-of-college designers to create logos. These designers do nothing but logos so they are good and fast at cranking out designs which, in turn, brings the price down.  Since they rely on the Internet to display proofs and the phone to talk to customers, Logoworks can offload projects to freelance designers when they get busy.  Instead of locating in an expensive creative hub like New York or San Francisco, they set up shop in American Fork, Utah.

In short, Logoworks took the pretentiousness out of designing logos, built a Standard Service Offering, and brought scale to the business.

In 2005, the venture capital community took notice of Logoworks and Benchmark Capital injected $9.3 million to help fund their growth; in 2007, Logoworks was acquired by HP — pretty good for a design shop.

If Logoworks can create a Standard Service Offering in a precious industry like design, you too can remake your business into something sell-able.

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  • Great post. My only objection is branding. I’ve bumped into Logoworks on none other than a proposal for a logo. We lost the bid, and I hope the owner we propositioned does not in the long run. We have a full branding perspective with every project we take on, I haven’t used Logoworks, but I can’t imagine that they take the time necessary to evaluate the job from the the customer’s eyes while infusing the proper personality to tie it all in. Regardless, I’m happy for their success and you’ve earned a new follower.

    Thanks!

    Jon Tsourakis
    http://www.innersightdzinestudio.com

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