My career in design has had some pretty cool twists and turns, from building a successful agency in Silicon Valley to outselling Martha Stewart in online custom stationery. The common factor throughout these 20+ years is that managing the business side of things is absolutely crucial to success. Yep, it doesn’t matter how much of a creative genius you are if you don’t take care of the money, the relationships and the long term strategy.

Many years ago I attended an excellent conference called Mind Your Own Business. The keynote speaker was David Baker, a creative business guru. He is an understated guy but his message was anything but… so my partner and I hired him to do a business review for us that permanently changed the way we ran the shop. We captured an additional $150,000 in revenue that year without working any harder.

So I thought you guys might find some of David’s insights helpful on your path to crazy awesome success… here’s what he had to say:

SHQ: What is the biggest mistake small design firms or freelancers make in business?

DB: 1. Thinking “If I build it, they will come.”

2. Poor Positioning. By positioning yourself as a designer who can do everything in order to be relevant to everyone, instead you become irrelevant. Know you’re specialty and sell it.

SHQ: What are the most important factors for success in a small business?

DB: I tested 14,000+ business owners to find out whether there were common traits amongst those who were very successful. 1,340 of those tested were considered successful and almost every single one was a risk taker.

Along with a willingness to make bold decisions, successful business owners have money smarts. Does a designer go out of business because they are not talented? Almost never. It’s because they don’t have money smarts. DO NOT incur debt at risk of the future of your business. If you need to spend to grow, save it up and be comfortable with the possibility of losing it.

SHQ: What’s a Gorilla client and why are they dangerous?

DB: If you add up your revenue and count how many active clients or partners you have, each one should be between 5% – 25% of that business. 8 to 15 clients is a good number for success. If a client is more than 25% of your business you are approaching the danger zone. If they are over 35% of your business you have both feet in it.

Erin: I have had the Gorilla Client experience twice in my career. Both times we made a lot of money. I mean a LOT of money. The second time the GC was KodakGallery.com, you’ve heard of them right? They filed bankruptcy a few years ago owing us about $100,000 in card royalties. At the time they were about 50% of our revenue. We are still recovering and making damn sure that none of our partners are ever that much of our business again.

Here’s a more in-depth explanation from David about the subject: Gorilla Clients

SHQ: When you do business reviews of creative firms, do you find a common problem that we all seem to have?

DB: It’s common that business owners try to be and do all things. In order for a business to grow, it’s leader needs to focus on strong positioning, getting new business and running the business from a financial perspective.

Erin: If you only read one of David’s articles (and I suggest you spend significant time on his site, he’s got a whole buttload of crucial information for you) read this one: Why Your Firm Might Fail and How to Prevent It