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Why Basic Business Skills are Important for Graphic Designers

April 28, 2014 General 0 Comments

Why Basic Business Skills are Important for Graphic DesignersSo, you love graphic design, and you think you'd like to pursue it as a career — but you've also loved business ever since you took that part-time retail job. If only you didn't have to choose!

Fortunately, you don't. There are degree programs that incorporate both design skills and business skills. If you choose to go that route, you'll find that you have a huge advantage over colleagues who just focused on the design end of things. Though employees are trained in special areas, many of them lack basic business skills and knowledge. They may know what goods or services the company sells but don't know how the company measures success and how their efforts fit in to that success. You don't need a Master of Business Administration to stand out from the competition, but you do need to understand some basic business terms and how your company uses them.


Profit is a simple measurement of how much money a company makes. Gross profit is what something sells for, minus whatever it cost to buy or make it. For instance, if you buy a toy for $4 and sell it for $10, your gross profit is $6. To calculate net profit, you have to subtract all other expenses. So, if you buy a toy for $4, pay a salesperson $2 and sell the toy for $10, your net profit is $4. For most companies, profit is the whole point. It wouldn't matter how many iPhones Apple sold if it didn't make any money!

Profit Margin

Profit margin is profit expressed as a percentage of cost. For example, a toy that costs $6 ($4 to buy the toy and $2 to pay the salesperson) and sells for $10 has a profit margin of 40 percent. The profit of $4 is 40 percent of the sales price of $10. Most companies would be thrilled with a profit margin of 40 percent; the average is under 5 percent.

Market Share

Market share is the ratio of your company's sales to the industry as a whole. In other words, how much of the pie does your company own? It can be expressed in either dollars or units. If the entire market for toys (total sales of all toy retailers) is $10,000, and you sell $1,000 worth of toys, your market share in dollars is 10 percent. If all the toy retailers together sell 1,000 toys, and you sell 100 of them, your market share in units is 10 percent. Stock market analysts want to see market share growing over time.

Return on Investment (ROI)

ROI tells you whether something is worth the effort. No matter how much revenue a marketing campaign generates, that number is meaningless unless you know how much it cost. A campaign that brings in $200 million sounds great — unless it cost $300 million to launch. To calculate ROI, subtract the cost from the revenue and divide the difference by the cost. For instance, if a marketing campaign generated $300 million and cost $100 million, you would calculate ROI like this: $300 million minus $100 million = $200 million. Then, $200 million divided by $100 million (the cost) equals two, expressed as an ROI of 2 percent.

Earnings Per Share (EPS)

EPS is one of the most important indicators of a company's health. It refers to the company's profits divided by the number of shares of stock owned by all investors. When a company's EPS increases, that indicates that the company is growing. Analysts compare the EPS of different companies to help them decide where to invest.

Key Performance Indicators (KPI)

KPIs are the factors a company has decided are important in measuring success. For a factory, a KPI might be the number of days without an accident. For a retailer, it may be market share. It's important to know what they are for your employer.

There is more to a career in graphic design than creating awesome images. Think big, like vice president of marketing or account executive. Those options require a solid foundation of business skills, starting with the terms described here. Getting those skills now can pave the way for your future success!

Photo credit: stock.xchng


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