- Company: Love Digital
- Player: Devon Brough
- Est: 2012
- Contact: +27 (0)21 418 3044
- Visit: www.lovedigital.co.za
Sometimes you just have to say no. That’s what Devon Brough discovered in year two of running his own business, Love Digital.
The company’s turnover had rocketed to R3,2 million – 320% growth on the previous year. He had a partner on board and a payroll of R150 000, not bad for a one-man-band that he started in 2012 after moving to Cape Town.
Related: 3 Strategies for Raising Your Prices
But then he made a big mistake. His content production company took on a motorsport series with a budget of just R700 000.
“I had always believed that you should say ‘yes’ to every job, but that backfired. I realised that income does not equal profit, and that if the margins are not right, you should step away.
“Not only did we not grow the business, but we ended up having to pay between R30 000 and R40 000 a month towards the production just to get the job done. It meant that even though we had more than tripled our turnover, we were making a gross profit of just 50% before expenses on our work, and paying a big salary bill.”
Always check the budget
It was a frustrating year, but he learnt a key lesson: Every concept has a price tag. “If a client doesn’t have the budget, then you need a different concept. It does not work to try to squeeze a bid idea into a small budget. All that happens is that you over-extend your business and you are left with cash flow problems.”
This error in judgement was compounded when a contract with a big media company failed to run its course, again because of budget constraints. “When you have a small business, you end up being the CEO, the administrator and the debt collector, which is a major challenge,” Brough says.
“I found myself fighting to get payment. In the creative field that becomes awkward. You work closely with your client and after a job well done you have to put your foot down and become the money chaser.”
His problem was solved when the business caught the attention of Ole! Media Group, which bought Love Digital in May this year.
The group, a R60 million business, is an umbrella for a bunch of digital media businesses that have an impressive array of big clients. What Brough got as part of the deal is peace of mind that has enabled his team of eight to agree on a target of R6,5 million this year.
“Managing money made me anxious and I was not playing to my creative strengths,” he says. “Now, we have all the tools we need to focus on growth, including a strong accounts department. I can be excited about my business, and my number one strength which is connecting with people and creating content.”
Brough says there is enormous opportunity for all the businesses in Ole! Media to flourish as they have big company infrastructure coupled with entrepreneurial vigour.
Related: How Saleable Is Your Business?