How To Do Budgeting And Work With Vendors And Subcontractors?

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Summary: Vendors and sub contractors can act as messenger of you in market. They too have contact with many other professionals. Your relationship with them affects your prospects in business. You should be clear with them about every detail, deadlines related to the projects. Complementing them occasionally helps in maintaining a good relation.

Next to clients, vendors are the second most important people agency employees will come into contact with. No agency can produce all their own work in house, so vendors and subcontractors are essential when it comes to completing agency projects.

A vendor is someone or some company that sells a product or service to another company. A subcontractor sells his or her talent in the form of a service. The word talent is the main difference between a vendor and subcontractor. A printing company, art supplier, paper company, color separator, reprographic specialist (people who make stats, films, and negatives) are usually called vendors. Photographers, videographers, voice and acting talent, illustrators, and other freelance people such as copywriters and paste up artists are hired on a sub contracting basis to produce or complete a specific part of a project that cannot be done by the agency's own staff. The reason it cannot be done by the agency might be because no one in the agency has the particular talent necessary to do the job or the staff is too backed up with work and needs to farm out a part of the project.

Good vendor relationships are extremely important to an agency for a variety of reasons. When you have to meet a deadline, and you need a printer or typesetter or photographer who is willing to work overtime or squeeze your job in at the last minute, you had better be on good terms with that person. People in business will go out of their way to help out each other, because we all know our turn will come. If you treat vendors and subcontractors as if they are your servants, they will not be there for you when the chips are down.

It is very important to be fair in your dealings with vendors and subcontractors. Do not blame them when something goes wrong, just to get off the hook with your boss or client. Be as honest with them about your mistakes and your shortcomings as you would with a colleague. And give them all the information they need to do their best job, which includes giving them plenty of lead time on deadlines. Keep them informed when a deadline is approaching. Do not assume that they are as aware of every detail of your project as you are. Put all their directions and specifications for a job in writing. Compliment them when they do a good or great job. When you receive a client's praise for a project, pass it on to everyone else involved in the project. Direct business referrals to them whenever you can, and they will do the same for you.

Vendors and subcontractors will become the messengers of your agency's good or bad reputation. News in the advertising community travels fastest. So always be very careful what you say about your agency or a client to one of your vendors or subcontractors. Bad vendor/subcontractor relationships can break an agency. These people have important contacts throughout the advertising community, not only with other vendors and subcontractors, but with your agency's clients and potential new clients as well. They can be an agency's greatest source of new business referrals or the greatest source for discouraging new business from even considering your agency.

Pricing and budget

It is not just art directors who are responsible for putting together price quotes and making sure a project stays within a client's budget. Project managers, media buyers, financial managers, account coordinators, assistants, and secretaries, too, are all involved in soliciting bids from vendors, subcontractors, and media salespeople and compiling that information into a price quote or estimate. And these same people are responsible for maintaining the cost accounting records on projects for billing purposes. Whatever position you are hired for, chances are that one day your turn will come, too, and you will find yourself trying to get some prices and write up a quote. When that happens, you want to be prepared with the "how to's" of putting a bid together, soliciting bids, and adding in markup. So here goes, a whirlwind introduction to budget breakdowns, pricing a job, and cost control.

Breaking down the budget

Budgets represent the amount of money a client sets aside for a single project or an entire campaign. Whether that amount is $500 or $500,000, it is up to the agency to first decide if what the client wants to do can be accomplished with that amount of money. The only way to know is to take the total amount of the budget and break it down into all the components of the project.

For example, suppose a client has $5,500 to spend on a capabilities brochure. She asks you if you can do this project for that amount of money. You say, "Well, let's put together the specs." That means all the specifications or details of the project. To do that, you have to ask the client questions. To begin with you ask, "How many brochures do you need?" She says, "5,000." Then you ask her how much information she wants to have in the brochure. She hands you several pages of copy. "What about visuals, do you want photographs or illustrations?" you ask. She gives you a folder of seven color 5"x7" photographs. "Let me price it out," you respond. That means you are going to go back to your office and write out all the specs she has given you, plus add in some others that you know are givens. For example, you know that the finished size will have to conform to postal regulations, since this is to be a brochure that can be handed out or sent through the mail. When you have all the specs on paper, you will then contact vendors and subcontractors for prices on the various parts of the project that will have to be sent out, like typesetting and printing. Then you will figure out how much it will cost your agency in time and materials to produce those other parts of the project that will be done in house. Once you have collected all of your prices, you will add them up and see how close they are to the client's budget if the final total exceeds the budget figure of $5,500, and then you will have to go back to the client and see what she is willing to cut back on. Maybe it could be the quantity she wants to print or the number of photos or the quality of paper.

If the total is less than the budget amount, then you tell her you can add options. What are those options? Options are design choices, like the number of colors you can have within that price range, or upgrading the quality of the paper the finished piece will be printed on, or adding illustrations or cartoons (if appropriate) to complement or supplement the photographs, etc. If, for in stance, she chooses to add in another color, then you can reprice the job by finding out from the printer how much more an additional color would cost. You may continue putting in add ons until the total budget figure has been reached. Or the client may decide to save some money and stay with the original price you gave her without the option of add ons.
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