Pacdora Blog

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The first in a series of texts to help you expand your value by becoming fluent in the Language of Business.

As designers, we are accustomed to fielding questions about resolution, pixels, PMS, typography, kerning, Lorum Ipsum, hex codes, UX, CMYK. It’s as if we have our own language.

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Do you understand the language of business? This is important because when we talk to our clients, they may not be designers or creative professionals. Instead, they may come from marketing, operations, finance, or sales. Their focus is not on the font or finishing we’re recommending, but on the budget, cost, logistics, and ROI. (We’ll get to ROI in another installment of this series. Stay tuned.)

When we discuss design with clients using business terminology, we can reshape the conversation from subjective to objective. This allows us to explain our reasoning behind the design and how it is designed to achieve specific business goals.

Starting with aesthetics, the design world has a long list of relevant terms. For this series, we’re focusing on The Business 6(TM)– the top six terms to begin building your business vocabulary. When we understand these terms, synthesize them, and use them correctly in conversations and meetings, we’re no longer just talking about aesthetics or color palettes or fonts. Instead, we’re talking about economics; we’re asking about sales goals; we’re listening to strategies for gaining market share.

You can design your ideal packaging here online: Pacdora

When we share our knowledge about a particular design’s advantages, we can frame our design, data, and scientific-based input within our client’s business goals. The Business 6™ are tools we can use to expand our understanding, credibility, and impact. You’ll find that clients are more receptive to your input when the point you make is in their language.

There’s a big difference between design and design strategy. The Business 6 are the top six business and financial terms that will help you understand your clients’ perspective and connect with their objectives. Revenue is the money a company receives in exchange for its products and/or services. There are a lot of terms associated with revenue, like gross revenue, net revenue, and top line. Let’s unpack those, too.

Gross revenue, also known as the top line, is the total amount of money a business receives from sales. The term a person uses often depends on their role. I have attended cross-functional meetings that include representatives from sales, operations, HR, the CEO, and the CFO. These meetings often have many different points of view. One person may use the term top line, while someone else uses gross revenue, but they are both referring to the money the business made from sales.

Net revenue is the amount of money a business makes from sales over a given period of time, minus the expenses the business incurred making that product or providing that service over that same period. In other words, net revenue is the total amount of money a company has left over after it subtracts the costs of producing its goods or services from the total revenue it generates from selling those goods or services.

You can design your ideal packaging here online: Pacdora

The terms profit, earnings, and bottom line refer to the company’s net revenue after accounting for the cost of producing that product or service. Operating expenses, such as paying employees, rent, and overhead expenses to run the business, are subtracted from net revenue to calculate profit, earnings, and bottom line. In our example, if operating expenses are $1 million, and net revenue is $4 million, profit is $3 million.

However, because those are not considered operating expenses, financial investors created a standard formula called EBITDA — an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA provides a universal understanding of what is included when assessing a company’s earnings.

Revenue is the total amount of money that a company brings in from selling its products or services. The second term in The Business 6 is margin. Margin is the amount of revenue that a company has left after it pays the cost of producing its products or services. Margin is important to designers because the budget for branding, design, and marketing often comes from margin. So when designers are in conversations with their clients, it’s important to understand where the budget is coming from as they talk about the client’s investment in design.

I often find myself in the situation where I’m advising my client to do something interesting to make their product more appealing to consumers, or to make it stand out among the competition, or to make it fit in with an integrated marketing campaign. I know that any extra design elements I suggest, like foil, a specialty substrate, or a soft touch finish, will come out of their margin. So sometimes I’ll ask them, “What is your margin?” That way, I can get a better idea of how willing they are to add the extra element, especially if it’s something that can help them achieve their business objectives.

I can inquire about my client’s current profit margins, projected sales, and marketing plans. I can also suggest that adding a certain element to the design may increase sales. (I should be prepared to back this suggestion up with examples or studies.) Having this level of conversation with my client lets them know that I am working with them to help them achieve their objectives. These objectives could be related to revenue, profit, market, consumers, sustainability, or any number of other goals.