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Balancing Cash Flow and Bigger Clients

“Balancing Cash Flow and Bigger Clients”

Paul Baker and Todd Reifenrath started Chicago-based Webitects.com in February 1999 to lasso the burgeoning demand for Web-site design and Internet content management. However, Webitects may be giving away a lucrative component of its services: a software interface that allows clients to manage and change their sites without dependence on Webitects.com. Baker says most designers make a site’s content dependent on its graphic elements. Webitects separates the design and content functions, allowing new content to be added without changing or rewriting code.

In 1999 Baker and Reifenrath were the sole employees at Webitects.com. The duo added three employees in 2000, but they still have to turn down work. Baker explains his concerns about Webitects.com’s growth management and direction:

Pretty much anyone who wants a Web site — and can afford between a $15,000-$150,000 fee — are who we’re going after. With larger firms, you can’t get them to talk to you for less than $250,000. That’ll get you initial development, and then you’ll sign for $1.5 million over a year or two before they’ll take the job. We’re getting a lot of firms who don’t want to spend that money, who want to get their feet wet. We’ll do for $150,000 what larger firms do for several times more.

Over the last few years we have developed our philosophy: We want the customer to have the most-effective Web site possible — and those that change frequently get the most traffic. If we empower clients to change it, we have to separate the content from the design. So we created a program comparable to a word processor.

Revenues were $500,000 this year. Sales last year were $325,000. Now we have more work than we can handle. We don’t have any venture-capital money. We’ve logged a 20% profit this year, but you still have to have enough money in the bank. Lots of projects won’t pay for four to five months. We’ve had enough profits, so we don’t have to worry as much about cash flow. But that may change in the future.

We started out designing for smaller Chicago companies, and now we’re doing some large organizations both here and out of town. Probably half our work comes through word of mouth.

You have to do a good analysis before you do a good design. Our competitors tend to place firewalls between designers and developers. Here, we work together. We’re the only firm we know of that has that type of integration. As we grow, so will the temptation to separate these two camps. But we believe that will result in lower-quality design.

Our problems stem from handling demand. We’ve had to ignore incoming requests and canceled all advertising for two or three months. We want to grow in a controlled fashion to maintain quality and service. And though we want larger clients, we don’t want 80% of our billing coming from one source.

We also still do 15%-20% print design and production work, but we’re phasing that out. We only do print work for Web customers who absolutely insist and they need a logo or identity. Sometimes we’ll then contract with and supervise other designers to take that on.