6 Realizations to Starting an Interior Design Business that Many Designers MissDec 28, 2021
I have several design students eager to start their own firm every semester. Unfortunately, they believe it is as simple as hanging a shingle and making money as a designer. I am bluntly honest that this is a bad idea and unrealistic. I speak from experience as I was one of those students at one time. Luckily, I quickly realized I was way over my head after only a couple of projects, or I probably would have made an even bigger mess.
Before you set out to start your own firm, you should have a minimum of 5 years of working experience under a seasoned designer. And only then do you take a closer look at whether you have the energy, strength, and business know-how to start a firm.
Running your own business is hard – very hard. To be a successful business owner takes a lot more than picking out beautiful finishes and furniture. It takes a level of risk and resilience that many people lack.
People forget to tell you that when you are starting a design business, you are working 10 different jobs all at once. So although you may think that you will be designing and working on projects you want, the reality is much different.
In this article, we will discuss the 6 things you may not realize and steps to help you work through each. But, before we do, let’s talk about the top 10 jobs an interior design entrepreneur does besides design.
10 Jobs of An Interior Designer Entrepreneur
I have met with several dozen interior design entrepreneurs in the last two months. I ask each one, “When starting your firm, what was the biggest thing that surprised you? What do you wish you had known before you started?” Inevitably the answer is always the same - they didn’t realize how many different hats they would wear.
When starting a design business, you hold all ten jobs below and many more.
1. Marketing and Branding Expert
2. Accountant | Bookkeeper | Tax Expert
3. Business Operations & Process Manager
4. Technology Guru & Webmaster
5. Salesperson and Business Development Manager
6. Project Manager
7. Leader & Career Advisor
8. Customer Service Representative
9. Procurement and Vendor Manager
10. Human Resource Manager
Those reading this article that is well into running a design business have probably added several more jobs to the list above. As the business owner, you own it all, especially when just starting.
5 Things You May Not Realize When Starting a Business
1. Time is a Commodity.
Time is one of my biggest struggles as an entrepreneur, mom, wife, friend, and designer. As an interior designer, you bill your time hourly. The more you bill, the more money you make. Unfortunately, running a business requires many non-billable hours. Additionally, you only have so many available hours per week to work.
Many designers go into this business for flexibility. They think they will have the freedom to work the hours they want and take off the time needed for their personal lives. But, unfortunately, that doesn’t happen, and for many of us, that drives the feeling of guilt.
For instance, I originally started my marketing consulting business when my oldest son entered high school. I previously worked for a Marketing VP at a major telecommunications company. Unfortunately, she had zero flexibility or compassion for other people. She was completely unreasonable about flexible office hours and insistent on an 8:00 a.m. to 5:00 p.m. workday. I wanted to work from 7 to 4, so I could go to my son’s baseball games.
At the point where she told me that I could attend one game per month, I had had enough and quit the next day, starting my consultancy firm. I do not regret that decision for one minute, but what I missed in my calculations wasn’t the regular paychecks; it was the illusion that my time was now mine to control.
I learned that as a business owner, you work non-stop. Regrettably, your family suffers in the process. I did go to every baseball game that season and many seasons after through his college career. However, I struggled with the guilt of either not being in the moment with my family or the guilt of not working hard enough, as silly as that sounds.
In speaking with many interior designers, their path is similar. They chose to start a business to control their time and maximize their design work. In other words, they want to design more and on their own schedule. Although that is a noble reason, it isn’t the reality.
Time is not on your side as an entrepreneur, especially one that lives and dies from billable hours. It is important to recognize this early on when starting a business.
Determining your hourly rate will depend on your costs of running a business, your value, and the true time involved in designing and completing a project. Do not make the mistake of determining your hourly rate by deciding how much you want to make per year and dividing it by the number of available hours per year.
For instance, if you want to make $100,000 per year as a designer and you worked 50 weeks per year – taking 2 weeks off for vacation – then your hourly rate would be $50 per hour. However, you are forgetting one major factor. You can’t bill every hour you work. More realistically, you may bill 20% to 40% of your time if you are lucky.
Before you set your billable rate, determine the number of hours you can reasonably work on design work. Let’s use 50% of your time is billable to make the math easy. That brings your hourly rate to $100/hour. But wait, what about your expenses of running the business. You will need to generate additional money to pay for software, equipment, marketing, and general business expenses.
Additionally, you will want to hire specialists for certain tasks, like taxes. That is another expense. Hopefully, you see where I am heading with this train of thought. It costs money to make money.
I have a couple of suggestions to help you control your time more efficiently to maximize your billable hours.
One, set a daily schedule and stick to it. If you plan on working from 7 to 4 every day, then do just that. Within the daily schedule, set realistic blocks of time that are designated for particular tasks. Stick with the schedule, even if it includes doing something you really don’t enjoy, like marketing.
Be careful not to short-change the time it takes to complete a task. As much as I would like a blog post to take an hour, it takes at least 4 hours for me to write, edit, and upload to my website.
Two, create processes early on that will help you save time. A good example is a client intake questionnaire form. For every potential client, you meet, have a form with a series of questions that need to be answered before the project begins.
We often call this a programming document, but these questions are not just about the project. It also includes their budget, payment terms, how they like to communicate, project expectations, and schedule. Determine how and where this information will be stored for the project's duration.
Next, determine how to store and access the project information quickly. This will save you and your team time from calling the client repeatedly or working in a direction that doesn’t pertain to the client’s needs.
Create a communication schedule for each project and add reminders in your calendar to touch base with clients, vendors, or contractors. Communication templates that cover status updates are helpful to copy/paste and fill in the blanks.
Process creation works for all aspects of your business. Although it may feel overwhelming and time-consuming to create processes, they will save you considerable time in the long run.
My final tip is to reduce your guilt by recognizing you are human. My husband and sons are the most important thing to me. I have struggled for years to balance family time and work time. Holding on to guilt is not helping them or me. I have reduced this guilt, notice I said reduced and not got rid of, by recognizing that there are only 24 hours in a day and that it is okay if I do not spend 20 of them working.
2. Your Business is a Legal Entity.
It is critical to realize that your business is its own legal entity. Therefore, you will need to set it up by registering it with the state in which you will work. Additionally, if you plan to work in other states, you must understand the licensing requirements for each state. It is different in every state, and you want to protect yourself and your business.
Preferably, you want to set your business up separate from your personal life. You will want to talk with a tax advisor (CPA) on the best way to do this. Small interior design businesses are usually registered as limited liability companies, either solo or partnership. By being a limited liability company, you are removing your personal liability. With that said, all finances must be separate from your personal accounts.
A checking account will be established separately from a personal account. This is important for tax purposes. All business expenses and revenue will go through this account. Do not deposit client checks into your personal account.
Additionally, you will need a sales tax license if you plan to sell products. Selling products will require you to charge sales tax and pay them accordingly to the state. In Colorado, sales taxes are the hardest things to calculate and track because each city and county has a different rate. I highly recommend software to help you track sales taxes. Additionally, there are specific reporting requirements for sales taxes. You may need to pay these taxes monthly, depending on your total sales amount.
Note, your design services are not subject to sales tax. However, your design services are subject to state and federal taxes. You will pay state and federal taxes quarterly. If you hire employees, you will also hold income taxes and pay those on a schedule.
You will need a lawyer as well. A signed contract between each person is needed to determine legal responsibility and financial requirements for a partnership. Please do not start a partnership without a contract. Additionally, a contract template is needed for you to use with clients. The contract should be customizable for each party’s name, detailed project requirements, costs, terms, etc.
This is an area that many small businesses get into trouble, so be sure you consult a lawyer, tax expert, and an accountant before you start a business.
3. Know (and Set) Your Boundaries.
When starting a business, many designers are so eager to make money that they will take on projects out of their scope or say yes to difficult clients. Unfortunately, this will get you in trouble quickly, as not every project or client warrants your time.
When starting a new business, define what projects are best suited for your design services. Do not deviate from the core business by taking on a project that you are not qualified.
Furthermore, if you have a bad feeling about a project or client, walk away. I can’t tell you the number of times I ignored a bad feeling and regretted it later. Listen to your gut, as it can be a powerful tool.
We often personalize the business and believe we need to live it every day, all day. This just isn’t true. Although it is important to be responsive to your client, it is also important to set clear boundaries.
I am baffled by clients that think it is okay to text or call at 10:00 p.m. Many clients believe they are your top and only priority; therefore, they will become frustrated with you when you’re not available. To avoid this frustration on both sides, be very clear about the hours you work and when you are available at the very beginning of the project.
I also do this with my design students as well. I used to be available 24/7 but then found myself getting angry when I would get a call late at night or a barrage of texts during family dinner. Well, that was on me for not setting my boundaries. So now, I am incredibly clear will clients and design students on my availability.
Set clear deadlines with dates and times for every stage of work. If you are like me, you may work off hours. I often take time during the day for the gym or a personal appointment but then work late into the night to get work done. I will meet a deadline, but it may be close to midnight.
There have been times where a client has expected it by 5, and I wasn’t done yet. A good rule of thumb is to set an internal deadline, then give the client the following day as the deadline. This gives you extra time if needed.
Next, don’t give a free consultation to a client. Rather I recommend you offer a free “get to know” you meeting. In this meeting, you can walk through the space, take pictures, and discuss the likes/dislikes of the client. It is also a good opportunity to share your portfolio.
However, during this meeting, do not give away your design ideas. This is a hard rule to follow because you are clearly thinking design from the moment you walk through the door as a designer. Your design ideas are your product, and they shouldn’t be given away for free. If someone wants to discuss your ideas, it is time to schedule a consultation, which should be billed hourly. Be clear on the distinction between these two meeting types.
4. Hard Conversations Are Required.
Confrontation is hard. I won’t lie in that I have struggled with not hurting someone’s feelings or being afraid to state my fees, which is underly ridiculously. However, your experience and expertise are worth the value you bring. Therefore, you should never be ashamed or nervous about telling a prospect what your time and experience are worth.
The truth is that you must have hard conversations to grow your design business. Do not be afraid to give a client your billable rate. You are bringing a service, and if they don’t see it initially, then I guarantee you will struggle with the project throughout.
In addition, there will be times when you have to tell a client no. Many of us are so eager to please that we lose control of design decisions because we aren’t standing up for what is right for the project.
Employees are another challenge. If you have an employee struggling, your job as their manager is to help them overcome and grow into their role. A good book to read is Radical Candor by Kim Scott. The author discusses the importance of being clear and concise when giving clients feedback in this book.
Vendors and contractors are groups you will need to have tough conversations with throughout a project. You do not want to be bullied by anyone, and it is your job to represent your client and the project design. Do not be afraid to insert yourself and give your opinion.
5. Understand Business Operations
This is an area that most interior designers are not prepared for when going out independently. I have heard time and time again that designers believe they will have the freedom to pick the jobs they want and control the entire design process. Well, you can do that, but you may not make enough money to stay in business for long.
Interior designers often decide to work independently of a larger design firm for larger control of their work. This is different than starting a business. When working independently, you have essentially created a job for yourself. And, it is a hard job, many times harder than working for someone else.
If you truly want to build a business with market value and can be sold down the road, it will require you to grow beyond your own capabilities. This starts with knowing business operations. This includes accounting, marketing, hiring, employee management, leadership, time management tracking, billables, and general administration. Don’t forget you also have to be responsible for business development, vendor and client relations, and technology systems.
Your next question is, how do I grow a business beyond myself. This begins with educating yourself. Running a business is an area that many interior designers struggle with because it wasn’t taught in design school. While in school, you most likely learned the principles and elements of design, not the principles of business.
At Behind the Design, we are committed to educating our members on how to grow a design business through training, education, and support. Our community membership is free to join, and you will have access to many free resources.
Furthermore, finding additional experts to help you will be key to your success. Don’t be afraid to ask questions, even if the question feels dumb.
Next, read business books and listen to business podcasts as much as possible. Then, attend business conferences and webinars outside of traditional design events. Finally, don’t limit yourself to just following designers on social platforms; expand your horizon by following leaders and entrepreneurs in different fields.
Your design firm must operate with efficiencies that take time along with trial and error. Early on, you may not have the resources to outsource. Therefore you have to figure out your processes and systems to ensure nothing is missed. As you grow, you will hire resources and employees to take on some business burdens. However, you must be impeccably aware of every aspect so you know who to hire and how they can help you grow.
6. Marketing is a Necessary Expense.
Often designers start their business with a few clients who follow them from a previous position. This can be a slippery slope as you want to ensure that you are not “stealing” clients. You may have signed a non-compete clause that can be used against you. That is a great start if you have a few clients that follow, but you will still need to find new clients through marketing and sales efforts.
Remember earlier we discuss business expenses? Marketing is usually the largest expenditure for many small businesses because you can’t grow without it. An adequate marketing budget is five to eight percent of your revenue or proposed revenue. If you plan to make $100,000, your marketing budget should be between $5,000 and $8,000 per year. That budget is low in the big scheme of things, so it will be important for you to maximize every dollar.
This means that you will be doing a lot of the marketing yourself. Yes, on top of everything else we discussed. I can’t emphasize enough how important branding and marketing are for your long-term success.
We have several resources and articles to help you. But, first, check out our online branding course, “Building a Brand Identity Beyond Logos.” This one-hour course walks you through branding and how you can use it to grow your interior design business.
If your website needs help, don’t fret. We use Kajabi, which has been a huge help. I was using WordPress for years, and it was literally the hardest part of my marketing effort. This past summer, we switched our sites to Kajabi, saving me time and money. You can check Kajabi out for yourself.
Another tool I can’t live without is Grammarly. This add-on helps me with everything from spelling to grammar. It even helps me with recommendations to improve my writing. If you are nervous about writing, the professional subscription is well worth the minimal cost.
One more tool that helps me is Canva. Canva allows me to edit images, design social posts, and create presentation materials easily. I find it easier and faster to use than the Adobe Suite.
My last recommendation is to join our community of interior designers. Once you sign up, you will have access to all of our marketing and business tips and resources.
Marketing doesn’t have to be hard, nor should it be neglected. A good marketing strategy and plan will help your business grow tenfold.
Owning and running a growing interior design business takes courage. As an entrepreneur, you will constantly grow and push yourself to do more and be more. Self-doubt and loneliness are inevitable. But understand, with the right support system, processes, and strategic plan, you can build a business that not only provides for your family but also provides for other families.
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