3 Top tips on how to build a successful interior design business
It’s always good to get advice from experts when making decisions about your business. Building a business is a challenge and so much can be learned from working with specialists in your field. I asked Dionne Sherwood a Chartered Certified Accountant who specialises in helping interior design businesses for her top three tips on how to build a successful interior design business. Here’s what she shared with me.
1. Have a plan to build a successful interior design business
If you want to build a successful interior design business ask yourself these questions:
- Why are you in business?
- Why are you in the business of interior design, particular?
- What part of the interior design sector are you in?
- How long do you plan to run this business?
- Do you want to grow it and sell it so that you can retire?
- Are you planning to grow it and pass it onto the next generation?
- Do you have a plan to grow and reap financial rewards, without having to be there all the time?
- Can you make it provide you with a comfortable income for as long as you need it?
It really doesn’t matter what the answer is to any of the above questions. Yes really! However thinking about the answers will mean you have an idea of where you want to take your business. If you don’t at best you’ll just amble along and find that everyday is a fight for business and security.
When doing design work for a client, you will talk with them. Find out what they want, how they use their rooms and the type of activities that might take place. You’ll then plan those rooms to meet the needs of your clients.
Working out how to build a successful interior design business is exactly the same. You need to know what you want your business to do for you. Once you establish this, then you can build it and run it. It doesn’t matter if you have big plans and big dreams, or smaller aspirations. Whatever they are you can make them come true, but only with a plan.
If you have borrowed, or plan to borrow money to set up your business, you will have put together a business plan. Don’t put it to one side thinking it has served its purpose, once you have the funding. Keep it alive. Make it a living breathing document, that you refer to when you are unsure whether to take a particular piece of action. You can use it to see if you are getting the results you set out to achieve.
And like all things, plans change over time. But that doesn’t matter. You can tweak it and update it as things in the industry change. No doubt you have had a client that wanted to achieve a particular look, but your experience tells you the room was too small, or without sufficient natural light etc, but by making certain adaptations, you were able to get a really good result.
Think of running your business a bit like designing a room. You have a plan but things can sometimes go wrong, or at least result in a slight change. The important thing is that you have that plan in the first place to guide you.
2. Price what you are worth
How do you price for your services? How do you know what to price? Most business owners price emotionally rather than strategically.
Many people have a formula based on the amount of time it is going to take, plus the cost of the materials, plus a mark-up on the materials.
There is nothing inherently wrong with that, but there are disadvantages. For example:
- If you tell a client you charge £80 per hour there is no incentive for you to complete a project ahead of schedule. In fact it benefits you to take longer and no doubt you have good reasons for taking longer which you would expect a client to pay for, especially if they change the remit. Equally if you take less time, the client is likely to expect a reduction in the fee.
- If you tell a client, on a tighter budget, how much the materials are, they may well decide to source cheaper options themselves, and with the internet they probably can (although there might be questions over the quality).
Either way the client is likely to haggle the price down.
So, if you don’t want to get into a bartering conversation you have to find a way of working with the client’s budget.
Pricing for success
Rule No 1 is never crash and burn on price. The prices you set are the prices the customer will pay. Those that haggle on the price and want to pay the lowest price possible are the ones that are going to give you the greatest amount of grief. Simply by starting on a bad footing with the price, means your relationship with the client is going to be tense. This is not unique to Interior Design, and neither is Interior Design immune to this – it happens in all businesses.
There are ways of working with your client to set the price that both you and the client are happy to work with.
Know your niche and your worth
Knowing your niche and how to define your ideal client will help determine how much you can charge and so too will your geographical location. But don’t compare your prices to the interior designer down the road. Ha
ve a strategy for getting the best prices, knowing that your clients have had a say in that so that they know what they are getting for their money. Small businesses cannot compete on price, so don’t even try. You only end up in a race to the bottom and that’s no way to run a successful interior design business. Show your value because that is what customers actually buy.
3. Keep on top of the finances
This is probably quite an obvious one, but if you are working on your own it often gets put to the back of the queue. You don’t like doing it, you might not even understand how to do it. Some people are frightened of numbers and finances, and that is quite common in creative industries. If this is you, you are not alone!
Unfortunately keeping on top of the numbers is crucial. When running a business you have responsibilities to you, your family, your customers, your suppliers and to the tax man. Whilst I have put the tax man at the end of this list, he does have the most influence if you get it wrong. Unfortunately, ignorance of the law is not a valid excuse. That said, as far as I am concerned, he stays at the back of the queue. Get everything else right and the tax man will be dealt with.
Get help where you need it
There is a load of stuff out there now to help you manage your finances on the go. From sending your invoices out, automating reminders for payment, automating actually getting paid through Direct debit or Credit Card. You’ll also want to make sure your supplier invoices are recorded so that you can schedule the payments and most importantly manage that cashflow. But if numbers really do frighten you, or you just don’t have time, then get professional help.
The taxman has changed the way VAT information is submitted by introducing “Making Tax Digital” (MTD) and whilst you might think it doesn’t affect you because you are not VAT registered, MTD for income tax (sole traders & partnerships) and corporation tax (limited companies) is on the horizon. Get your finances digitised now rather than later and MTD will be a piece of cake. Digitising your finances means that you can spot the problems before they happen when it comes to cash in the bank.
Ultimately Cash is King and if you don’t have any, you will have sleepless nights. Manage your finances properly and the rest of your business will be a joy to run. Be prepared to invest in planning, pricing and managing your finances and you will reap the rewards.
Dionne Sherwood is a Chartered Certified Accountant at DS Small Business Help who specialise in helping small businesses, in particular Interior Designers. Her focus is on helping clients set their goals, build in profitability and run a successful interior design business. Dionne helps clients understand the best way of pricing their services and managing their businesses so that the business works for them and not the other way around. If you would like to know more e-mail her at firstname.lastname@example.org