By Gail Doby, ASID
CVO and Co-Founder of Gail Doby Coaching & Consulting
Taking a read on what’s in store for interior design services in 2019, we are not getting any clear signals. Some, but not all, designers have experienced a tapering off in business over the past several months. Forecasts for the housing and remodeling markets suggest that trend likely will continue in the coming year. Which means, business probably will be okay but not as good as it has been in recent years.
While nothing is certain at this point, it’s always better to be prepared for a potential slow down in business than to hope for the best and be unpleasantly surprised. As you do your planning for the coming year, prepare two budgets. One should be a baseline, Plan A budget that assumes only modest net growth for the year, around two percent or so. The other should be a Plan B budget that assumes flat or even negative growth.
Your Plan B budget will require you to make some cuts in expenses and/or overhead in order to finish the year in the black. Look over your Plan A budget, separate out your fixed costs (such as your lease, utilities, taxes, etc.), and then begin to prioritize what’s left, working from the bottom with the things that, if cut, would have the least impact on your business up to those that would have the most impact on your business. Most likely, the things that are now at the top of your list (those that you can more easily cut) will involve less cost than those near the bottom (those that are more essential). Make one more list, this time prioritizing possible cuts by total amount saved or reduced, should the need arise to make a substantial adjustment to your budget.
As you prepare your two budgets keep in mind that you are not assuming business will decline, only taking the proper precautions. Even though circumstances may change during the year, taking the time now to consider and plan for budget cuts will allow you to remain calm and react more quickly in the event of a downturn in business. That will give you the confidence to weather a dry patch and engage in positive activities to keep your business moving forward.