Planning for Success in Your Interior Design Business
Do you set aside time on your calendar to plan for your business on a regular basis?
I find that not every designer does this regularly. You’re the CEO of your interior design business and you need to plan for your business and not just let it happen by accident.
My recommendation is that you block out one or two planning days on your calendar each month, and that you make sure you spend your time working on your business without interruption.
Here are seven key items that you should include in your business plan:
1. Create A Plan For Profit
Are you charging enough? Planning your profit will help you determine if you are running a profitable design business. A good rule of thumb for interior designers is to budget for 25 – 30% net profit, AFTER you first pay yourself a salary.
I call this “creating your budget from the bottom up.”
2. Plan Your Personal Income
Do this before you allocate any salary increases for your team. Don’t make the mistake that I see many designers make and pay yourself after you pay your team.
You should never have to miss a single paycheck or pay yourself less than anyone on your team.
3. Plan Your Marketing Expenses
I find that a good budget is usually 3 – 12% of your gross sales (all receipts for your design fees and product sales) depending on the size of your business.
Break down your marketing budget into categories – here’s a few to get you started:
- Newsletters – email or print
- Print – flyers, postcards etc…
- Social Media Marketing
- Networking functions
Take time and add the event and due dates into your marketing calendar.
4. Track each employee’s profit contribution to your business.
You want to make sure that each team member is pulling their weight and earning their salary.
I’m addressing your design related team, not your business manager or bookkeeper as they are overhead items. You should see at least a 50% margin for each of member of your design team.
For example, if you pay a member of your team $50,000 (including taxes, benefits, paid time off, etc.) they need to be contributing $100,000 of design fees which translates to $50,000 of gross profit before expenses.
5. Plan Your Billable Time
You’re lucky if you can bill 50% of your time for the year. You want to take a look at this number so you know what you need to be billing your clients.
For example: If you are able to realistically bill for 1,000 hours (a good goal) after subtracting vacation and holiday time, then you will be doing well.
So if you bill your clients at $150 per hour, that means you should have a goal to bring in $150,000 of business for the year. How are you doing?
6. Use Software to Run Your Business
Cut down on project management time and be more efficient. Make sure you are using the right software to run your business – we recommend Studio Webware for accounting, client and project management.
7. Create a Plan For Your Ongoing Education
Take a few minutes when planning to think about skills do you need/want to improve?
Think about what you coaching or classes will help you to improve those skills. Does it make sense financially and timewise to work with a consultant or coach? You want to make sure that you get good results and a “Return on Investment (ROI)” for each dollar invested in your education.
If you implement these seven action items every year and take time to review your progress each month, you will see growth both personally and in your design business.