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Five ways your business is silently leaking profit, and how to fix each one today
This article is part of our Business for Interior Designers series. Andrew Mitchell is the founder of The Design Coach and director of MR. MITCHELL, an award-winning Melbourne-based design studio. With over 26 years in the industry spanning residential, hospitality and commercial sectors, Andrew coaches interior designers on the business fundamentals that keep practices profitable and sustainable. This is the third and final article in his series on The Psychology of Fees.
A busy studio isn't necessarily a profitable studio. A full project pipeline, beautiful portfolio and happy clients can disguise poor cash flow, unpaid hours, weak margins and a fee structure that simply isn't working hard enough.
Andrew MitchellFounder, The Design Coach
The uncomfortable truth is that you're probably leaving money on the table every day, in more ways than you realise.
As creatives, we're trained to focus on the delivery: the beautifully completed project and the clients who are over the moon with the result. Handing over a finished project is an incredibly satisfying feeling, especially when it's supported by praise from the client and the team who collaborated with you to reach the finishing line.
But without the financial wins that should be a priority for every small business, that feeling of accomplishment can be short-lived.
A busy studio isn't necessarily a profitable studio. A full project pipeline, beautiful portfolio and happy clients can disguise poor cash flow, unpaid hours, weak margins and a fee structure that simply isn't working hard enough.
Zooming out from the day-to-day demands of running a design business to assess its financial health isn't only beneficial. It's imperative.
In this, my third and final article in a series for Programa on The Psychology of Fees, I'm looking at five common ways you might be leaking profit in your design practice, along with practical changes you can implement immediately to get your business back on track.
I don't really find that I need to do that. Occasionally I get a call from a potential client who is already working with an architect and they think that I will be the decorator. Typically that is when I explain that while architects have their place in a remodel, often a designer can provide much of what the project scope needs. Some clients do not know that designers are able to produce structural and permit drawings in addition to the decoration piece. Simply explaining my process in that first discovery call usually clears that up.
As my business grew, I was finding that I could not keep up with the office work like tracking orders, dealing with damages, and calculating quantities for things like tile and fabric. I also am not very tech inclined and I wanted to up my brand image with things like digital concept boards and calendar links to clients. Design Assisted has been a true life saver!
Hire people early in your career. Farm out anything you don't like to do or don't do well and focus on the things you are good at and enjoy.
Heather ClevelandFounder, HCD Design Studio
I have a background in psychology and that has come into play on more occasions than I can count! Typically in a husband and wife situation, the wife takes over the project, leaving very little room for the husband to weigh in. I make sure to help them feel heard and often bring the focus on their wants in the conversation to help them build confidence that I will take everyone's wants and needs into the design consideration.
I work very hard to have a fun and relaxed yet still professional relationship with my clients. I let them in on my personal life, just a little, so they feel they know me a bit. Interior design and remodels can last quite a long time and so the relationships need to be nurtured. I also think my process makes the projects go rather smoothly so that helps. There are a lot of horror stories floating around out there so I think when the project goes smoothly, clients feel relief!
I started creating these because I would get lots of calls years after a project was complete about the name or colour of a tile or that a product broke and they needed the warranty info. This all but eliminated most of those calls. It also sets me apart from other designers in showing that I am very detailed. The binder includes warranty info, product info like colour and brand, and care info for things like countertops or fabrics.
The discovery call is EVERYTHING! You will know right away if the client isn't a good fit from that call. I review the timeline and budget and that alone will weed out quite a few projects. And if the client is already asking for special favours before I have even taken on the project, that is a huge red flag. I have been lucky in that most of my projects are with really great clients.
Be more bold! Every time I took a huge risk, financial or design wise, it has always ended up being a great choice. It's scary to take risks when your reputation is everything. But do it anyway!
Hire people early in your career. Farm out anything you don't like to do or don't do well and focus on the things you are good at and enjoy. I hate tech and I am not good at the admin stuff so I pay others to do it and that leaves me more time to do the part I love: design.
