Are You Ready to Start Your Own Design Firm?
Interior design coach Beth Whitlinger outlines 7 steps designers should take to launch a successful business
Have you always dreamed of having your own design business? Do you feel as though you’re carrying most of the weight in your current firm? Maybe it’s time you went out on your own.
Starting your own business is a serious decision. The fun right-brain stuff comes more naturally to us creative types: putting together a website to showcase our portfolio and vision, setting up a Houzz profile, building social media pages, creating cool business cards, designing a fabulous office, thinking of a business name. The challenges can come with left-brain considerations such as legal, accounting and insurance that are necessities for a successful business.
Here are seven steps to take when establishing a new design business to ensure a healthy start and lasting success for your venture.
Starting your own business is a serious decision. The fun right-brain stuff comes more naturally to us creative types: putting together a website to showcase our portfolio and vision, setting up a Houzz profile, building social media pages, creating cool business cards, designing a fabulous office, thinking of a business name. The challenges can come with left-brain considerations such as legal, accounting and insurance that are necessities for a successful business.
Here are seven steps to take when establishing a new design business to ensure a healthy start and lasting success for your venture.
2. Market Your Services
Most designers find that their projects come from referrals and the internet. Hand out your card to everyone you know, everywhere you go. This is not the time to be shy. A presence on Houzz will expose you to homeowners who are looking for project ideas and designers to implement them. Compile a list of questions to ask potential clients by phone or email. This should include how they heard about you, so you can decide how to target your marketing dollars.
Most designers find that their projects come from referrals and the internet. Hand out your card to everyone you know, everywhere you go. This is not the time to be shy. A presence on Houzz will expose you to homeowners who are looking for project ideas and designers to implement them. Compile a list of questions to ask potential clients by phone or email. This should include how they heard about you, so you can decide how to target your marketing dollars.
3. Put Together a Dream Team
A loose team consisting of an architect, an engineer, a general contractor, a real estate agent and the like can be mutually beneficial, as each business can feed the others. This type of setup also offers a full-package solution to potential clients. Make sure these are people you know and trust; all it takes is one weak link to break the symbiosis. Ideally these are all professionals at roughly the same stage of business so you can all grow together. Nurture this group relationship and share ideas for marketing your joint services.
How to Make the Most of Industry Events in 2020
A loose team consisting of an architect, an engineer, a general contractor, a real estate agent and the like can be mutually beneficial, as each business can feed the others. This type of setup also offers a full-package solution to potential clients. Make sure these are people you know and trust; all it takes is one weak link to break the symbiosis. Ideally these are all professionals at roughly the same stage of business so you can all grow together. Nurture this group relationship and share ideas for marketing your joint services.
How to Make the Most of Industry Events in 2020
4. Take Care of Business
Your business structure affects how much you pay in taxes, the paperwork you need to file, your personal liability and more. Consult with an accountant or attorney about which structure is right for you. Typically you’ll need a tax ID, a resale license and a local business license, even if operating out of your home. Set up a business bank account so your business funds stay separate from your personal account. (The IRS and U.S. Small Business Administration offer helpful resources on this subject.)
Don’t forget insurance. Among the must-haves: general business liability, professional liability (also known as errors & omissions, which says it all) and a workers’ comp policy if you hire any employees. If you operate in hospitality, commercial environments or even some multi-unit dwellings, you may need additional umbrella coverage of up to $2 million during the project.
Your business structure affects how much you pay in taxes, the paperwork you need to file, your personal liability and more. Consult with an accountant or attorney about which structure is right for you. Typically you’ll need a tax ID, a resale license and a local business license, even if operating out of your home. Set up a business bank account so your business funds stay separate from your personal account. (The IRS and U.S. Small Business Administration offer helpful resources on this subject.)
Don’t forget insurance. Among the must-haves: general business liability, professional liability (also known as errors & omissions, which says it all) and a workers’ comp policy if you hire any employees. If you operate in hospitality, commercial environments or even some multi-unit dwellings, you may need additional umbrella coverage of up to $2 million during the project.
5. Create a Business Plan
Decide where you want to be in five, 10, even 20 years, and write a road map of how you intend to get there. It won’t be set in stone, so go ahead and shoot for the moon. Base any hourly billing on your level of experience and your local market. Don’t be afraid to call around to other designers to inquire about their hourly rates. You may get rebuffed by some, but others will be willing to share.
If you have a niche or specialty, don’t hesitate to charge more than your competitors, but be ready to explain that difference to a potential client. Evaluate all your expenses to be clear about your monthly break-even point. This helps you understand when you’re making money, breaking even, or when you’ve actually paid the client for the privilege of working for them!
Have an easy-to-understand and legally binding contract for your services, even if you’re only billing hourly. An attorney who is familiar with the design industry is essential to review your contract and other legal documents at the onset. If you’re not billing hourly, make sure you have a solid way to estimate your time for each project and a way to recover your costs if the project goes out of scope.
Decide where you want to be in five, 10, even 20 years, and write a road map of how you intend to get there. It won’t be set in stone, so go ahead and shoot for the moon. Base any hourly billing on your level of experience and your local market. Don’t be afraid to call around to other designers to inquire about their hourly rates. You may get rebuffed by some, but others will be willing to share.
If you have a niche or specialty, don’t hesitate to charge more than your competitors, but be ready to explain that difference to a potential client. Evaluate all your expenses to be clear about your monthly break-even point. This helps you understand when you’re making money, breaking even, or when you’ve actually paid the client for the privilege of working for them!
Have an easy-to-understand and legally binding contract for your services, even if you’re only billing hourly. An attorney who is familiar with the design industry is essential to review your contract and other legal documents at the onset. If you’re not billing hourly, make sure you have a solid way to estimate your time for each project and a way to recover your costs if the project goes out of scope.
6. Choose Your Clients
Write a profile of your ideal client. Don’t take on every client who contacts you. Pay attention to your gut instinct and any red flags. Make notes during initial calls and meetings, reviewing them at the close of the project so you learn from your mistakes.
Don’t be afraid to venture into new territory. Sometimes taking on a project that is outside your comfort zone can open a door to a new professional opportunity or path. But be sure you are ready to call in consultants to help you navigate this process rather than lose the client.
How to Expand or Switch Your Design Specialty
Write a profile of your ideal client. Don’t take on every client who contacts you. Pay attention to your gut instinct and any red flags. Make notes during initial calls and meetings, reviewing them at the close of the project so you learn from your mistakes.
Don’t be afraid to venture into new territory. Sometimes taking on a project that is outside your comfort zone can open a door to a new professional opportunity or path. But be sure you are ready to call in consultants to help you navigate this process rather than lose the client.
How to Expand or Switch Your Design Specialty
7. Cultivate Repeat Business
Make it your mantra to under-commit and over-deliver. Add a finishing touch for your clients at the end of a project: a bottle of champagne, a basket of lovely soaps, a great accessory or fresh flowers.
Always ask for referrals and reviews. Make sure your client understands you appreciate them working with you in your new venture. Keep in touch, making sure they are regularly informed on your journey and included in your social media.
Beth Whitlinger has been in the design business for nearly 40 years. When she’s not guiding interior designers through her coaching business, The Interior Design Coach, she’s the principal designer at Beth Whitlinger Interior Design.
Have a question for Beth? Email it to editor@houzz.com, Attention: Beth Whitlinger, or post your question in the Comments. It could be featured in a future column.
More for Pros on Houzz
Read more Designing a Business columns
Talk with your peers in the Pro-to-Pro discussions
Join the Houzz Trade Program
Make it your mantra to under-commit and over-deliver. Add a finishing touch for your clients at the end of a project: a bottle of champagne, a basket of lovely soaps, a great accessory or fresh flowers.
Always ask for referrals and reviews. Make sure your client understands you appreciate them working with you in your new venture. Keep in touch, making sure they are regularly informed on your journey and included in your social media.
Beth Whitlinger has been in the design business for nearly 40 years. When she’s not guiding interior designers through her coaching business, The Interior Design Coach, she’s the principal designer at Beth Whitlinger Interior Design.
Have a question for Beth? Email it to editor@houzz.com, Attention: Beth Whitlinger, or post your question in the Comments. It could be featured in a future column.
More for Pros on Houzz
Read more Designing a Business columns
Talk with your peers in the Pro-to-Pro discussions
Join the Houzz Trade Program
Running a business requires much more than just working on the projects. You should have enough capital to last at least a year. Unless you hit the ground running with projects galore, you’ll want an alternate source of income for the lean times while you get established. If you don’t have these funds in savings, you may want to work part-time during the transition. Design showrooms, a builder design center and other similar businesses are great places to stay in the industry and also find potential clients. Make your intentions transparent to your employer and ensure it does not present a conflict of interest.
Consider offering your services to other designers in the interim. Many established design firms have gone the way of using consultants or contract labor as their work flow temporarily increases. Offer what you’re best at — CAD services, renderings, project management, writing or reviewing specifications — and invoice hourly through your business.