Maybe you feel like you’re always playing catch-up with your interior design accounting. You’re making money but it disappears as quickly as it arrives, and you can’t figure out how to change that.
A great way to start is by evaluating your operating expenses – so let’s learn how!
Operating expenses are a key component of your interior design business – whether you work out of your home, from an office building, or own a storefront.
These costs are anything that it takes to keep your business up and running – from rent, electrical, and vendor payments to design software, office supplies, and so much more.
Business owners don’t need to avoid or be inherently stressed by operating expenses – they’re a normal and necessary part of your business. Aside from keeping the lights on, these tools that your company pays for can significantly impact productivity and the ability to do your work well.
Operating expenses can have a nasty underbelly. For example, once you hire a new employee or pay for a new recurring service, you are suddenly dependent on that service for the well-being of your business.
It’s great to hire a new employee when your business needs it. But if you pile on expenses regularly and without careful consideration, you may look around one day and see mountains of payments you can barely afford, with no idea how you got to that point.
It may be time for some serious cost cuts if you find yourself in a scenario like the above, where you’re getting more and more work yet still not making a profit. Regularly analyzing expenses is one of several paths to higher profitability.
Here are our tips for how to get started:
Review current expenses
What we don’t mean by this is to review how much you spend on pens for your employees and to start buying the cheaper ones. We would suggest skipping the easier, minuscule changes and taking an approach for the long game. You can’t change your rental situation and cut your staff size overnight, but you can start planning today for how to make those bigger changes over the next 6 months or a handful of years.
Budgeting for future business costs
A mindset toward your operating expenses will help you approach your future financial decisions with a fresh perspective. Page 141 of Profit First explains that the Profit First method enables you to work from a more limited financial pool. When you budget, you’ll have a clearly defined amount to spend on operations. Rather than always wondering how much you can or should invest in this area of your business, you’ll have the clarity to see when and where to spend less or more.
Using technology to maximize efficiency
Technology can be hugely beneficial to any and every business – that’s a no-brainer. But can is the key word – businesses may neglect to use helpful systems or use them inefficiently, and that will only make your business lose money and time, not save it. Time tracking and project and task management platforms are some of the easiest and best ways to implement helpful technology for your business. Platforms like Asana, ClickUp, and Monday are just a few of the project management platforms that you and your employees can benefit from today.
Maybe it doesn’t feel worth it to pay for one of these platforms, or for accounting software like Quickbooks or Xero, but the benefit of having a streamlined way to do your interior design bookkeeping should far outweigh the cost!
Creative Ways to Cut Costs
Once you begin pulling from a cash bucket with more guardrails than you’ve had in the past, opportunities to cut costs will pop up all over the place!
Find discount materials
Rather than buying the first brand-name product you see for supplies or the fanciest catering for your next event, push a bit further to see if you can find discount options you wouldn’t have otherwise known about.
It might be hard to cut back on luxury items if you’ve defaulted to operating beyond your means for a long time. But running your business more frugally now will enable you to sustain the luxury you want in the future.
We hope you’ll feel more equipped to handle your interior design bookkeeping with some new ways to approach your operating expenses. Some of these steps may be hard to take at first, but the payoff that comes from cutting your costs is so much greater! Remember, we’re not advocating for a complete overhaul of the way you run your business, but rather for slow and steady changes that will make a big impact over time.
If you want to hear more about how to improve your interior design accounting and reduce your operating expenses in practical ways, we’d love to talk with you! Schedule a call with Account Solve today and we’ll dive in.