One of the trickiest challenges of running your interior design business is project delays. They seem to pop up out of nowhere, don’t they?
Whether it’s a client who can’t make up their mind, a contractor falling behind, or supply chain disruptions beyond your control, these interior design delays can wreak havoc on your cash flow.
The good news? You can still maintain financial stability and profitability, even when things don’t go according to plan.
In this blog, we’ll explore some practical strategies to help you manage cash flow when projects are delayed. We’ll also share how Profit First can help ensure that your business stays on track, no matter what challenges pop up.
The Impact of Project Delays on Your Bottom Line
Interior designers are no strangers to project delays. Sometimes clients change their minds or can’t make decisions quickly. Other times, contractors get delayed by other projects, pushing your timelines back. And then there are supply chain issues—like the recent impact of Hurricane Helene on furniture companies —that can delay deliveries by weeks or even months.
All of this can put a strain on your business’s cash flow. Payments get delayed when projects don’t wrap up on time, but your bills—rent, utilities, employee wages—keep coming in like clockwork. Without a solid plan in place, it’s easy to find yourself in a cash crunch that leaves you scrambling to pay expenses while waiting for that next client payment.
Enter Profit First: A Simple System to Keep Cash Flowing
Here’s where the Profit First system comes in handy. It’s a straightforward way to make sure you always have enough money to cover your expenses, pay yourself, and keep your business profitable. Instead of focusing on what’s left over after expenses, Profit First encourages you to allocate your income into different accounts for profit, taxes, operating expenses, and your own pay—right from the start.
Communicating with Clients: Set Expectations Early and Often
One of the biggest challenges during delays is keeping your clients informed and managing their expectations. It’s tempting to hope the delay will resolve itself quickly, but clients appreciate honesty, even when the news isn’t what they want to hear.
Start by setting clear expectations upfront, during the onboarding process. Walk your clients through how the project timeline works and let them know that unexpected things—like supply chain disruptions or weather-related issues—can happen. The more information you share upfront, the more secure your clients will feel about their decision to hire you.
When delays do occur, don’t assume your clients are following the news closely or that they know how it might affect them. If there’s a major event, like Hurricane Helene disrupting furniture deliveries, it’s your job to let them know how that impacts their project. Be upfront about it, explain the situation, and most importantly, offer a plan for how you’re handling it. This helps build trust, and your clients will appreciate your transparency.
Building a Financial Buffer for Delays
Another way to protect your business from the financial impact of delays is by planning for them. You can’t always predict when a project will get pushed back, but you can build a buffer into your timeline and your budget. When quoting a timeline to a client, leave room for possible delays, whether they’re caused by contractors, clients, or supply chain issues.
On the financial side, set aside a portion of your revenue as a buffer—essentially an emergency fund for your business. With Profit First, this can be built into your cash flow system. Having a financial cushion means that even if a client’s payment is delayed, you won’t be stressed when it comes time to pay your bills.
Stay on Top of Invoicing and Receivables
Cash flow can get tricky when payments are delayed, but that’s why it’s so important to stay on top of invoicing. Make sure you’re sending out invoices promptly and following up with clients as necessary. Set clear terms for when payments are due, and don’t be afraid to enforce them.
If you’ve already implemented Profit First, you’ve separated out your income into different accounts, which can help you keep better track of what’s coming in and what still needs to be paid. This way, you’ll always know where you stand financially.
Monitor Expenses When Timelines Are Extended
It’s not just income that can get disrupted by project delays—expenses can quickly pile up, too. Contractors might need extra time, and materials may increase in price due to supply chain issues. This is where you need to be extra vigilant about managing costs.
Review your expenses regularly and look for ways to cut unnecessary costs when timelines are stretched. This could mean renegotiating contracts, postponing non-essential purchases, or even finding more affordable suppliers. Profit First encourages this kind of discipline by ensuring that your operating expenses are capped at a certain percentage so you don’t overspend.
You Can Stay Profitable Through the Ups and Downs
Project delays are part of the reality of running an interior design business, but with the right financial strategies in place, they don’t have to derail your profitability. Implementing Profit First can help you manage your cash flow in a way that ensures you’re always covered, even when payments are delayed.
By being proactive with your finances, communicating clearly with your clients, and keeping a close eye on expenses, you’ll be better prepared to handle whatever challenges come your way—and your business will stay profitable, no matter what.
We invite you to book a call to find out how we can help you prepare for the expected unexpected in your business.
