Have you ever thought of buying that yellow Business for Dummies book on how to scale your interior design firm?
No shame; you’re not the first one. Every entrepreneur wishes to uncover the secret formula to overnight business success. The truth is, there isn’t one. But that doesn’t mean the only way to win is through trial and error. Quoting Warren Buffett, the greatest investor of all time, “It’s better to learn from other people’s mistakes.”
According to experienced entrepreneurs, here are three crucial mistakes you should avoid while growing your interior design business…
#1. Saying YES to every project on the table
When you’re starting out or operating in a fear-based mentality, it’s tempting to say yes to every project that comes your way. More work equals more money, right? Actually, it’s quite the opposite: doing a bunch of small jobs makes it harder to be profitable.
Instead, consider having rules in place to protect the profitability of your business!
For example: Do you need to have a minimum room count for each client you work with? Think of the distance you need to travel and the “getting to know you” work behind the scenes, then ask yourself: Is it worth my time and effort? You may find that it’s more efficient to have a 3-room minimum for each customer.
#2. Thinking your rate structure is the problem
Some interior designers prefer a fixed fee rate structure while others charge an hourly fee. Some even create a combination of the two. Once you determine the approach that fits you best, the next step is even more crucial: maintain those boundaries.
Many business owners compromise their profitability when they are loose on boundaries. If you’re on an hourly fee and not being careful at tracking your hours—you’ll end up doing your work for free. Alternatively, if you’re on a fixed fee and spending too much time on a single project, you’ll be losing money in the long run.
Weak boundaries are why businesses aren’t profitable – not the rate structure itself. Always make sure you let your clients know when they’re out of scope and offer them a way forward. This way you’ll always be compensated for your time and effort. AND you’ll help them be great clients who respect your boundaries.
#3. Creating new offerings with each project
It might seem that the more products or services you offer, the more money you’re going to make. But the truth is, if you narrow your service offerings, you will be more profitable.
In Mike Michalowicz’s book The Pumpkin Plan, Mike explains the concept of “pumpkin planning” your business. First, you look at the projects you’ve done. Note the amount coming from each customer, service, revenue stream, and how many customers you have for each category. This exercise will help you see which are your most profitable projects and who are your top clients.
Next, Mike encourages you to remove the least profitable activities as those are taking time, energy, and effort away from where you should be focusing.
I understand that turning money away can be the hardest and the most frightening thing to do. But we’ve seen time and time again that when business owners are specific about what they sell, their projects are consistently more profitable across the board.
Mistakes described here might seem like not a big deal, but you’ll be surprised how much these affect your business growth. In the next months, try to set aside some time to evaluate all your projects. Also, don’t forget to set and communicate your boundaries with clients.
Need guidance to make your interior design business more profitable? Contact us, we’re happy to help!
