ICON - The magazine of the American Society of Interior Designers - (Page 50) Optimizing Profitability: Getting the Most Out B Y J U L I E WA R R E N THERE’S NO QUESTION ABOUT IT—INTERIOR DESIGN IS A TOUGH BUSINESS IN WHICH TO MAKE A LIVING. MOST INTERIOR DESIGNERS DON’T GO INTO THIS PROFESSION TO GET RICH—THEY BECOME DESIGNERS BECAUSE OF THEIR PASSION FOR TRANSFORMING SPACES AND THEIR TALENT FOR CREATING LIVABLE, ATTRACTIVE SURROUNDINGS. AND THOUGH NOVICE DESIGNERS AND THOSE WHO ARE EMPLOYEES OF OTHERS CAN EXPECT TO MAKE ONLY MODEST INCOMES, ACCORDING TO EHOW.COM, DESIGNERS WHO OWN THEIR OWN FIRMS—A FIGURE ESTIMATED BY THE U.S. BUREAU OF LABOR STATISTICS TO BE THREE DESIGNERS IN 10—“CAN MAKE MORE THAN $100,000 ANNUALLY.” BUT ARE THOSE DESIGN FIRM OWNERS GETTING THE MOST DOLLARS OUT OF THEIR EFFORTS? A Complex Business David Shepherd, best-selling author and faculty member of one of the nation’s leading business schools, says he’s never seen a more complex business than interior design. Shepherd, whose company, Designing Profits, Inc., provides business and financial strategies to interior design professionals through annual seminars, says that designers typically graduate from college with almost no business management training. Yet, when they start their own firms, Shepherd claims, designers are usually conducting at least two very different types of businesses: First, as design consultants, they are operating a time/billing model of business, like a law firm, that is dependent on productivity and rates per hour. Second, most designers are also in the product/procurement/project management business—like a construction firm—in which they place and track orders for materials and products, monitor shipping dates, resell merchandise and manage installation crews. “With four or five concurrent projects,” says Shepherd, “details become very complicated.” Shepherd urges designers— whether they are sole practitioners or those who manage several associates— to be aware of how many business models they are actually incorporating into their companies and to carefully detail the expenses and revenue for each to determine those activities that are bringing in the largest portion of income and those that are costing the most to conduct. In his books and seminars, Shepherd refers often to “Pareto’s Law,” or the 80/20 rule, which espouses that 20 percent of a design firm’s activities will produce 80 percent of its revenue. This means that the opposite is also true: 80 percent of your clients or projects will produce only 20 percent of your revenue. So Shepherd suggests that once designers have determined those areas of 50 ASID ICON | THE MAGAZINE OF THE AMERICAN SOCIETY OF INTERIOR DESIGNERS GETTY IMAGES
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.