5 mistakes that are limiting your growth, and how to fix them

Boh business blueprint graphics 2024 03 20v1
Boh business blueprint graphics 2024 03 20v1

Business Blueprint | Mar 20, 2024

By Gail Doby

Business of Home is excited to welcome our newest columnist, Gail Doby. In Business Blueprint, the design business coach shares proven advice for achieving financial freedom for your firm. For her first installment, she unpacks the most common missteps that hold designers back from success.

Many deserving designers struggle to make a significant profit, the ultimate measure of their business’s financial success. Often, firm owners think they’re doing OK because they equate success with how busy they are. However, the health of the firm isn’t just about having enough work.

I’ll hear designers say, “We’ve got a $2 million business.” But how much of that $2 million are they keeping? In the latest Interior Design Business Survey—conducted in 2023 by Pearl Collective, Interior Talent and BOH—designers who had been in business for a decade or more reported that they had not experienced significant growth in recent years. One-third of the survey respondents reported revenue of less than $250,000 in 2022.

A scarcity mindset—the fear that more work will never come—holds many interior designers back from financial freedom. I see it happen all the time: Designers experience this roller-coaster effect in their business, with periods where they’re very busy, and then everything suddenly drops off. They don’t know where the next job is coming from, and they start panicking: “I won’t be able to pay my bills,” or “I’m going to have to let all of my employees go.”

Few design firm owners start with a business plan. Most start their business not knowing how to read a profit and loss statement or navigate balance sheets, cash flow projections and budgets. Maybe they followed their passion for creating beauty because their friends and family noticed their natural talent, or wanted to be their own boss so they could have flexibility in their schedule to raise their children—and all of that is OK! But a little bit of business education can deliver a better understanding of the foundational levers of growing a successful enterprise.

How is the health of your firm? Are you getting close to financial freedom? That’s what we’ll explore every other week in this column.

Let’s begin with taking a look at where designers are going wrong. After two decades of running my own firm and more than 15 years of helping other designers transform their businesses, I have discovered five common mistakes that get in the way of true interior design business success.

1. You’re saying yes to any project where someone is willing to sign on the dotted line. When you do this, you risk working with nonideal clients. Instead, identify the type of people you want to work with, create an ideal client profile, and stick to it.

2. You’re taking on very small projects. When one client came to us, she had mostly $5,000 projects—she was only netting about $275 per job. I advised her to triple her minimum, and today she’s less stressed and making much more money.

3. You’re not marketing consistently—especially when you’re busy. It may seem counterintuitive at first, but the marketing efforts you make when your firm is at its busiest are how you fill the future pipeline. Create a simple plan, and do the work daily—preferably first thing in the morning so it doesn’t get postponed until you “have time.”

4. You’re not hiring because you don’t think you can afford it. Many designers believe they don’t have the resources to hire help, so they wear too many hats, which limits their income. (The average revenue for firms run by solopreneurs in 2022 was $390,659.) If you’re worried about the overhead of bringing on employees—or you’re worried that you won’t have enough work to keep paying them—think again. Design employees should help you make three to five times what you’re paying them. By that logic, you can’t afford not to hire. Having help also means you can spend more time marketing.

5. You’re not hiring because you think you can do everything. Doing everything is a great recipe for burnout. It also limits your earning potential. Do the math: If you can bill $150 per hour for design, but you’re doing accounting work that you could pay someone $30 to $40 an hour to do, how much income are you missing out on every hour you spend running numbers?

None of these mistakes alone is going to tank your firm, but taken together they can significantly limit your growth. Likewise, shifting your mindset in these areas is not a total overhaul, but it can have a huge positive impact on your bottom line. Sometimes it’s hard to change your perspective—this is how you’re used to operating, and you think, “Well, the phone’s ringing, and these are the jobs I’m getting.” But if you want to increase your profitability, you need to start setting higher bars for yourself and move from thinking, “What have I been doing to get these jobs?” to “How do I get those jobs?” You have to be proactive with your marketing; you cannot wait for the phone to ring, because then you’re stuck reacting to whatever comes your way. With the client I mentioned above, whose minimum fee was originally $5,000, we set an initial goal of $15,000; today, the number is closer to $50,000.

That’s why understanding your business is so important: The decisions you make every day must be based on your financial results—and once you understand what it takes to move the needle in your business, you’re able to make better decisions. You can figure out what you need to do to reach your goals, break it down into pieces, and develop a plan to get there.

For insights and analysis on how designers across the country run their firms, download the 2023 Interior Design Business Survey report, presented by Pearl Collective, Interior Talent and Business of Home.

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Gail Doby is co-founder of Pearl Collective (formerly Gail Doby Coaching & Consulting), an interior design business consultancy that helps designers, architects and other creatives increase their profitability. Doby ran her own design firm in Denver for nearly 20 years and has a degree in finance and banking. Since 2008, she has been helping designers scale their businesses profitably and reach financial freedom. As a coach, mentor and business transformation specialist, she shares innovative ways to overcome the roadblocks, challenges and detours creative entrepreneurs face. She is also the bestselling author of Business Breakthrough: Your Creative Value Blueprint to Get Paid What You’re Worth. Her goal is to empower design industry clients to differentiate themselves, drive measurable results, achieve business projections, and create personal satisfaction through game-changing strategies and business practices.

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