There are a lot of perks to being self-employed, but a steady paycheck is not one of them.
Experienced interior designers have learned to prepare for ebbs and flows of their businesses. That often means saving during the busy times so that you’re ready for the lulls that always seem to come out of nowhere.
However, it’s better to avoid those valleys as much as you can with an effort to stabilize revenue as much as possible. A consistent income makes managing finances much easier and drastically reduces the chances that you’ll be stuck without the cash to pay the bills when you need it.
There are many ways to try to stabilize your interior design business’ revenue, but one of the most important is to establish multiple revenue streams for yourself.
It’s risky to depend on the income from just one type of project. If that revenue gets interrupted, you won’t have much to fall back on.
The best diversification options will organically build on your design specialty to boost your revenue without distracting from your core business.
Cash Flow Basics
Many novice designers often don’t realize the importance of creating a stable income for themselves. They’re much more excited about their projects and establishing their brand.
That’s understandable. Designing and branding is what drew you to this business in the first place. However, it’s important to remember that cash management keeps you in business. It allows you to keep designing on your terms.Cash management keeps you in business. It allows you to keep designing on your terms. Click To Tweet
Understanding your “cash flow” means making sure that you always have enough money to pay yourself and your essential bills when they come in.
If you’re new to the idea of managing your cash, here are some basics:
Understand the timing
Plenty of businesses fail not because of a lack of customers or revenue, but simply because they couldn’t make payroll or pay an essential bill right when it came due. You need a good understanding of when cash is expected to come in and get paid out so you don’t find yourself in this position. Here are a list of some tools that can help.
Focus on getting paid quickly
A big part of making sure you don’t get stuck without cash when you need it is ensuring that you get paid promptly. That’s before you start the project and before you place any product orders. You shouldn’t be financing the project. Ever. I generally recommend breaking design projects up into phases and having the client pay before you start each one. Spending your time running around tracking down invoices is a waste of energy and might end up with you in cash-flow trouble.
Try to stabilize your income
Having a more predictable source of income can take a big weight off your shoulders when it comes to managing cash flow.
There are plenty of tactics to use. For one, consistent marketing all year long helps to ward off any slumps. Identify a minimum monthly revenue target and base your expenses on that amount. You’ll need to understand exactly how many projects you’ll need to onboard or products you’ll need to procure to reach that minimum and preload your calendar appropriately.
However, a big part of stabilizing your income is generating multiple sources of revenue. That way, if one stream runs dry, you’ll be less likely to be stuck up that creek with no paddle. And if both streams keep flowing, all the better!
Examples of Additional Revenue Streams
As you try to choose which extra revenue streams will work the best for you, see if they fit these criteria:
- They don’t distract too much from your core design work; instead, they enhance or complement it.
- They don’t require that you exchange your time for money. Ideally, the revenue from your other additional stream will flow in on its own, perhaps as a byproduct of your primary work.
Keeping those factors in mind, here are a few of the revenue streams I recommend to all designers.
Many designers never choose to start a project without a consultation, but you can also opt to offer and market consultations as standalone services. This makes them a revenue stream in their own right.
Consultations are nice because they’re much simpler than a full-scale project and can provide quick injections of cash when you need it.
Consultations can also appeal to a slightly bigger group of people because they’re more affordable. They can also give you a chance to step out of your design comfort zone and try new things, since these projects often don’t end up in your portfolio.
Create Your Own Products or Sell Products
Creating your own line of decor products or selling a curated list of your favourite decor products is a great way to boost your revenue and enhance your brand. I work with some clients whose product sales bring in more than their design services.
However, this will only be a lucrative path for you if you’re already well-established: you’ve built up your portfolio and you have a strong social media presence with a following that includes other designers and fans.
If you already have that strong following, it’s probably time for you to cultivate relationships with directly with manufacturers who can create branded products that speak to your signature aesthetic.
If you think you’re ready to get started with your own products or a curated list of products you love, start small. A great place to start is with your own brand of candle. You can put your logo on the label and leave it as a parting gift for your clients. Other great ideas of starter lines of products are pillows or small accessories.
If you don’t have a strong portfolio yet, are still developing your brand voice, or don’t have an extensive network, focus on that first. You may also be able to create a smaller revenue stream by establishing partnerships with local retailers who compliment your design offering. A example of this would be a local floral shop or an artist whose work you admire.
Specialize in Seasonal Decor
One of my designers has had great success with decorating for the Holidays as an additional service offering. This is a separate revenue stream for her because it’s distinct from the rest of the projects she does throughout the year. There are different needs, budgets, and timelines along with a different group of clients.
Of course, winter holidays tend to present the biggest home decor opportunities, but other designers could create revenue streams by designing for other holidays or seasons, as well. Consider what’s popular in your market.
If seasonal design interests you at all, you should set a price and start offering it right now. Announce it to your email list and on your website. Maybe even start with a promotional rate so you can get a few projects in your portfolio.
A Note About Retainers
In some industries, the term “retainer” refers to a fee paid regularly (usually monthly) to “retain” some amount of that professional’s time or services. With this type of retainer agreement, you would essentially be a “designer on call” for these clients.
It might seem like a great way to stabilize your income and lock in long-term commitments from your clients. However, I don’t recommend it.
Experience shows that designers have much more success and freedom when they charge per project and not per hour. With retainer work, designers still must subtract their work from the “bucket” of hours that has been established for that client monthly. It can also be tricky from a time management perspective as you have to make sure you have all the hours available if, for example, they need them all at once when you have another deadline.
When I use the term “retainer” in the interior design business, I’m always using it to refer to the client’s first payment for a project that “retains” their spot on your calendar. This allows you to pre-load your calendar with a commitment. This retainer is not to be confused with a deposit for design services.