Lloyd Princeton offers more business tips as a follow-up to his Field Notes piece in the May issue themed on the Business of Design, available here.
Buy, Sell or Expand: What’s Your Firm’s Long-Term Plan?
Having an annual business plan with a detailed budget and revenue targets is essential to your firm’s success. You can’t fulfill your goals until you can say specifically what they are. It’s also important from time to time to look farther down the road. What are your goals for the next three years? The next five? You can’t get as detailed as you can with an annual plan, but you can define for yourself what success looks like in the future and plot a course for how you will get there.
A new report confirms what I have perceived for some time now: The industry is in flux, and many firms are considering mergers in order to keep up with changing conditions. The survey, conducted by the research consulting firm Zweig Group, found that more than three-fourths of architecture and interior design firms are planning to merge or sell their businesses within the next five years. Jamie Claire Kiser, the company’s director of merger and acquisitions services, said, “The industry’s structure continues to transform to a more integrated business model. The top performers will be those that embrace change and are able to respond quickly, nimbly, and decisively to the evolution of the industry.”
How will you deal with the changes in the industry? Do your plans include expanding to stay competitive? Will yours be one of the firms that merge, or are you expecting to sell your firm within the next five years? Depending on your long-term goal, you will need to start now to prepare your firm for one or other eventuality. Your first step should be to have your firm evaluated to determine its worth. You don’t want to be surprised later. The future will be here before you know it.
Getting Over the Fee Hurdle
Pricing is the bane of the interior design industry. Take a look at any number of design websites and blogs, whether for consumers or professionals, and you’ll see what I mean. Everyone is looking for or handing out advice about pricing. Clients worry about how much they should pay or will be charged for interior design services, and designers fret over how much they should charge or how much clients are willing to pay. It’s a stumbling block that seems hard to avoid.
As the professional in the conversation, you have to take the lead. Decide what your fees will be and present them in a clear, businesslike manner. To do so, you need to take some time to reflect on some fundamental questions about your business. What types of clients are you seeking? In their eyes, what is the cost/benefit of your services, and what is their ability to pay? What types of projects are you interested in or are willing to accept? How much do you need to earn to make a project worthwhile and profitable?
Having the answers to these questions will give you the confidence to charge what the project requires and what your time, talent, and expertise are worth. Some negotiating may be inevitable, but you don’t want to put yourself in the position of bargaining with the client. If the client does not value you as a professional, they are not a good client for you.
If you are not sure how to answer these fundamental questions, contact me, and let’s talk about how to set the right pricing for your interior design business.
