Thursday, April 18, 2013

The Real Design Challenge: Running Your Own Small Business

Some of the most important things you'll need to know about running your own company will have little or nothing to do with design.
If you have gone to school to learn any of the many design fields, there's an elusive and ambiguous element that's about 95 percent of the job: knowing how to run a small business.
When I began in the field, I met with not only seasoned designers but all types of small business owners in order to hopefully glean some of the how-tos of the business side. What I found is that everyone approaches it differently. This conversation is a much bigger one than I can address in full here, but it's a conversation that every designer must have in their career in order to be a successful in business.

There doesn't seem to be one set way of doing things, but here are some of the more important points I've encountered, and how I approach them in my own business. Tweak as you wish!

Managing a Client's Expectations
This is where it all starts and what dictates a large part of your relationship with the client. It begins when you meet the client and should continue throughout the project. This includes educating your client on how the design process works, how your design fees fit in and that some things (the good things) may take longer than they expect. In this day and age a lot of clients believe that a room can be done, "In 48 hours for $1,000.00." This might be true for some people, but it's your job to be realistic with them up front about what they can expect for their allotted budget.

The idea of a creating a contract can seem daunting to some of us, but this is imperative to the process. You must have something in writing that says you and the client 'agree' to the job in detail. For example, this can include how many times you're willing to make changes in the design before your contracted time is up. I require a 10 hour retainer with up to three, major design changes. If the client and I cannot reach a decision by that time, it allows both of us to decide if we are a good fit or if we need to discuss what the client's specific needs and desires are before going back into a new contract. This way, nobody's time is wasted, and you've been compensated for your time and efforts.
If you do enough research, you can write up your own contract, find contracts online, in interior design business books or you can enlist the help of a lawyer. They can be very legal in language, or written in a lay person’s terms. Either way, just make sure you've covered yourself for any scenario and have created an expectation for the client. Include an “out clause” for both yourself and the client in case things go haywire. 

Timelines and Communication
Your client will be a lot happier with your work if you keep them in the loop and give them regular status reports about the progress of the project. With all of the sub-contracting we do, our jobs can be moving targets at times. There's not a lot you can do when your millwork person doesn't look like he'll meet his deadline, for instance. But, if you let your client know that the time may be pushed a little, rather than not explaining to them what's going on, at least their expectations are being managed. They may not love it, but they know what's happening - and they know you're their advocate.

Time Is Money
There are a lot of ways designers figure out how to get paid. Some designers charge for their time and mark up the product. Others charge one flat fee and the client isn’t privy to how it’s broken down. And still others charge by the hour on top of an upcharge on wholesale items. Your time for creating a concept, shopping, researching, driving, managing contracted work, and purchasing management should be compensated.

In my business, at that first meeting, I let the client know what I charge per hour and then let them know what sort of time the job will require. I give them the option of either hourly time billing or a value based design fee. This should be considered, by the client, into their entire budget- on top of furniture, fabric, labor etc. I also explain the design process and what pitfalls to expect along the way. There’s no magic or easy shortcut to avoiding weather related or material issue delays. 

I find it’s always best to educate and prepare your clients to make everyone’s life run smoother during the design and renovation process. Make sure they understand the “reality” of the scope of work required on their project. Lastly, make sure you ask a series of questions to find out exactly what their expectations are for the outcome. This will to minimize those unforeseen, stomach churning moments half way through the project.

I would also highly recommend getting an app on your phone that allows you to clock in and clock out. I’m always amazed at how much time, the smallest things take. If anything, this will give you an idea of how much time you are spending on each job, something I think that we designers don’t credit ourselves for.

What things have you learned about managing your business?