Most interior designers got into the field for the creative aspects and the reward of being able to create a beautiful and functional space. Odds are, you weren’t attracted by the prospects of balancing your budget, processing invoices, and trying to figure out what counts as a business expense. And yet, financials are an everyday part of running a business. And as a solopreneur or small firm, these tasks will often fall to you. This means you have less time to pursue design and finding new clients. This only gets harder in lean times, when financial stress is at its highest. In this article, we’ll cover a few ways to manage this stress. Then we’ll offer some next steps for saving your sanity.
Evaluate Your Areas of Improvement
You may know some things about finance, but you might have some areas of improvement as well. Start by identifying where you can improve. Here are a few areas that we have noticed are common knowledge gaps or negative mindsets for designers that we work with:
- Money discomfort: Many designers are uncomfortable with money in general. This makes it difficult and intimidating to handle financial statements. But it also means many designers would work for free if they could, just for the love of design. Negotiation rates, collecting payments from clients, and following up on late payments can all be uncomfortable situations for designers.
- Fear of money issues: Beyond just being uncomfortable with money, there is a fear of the numbers and what they mean. It all seems intimidating, so you don’t bother to dive deep into the numbers. But then you worry about going out of business or not being able to support your family, all because you didn’t see the warning signs in your financial documents. You don’t know what you should be keeping track of, and you’re scared to find out.
- Not having a bookkeeper: A huge chunk of your financial problems can be solved by simply hiring a bookkeeper. They don’t have to be full-time, they just have to be able to help take some of the stress away. You can have them handle everything, or you can have them around as a consultant to review your statements once a month. They can help with a cash flow analysis, which is one of the most important ways of seeing how stable your income pipeline is.
- Not tracking your time: Time-tracking is important (learn more about why time tracking is important with this article here) and without it you might not know you’re losing money with every job! Many designers use fixed fees, but this can result in undercharging. Knowing how many billable (and non-billable) hours are spent on a project can completely recontextualize how much money you’re making. Using software to track time can be a life-saver.
How to Take the First Steps
So you’ve identified your areas of improvement, but now what? If you feel paralyzed by money, how can you begin? Well, there are a few ways you can master your financial literacy and become comfortable with your finances.
- Attend a Pearl Collective Financial MasterClass: We host our Financial MasterClass multiple times per year, and it’s helped hundreds of designers to understand their basic financial statements and gain the confidence needed to work with their numbers. We have one coming up in July, so learn more about that here!
- Hire a bookkeeper: A bookkeeper can help take away the daily stress of finances, as well as give you benchmarks. But, it’s still important to understand your finances with or without them. Also be sure to hire someone who understands the interior design industry! Our industry is very specific and complex, and requires special knowledge.
- Use integrated software and tools that include billing and accounting features. One such tool is Studio Designer, and we have an upcoming webinar with Studio Designer called Is The Money in the Bank Really Yours? How to Stay Afloat in Lean Times. You won’t want to miss this July 19th webinar to learn more about these financial mistakes and how you can overcome them and stay sane! Make sure to register now!’