Have you ever ended your year wondering why you didn’t achieve your financial goals? We conducted fee and salary surveys for interior designers, and we found that owners of design firms worked an average of 60 hours per week. If you bill at $150 per hour, and you bill 50% of your time (typical for most firm owners) for 3,000 hours per year, then your target billing amount is $225,000. Look at your Income Statement and calculate your own target billing amount after reading this article.
Now that you have a baseline for what you should be bringing into your firm, let’s review the top 10 ways you’re sabotaging your income:
- NOT TRACKING YOUR TIME. When clients come to me for VIP Days, I ask them to submit their billable rates per employee and number of hours worked. Occasionally, I have clients come to me that offer a mixture of fixed fees and time billing. When a client uses fixed fees, they should be tracking their project time as non-billable. If you don’t track your time, then it is very likely that you are undercharging for your flat fee projects. Time tracking also allows you to create benchmarks for your business. If you know how many hours a typical project takes per task like (CAD or shopping), then you can more profitably price your contracts.
- STARTING TOO MANY PROJECTS AT THE SAME TIME. The more projects you start at one time, the longer all projects will take to complete. Because the majority of your work is done in the first 30 – 60 days of the project, you should consider limiting each lead designer to two new projects per month especially if they are large projects. It is best to stagger your starting times for your projects.
- TAKING THE WRONG CLIENTS. Ultimately, difficult clients cost you money because they demand your time, they create stress that prevents you from focusing on your good clients, they nitpick your bills, slow pay, don’t pay and/or they are abusive. It is not worth it to take difficult clients. Period. If you don’t have a written Ideal Client Profile, start there. Your profile should include characteristics that you don’t want as well as what you do want.
- SECOND GUESSING YOUR DECISIONS. The more decisive you are, the faster your projects will be completed. Your clients will be happier, and you’ll make more money.
- NOT TAKING TIME OFF. If we don’t take breaks, then our ability to make good decisions is severely impacted. We need downtime to think effectively. Decision fatigue is rarely discussed, but it is a big issue for all of us. We make more decisions by noon than our ancestors did in a month. Take time to recharge and you will come up with better ideas. Better ideas lead to more clients and more clients lead to more income.
- NOT HOLDING YOUR TEAM ACCOUNTABLE. If your nature is to be too nice to your employees because you want to be liked, then you may be sabotaging your leadership credibility. Holding employees accountable is like parenting, you need to hold your team accountable for their work. Are they tracking their time? Are they delivering an excellent client experience? Are they team players? It is your job to manage your team to meet and exceed expectations.
- YOU WORK ALONE. If you work alone, you have a ceiling for how much revenue you can generate. You are probably doing several tasks you are not good at doing, don’t enjoy, don’t have training to do, and may not produce revenue for your business. If you bill at $150 per hour, you need to stop doing tasks that do not generate revenue or new clients at least 50% of your working hours. If you tend to procrastinate with certain tasks, you shouldn’t be doing that task. If you bill one hour, and you can hire someone at $15 per hour to do a task that is not financially productive, then you’ve just regained 10 hours of time. Outsourcing is a great solution if you don’t want to have employees. Bookkeeping is the first task that should be delegated.
- NOT MARKETING ENOUGH. Marketing should be top of mind next to client work. Ten hours per week is the recommended amount of time someone in your firm should be spending on generating new leads. Your job is to fill the pipeline. If you don’t market consistently, your cash flow will be inconsistent.
- NOT TIME CHUNKING. Time chunking is one of the best ways to ensure you are truly productive. Group similar tasks. An example would be creating proposals. It’s best to do this in chunks of time because it takes left brained skills to ensure accuracy. If you are selecting fabrics (right brained) and then switch to clerical activities (left brained), you lose valuable time because it takes time to activate the opposing hemisphere of your brain. Scheduling your work by time chunking will also help you be more productive. I recommend blocking Tuesday through Thursday for client billable work.
- MULTI-TASKING. Multi-tasking is hands down one of the worst methods for managing your time. Interruptions are also a problem. It can take 20 minutes to get back in the flow of the work you were doing before the interruption. If you are interrupted, or you check email and your text messages 10 times per day X 20 minutes, you just wasted three hours. Would you rather work longer or shorter days?
Pick a mistake category that will make the biggest impact on your bottom line and tie and implement changes immediately. If you implement changes for all of the 10 mistakes by the end of the year, you will dramatically increase your income and reduce your work time.
Gail is one of Designers Today's most prominent contributors - focusing specifically on the business side of interior design.