How to Start an Interior Design Business

Part 1 - How to start an Interior Design business - Background

Interior designers have a deep understanding of human psychology, especially as it relates to how people react with a specific interpretation of interior design and physical space. An interior design firm may work on many different types of environments that can be created inside a building. Examples are office spaces in a corporate skyscraper, luxury hotels, fine homes, museums, and even churches. Typically, designers will specialize in either commercial or residential interior design, though some firms do both.

Our guide is in 3 parts:

• Part 1 - How to start an Interior Design business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening an interior design business?

If you are going to be self-employed, this business can be started in a very modest way for a few thousand dollars by taking online home study courses to get your certification and then working from home until you build up a client base that can support the expenses of an office and additional staff.

If you are considering working for a major design firm before beginning your own business, you will most likely need to pay for a formal education to get a degree. There are two-year and four-year programs at major universities, colleges, trade schools, community colleges, and art/design schools. These programs range from $4,000 to 25,000 per year.

The range in startup costs, after you have a degree and are certified, is what it takes to pay for an office for the time needed to find your first clients. Allow six months for the initial marketing efforts to attract the first clients and $2,000 to $5,000 per month budget ($12,000 to $30,000 total) to give you enough time to succeed.

What are the ongoing expenses for an interior design business?

This is not a high-overhead business. You will need to pay for marketing expenses, the cost of an office, insurance, staff (if you have any), and transportation costs to go to visit clients. A small interior design business, operating from home, might have expenses of around $2,000 to $3,000 per month. The next step up would be having a commercial office space and that runs around $2,000 per month more. As you add staff you will need to allow for $5,000 to $12,000 per month in additional expenses so your total monthly budget could rise to be about $20,000 per month.

Who is the target market?

The best type of client is one that is easy to get along with, has good taste, enjoys the finer things in life, is open to suggestions, and has a project where “money is no object” with an almost unlimited budget. Of course, no one just starting out in this business will find clients like that.

The second best type of client is the “bread and butter” client. These clients have a reasonable budget to spend on the interior design work and ask the interior designer to work on a specific space. When they are pleased with the results, they give the same interior designer another project to work on. They also tell their friends how happy they are with the work and invite them over to see what was done.

Most of the successful interior design firms have plenty of this second type of client. By making these clients happy, the business grows in an almost organic, automatic way. One successful project leads to another and then another.

How does an interior design business make money?

Interior design firms can be paid in a variety of ways. The American Society of Interior Designers notes these are the most common ways to charge for interior design services:

• Charging a flat or fixed fee – After discussing the project with the client and agreeing on the detailed specifics of the project scope, the interior designer proposes a complete fee (expense reimbursement of actual out-of-pocket costs is additional) to take the project through all the stages from concept development, specifications, layout, and installation.

• Time-based fee – The interior designer proposes a compensation rate based on hours, weeks, or months of service.

• Project percentage fee – The interior designer earns a markup percentage of the cost of the total project including any items, artwork, furniture, or services purchased to complete the project for the client.

• Retainer with balance paid upon completion – An initial deposit is paid by the client, which is a portion of the interior designer’s fee that is agreed by signed written contract. The balance of this fee is paid upon successful completion of the project.

• Cost plus – Using this method, the interior designer buys things at wholesale for the project and then charges the client the retail price or a slightly discounted price from regular retail.

• Cost per square foot – The fee for the interior designer is calculated based on the total square footage involved in the project.

How much can you charge customers?

The self-employed interior designer can charge on average $100 per hour for their services. One interior design company recommends either charging hourly, per square foot, or with a flat fee.

The top interior designer firms in the world, are able to charge clients millions of dollars in fees. Partners in those firms make more than one million a year and regular staff designers make around $80,000 to $144,000 per year.

How much profit can an interior design business make?

The total profit depends on the number of interior designers working for the firm and whether there is enough work to keep them all busy. Each designer should generate enough billable hours at $75 per hour to bring in revenues of $80,000 to $144,000 per year. If the firm is a single designer, the expenses would be $24,000 to $60,000 per year, which creates a gross profit before taxes of $56,000 to $84,000 per year.

How can you make your business more profitable?

It is not uncommon for an interior design firm to double as an architectural firm, combining the two through dual expertise or through a partnership between an interior designer and an architect. Several of the world’s best interior design firms have an architectural component, which provides additional revenues.

Another source of additional income is designing products to sell (e.g. lamps, furniture, decorative items etc.) and then creating a popular and successful brand name for those products.

Day-to-Day and Growth

What happens during a typical day at an interior design business?

There are three main activities of an interior design firm owner. They are: 1) constantly learning about new elements of design and current trends, 2) seeking new clients to work for, and: 3) managing the ongoing projects and staff.

What are some skills and experiences that will help you build a successful interior design business?

Having a flair for creative efforts, the ability to work hard, and an eye for aesthetics are the critical elements needed to succeed in this work. Most interior designers have a degree in interior design, but some are architects, and some have a degree in fine arts and supplement their knowledge by taking interior design classes for the necessary certification requirements.

If people walk into your home and are amazed by how it looks and ask how they can get similar results created for them, you are on the right track and may have found your first client.

The American Society of Interior Designers has a website with information for students and information for those who want to become interior designers. They also have a job bank and recommend taking an internship with a design firm to learn more about this career path.

What is the growth potential for an interior design business?

Interior Design publishes an annual list of the 100 top designs firms in the world.

The list for 2016 shows these firms are the top ten with these earnings:

1. Gensler from San Francisco earned $527 million in design fees.

2. HOK from St. Louis earned $151 million in design fees.

3. Perkins + Will from Chicago earned $149 million in design fees.

4. Jacobs from Pasadena earned $145 million in design fees.

5. HBA/Hirsch Bedner Associates from Los Angeles earned $132 million in design fees.

6. IA Interior Architects from San Francisco earned $95 million in design fees.

7. Stantec from Edmonton earned $92 million in design fees.

8. CallisonRTKL from Dallas earned $83 million in design fees.

9. Nelson from Philadelphia earned $79 million in design fees.

10. HKS from Dallas earned $77 million in design fees.

What are some insider tips for jump starting an interior design business?

It is best to have some experience by either interning at or working with a design firm. Alternatively, you can offer to help a successful interior designer that works on their own. While learning, build up a portfolio of your work. Take high-quality digital photographs of the work, make big glossy prints for your physical portfolio (11” x 17” size), and put them in a very attractive leather portfolio binder. Carry this physical portfolio with you everywhere you go and as often as possible show your work to other people.

Use a “soft” sell approach, by not trying to sell anything at all. Just ask everyone, even someone you just met in a casual setting, to give you their opinion of your work. You will be surprised how this can lead to jobs. Also, put the photos on a website that shows the best of your work as well.

How and when to build a team

When there is so much design work that you have a client waiting list, it is time to consider adding staff to help you. However, it is imperative that you supervise your staff and exercise caution when hiring a new team members, as your business’ reputation will rely on the quality of your staff and quality of the work that they do.

Part 2 - Is an Interior Design business the right fit for you?

Part 3 - Action plan to launch your Interior Design business in 90 days