| Mar 4, 2013 |
Designers discuss how to make a business more profitable
Boh staff
By Staff

Last week at the Decoration and Design Building (DDB) in New York City, designers Amy Lau and Darren Henault sat down with attorney Alan Siegel to discuss the things every designer should know about making their business a success.

The discussion, held in the brand new Warp & Weft Showroom, drew a full house and focused on everything from how to keep a great client relationship to how to charge and what to put in a contract.

Siegel, Henault, Lau

Siegel opened the discussion by asking the audience to shout out what has made their relationships with clients disintegrate. “Impatience, unrealistic expectations, lack of communication, unclear terms of the job, finding similar sources online, design fees and competition,” were just some of what the audience expressed.

Lau and Henault both agreed that the key to any relationship is open and fluid communication, which was also a key theme at last month’s DDB panel.

“Every problem [that the audience said] is related to communication,” said Henault. “The best thing in the world that you can do is get an attorney who is familiar with the world of interior design and can draw up an amazing contract for you. Then, if there’s an issue he’s got your back.”

Lau shared her biggest problem with clients, which she described as “sticker shock.”

“This often happens when it’s the first time your client has ever worked with a designer,” she said. “They’re really not sure what to expect…we go through the scope of work and I think they have an idea of what to expect but they really don’t. So what I do is write down a list of every single thing that that person has to buy, an estimated value list. Then, I go through with the client and discuss what that price range is coming in at. And then right away there is the jaw-drop ‘are you serious?’ So, we can evaluate the items and see if we need to back off on some things, and the clients get the reality of it right away. Before I jump right into a project, that’s what I do.”

Henault does something very similar. He sits down with a client, puts everything on paper that he plans to buy. “If you agree on a budget, you don’t ever have to talk money again,” he said. Henault went on to say that when he goes shopping, he’ll put the actual amount he spends on each item on the sheet and if he comes in too high on something, he pulls back on something else, or if he’s coming in low on something he has room to splurge elsewhere. Having a set price range and not going over it is key.

Another piece of advice Henault shared is that he takes a large deposit from his clients. He will put it in an interest-bearing account that is beneficial to them, but then he knows he will not end up getting hurt in the end.

Regarding how they actually get paid, both Lau and Henault explained that they recently switched to charging an hourly rate, and they swear by it. Even before the job begins, they charge for the initial consultations and planning work.

Henault explained he uses an hourly rate because every client works at a different pace. Every second that gets spent on that particular client’s project gets documented, and presented to them once a month, and that way there is no question on the work that was done or what the payment should be.

A big issue in the design industry now is the use of the Internet and clients going online to source their own products for a design project. Lau explained that she allows clients to do that if they so choose, but she still gets her fee on that piece because she is designing that into the room, and it’s written specifically in her contract that she can do that.

“The moment you go out and buy something and ask me about it, you’ve consulted me and now I’m charging my fee,” said Henault. “At the end of the day I’m designing the house and that’s what you’re paying me for.”

Two things never to do? Lau and Henault agreed never, ever put in writing a date when the project will be finished or a hard number for the final cost of the project.

“I have two houses in the Hamptons right now that I’m working on,” said Lau. “Yes, I know in my head they have to be ready early June for the summer but I would never put that in my contract or in writing, because things happen.” Instead, Henault and Lau use ranges for a completion date and a budget.

A way to keep the job moving, according to Henault, is to sometimes remove a particular client from the situation. He shared a story about a husband and wife, in which the husband was constantly busy and was dragging the project out. He made an agreement that he would consult the wife throughout the project and on one day of the month put together a summary of the work for the husband to review, and he would have to get back to him on that same day.

The panel wrapped before answering all questions, but Siegel mentioned there would be more to come in the future. Billing, contracts and fees are hot topics in the design industry and there is much more to learn.

The DDB invites you to email with any topics you’d like to hear addressed in a future panel.

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