Though economists have not officially declared the United States in a recession, many designers say it’s starting to feel like one. Amid stubbornly high inflation, a stalled housing market and recent waves of mass layoffs at major U.S. companies, interior designer and creative coach Michelle Lynne of Designed for the Creative Mind says that she’s seeing at the very least what some call a “trust recession,” with homeowners starting to feel cagey about the big-ticket cost of full-service interior design.
When the economy is shaky, clients are understandably nervous about what might be coming, and the impulse to rein in luxury spending is to be expected. For designers, that means a flood of new business inquiries may turn into a trickle. With that in mind, BOH spoke to interior design business coaches to gather their best tips on how to prepare for (and survive) an economic slowdown.
Know Your Numbers
When your project pipeline slows, it can actually be a great opportunity to focus on your business, says designer and business coach Sandra Funk of House of Funk. “I know it’s hard to be in the mindset of ‘focus on something else’ [when] you don’t have another job coming in,” she says. But that downtime can have an upside: “Take that time when you’re not so slammed with client work to work on the business instead of working in the business.” Study your firm’s books and evaluate your overhead costs, billing systems and pricing model. Knowing exactly how much you need to bring in to operate your business on a monthly basis is critical even at the best of times—but can be make-or-break information to have during a recession.
A big piece of understanding your operating costs can be boiled down to effective time tracking across your team. A clear understanding of how much time each employee is spending on tasks allows you to ensure you’re charging enough to make a profit, not simply cover costs. Lynne recommends tracking your time in 15-minute increments to account for every billable minute. “That should include portal-to-portal travel for things like site visits or meetings,” she says. “It includes administrative things like communication. If you’re emailing a client and it’s taking you 14 minutes to tailor your well-crafted email, then you’re billing for it. There are no freebies, no giveaways. Don’t think an attorney is saying, ‘Oh, it’s just an email—I won’t charge them for that time.’ They’re billing you.”
Reflecting on whether your billing model works for you and your client can also be a savvy move when money is tight. Design business coach Brooke Stoll has found that a flat fee can be a more palatable option than hourly billing for a client during economic downturns. “Finding a way to package a flat fee in a way that makes sense for your business is going to make people a lot more willing to commit to working with you, because they understand the financial burden that they’re signing up for [upfront],” she says. But knowing what your firm needs to bring in from a flat fee to turn a profit is essential—a lull in new business can free you up to crunch the numbers so that you can go to market with the right offering.
Weathering an economic storm successfully can ultimately come down to how well you’ve prepared ahead of time. While it might not be possible in the middle of a recession, setting aside money in a “rainy day” fund can relieve some of the immediate pressure. Most coaches recommend having a minimum reserve of three months of operating costs socked away to help weather slower periods; Funk says 18 months’ worth of funds is ideal in case things get really slow. Michele Williams of Scarlet Thread Consulting agrees: “That enables you to draw from your own account and not take out a line of credit. At the end of the day, it’s about knowing how much money you need to stay in business.”
A Good Hard Look
In addition to reviewing your overhead costs and billing model, doing a deeper audit of your company’s spending can pay off in lean times. Lynne recommends taking a look at all of your firm’s software subscriptions and whittling them down to the ones you absolutely must have to operate. “Do you really need a professional tier of Canva? Do you need video editing apps to make Instagram Reels, or could you do that with a free option?” she says. “Take a look at your project management software and make sure you’re only paying for the number of accounts you need for the team you have at that moment.”
Slow periods are also a great time to reduce procedural inefficiencies and implement new systems that automate tasks. Using a scheduling software like Calendly can cut down on back-and-forth communications about meetings, and investing in an accounting platform that automatically sends invoices can reduce time spent on rote administrative tasks and help maximize productive work hours across your team.
You should also take account of the vendors you spend the most money with on a yearly basis and try to negotiate a deeper trade discount with them. “Vendors want to reward you for your business,” says Stoll. “The end of the year is a great time for this—you can say something like, ‘We’re running our year-end totals, and it looks like we spent around $125,000 with you this year. We would love to continue to strategically partner with you and use you as one of our core vendors. Is there any way we can negotiate a deeper discount, or access a higher trade tier?’” While not all vendors are willing and able to lower their trade rates, many are. Accessing deeper discounts, especially during a dry spell, can allow designers to maximize their profit margins on product.
At Your Service
When business is booming, designers often filter inbound leads by setting strict parameters around the type of work they’ll take on, whether that’s a minimum budget requirement, a square footage benchmark, or a specific scope of work. When the inquiries are less abundant, that approach may not make sense. Still, it doesn’t have to mean backsliding—and it definitely doesn’t mean you need to lower your rates. Instead, think about attracting that same ideal client with a new offering.
“If a designer is struggling to bring in their ideal client right now, I’d suggest that they look at: What would that client need right now? [Maybe] that’s not the typical full service, but what would they still want? What would be attractive to them?” says business coach Desi Creswell. “Maybe you can modify a piece of your process to fit their needs and meet them where they are.” During a recent lull, one of Creswell’s clients created a design-only package, where the designer came up with a concept and floor plan, then let the homeowner do project management and procurement themselves. “Now things have picked back up, so they’re back to full service, but they were able to continue to bring cash into the business by just modifying their services a little bit until they didn’t need to anymore.”
Altering your services doesn’t have to be about accepting any job that comes your way. It may even mean reactivating past clients with an email blast offering options like a room refresh, a paint consultation, an e-design package, or even holiday decorating. “Think about ways you can still bring value to your clients,” says business coach Monique Nicole. “Taking on something like holiday decorating and turning a client’s living room into a holiday oasis is not going to be a big-ticket moneymaker for you, but to your client, you’re bringing value.”
These types of additional revenue streams that still feel in your wheelhouse can help bring in extra money without having to do something drastic like lower your full-service rates. Even better, most are easy to jettison once business picks back up.
Put Yourself Out There
It might seem obvious, but investing in marketing when your pipeline is dwindling is a great use of company resources. Efforts around getting more press, ramping up your social media presence, or employing an email marketing platform to get your firm’s name out there can’t hurt. While increasing your marketing budget might seem risky, Lynne emphasizes that there are wallet-friendly ways to do so. “Instagram is free. Email marketing has a very low entry point, and some platforms even have free tiers depending on how many people you’re sending to,” she says. However, she adds that not all marketing efforts are created equal, and encourages designers to refine their strategy to go after their target clients, not just anyone. “If you’re talking to everyone, you’re talking to no one,” she explains. “Make yourself visible to your ideal client and position yourself as an expert that can lead them on this journey.”
Ramping up your customer service experience can also foster client loyalty. Funk suggests “layering in moments of delight” throughout a project—thoughtful touches like sending a client flowers on their birthday or giving them a restaurant gift card when their kitchen is being renovated have been part of her firm’s process for years. “Bake it into your pricing and make your clients feel spoiled rotten,” she says. Birthday cards, holiday gifts or invitations to events around town can also be extended to past clients as a way to keep in touch and keep your services top of mind.
Finding occasion to be more present in your community can help too, from volunteering at your kid’s school and mingling with other parents to reaching out to local architects and builders to establish a rapport: When people know who you are and what you do, they can think of you when an opportunity arises. “Casting a wide net is crucial so that people who can still afford full-service design know you and have you in mind,” says Creswell. “And don’t forget that even in troubled times, there are always going to be people who can pay for your services.”
