Few of us like to think about what could go wrong. Contingency planning isn’t sexy. It’s your Plan B just in case things don’t go as expected—which seems to happen every three to seven years. And when we don’t plan for this, it can bite us hard.
Last year offered a prime example: The Fed raised interest rates four times (after raising them seven times in 2022); interest rates hit a 23-year high; there were 9 percent fewer home starts; and the 30-year mortgage rate doubled. These economic factors resulted in fewer new construction projects, more remodels with smaller budgets, and many stopped or stalled jobs.
The slump came on the heels of a time when business was abundant. Throughout 2020 and 2021, when interest rates hit record lows, many designers were so busy there was little time to focus on marketing their business and sourcing new project leads. They had all but forgotten the lessons learned in the 2008 recession when the phones quit ringing.
When you don’t market consistently, your pipeline eventually empties—not immediately, but at some point in the near future. That’s why it’s vital to market when you’re the busiest, to build a stream of steady inquiries, no matter the economic climate.
WHY CONSTANT MARKETING MATTERS
It’s easy to quit marketing when you’re busy. But for however long you pause promoting your business, you should expect an equivalent period down the road that will be fallow. If you have big cycles and ebbs and flows in your business, it’s because you haven’t established a consistent marketing pattern to ensure you’re constantly filling that pipeline.
Relying on referrals alone isn’t always going to work, either. Especially at the very high end, there’s a cliff from lots of referrals to none, and you’ll reach an echelon of clients where many of them won’t refer you. They are private and don’t want to share who’s doing their work. There will be projects you can never photograph—and if you can’t photograph it, you can assume those clients also won’t tell their friends who their designer is. That’s why a project pipeline must be the business owner’s top priority, even when it seems it should be last on the to-do list.
HOW TO REFRAME YOUR THINKING
It’s not fun to think about something going wrong, especially when you’re busy and the cash is freely flowing. Thankfully, we’re starting to see glimmers of hope despite 2024 being a stress-inducing election year, with many of our clients getting amazing new projects.
This time, when business rebounds, remember these six tips to avoid stress and survive most business challenges with ease:
- Market the most when you’re the busiest. Don’t wait for the phone to stop ringing!
- Don’t simply rely on referrals. Actively look for new business leads.
- Stay lean. Save cash for major investments like a new website, and only invest when you have cash reserves in addition to the required cash outlay.
- Put 10 percent of every check into a savings account in order to build a cash reserve for three to six months of operating expenses.
- Once you have a safety net, keep saving that 10 percent—this time, to reinvest in the business. Maybe you’re buying equipment, maybe you’re hiring people, maybe you’re saving for office space—you are building the cash reserves for that.
- Hire billable team members before hiring nonbillable ones.
For insights and analysis on how designers across the country run their firms, download the 2023 Interior Design Business Survey report, presented by Pearl Collective, Interior Talent and Business of Home.
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Gail Doby is co-founder of Pearl Collective (formerly Gail Doby Coaching & Consulting), an interior design business consultancy that helps designers, architects and other creatives increase their profitability. Doby ran her own design firm in Denver for nearly 20 years and has a degree in finance and banking. Since 2008, she has been helping designers scale their businesses profitably and reach financial freedom. As a coach, mentor and business transformation specialist, she shares innovative ways to overcome the roadblocks, challenges and detours creative entrepreneurs face. She is also the bestselling author of Business Breakthrough: Your Creative Value Blueprint to Get Paid What You’re Worth. Her goal is to empower design industry clients to differentiate themselves, drive measurable results, achieve business projections, and create personal satisfaction through game-changing strategies and business practices.
