The 50 States Project is a yearlong series of candid conversations with interior designers across the country about how they’ve built their businesses. This week, Sioux Falls, South Dakota–based Megan Peterson of Design House tells us about choosing residential over commercial work in spite of skeptics, why digital marketing and professional photography aren’t her top priorities, and how she caters her design aesthetic to every client.
Did you always know you wanted to be a designer?
Yeah, it’s the only thing I’ve ever wanted to do. I went to college for it at [the University of Nebraska–Lincoln], and that was it. There was no plan B—and there still isn’t. I don’t know what I would do.
What did you understand about the career of interior designer when you were young?
I don’t know if I understood it at all. It was just something in me, and I just had to figure it out. Like everyone else, I liked to rearrange my room and make things better and more functional—and see what I could get away with, pushing the envelope with my parents—and found joy in that and decided it’s what I have to do.
What did school prepare you to do as a designer?
The Nebraska program is a lot like others where they’re accredited for more commercial design. There were 30 in our class, and I was the one who wanted to do residential. So I was kind of the oddball. ... During college, I was nannying for a family, and they had an interior designer. So I became her intern and then her assistant at a residential studio, much like what I own today, for almost three years. I got a firsthand experience of the business side, the clients, the employees, the full thing.
What was the firm experience like there?
I believe there were five designers at the time. With my classwork, it was like, Just get through it, because I know what I’m actually going to do when I graduate. And my professors were, I think, kind of telling me: “No, there’s no money in residential interior design. That is not what you graduate here and go to school for.” But now I probably make double or triple what commercial designers are making that I went to college with. And they were kind of shaming me at first, thinking I was going to be a decorator and buy stuff at Hobby Lobby. I have now had designers reach out to me from all over the country that I graduated with, asking the source product and using my resources, and I’ve kind of helped them. So that’s kind of cool to see that all come full circle.
After graduation, where did you go next?
I was married my freshman year of college, and we were expecting a baby by senior year—by design. I don’t know how or why, but that’s what we did. And so we moved back home to Sioux Falls and built a house. I was a general contractor on our first home, so that was my first big project. And then, kind of while on maternity leave, I started my own business. I was doing consultations for paint colors and helping people build custom homes. So I was an interior design consultant at the time, while raising a little baby, and [the business] took off like crazy.
Was there a moment when you realized, “Oh, my gosh, this is working better than I ever imagined it would”?
I don’t know if there was a moment, but there was definitely a gut feeling of, “I’m on the right path, and this is working. This could actually be a career that I’m proud of and is everything I wanted it to be.” For that first year, right out of college, I had my own low-level consultation service. And then the designer that I worked for in Lincoln, while going to school, we ended up opening a store here. We opened a second location of her design studio, and I ran that for two years.
And then had your design business in parallel?
Kind of, because I had my clients here, but then we had her product, sourcing, background and business knowledge, and the resources from Lincoln that we could rely on for accounting and order tracking, and [we went to High Point Market] as a buying group together.
It worked really well, but then I had another baby, my son, so I had two under 2. I was trying to run a business for somebody else that also doubled as a retail store, and I just got burnt out. So by the time our two-year lease was up, I had to listen to my gut and call it quits. So then they closed. When I left, they decided to leave town because they didn’t have any connection to Sioux Falls other than me. Probably three months later, my kids were back in day care full-time, and I was back to consulting and had more projects than I had ever had. So I did that for six years as an independent out of my house.
What changed that inspired you to grow the business?
The clients and projects kept getting bigger and bigger. I started to realize that retail stores in town didn’t really care about independent designers. They only cared about their furniture and salespeople. When I ran that store for that other designer, we really cared about independents. We realized that was actually an avenue that could help support us, rather than compete with us. We can help support them because they don’t have the resources and they can’t get them. After six years, I was like, “You know what? I need to do this. No one else is stepping up and doing this. I’m going to bite the bullet.” And did it in May 2017, when we took out a lease on the building.
And you were still working by yourself at this point.
Yes, I’d been on my own since 2011. Design House will be five years old in May. I’m still kind of shocked when I pull into the parking lot every day [and think], “Oh, we can afford to keep the lights on and I still have the staff. And we’re all growing and learning together, and the group made this work.” When it was just me, it wasn’t as much of a shock, because it was all me. Now, with the whole team—a team I’ve built—to see us all doing it together is really neat.
Who was your first hire?
It was Sarah [Knutson], who is a designer under me. Right now, it’s just Sarah and me designing. She went to school at [South Dakota State University]. But I had met her in Minneapolis, where she was working at a showroom in [International Market Square]. She had a boyfriend that lived in Sioux Falls, so after talking to her a little bit, she was very interested in possibly moving and taking over. She was fresh out of college, so she was ready to get her own design business going, to get her own clients and projects rather than just working in a showroom. So I totally just took a leap of faith on her, and she’s been with me since day one.
How do you divide up the design work?
When we began, Sarah was the designer contact, but she didn’t have a big portfolio, other than her college work. So she took over all the [purchase orders from] designers in town—independents were her sales. And then, under my wing, we did some projects together. And then she got a little bathroom remodel and someone needed a living room, so she got her toes wet. I think after a year or two, she’s been mostly doing projects on her own—she’s got her own clients, and I’ve got mine, and then we do a couple together. We do a little bit of light commercial, so sometimes we’ll team up on those projects. She also still handles all of the independent designers that purchase with us, so she gets to see the ugly side of the business with independent designers and the mistakes they’ve made. And she’s learned a lot from them, and from me. She has grown immensely because of that.
Learning from the mistakes people make ordering from you?
Oh, yeah. Measuring and specifying wrong.
What does your showroom footprint look like?
We have about 8,000 square feet of showroom retail space, and we carry lines like Taylor King, Vanguard, MT and Jessica Charles. There’s a lot more that we can source, too. We just don’t put those lines on our floor, because a lot of other competitors have them. We’ve got the samples, we’ve got the catalog, so we can still get them—just not stock it.
You also have a support team. Can you tell me how you built up the team around the two of you?
I believe Tiffany [Hartman] joined the team shortly after Sarah. Tiffany does all of our ordering and accounting, because we do not do well with numbers.
You’d been doing it by yourself for a long time at that point, though.
Yeah. But I would get six months behind on billing because it’s not the part of my job that I’m good at. I just want to be with clients. I don’t want to be behind the computer looking at [the] accounting and applying payments. No. So we hired Tiffany, and then we hired Kelsey [Sullivan]—she did our marketing, and she’s our design assistant to this day. Everyone’s roles have evolved as we’ve grown. And then we have a showroom manager, so Sarah and I can be out, go to Market, both be on job sites and it doesn’t matter. The showroom is taken care of.
How do you decide what you say yes to?
I don’t say no. I mean, it got to a point where I would hand projects off to Sarah if it was a little bit smaller than I wanted to take on. We’re starting to figure out, “OK, maybe this is not a great project.” But we’re full-service, so we do remodels or we can sell you just the lamp off the floor. We can do a full new construction that takes three years on a $5 million house. Our projects run the gamut.
I think having a showroom also [helps filter clients]. Some people will walk through our showroom and see a $4,000 sofa and realize we are not for them. So that weeds them out kind of from the get-go. They might buy a pillow or lamp, and we try to keep these accessories so everyone feels like they can [access the store]. But I think if you walk in and we’re out of your ballpark, you’re probably not going to call us to do your home.
How do people find you?
It’s all been word-of-mouth. We quit doing our Instagram kind of when the pandemic hit.
Just quit, cold turkey?
Yeah, cold turkey. In South Dakota, we all kept working, harder than ever. We were seeing more clients; everyone was calling us—we had doubled 2019 sales by July of 2020. We’re pulling all resources to help clients. If I could push a button and shut down the website and our Instagram, and you only have our showroom phone numbers and can only get in by a secret knock, that’s how I’d like it.
So many people feel that external pressure to kind of perform their business.
I think the whole social media thing is getting us so far from reality. Personally, I get inspired by great photography. But a lot of it’s not real life. I’ve seen counter stools that toddlers have to sit in. I’m like, No stay-at-home mom is going to think that’s realistic. We’re designing homes for living. That’s also why we don’t photograph most of our stuff. It’s like, “This is for you. If you’re happy, that’s all I need. If you’re happy and pass my name on, we’re good.”
Have you photographed for social or for your website?
We’ve had a couple of lake homes. I’ve got a house I did out in Scottsdale. If we did the entire project, we’ll sometimes photograph it. Sometimes it’s awkward if it’s like a parade home, a spec home and the builder did the house, or the builder’s wife or team, and not us. If we just furnished it, I feel like that’s not us. And that’s what social media doesn’t get through, is that it took 35 people to make that look happen. It wasn’t Megan Peterson. It was all of us. So for me to take ownership in that is a lie. So I don’t know. It just makes me feel a little sleazy to photograph stuff that’s not a hundred percent all me.
Was there a moment when COVID slowed things down?
No, it’s been full steam ahead. It has slowed things only in that we can’t expect when certain things are going to arrive, and some projects and products have been delayed, so we aren’t closing projects, but we’re still taking on just as many. So it’s been stressful in that way, but a good stressful. We aren’t exactly out there looking for projects.
What does a full project load look like for you right now?
At any one time, I have 20 to 40 projects open. One could be a client that I did a house for four or five years ago, and now we’re doing a guest bedroom. It could be a client that bought a second home in Scottsdale, an entire home that we have to have furnished in two months. It could be a $5 million home. It could be a client that just wants a refresh of a project I did 10 years ago. So it’s all over the board. We also sell window coverings. We do custom bedding. We do furniture reupholstery. So once we get in with a client, it’s very rare that we are not part of their lives for a long time.
Is there a specific look or aesthetic that comes with working with you, or how much are you leaning into the client’s preferences?
Mostly the client. It’s whatever they want. And that’s why we don’t do a lot of marketing and photographing of projects, because when I leave your home and your project, that is for you. I don’t take ownership of that. I’m proud of it, but that is your home and it’s what you paid me to give you. In our showroom, you can definitely see our brand, and in the parade home where we’re just staging it, and in my personal home, you can see a theme, but we’ve done every style imaginable.
If you have 20 to 40 product projects on your desk on a given day, how hands-on are you with each? Where do clients interact with you in the process?
They only interact with me. Most people don’t know that I have an assistant. I take notes, pass them on to her. She will do the pricing, the estimate, the floor plan. I’ll come in, tweak everything before we present, maybe 10, 15 minutes before the clients get there, and we’re done. And then if there’s revisions, I’ll pass on my notes to her. But everything goes through me. Even our warehouse is attached to our building. And when your furniture comes, sometimes my eyes are on it before it gets loaded. I’m not always in the delivery truck, but I’m on the delivery, watching your pieces come through the door, or I’m on the other end of the sofa bringing it to you. So I’m very, very hands-on.
Does that give clients comfort and confidence?
I think so. All my clients have my cell phone. They can call, they can text. It’s like, a lot of the clients, they just think they’re texting their best friend.
Does that happen often?
It can. There are some that, from the get-go, start to abuse that privilege. And I won’t reply to them as quickly or [I’ll say], “Hey, can you please email this to me?” I try and set some ground rules from the beginning, and a lot of them respect it. There are a few that don’t. But for the most part, I think they do. They know I have kids and a husband and stuff going on outside of work. But on the other hand, I’ve also had clients take me on trips and take my husband and me out for dinner, and invite the kids back to the house that we’ve designed in Arizona and stay for the weekend. So I think it goes both ways.
I’m guessing a lot of them must become friends.
Yeah, a lot of them do. It’s a really small community here. It’s almost 200,000 in our surrounding area that we service, but it feels just like a small town. Everybody knows everybody. If you do a good job for somebody, you don’t need to advertise. Word spreads like wildfire. And you just take care of everybody, and you’re golden.
I was going to ask you about the design community. Are there a lot of other designers in the marketplace?
There aren’t a lot of other big players. I mean, there are some, and some are more Instagram designers. They photograph their house or their one or two projects in their feed, and they get a couple small projects. But they’re also shopping at Hobby Lobby, at Target and Pottery Barn. And we don’t do that. I kind of graduated out of that 10 years ago. There’s a certain level of quality and expertise that you get with some designers that the others just haven’t learned yet or [they haven’t] been able to capitalize on the profit margin in the trade.
How have you approached billing?
I’ve been pretty consistent. My specialty is new construction consultation. I love that construction part of being on job sites with plumbers and electricians and the builder, and making something out of nothing. And that works to our advantage as a business, because then we sell you the blinds. We sell you the drapery. We sell you the furniture, the rug, because now we have to fill it. And I already know your house. So it’s worked out really, really well.
When you’re in the construction phase, is that a flat fee or a percentage? How have you structured that?
We use a flat hourly rate. When I was on my own, doing spec homes for builders, I would do per square foot. But when there are clients involved, you have no idea what you’re getting into. Some can completely abuse it. And others, you meet with them two times and they have what they need, so it’s not fair to charge a flat fee when it’s a custom build. If it’s a spec home for a builder, I’ll send them one bill. I can almost gauge to the hour, how many hours we’re going to spend.
Is it the same fee for the design work?
Yep. And then if we sell you furniture and blinds and all that stuff, we don’t charge for that. So there usually becomes a cutoff. Like we charge you for your paint colors, plumbing, specifications, electrical, walkthroughs, flooring. And then at some point, it kind of turns to where we’re selling you product, and you don’t get a consultation bill after that point.
Just the markup on product.
How have you made that work?
That’s where the showroom comes in. That system did not work when I was on my own. Now, when we go to Market and buy in with vendors, we buy in as stocking dealers, for the most part. We do High Point every spring and fall, and then [Las Vegas Market] in January.
What are you looking for in each place? Why is it important to do all three?
We usually need to restock the floor twice a year with High Point. We’ve also started doing more commercial and apartment clubhouses and community spaces, so [we’re looking for] product that is contract grade and something [where] we haven’t exhausted the entire catalog. And then Vegas [is good for] the accessories and taking a look at rugs and art. There’s not a lot of custom upholstery there, but it’s a fun market. It’s quick and easy—and it’s in January, and there’s usually snow on the ground at home, so we’ll take a getaway. But at High Point, we are booked almost every hour for six days.
Oh, my gosh, same. You mentioned that you had met Sarah in part because she was at a showroom in Minneapolis. How useful is that for you as a resource?
We don’t go there. We’ve essentially become the trade showroom of our area. We’re a mini IMS. We have a full library and independent designers can come in and shop. They can check out samples. We’ll send you memos, much like there. It’s just a smaller version of it. Reps come to us and fill our library. We don’t have to go there.
How many designers are shopping and using your library on a regular basis?
There are probably 10. There are two or three that use us for everything. We’re also a receiving warehouse.
This is brilliant!
Well, it was designed by an independent designer. I kind of created what we needed. But it makes sense on the business front, because now we buy for all of them and we’re using our resources so we can save them money, but it also is helping us. We can charge them for receiving, and then we’ve got our delivery truck and crew. So if we aren’t delivering our own stuff, we can deliver for other independents. It’s a cash flow thing.
Where do you see opportunity to grow?
Honestly, I don’t know if I want to grow. I want to perfect what we have and figure out better ways to serve our clients and grow as a team. I don’t want much more of a staff, if I’m perfectly honest. We’re maxed out. We do the biggest homes in town and the area. And we’re happy.
What’s happening in the local housing market?
It’s completely insane.
What are people building?
Our architectural style is usually ranch walkouts. On average, I would say 2,000 square feet on the main. And there’s almost always a basement. Sometimes it’s a two-story, so if you’ve got three levels at 2,000 square feet ...
That’s a big house.
That’s a big house. We’ve got lots of land here, so we can build things.
Do you see any sign of the housing and design boom slowing down?
Not in our community. The recession hit the year I graduated college, and we still talk about how we didn’t really feel it here like the rest of the country. And we were all kind of embarrassed to admit that. But we didn’t feel it—I think because people here are generally more conservative with money. And then since the pandemic hit, we’ve had a lot of people move here from California. I’ve probably got five or six clients that have moved from out of state. All I hear is that there are no homes, no apartments, not enough housing for the amount of people that are coming right now.
Is there a specific local industry that Sioux Falls is known for?
Health care and banking, I think, are our two big industries. And a lot of business. Our state is built on business-friendly tax laws. And we’re the middle of the country, so we can service the East and the West Coast.
What is your biggest business challenge right now?
It’s probably employees—making sure [they] are happy and growing within the company and feeling like they have a spot. I’ve learned, because I never set out to own a retail showroom with employees, but without them, I don’t know what I would do. I can’t do it without them. So keeping them happy and fulfilled in their career and personally kind of falls on my shoulders. And that’s the part that’s a little scary.
How do you provide opportunities to grow?
I’m very hands-on, but [I think about] what I can give up and have them do, and how they can take ownership of that duty and run with it. Or how can they make that even better? So allowing them to grow. Everyone has grown and morphed so many times. Every time we get business cards redone, it’s like, “Now what’s your title?” We joke about it, because we’re so small, we all do what it takes every day to make things happen.
With the current supply chain delays in product fulfillment, have clients been understanding?
They’ve been pretty understanding. The beauty of it is they can’t go to a competitor. We can’t switch vendors. Everybody is in the exact same boat. So they’re not pulling orders from us and taking it to a competitor. I hate this saying, but we are all in this together. Like, just stick with me—we’re doing the best we can. We’re trying to pull strings. If we can swap it for something from another vendor that is suitable, I will give you options A, B and C. But if I think this one that we have on order is correct, I’m going to vouch for it and try to manage your expectations and get it here as soon as possible. And kind of laugh about it.
You have to, at this point.
Yeah. It’s only gotten worse. We were told in June when we were at High Point that it was supposed to get better. It’s gotten worse. Now when I log in to vendor sites, I’m like, “Why does it say July 2022 for this dresser to be available?”
I appreciate the ones that are honest, though. When we call customer service and they can’t give us a date, I understand that, but when they keep moving that goalpost, that’s when clients get really irritated. Tell me it’s 18 months. So at 18 months, I want it, when you said it was going to be here—not every time we call, you tack on two or three more weeks. That’s frustrating. It makes us feel like we’re lying to clients. And our clients see us as trying to cover up for somebody, but nobody has an answer.
Would you rather a brand just said, “I don’t know”?
Yes. I mean, that’s what we’ve been doing. Like, “I’m not giving you a date unless I get a date and I feel good about it.” When we’re so small, the second a piece comes in, we’ll receive it. If I know you’re hot for it, I will get on that delivery truck and deliver it to you that same day we receive it.
So you’re not holding everything and doing big reveals?
No. I never have, as much as I would love to—storing it costs money. Also, there’s more risk for damage if something’s wrong or we need to swap it out, or the client’s not happy with it. I’d rather get it to you and catch those things than let another two months go by.
Do you ever have clients who are leery of something while the design is sort of half-installed?
Oh, every project.
How do you manage that?
I think a lot of them have relied on my reputation. Like, “I’ve never had a bad experience with Design House or Megan. My friends never have. I’ve got to trust her through this.” So it’s just having that honest conversation. There have been a couple of times when I’ve said, “I will put it back on my showroom floor. If you don’t like the way that chair fits, I will take it back.” I’ve never had anyone take me up on it. But I tell you that I’ve sat in it and I can guarantee you’re going to love it. I’ll tell you if it sits poorly, but if it’s the chair that you weren’t ever going to sit in, who cares?
What does success look like to you?
Feeling content at the end of the day that you made people happy and did everything that you could to make their project and their home. And as far as employees go, that they can leave there feeling accomplished. It’s not money. It’s not your name. It’s none of that. It’s when I pull away at the end of the day, going, “All right. I felt good about that.”