to understand what it is like in the real world. This section presents some basic yet very important information to help readers understand that interior design is a business as well as a creative opportunity.
For a business to exist and (we hope) succeed, it must have at least three elements. First, it has to have people who are committed to operating and participating in the business. Second, it must have customers or clients who will purchase whatever the business provides in terms of services and possibly products. Third, it must have adequate financial resources for operation.
People
An interior design business starts with the owner committed to doing design work the way she thinks is right. The owner should have experience in the field before opening the doors. Many students think that once they have graduated from a program, they are automatically ready to open their own offices. Some do. Many fail and end up working for someone else.
When you read Chapter 19 and the other chapters dealing with creating a design business, you will gain a deeper appreciation for what it is to be the owner of a design firm—even one whose only employee is the owner. There is a lot more to it than having a diploma, passing a licensing exam, and setting up an office.
There is risk involved in opening a business: financial risk, legal risk, and even risk in hiring employees. Employees—the people of the firm—must work as a team and must work in accordance with the rules the owner has set up. If you work for a sole practitioner or any small design firm, your willingness and ability to be a team player are crucial. Each individual in the company has a role on the team. Sometimes that role is not very glamorous. Not everything about interior design is glamorous.
As an employee, you need to remember that the firm does not belong to you. The owner, not you, makes decisions concerning how to go about doing a design project. The owners may veto work that you have spent hours doing with a wave of the hand. Guess what? It's their prerogative to do so, because it's their names on the door. Their risk is paramount to yours.
As the new person in the office, it is wise for you to keep your eyes and ears open; listen and observe what is going on. Each office has its way of doing things, and you need to learn those processes. Become a team player, and your experience opportunities will grow, just as your experience as a professional interior designer will grow.
Clients
You will read in the chapters concerning marketing, strategies and methods that the business must utilize to attract new business. Your boss will spend a great deal of time cultivating business and projects for the firm. Certainly some client opportunities walk in the door because of a referral or something the client saw on the Internet or in a magazine. Those are part of the strategies and methods that the owner must use to cultivate clients.
Design firms work very hard to create an image that they hope will appeal to potential clients. That image is commonly referred to as the company's brand. A design firm's brand is the combination of images and encounters that the customer perceives, accepts, and experiences with a company providing services and (depending on the company) selling products. You and your work express that brand to clients.
Clients have an impression of what it is like to work with an interior designer. That impression has been fostered by what clients see in the media, movies, and previous experiences with designers or others in the design–build industry. For many, the reality of working with you or others in the studio will be different from what their reference impression is. That is why your boss, your professors, and this textbook stress the importance of professionalism. The more professional you are in your interactions with clients, coworkers, vendors, and others who come in contact with the firm, the stronger the firm's brand will grow.
Financial Resources
Marketing brings in clients with projects. Those projects bring in the funds to pay salaries and operate the business. Our industry and profession have suffered through recessions as well as exceptional economic times. But the financial resources needed to operate the practice are never easy to obtain and retain. When your boss is concerned about someone in the office using the telephone or Internet for personal use, she is probably remembering that those personal calls cost the company—not the user—money.
A firm makes money by charging design fees for services and perhaps by selling merchandise to clients. Design services have a cost to the company, as well as representing revenue. The biggest cost to the firm for providing design services is the salary of the designer. As you will read in Chapter 29, salary is not the only part of the employee cost of providing design services.
There are other costs involved in those services. The company has to pay utility bills, buy supplies like pens and ink for the printer, and pay monthly Web fees. These operating expenses are deducted from the revenue that is obtained from clients. Only after the expenses are paid does the firm make a potential profit. And when there is no profit, there are no funds for the owner to provide benefits to employees.
You might not think it's important to understand accounting, but it is. Chapter 28 on basic accounting and money management will not teach you how to be an accountant or how to keep the financial records, but it will help you understand the important point that revenue and profit are not the same thing. Just because the company has sold a sofa or charged a design fee does not mean it has made a profit and can now give you a raise.
Profit only results after all the expenses of the company are subtracted from revenue. So, when it costs your boss more to operate the company than the amount of revenue the company brings in, a loss occurs. Too many months of operating at a loss means the owner might have to let you go and even close the doors.
As a final note, the business of interior design, which is the professional practice of interior design, goes way beyond just design. It is important for the student, the emerging professional, and the experienced interior designer to understand ethics, legal issues, contract creation, and appropriate ways to be compensated for work. It is also critical to be a good project manager, as any project (regardless of size) has many components to be controlled. It is also important for anyone in the interior design profession to understand basic accounting, marketing strategies, and how to organize a practice, operate that business, and hire and manage employees. All of these topics and more are presented in this textbook.
The “real world” of interior design is at times glamorous. Yet, it is also many hours of paperwork to create specifications, prepare drawings, resolve problems with vendors, track missing furniture, and more problems that you probably don't want to read about right now! Mostly, it is an opportunity to create places for people to come home and be safe and comfortable, to encourage recovery from illness, to enjoy a special event or vacation, and so on. It is a great way to work and make a living. Very few interior designers who have worked for several years would say differently in good times—or bad!
Interior Design Economic Snapshot
The vast majority of interior design businesses are sole owners or very small companies with five or fewer employees. Because of this, the economic impact of interior design is hard to judge. These businesses stay under the radar of most agencies that gather information on industry. Like many businesses, interior design booms when construction and the general economy boom and falls when a recession hits.
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