Embracing your inner artist meets entrepreneur, you started your own interior design business. After a few bumps in the road, you are finally running on all cylinders, with multiple projects in the works and a steadily growing bank account. You have reached the point where you wonder if you should build a team to support the growth trajectory you created as a do-it-all solopreneur. However, ambivalence has you in a holding pattern. As exhausted as you are, you are used to doing everything yourself. How does a solo-practitioner interior designer know when it’s the right time to hire their first employee(s)?
There are two important factors to evaluate when deciding the right answer for your interior design company: workload and earnings, both current and future-projected. Workload takes precedence, because if you are currently or soon to be unable to meet the demands of your business, you are setting yourself up for failure. Having more work than you have time for should be a good thing, assuming you are charging effectively for your interior design services.
If you have conceded that you absolutely need help, the next step is to figure out how much you can afford to pay for it. Employees are an investment. Initial costs can include fees for recruitment, legal and financial planning, insurance, payroll tax, additional office space, and supplies. Of course, there is also the ongoing cost of salaries and periodic bonuses. Also, because you have to train employees, it takes time for productivity to increase to the point where working as a multi-member design firm improves your profit margin. This is why it’s so important to have financial stability, both personally and in your business, before hiring any staff. The financial and other operational requirements for hiring employees will be discussed in more detail below.
A Checklist for Hiring Your First Employee(s)
When thinking about who to hire as your first employee(s), each interior designer will have a unique ideal candidate. Simply put, your first hires should bolster your weak points. In order to make the smartest decision about who to bring into your carefully constructed business, you have to honestly assess where you excel and where you are failing. Are you struggling to maintain organization? Do you have a list of drawings or client presentations longer than you can humanly produce within the deadlines your clients expect? Make a list of everything you feel you have under control at this time, and everything you do not. You may need to meet with a business consultant or operations expert, preferably with knowledge of the interior design industry, to truly see the areas in which you are not adequately meeting your current responsibilities.
Once you have a realistic list of the tasks that need to be handled better or differently than you can, group them into sensible categories. For example, if you are struggling to make day-to-day bookkeeping entries, keep your calendar organized, and keep your office stocked with necessary supplies, those tasks can be grouped together as administrative. If you have a growing list of mood boards to be composed in Photoshop, plans to be drafted in AutoCad, and materials to be sourced from vendors, group these together as design.
Once you have broken down your list into categories, highlight tasks that could conceivably be outsourced verus what you feel strongly should be done in-house. For example, if computer generated 3-D renderings is an area you need help with, you may be able to outsource this responsibility to an expert for a fee that is more affordable to your level of need instead of hiring a person with the same skill level as a full-time employee. The same applies to a bookkeeper. If you are able to keep up with daily entries and only need light oversight to ensure you are meeting reporting requirements, you may be able to outsource this task or hire a freelance bookkeeper (familiar with the interior design business model) to come into your office for a few hours every week. Research all of the tasks you see as potentially outsourceable to find out if there are any high-quality, affordable solutions that can lighten your list of needs for full-time staff.
At this point, you should have a clear idea of what type(s) of roles you need to fill to bring your productivity to a new level, whether it’s administrative, design assistance, or both. The next step is figuring out how much you can afford to pay staff and what level of knowledge and experience you should seek relative to the compensation you are able to offer.
Supporting Long-Term Increases to Overhead
As mentioned above, hiring employees to support your interior design business requires an upfront financial investment, as well as a future financial commitment. The first sums you will need to calculate when determining if you are financially ready to hire an employee are your current monthly overhead costs, both personally and professionally. How much does your company make on a gross basis? How much is left after you pay all of your business expenses such as rent, insurance, retainers for legal and accounting specialists, supplies, etc.? What do you do with the balance? You should also run this exercise for your personal finances, computing how much money you earn as income every month, and how much is left over after you pay your necessary personal expenses and make contributions to your savings and 401k. The money you pay employees is determined by the amount of profit your business earns, but it’s important to know you are in a financially secure position personally before committing future profits to re-investment in your interior design business.
Once you have a clear picture of your current financials, tally up the upfront costs of hiring an employee. This includes fees paid to recruiters or job listing sites, the increase in office space and supplies, as well as legal, accounting, and other operational fees. As an employer, you need to comply with the federal and state employment laws, which include setting up a payroll tax, paying social security tax, and insurance for workers compensation, disability, leave benefits, and unemployment. If this initial investment is too burdensome but you still need to hire help, consider hiring independent contractors. These temporary workers are more affordable for a small business and do not require the same level of commitment as an employee, but independent contractors have less incentive to offer high quality work, as they have no investment in your business. Whether you hire employees or independent contractors, you will need any workers to sign legal contracts that stipulate the details of your arrangement, so you should expect to incur legal fees regardless. It is also smart to consult with your accountant to ensure you are meeting the reporting and tax requirements in either scenario.
Once you have determined whether you can afford the upfront investment of an employee or are better off hiring independent contractors for the time being, the next step is to analyze your projected future earnings to figure out what you can pay workers. How much income do you have locked in for the next 12 months, and how much additional income, whether by means of additional interior design projects or other revenue streams, like products for interiors, would you earn with help from the employee(s)? Be conservative in your estimate by slashing your expectations by half. Take your net projected monthly income (after expenses, including your paycheck), and expect that you can pay an employee half of your net projected surplus earnings.
There is no exact formula to determine when you can afford to hire an employee, but the smart approach is to be conservative in your estimates and to think long-term. While independent contractors are not necessarily motivated to be the best workers, you can always start by hiring a great candidate on a temporary-to-permanent basis, where the worker starts as an independent contractor, and is then moved into the position of employee when you are financially ready as the business owner.
Where To Find Good Help
Now that you know what type of role(s) you need to fill, the type of employment you can offer (independent contractor or employee), and how much you can afford to pay, you are ready to draft a job description and start looking for the best candidates to join your interior design team. To make sure you are realistic in the level of knowledge and experience you expect from a candidate based on the position and compensation you are able to offer, thoroughly search the major job listing websites, like LinkedIn, Indeed, and creative-centric sites, like Dezeen Jobs, to see what other companies are offering. Once you know what the market rate is for the role you are seeking, you may need to adjust your expectations based on your findings. If you are unable to see salary information in other job postings, as sometimes this information is kept private, consult with a specialist or ask other interior designers in your network for their advice. In terms of using these platforms to find candidates for your team, fees for posting jobs on these websites are minimal, so consider this approach as a cost-effective way to cast a wide net.
Another option is to hire a recruiter that specializes in staffing for interior design companies, who will find and vet candidates for you. A recruiter will also be able to give you advice on salary expectations and other broader market information that can be difficult to find on your own. Hiring a recruiter can be expensive, however, and will likely cost thousands of dollars. They are typically paid a fee of 20% of the annual income of the position you are seeking to fill.
If a recruiter is not in your budget, but posting to job sites is bringing in too many, or not the right type of candidates, there is a third approach that is both targeted and low cost: leveraging your network. Send the job description to your trusted vendors and fellow interior designers and post it to industry trade organization websites, like the American Society of Interior Designers (ASID). If you are seeking an entry-level worker, post on local university job boards or contact the schools to find out how you can participate in their job fairs.
Now that you have reviewed several resumes, interviewed a handful of the best candidates, and narrowed it down to the best choice(s), do your due diligence on your prospective team member before offering a position with your interior design company. Ask for at least three references, and be sure to call each one and ask thoughtful questions about your candidate’s past work experience, attitude, and professionalism. Pay to run a background check to make sure your candidate does not have any problematic legal history. If you are ready to extend a legal agreement formalizing the invitation to work with you, consider also having the candidate sign a Non-Disclosure Agreement that protects any proprietary information about your company, work process, and even personal life.
This is also a good time to look into bolstering your infrastructure to give you and your new team member(s) the best tools to be as productive as possible. With extra manpower, you will have an even greater ability to utilize business software to help with social media management and marketing. As a successful interior design solopreneur, you probably already use Design Manager for all of your accounting and project management needs. If not, sign up for a free trial ASAP, as implementing this deeply comprehensive organization tool may eliminate your imminent need to hire help, as it saves interior designers countless hours previously devoted to bookkeeping, creating client documents, ordering and invoicing, and all other aspects of financial and project management.
If you have moved forward with adding to your interior design team, congratulations! Now you can begin taking your company to the next level and planning the growth trajectory of your employee(s). Before you know it, your firm will be growing at lightning speed, so start thinking about your future personnel needs now. Next week, we will discuss scaling your interior design team from 1-2 employees to an office of 10, so stay tuned!