As interior designers, we often start our businesses as solopreneurs – wearing all hats at once and working around the clock to pull it off. As our businesses take off, we inevitably reach the point where our workload outpaces our ability to do it all by ourselves. That’s when it's time to consider hiring your first employees.
But making the leap from solopreneur to team leader is a delicate process. Hiring the right employees and having the proper infrastructure to ensure they can succeed can determine your success, and hiring and onboarding new employees is especially challenging during this time when COVID makes it difficult to meet candidates in person. This article will explain when to hire your first employees, how to decide on which positions you need to fill, and how to do so in an increasingly virtual world.
First: Maximize Your Efficiency
Before you come to the conclusion that you need to hire an employee(s), ask yourself, are you creating efficient internal processes and using all the tools available to you right now? For example, there are plenty of operational software solutions that can help you handle non-core tasks like social media management and marketing.
Secondly, as an interior designer, you should be using an industry-specific accounting and project management tool to help you manage the essential duties of bookkeeping and workflow management. Naturally, we suggest Design Manager as a customized solution that addresses the specific needs of interior designers – you can try before you decide by using a free trial.
Figure out the Financials
There are two important factors to evaluate when deciding whether or not to hire employees: 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, even with the digital tools available, 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.
Once you decide you do need help, the next step is to figure out how much you can afford to pay for it.
Employees are an investment.
Of course, you have to consider the salary and potential bonuses you’ll pay an employee, but before you even get there, the initial and circumstantial costs of hiring an employee can include:
- Fees for recruitment
- Legal and financial planning
- Employee insurance
- Payroll tax
- Additional office space (although this may not be an issue in the near to intermediate term)
- Work supplies, like laptops, monitors, etc.
Also, because you have to train employees, there is the opportunity cost of your own time as you train them, and you must also realize it will take them time to be fully functional members of your team such that their productivity 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. And you should, of course, plan ahead – you do not want to hire candidates under a time crunch.
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 do not.
You can start by making a list of everything you feel you have under control at this time, and everything you do not. To get a truly accurate assessment, it may help to get an outsider’s perspective by meeting 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.
- Administrative Tasks: This includes keeping your calendar organized, and keeping your office stocked with necessary supplies.
- Project Management: Are you hitting your deadlines for projects smoothly, or struggling to juggle the various checkpoints along the way to project completion? If it’s the latter, you need help keeping the trains running on time.
- Bookkeeping: Interior design companies have unique accounting needs, so these duties include the day-to-day bookkeeping entries and the monthly reconciliations that you need to stay on top of to ensure the financial health of your business.
- Design: This is, of course, the soul of your business. However the presentation related tasks, like composing mood boards in Photoshop, drafting plans in AutoCad, and sourcing material samples from vendors can be handled by design assistants while you focus on the bigger creative picture.
Once you have broken down your list into categories, highlight tasks that could conceivably be outsourced versus 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.
By now you should have a clear idea of what type(s) of roles you need to fill, either internally or externally. The next step is figuring out how much you can afford to pay and what level of experience you should seek relative to the compensation you can offer.
Building for Growth
As mentioned above, hiring employees to support your interior design business requires an upfront financial investment, as well as a future financial commitment.
Formula to determine if you can hire employees
- Monthly overhead costs: 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? 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 (both personally and as a business) before committing future profits to re-investment in your interior design business.
- Next, 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 you are considering hiring remote employees who are located in other states, you will have to comply with that state’s employment laws in addition to that of your headquarter location, which may also incur additional costs. l
If these costs are too high, but you know you still need to hire help, consider independent contractors.
Benefits and drawbacks of independent contractors
- Benefit: Temporary workers are more affordable for a small business
- Benefit: They do not require the same level of commitment as an employee
- Drawback: Less invested in your business
- Drawback: Depending on the arrangement you have with them, they may be more likely to leave at inopportune times
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 determine 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 can you pay your workers?
Ask yourself two key questions to get this answer:
- How much income do you have locked in for the next 12 months
- 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 always 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 once they have proven themselves and when you are financially ready as the business owner.
Where and How 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.
Finding job candidates
There are three avenues to identify the level of knowledge and experience you expect from a candidate based on the position and compensation you are able to offer, and then to actually go out and recruit these candidates:
- Job Sites: Research the major job listing websites, like LinkedIn, Indeed, and creative-centric sites like Dezeen Jobs to see what other companies are offering; then, post your job listing here. 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.
- Recruiters: Hire a recruiter that specializes in staffing for interior design companies, who will find and vet candidates for you. This expertise comes with a price tag: Recruiters are typically paid 20% of the annual income of the position you are seeking to fill.
- Your Network: If a recruiter is not in your budget, but posting to job sites is bringing in too many candidates 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).
Deciding who to hire
Now that you have reviewed several resumes, you are ready to interview, which brings your next major challenge. How do you determine if a candidate is right for your business when you are interviewing them remotely? As COVID continues to keep many of us working from home, you may have to rely on virtual meetings to suss out whether or not your candidate is a good hire.
Tips for hiring the right people
- Multiple interviews: meeting a candidate more than once can help you really get a feel for a candidate.
- Get a second opinion: Get other perspectives by bringing in a trusted person, like a frequent work collaborator or vendor, to one of the video interviews to get their opinion.
- Get references: 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.
- Background checks: Pay to run a background check to make sure your candidate does not have any problematic legal history.
- Protect yourself: Because you can never be too safe, once you’re ready to hire, you should consider having the candidate sign a Non-Disclosure Agreement that protects any proprietary information about your company, work process, and even personal life.
You may also want to consider hiring employees who live out of state and will work remotely full-time.
Benefits and Drawbacks of Remote Employees
- Benefit: You can pull from a wider pool of talent
- Benefit: If you are headquartered in an area with a high cost of living where salary expectations are higher, you can search for remote employees located in areas with a lower cost of living, offering them a salary on par with the local expectation.
- Drawback: Each of your employees will affect the overall culture of the company, even if they work remotely. You will have a harder time analyzing how a remote worker interacts with others and how well their personality matches the company culture you want to create — an important part of protecting your brand.
- Drawback: While touched on above, there are several tax and legal implications that you should discuss with your account and lawyer. They may have to refer you to specialists who can accurately guide you through the compliance measures you will have to prepare for.
While hiring remote employees may be the right solution for your business, give strong consideration to which functions make the most sense to keep close to headquarters. Will you be able to creatively collaborate with remote workers? It is definitely possible, but depends on the individual.
Conclusion: Your Growing Team
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. Be sure to read our followup articles about scaling your interior design team from 2 employees to an office of 10, and then developing and retaining top talent for your now large and thriving interior design business.
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