We all know that professional interior designers are in the business of creating beautiful spaces, but often overlooked is the reality that designers are also in the business of making money. Design may be a labor of love, but for professionals like yourself, it is a means to earn a living. No matter how popular or prolific a designer you may be, if your underlying business is not generating a profit, no amount of creative genius can save it from inevitable failure.
It feels counter-intuitive — how could you be an in-demand designer with a knock-out portfolio and still be at risk of going out of business? The answer is simple: financial mismanagement. Many talented interior designers struggle to grow, or even maintain, their businesses because they do not have an effective financial manager, a bookkeeper, to provide the stable foundation critical to the success of any company. Not convinced? Keep reading for a rundown of all of the ways hiring the right bookkeeper contributes to a thriving interior design business.
How a Good Bookkeeper Contributes to Company Success
So what exactly are the responsibilities of a bookkeeper? According to The United States Department of Labor, bookkeepers “record financial transactions, update statements, and check financial records for accuracy.” Thinking of such tasks may cause your eyes to glaze over; it doesn’t sound like a job that fits into an atmosphere of inspiration and innovation. However, this instinctual disassociation you feel as a designer can lead to dire consequences. A business may soon cease to exist without a diligent bookkeeper to implement structure and organization. It is a function especially crucial to interior design, arguably more so than any other industry.
"A business may soon cease to exist without a diligent bookkeeper to implement structure and organization."
Why Hiring the Right Bookkeeper Is Crucial for Interior Design
What makes bookkeeping so important to an interior design business? To start, the industry lacks a standard client billing procedure or process for purchasing client FF&E. Many designers use a variety of methods to charge for their services and to manage client purchases, often adjusting the formula from project to project. As a result, keeping track of billing can become dangerously complicated for interior designers.
Do you combine several methods of charging for your time and services across projects? This can leave you vulnerable to mistakes and omissions. A bookkeeper can help you implement a system to keep track of each item in an invoice, then manage the flow and timeliness of issuing invoices and collecting payment moving forward.
Let’s break down these billing complexities to better understand how they can hurt your business if not managed properly. As an interior designer, you likely purchase materials, furniture, and art on behalf of clients, to be reimbursed later in the process. Even if you take deposits up-front, you are still loaning large sums of money to clients for months at a time. The advantage is in the opportunity to profit from the difference in wholesale to retail pricing, plus the convenience you provide to clients by limiting the number of total payments they will have to make over the course of the project. However, one un-reimbursed payment could cost you thousands of dollars or more! Therefore, this method of billing demands keen attention to detail. Correctly tracking and applying your industry discounts is, in itself, an important function that can be overseen by a bookkeeper. It is critical that a dedicated financial professional manage such complicated transactions.
Even simple schemes such as charging a flat hourly fee can cost you dearly if a bookkeeper hasn’t implemented a system for keeping track of and charging for design time. Emails punched out on an iPhone in between meetings may not seem worth counting, but a good bookkeeper knows that every dollar is important when establishing financial security for a business. In fact, a bookkeeper can help collect a retainer at the beginning of a project, which is a good idea for protecting financial stability, and then draw from the reserve as needed while providing a detailed summary of each transaction. This practice would seem like a Herculean task for you to execute without an expert bookkeeper, yet it is a simple and surefire way to protect against financial jeopardy.
Another reason bookkeepers are important is that they understand business fundamentals through and through. Their specialized education and experience in business operations allows them to be more than just trusted support, but also a guide to navigate you through issues you may not have learned about in design school. Good bookkeepers have transferable skills that bridge the gap between design and business, and they will proactively advise you on how to optimize your operations to minimize the potential for problems before they arise.
Lastly, it all comes down to reputation. As an interior designer, image is the most important marketing tool you have for bringing in new clients. While design itself is a huge part of that image, the workings of the underlying business become part of that image as well. Most designers rely on word of mouth referrals, and if a client has a bad experience as a result of billing mistakes or other forms of clerical sloppiness, he or she is doubtful to recommend your firm in the future. In extreme scenarios, financial mismanagement can even lead to expensive and reputation-damaging lawsuits from which some businesses can never recover. In other words, the value a good bookkeeper brings to your business from the inside allows it to shine from the outside as well.
"A good bookkeeper helps turn a labor of love into a paid occupation — the ultimate goal of every aspiring interior designer."
If design is a beautiful building, then diligent bookkeeping is the sturdy foundation built deep into the bedrock. No matter how exceptional your designs, you can only capitalize on your talents by building a financially sound business. A good bookkeeper will keep finances in order so that you can focus on innovating the way we experience the spaces we inhabit. A good bookkeeper helps turn a labor of love into a paid occupation — the ultimate goal of every aspiring interior designer.
We understand that hiring a trusted bookkeeper is difficult, so we put together a searchable Partner List with our recommendations.
If you have a great bookkeeper (or are one!) we would love to hear from you in the comments section below.