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How to Start a Home Design Business

More on Interior Design

With creativity, imagination and a good eye for form, shape and color, you can forge a successful career as an interior design professional, and you can do it as a homebased business with a minimal financial investment. But an interior designer does more than just attach beaded fringe to drapery panels or comb the merchandise marts for the perfect Biedermeier-inspired occasional table.

Designers also have to be artists who can create an entire color scheme and coordinated look from a swatch of fabric and a paint chip. They have to be engineers and technical advisors who can plan a space, counsel on product and function, and then arrange furniture and accessories for the best effect. They also have to be visionaries who can anticipate color trends and turn the vague, unformed ideas floating around in a client's mind into stunning tableaus that will be both enjoyable and functional for years. Finally, they have to be good project managers who can multitask and keep jobs on schedule and on budget, as well as good business managers who can keep their own businesses operating efficiently.

What's a Designer Do?
One of the things that makes this field especially exciting is there are so many ways you can use your design talent. For example, you can:

  • Decorate homes of varying architectural styles to give them a fresh, new look.
  • Design custom interiors for a homebuilder's model homes.
  • Work with builders' clients who need assistance making color choices for their newly built home (and maybe also get their business when they need help decorating it).
  • Provide commercial design services.
  • Function as a product-driven designer by both marketing products and designing interiors (the most common way to start out).

There is one more type of interior designer that should be mentioned. A design consultant simply gives design advice rather than doing the hands-on work or selling product. This type of work is usually the bailiwick of designers with a great deal of experience, a respected reputation and a degree in the field, all things that fledgling business owners generally don't have when they start out. So for the purpose of this book, we're going to assume you'll take the hands-on route and leave the consulting to the experienced pros.

By the way, although the designation "interior designer" tends to be a catch-all title in home design, there actually are two kinds of design practitioners. Most new interior design professionals are actually decorators. They do everything a true interior designer does, from consultations to product installation, and they are no less talented in the artistic and creative departments. What sets interior designers apart from decorators is their education and certification. Many interior designers earn bachelor's degrees or the equivalent education, then become certified in the field. That certification is bestowed by the American Society of Interior Designers (ASID), but to earn it the typical decorator usually must have many years of experience and must pass a rigorous examination administered by the National Council for Interior Design Qualification. Having this certification is akin to being licensed in the field, which is why many interior designers choose to become certified even if they are not doing business in one of the 25 states and jurisdictions or seven Canadian provinces that require professional licensing.

If you're starting from square one as a design professional (as we assume you are), you can put out your shingle as a decorator until the time comes when you can make the leap to interior designer status. Frankly, the average person will not have the foggiest idea that there's a difference.

A Day in the Life
While you're no doubt getting into this business so you can design beautiful interiors, there's more to it than planning spaces and selecting fabric. You must also be a savvy business manager who can juggle the myriad tasks involved in running a small business. To begin with, on a typical day, you might find yourself:

  • Fielding calls from potential clients concerning design projects
  • Scheduling consultation appointments and product installations
  • Meeting with clients to get details about their project
  • Estimating time and product costs, then writing a bid
  • Measuring rooms
  • Researching and ordering accessories, furniture and hard goods like window treatments
  • Picking up and delivering products from wholesalers, design showrooms or receivers
  • Meeting with subcontractors such as installers
  • Balancing the books, including dealing with accounts payable and receivable
  • Ordering sample books and office supplies

Estimating
Naturally one of the main criteria for your clients will be price, so you'll want to estimate very carefully. If you price your services too high, you won't get any business, and if you price them too low, you'll lower the perceived value and you still might not get much business, or you'll get business that won't generate much profit.

When estimating a job, you should consider:

  • The size of the job and the number of hours you'll need to complete it (including hands-on work, ordering and installing products, etc.)
  • The cost of product
  • The services, in addition to your own, that may be needed (i.e., carpet or drywall installation)
  • The number of outside helpers you will need (to lay that carpet, for instance)
  • The deadline for completing the job (a rush job is always billed at a higher rate)
  • Your markup (typically a minimum of 15 percent)

Estimating is a science that can't be covered in an article of this length. For further guidance, refer to Carol A. Sampson's excellent book Estimating for Interior Designers (Whitney Library of Design).

Setting Rates
Just as there are numerous decorating styles and products, there are many different ways to set your rates. Some of the common ways to charge include:

Hourly fee: This is probably the easiest way to charge, since all you do is multiply the number of hours you actually work by your rate. This works well for a fledgling designer because you won't know exactly how much time a job will take until you have a few jobs under your belt. The challenge will be to set a fair hourly rate that nets you enough money to make the business profitable. Depending on where you live, your rate as a new designer may range from $35 to $125 an hour. You can determine what your market will bear by checking with the competition (try visiting their websites to get an idea) or contacting an organization like the American Society of Interior Designers for help.

California interior designer Lee Snijders, who also hosts HGTV's "Design on a Dime" design show, started out charging by the hour, then realized he was working 24/7 because the thought of earning as much cash as possible was irresistible. "I didn't know when to stop working at first," he says. "But I stopped doing that pretty quickly when I figured out how much my services were worth based on what was fair and competitive in the market."

Flat fee: This method can work well if your client supplies all the products and furniture. You simply multiply your hourly rate by the number of hours you think you'll need to complete the job, plus expenses. This fee would apply to every service you provide, from concept to installation. But as mentioned earlier, freshman designers usually aren't quite sure exactly how long a job will take, so it this might not be the best route for you when you start out. After all, the last thing you want to do is to underestimate on your bid and lose money on a job. That will put you out of business pretty fast.

Cost plus: With this method, you add up the costs for all the necessary furnishings and materials for a job as well as for any subcontractors (like carpenters, carpet installers, etc.). You then add on an agreed-upon percentage to the total as your fee. Designers commonly charge a 20 percent service fee with this method, although some experts in the field recommend a 50 percent to 100 percent markup, depending on what will fly in your market. This is one of the most common ways for designers to charge.

Retail: This entails charging clients the retail price for every item you purchase-and your fee is the difference between the wholesale cost you've paid and the retail price. In essence, this means clients aren't paying directly for your services, which means a lower cost for them. If all you're doing is buying products and arranging them rather than planning spaces and installing items like curtains, this pricing method can be feasible. It also works best on smaller jobs.

Square footage: Usually the choice for commercial work, this fee is calculated based on the area of the room being designed. If you're interested in trying this technique, use the stats from other design work you've done to figure out a price per square foot.

No matter which method you use, the cost of freight and the amount of time you spend planning, lining up subcontractors, buying product and supervising work should all be taken into consideration when you set your rate. You may find you'll have to use a combination of the methods discussed here to establish a rate that covers your costs and allows you to make a profit.

Getting Certified
If you plan to call yourself an interior designer (as opposed to a decorator) in one of the 25 states and jurisdictions or one of the seven Canadian provinces that require licensing for interior designers, you will have to become certified. The only approved certification is offered by the National Council for Interior Design Qualification (NCIDQ). To earn that certification, you must hold a baccalaureate degree with no fewer than 60 interior design-related semester hours and a certain number of experience hours. You must also pass an exam that consists of three parts: Principles & Practices of Interior Design, Contract Documents & Administration, and Schematics & Design Development (each part may be taken at different times if you wish). Exams are administered in various locations around the United States and Canada in the spring and fall. As of 2005, the cost for all three sections was $695.

In addition to NCIDQ's requirements, each of the jurisdictions has specific requirements as well. You can find links to each of the U.S. jurisdictions' registration laws from a link on the ASID website (go to www.asid.org and look for the link to the "Factsheet of Interior Design Registration Laws").

Startup Costs
As you can see, the basic startup costs for interior design businesses are fairly low, especially if you already own a computer and have reliable transportation in good condition (since your vehicle will be your portable office). Basic expenses will include the sample books mentioned earlier, business cards, software, and promotional tools like brochures. (You can create and print your own brochure or you can buy generic versions ready-made from organizations like ASID.) You'll also need a design portfolio and funds to have professional photographs of your interiors taken. Other necessities include insurance, office equipment and services, and initial advertising. Finally, you should have funds to cover three to six months of personal and business expenses, as well as working capital, which will probably be your single most expensive startup cost.

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