Designers Profit more while Working Less
The wickedly effective way successful designers profit more while working less
Steal their secret and make it work for you.
Have you ever wondered how some business owners seem to have it all? A thriving business, a constant stream of clients, referrals through the roof and the kicker – the time and money to take an enviable vacation.
So, how do they do it? How do they work fewer hours, make more money and have more time off? More importantly, how can you take what they know and put it to work for your business?
There’s a secret that successful designers know – a little thing they do differently that allows them to work smarter, faster and with less effort. It’s not discussed much because, well, it’s not particularly interesting or sexy. In fact, it’s so ordinary that if you’ve heard it discussed you probably didn’t give it another thought.
The most successful designers implement processes and systems to make their workflow as efficient as possible. They also continually measure and tweak these processes to improve them.
The point of implementing processes is to streamline, save time and automate certain areas of your business. When your processes are tight and your team adheres to them, business hums along efficiently.
You might be shaking your head, thinking… I have processes. I have systems that help me work quicker. And yet, I’m not reaping the rewards of profiting more and working less. What gives?
I often hear similar complaints from clients. They have processes and systems in place, and still, they’re working constantly to stay afloat. Often it’s not an issue of whether you have processes but if those processes are actually effective.
As long as Henry’s worked as an interior designer, he’s used Quickbooks for his bookkeeping and project management. A few years ago he invested in Design Manager. Since then, he’s successfully automated a good portion of his business processes and saved countless hours. He’s thought about transitioning to Design Manager for his accounting, but his accountant is a traditional CPA who works strictly in Quickbooks Desktop.
Henry hasn’t quite figured out how to use Design Manager for accounting anyway, so he rationalizes that he’ll at least save some time in the short term sticking with what he knows.
Fact: Reviewing your processes with an unbiased business partner (and being open to listening to feedback) has the potential to save you an incredible amount of time and money.
Here are some lucrative processes successful designers seem to have down to a science.
They have a process for profit that includes paying themselves first.
In one of my favorite books, Profit First, Mike Michalowicz discusses the importance of paying yourself first. It’s a unique idea and one that can work for many designers.
In order for designers to adapt to a Profit First mindset, they must ignore “GAAP,” or Generally Accepted Accounting Principles, that dictate “Sales–Expenses = Profit” and use a “PFA,” or Profit First Accounting, that states: “Sales – Profit = Expenses.”
Here’s how it’s done…
At the crux of the Profit First system is multiple accounts. So, if Casey runs an interior design business, she’d set up multiple accounts, each designed to act as either a holding place for funds to be dispersed or (wait for it…) an owner’s salary account. Here’s what a glimpse of Casey’s accounts might look like:
- An operating expense account (a.k.a. your business checking account)
- A profit account (recommended at a different bank than #1)
- A tax account (recommended at a different bank than #1)
- An owner’s salary account
In Profit First (a truly radical book that changed the way I looked at financials even after a decade in accounting), Michalowicz starts with very small percentages. The goal is to start slowly and gradually increase your profits while decreasing spending.
Taking a salary might seem like a big change, but when you get into the groove of doing it slowly and steadily, it will produce massive results for your business.
They place an equal emphasis on creativity and efficiency.
Designers are my favorite clients to work with. This is, quite possibly, because we are very different. As an accountant, I’m a right-brain analytic who loves data, numbers, and systems. Many of the creatives I work with prefer visuals over numbers and emotion over logic. That said, the most successful designers I work with know that they need to have a basic understanding of the numbers.
Typically, we touch base monthly to measure and monitor their most important processes and see where we can save time and money. Specifically, we look at:
- Lead time per project: How long a project takes from request to final delivery is the best way to understand how efficient your workflow is. A tweak in your workflow process could save hours every month, freeing you up to create or even (gasp!) work less. Larger design firms should also track their employees’ time to monitor effectiveness. The findings can be used to adjust the creative process and help employees maximize their time.
- Estimated vs. actual project time: This metric is extremely important when it comes to pricing your services. Some designers price too high and others price too low. An error in either direction has the ability to negatively impact your growth and profitability.
- Estimated vs. actual project budget: If you’ve ever gone over a budget you’ve quoted and had to either eat the cost or inform a client they need to fork over more money, you know how important this is. Keeping budgets within the quoted range is the best way to earn trust and repeat clients.
Measuring your processes really isn’t as bad as it sounds, especially when you have a profitability partner on your side.
We’ll discuss more process improvements in the coming blogs, but for now, I want to leave you with this…
It’s easy to get discouraged when we’re hustling like mad to get a new client and our competition seems to be closing deals left, right and sideways. So, feel frustrated for an hour or two, then get over it. The ability to be humble, learn from other business owners (yes, even your competition) and constantly grow is what will ultimately propel your business.