What Designers Can Learn From (wait for it…) Lawyers!

In an article in Avvo, an information site about lawyers, I found these seven tips that I believe are also applicable to another type of service firm—interior designers. And, you don’t have to be a startup. See how you rate on this checklist.

1. Administrative tasks matter
Given that you run the most complex business on earth (I truly mean that!) your ability to capture and organize information is critical…and also problematic. This is why there is so much gnashing of teeth in your field over how to track orders, how to track hours billed, and how to maintain marketing momentum, to name a few. That’s why textbooks in your industry that try to explain everything you need to do are measured in pounds, not pages. Starbucks founder, Howard Schultz, discovered this. He says in his autobiography that he was so in love with the customer-facing aspects of the business—the stores, the marketing, the coffee itself—that it took him a long time to admit the truth; profits are made in the “back room,” not the “front room.” The same is true for your business. Like it or not, the most profitable of my design coaching and consulting clients consistently consider themselves business people first, and designers second.

Just as Howard Schultz of Starbucks discovered, profits are made in the “back room,” not the “front room.”

2. Don’t wait for cash flow pain to get business financing
Comedian Bob Hope said, “A bank is a place that will lend you money if you can prove that you don’t need it,” and never were truer words spoken. Which means the time to apply for credit, for that eventual safety net, is when you need it least. For many readers, that time may be now. Your industry is actually not bad from a cash flow standpoint since you undoubtedly get deposits before ordering merchandise, and hopefully you get retainers, too. So it’s not the normal ebbs and flows of business cycles that you’re protecting against, it’s the schizophrenic nature of sales in your industry—up one year and down the next. You’ll never be able to scale overhead quickly enough (or lay off valuable staff) when you hit a lull, so having that line of credit ready to go should be a major goal.

3. Hire slow, fire fast
I can’t say it enough—the most difficult challenge designers have, given the wild fluctuations they experience in sales from year to year, is matching overhead (fixed costs) to those changing levels of sales. One of the largest overhead factors is the combined wages of your staff. When times are good, when that unexpected job comes into your already busy shop, it is tempting to want to hire. But what happens when things slow down? In almost every small business, the rule should be not to hire a new person until you really need two. You need to push yourself and your existing staff to the brink before hiring. That way, you know it’s not just a luxury but an essential. As for firing fast? Never let mistakes linger, and you’ll know you made a mistake in hiring within two weeks. It doesn’t matter if you did promise a three-month probationary period. Cut your losses ASAP.

4. Retaining great employees always beats replacing them
The most chaotic firms I work with have high turnover. The calmest, most grounded firms I work with have almost none. The latter are always far more profitable than the former. The reason my clients with low turnover operate that way, is that they build “golden handcuffs” into their employee contracts. Of course these are not the 7- and 8-figure golden handcuffs of the Fortune 500 world, but they do include things employees care about like health insurance and retirement accounts. Think those are too expensive? Then you don’t really understand the cost of turnover. Besides, one of the most profitable design firms I’ve ever worked with (7-8 people) has for years, paid their long-term employees below market! True, their total package is in line with the market, but because of the value of all of the perks, the base salary is actually less. Do employees complain? No! Just the opposite. If they were to interview with a competing firm that offered a higher base, but no benefits, their decision would be to stay put.

5. Don’t be afraid to fire customers
We all know that with customers come problems. With customers come issues of invoicing and collection and customer satisfaction. With customers comes complexity. There are some very powerful exercises in Step 3 of my 8 Steps Program (free to members of The Edge) that show how to separate ideal customers from the rest. But what to do with the rest? You’ll be amazed how good it feels to fire the ones that are eating up all of your time and resources, and contributing almost nothing to your bottom line.

6. Be prepared for the naysayers
Whether it’s family, friends, customers, employees, or anonymous trolls on the Internet, not everyone will wish you success. In fact, some will make themselves feel better about their own situation if they’re able to watch you struggle. Sadly, there’s a bit of human nature involved here. The Germans coined the best word for it—schadenfreude—pleasure derived by someone from another person’s misfortune. This effect must truly be the proverbial “water off a duck’s back” for you. For every person that wants to see you quit, there is another that will criticize you for that! In fact, that will probably be the same person who will never give you the credit you deserve. So be it. Just let it go and, if you must, trust Karma to make amends on your behalf.

7. But don’t forget to enjoy the journey
I am fairly certain that if you don’t eventually build a successful business, one that pays for the lifestyle you desire today and the future you desire tomorrow, that enjoyment of the journey will be fleeting. But once you know that you are on that path, and doing the right things and doing them right (what I call your “critical cores” during the ActionMaps process) you can take stock every day, write in your journal, and appreciate the moments-to-moments, good and bad.

See, maybe lawyers and interior designers have more in common than one would think!

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