The Interior Design Business Handbook: A Complete Guide to Profitability

561 Pages·2012·63.536 MB·English

by  Mary V. Knackstedt

The Interior Design Business Handbook

The Interior Design
Business Handbook
A Complete Guide to Profitability
FIFTH EDITIon
Mary V. Knackstedt, FASID, FIIDA
JOHN WILEY & SONS, INC.
Cover Image: © iStockphoto
This book is printed on acid-free paper.
Copyright © 2013 by Mary Knackstedt. All rights reserved
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Published simultaneously in Canada
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Library of Congress Cataloging-in-Publication Data:
Knackstedt, Mary V.
The interior design business handbook : a complete guide to profitability /
Mary V. Knackstedt, FASID, FIIDA.—Fifth edition.
pages cm
Includes bibliographical references and index.
ISBN 978-1-118-13987-5 (cloth); 978-1-118-31157-8 (ebk);
978-1-118-31159-2 (ebk); 978-1-118-32818-7 (ebk); 978-1-118-32819-4 (ebk); 978-1-118-32820-0 (ebk)
1. Interior decoration—Practice—Handbooks, manuals, etc. 2. Interior decoration
firms—United States—Management—Handbooks, manuals, etc. 3. Interior
decoration—United States—Marketing—Handbooks, manuals, etc. I. Title.
NK2002.K57 2012
729.068—dc23
2011051092
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
Contents
Preface vii
Acknowledgments ix
Chapter 1 Finding Your Place in Interior Design 1
Chapter 2 Starting or Changing Your Business Type or Structure 31
Chapter 3 Planning for Profit and Growth 56
Chapter 4 Setting Up a Design Studio 70
Chapter 5 The Design Team 87
Chapter 6 Business Development 135
Chapter 7 Charging for Your Services 174
Chapter 8 Succeeding in Project Management 252
Chapter 9 Working with Sources and Contractors 281
Chapter 10 Managing Your Office 312
Chapter 11 Managing and Securing Your Financial Position 355
Chapter 12 Growing Your Firm and Your Professional Skills 435
Epilogue 445
Appendices: AIA Document B171 ID 447
Professional Associations 465
CIDA 469
Glossary 498
Recommended Reading 533
Designer’s Business Forum 538
Index 539

Preface
Design creates change. Designers are therefore leaders in the progress of the world.
But being a leader has challenges of its own. Today’s designers are under great
pressure to perform at a high level, often faster than ever before. This means de-
signers’ business procedures must complement their creativity.
These procedures are key to our success—whether in developing products
or services or in communicating with clients. When we use the right procedures,
the business portion of our organizations can complement the creative process
beautifully.
We deal with business issues every day. We engage in business development
when we seek new clients. We deal with finance every time we handle money. We
sign contracts and letters of agreement, address personnel issues, and seek out new
resources. We cope with masses of paperwork, including specifications and orders.
To stay in business, we have to understand business. We don’t have to earn busi-
ness degrees or be personally capable of performing every business function, but
we do have to be able to talk with and understand the people who are specialists in
these fields. We must relate to other industries, including the financial and legal
entities that are part of the business world. A good, basic understanding of specific
business functions is necessary for every staff member, not just the person running
the design company.
Everything that affects business in general affects the interior design business.
When insurance rates go up or certain types of insurance become expensive or un-
available, we may have to modify the way we do business. The state of the stock
market, the price of oil, and the value of real estate all affect our clients’ attitudes
toward buying design services; therefore, they affect us.
When designers are comfortable dealing with money and financial issues, it
gives them a tremendous sense of freedom and enhances their creativity.
Though business procedures are taught in design schools, I feel they are not
emphasized as extensively as they should be. The Interior Design Business Handbook
was written primarily for practicing interior designers, whether working indepen-
dently or within large firms. It covers the full range of business activities and pro-
cedures for the life of a practice, from choosing a location and running a business
on a daily basis to selling it when you’ve decided to retire. It is also useful to stu-
dents and as a training manual for support staff members. Give a copy of the book
to your bookkeeper, accountant, and other consultants so they understand our
field better.
viii Preface
This fifth edition of the Handbook addresses many new issues not included in
previous editions. Financial issues and many general procedures have changed
significantly. Technology has been part of that change. Interior designers are also
dealing more on an international basis, and technology has allowed us to have more
virtual relationships. The Glossary includes an extensive list of business terms de-
signers use regularly; the descriptions have been tweaked to be as user-friendly as
possible. Many more subjects could have been included, but then the book would
have been difficult to carry. It was imperative to keep the book as concise as possi-
ble, yet to convey the important issues that are in front of us today.
This book is for the practicing designer who wants to be assured of a continu-
ously profitable business—in terms of profit and quality. Moreover, the information
in this book is experiential: It has been taken from situations that arose in the many
firms with which I have consulted. It has been researched and gathered in a real,
hands-on fashion during the many workshops, programs, and classes I have held
with designers, architects, and professionals in related industries. At these meet-
ings, many new questions surfaced. If I did not have a solution, I asked my consul-
tants for their assistance in finding one. Once we did, we asked the designers in
these programs to try the particular procedure. If appropriate, we tested the proce-
dure in our firm. As a result, I can state with confidence that every procedure in this
book works. They are being used daily in successful design firms throughout the
United States—including my own.
I believe interior designers have a great contribution to make to the world. It is
my hope that The Interior Design Business Handbook will enhance your creative ener-
gies by making the business end of interior design not only comprehensible but
rewarding—in every sense of the word.