4 Ways to Increase Profits in 2021
Have you set your business goals for 2021? I've made my list of intentions and set my strategies! And I'll bet we've set a similar goal - to be more profitable in the new year. That should be a goal for all small businesses! Now all you need are the tactics to achieve that intention. I have 4 tips that will help increase your profits, and they may not be what you expect!
1. Fix Your Mindset
Too many designers set goals that they think are important - but only because they see other designers "achieving" them. Like... being Insta-famous. Or being a spokesperson. Or having a licensed collection. But if you want to make money, you might want to look more carefully at those goals. They could bring you some income, but won't necessarily pay off in the way you think they will. If you really want to be profitable, you need to focus on what services and activities truly make you money. As I've said oh so many times: Celebrity doesn't often pay. That doesn't mean you can't still have those sorts of goals! You just need to understand what is worth your time and money, and what isn't.
2. Watch Your Margins
Do you know what your profit margin is for every single one of your services and activities? Diving deep into what REALLY makes you money is a great exercise for the beginning of the year. And remember to include your time and the hours that anyone else on your team spends on that activity. For example, doing a quick Designer Day service can pay off more in the long run than having a licensed collection. Why? Because there is ZERO overhead in a Designer Day - just your time. And if you price that service correctly, you can make as much as $500 an hour because the client pays for the service, not the hours! With a single licensed collection, you're going to make about 3% to 5% of the wholesale price of the products. BUT - you're going to spend weeks and weeks on the design process, then time on marketing, live appearances, and more. And guess what? You won't get paid for all of that time - and you'll be spending those hours away from your core business. If you want more profits, you have to be very honest about what gives you more in the hours-versus-dollars equation. Then focus your time and energy on where your margins are greater!
3. Increase Your Fees
Most designers are not charging enough for their time. We get caught up in the idea that our clients won't pay us a high hourly fee, or we second-guess the per-project pricing that we've set. (Been there, done that!) Usually that's a major confidence issue. But your clients are not just paying your for your time. It isn't just about the hours you spend on a project! NO! They are paying you for your experience, your expertise, and your creativity. Stop thinking of yourself as an hourly employee - that completely commoditizes your work! Think of yourself more like an artist, someone who creates interiors like no one else. YOUR ability is WHY people hire you - they can't do it themselves. It isn't just placing furniture or buying things at a discount! YOU need to believe that, and you need to be able to show your clients how important your knowledge and skill is. And here's another hint: If you've been swamped with work and way too many clients, that means you are not charging enough. Higher fees and fewer clients is the smarter way to work! So examine how you're charging and what you're charging to help increase your productivity AND your profitability.
4. Client Focus
One of the most important ways to boost your profits is one that most designers forget. Your clients! Treating your clients with white-glove, high-level customer service at all times not only creates long-term clients, it also pay off in referrals. Without spending a lot of money, you can give your clients the feeling that they are your sole focus and that you are there for them in every way possible. For that investment of a bit more of your time and a great system of communication and appreciation, you can find a major payoff in future business! And don't forget that your relationship with your clients doesn't end when the project does. You want to check in with them for holidays, special anniversaries (like their move-in day!), and at other random times. Staying top-of-mind with them is key to working with them on other projects. And never ever be afraid to ask for a referral. That's the lifeblood of most of our businesses.
To help you with that last tactic, you can download my FREE Guide to Giving Your Clients the Best Experience. It will help you offer that incredible luxe customer service to all of your clients!