How Is Your Cash Flow?

The number-one thing that can hurt your business more than any other thing is your cash flow - or the LACK of cash flow! That single issue has brought down huge companies - especially when bills have come due before there are funds to pay them. It's something that businesses of all sizes need to pay close attention to, so I'll ask it again: How is YOUR cash flow?? I have 4 strategies that can help you keep your day-to-day operations running smoothly with plenty of cash. Let's take a look!

1. Review Your Fees

Are you charging enough for your services? This is a constant question for interior designers. You've got to understand your profit margins very very well to answer this question! If you're margins are around 20% for a project, there is no way that you're actually making enough money. Do the math for your overall profit margins and start to adjust what you're charging based on the numbers you see. Many many designers are too afraid to ask for what they're worth. When you do that, you are definitely short-changing yourself and your business. Review your fees and consider raising them.

2. Count Those Hours

Another BIG mistake designers make is not actually keeping track of every hour they spend on a project, and then not charging for every hour. OUCH. You aren't doing your clients or your business any favors by not accurately tracking your hours. If you charge hourly, you're definitely leaving money on the table when you don't bill for all of that time. And if you use the flat-fee method, you still need to track your hours to be sure you aren't putting in more hours than you should. Every single member of your team should track their hours, and account for exactly which project and which task should be marked for those hours. 

3. Review Unnecessary Expenses

Do you really need to hire a full-time employee right now, or could you use a freelancer or contractor? Do you have to rent that large office space, or can you find a smaller space? You don't have to make major cuts to make a difference in your cash flow - it's all about making smarter decisions. If there are big expenses that can be put off, or travel that isn't really necessary right now, then be sure you're making the right choice for your business right now.

4. Improve Your Invoicing 

This is another fairly simple step that can truly hurt your business if you don't handle it correctly. You need to bill on time, and be sure that you are paid on time. Too often we put invoicing off until the end of the month, or when we "have time" to take care of it. NOPE. Billing for your services is WAY too important to be put on the back burner. You need that cash coming in because you are definitely going to have cash going out to pay for staff and materials. So do NOT put that off. 

I know that focusing on your cash flow can cause some anxiety, but it's a critical part of running a successful business. There are definitely highs and lows in every company, but it's how you handle them that's key! Download my Guide for How to Handle the Highs and Lows of the Interior Design Business here! It will help you take on any challenge with ease.

Check out more design business tips and tricks

5 Tips for Reviewing Yearly Goals

How to Make Your Goals Personal

How to Make More Money

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