Jaime Bako

An interior design firm's ability to effectively understand its financials is critical when planning for its overall profitability. If you're involved in running an interior design firm, you'll know that great accounting is one of the keys to success. And for design firms to grow in both business and profits, they must continually plan, monitor, and understand their financials.


All businesses heavily rely on laying a favorable and consistent foundation of pricing and margins that provide the building blocks for overall profitability.


DesignDocs make it easy to review and understand all of the elements that lead to a firm's big-picture profitability. As an all-in-one project management and accounting software, it provides a dependable way of analyzing the different levels of profitability, from each individual item to the overall company level.


So, let's take a closer look at three ways that DesignDocs puts the power in your hands to lead a profitable interior design firm.


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Suppose we boil an interior design firm's operation down to the finest level of detail. In that case, we soon understand that it's a firm's profitability at an item level that is key to its profitability at an overall company level.


Viewing the margin on each individual item allows designers to see in detail what's being spent and what's being billed. This is likely to vary from item to item – on some items, the margin may be a healthy one, and on others, maybe not so much. This fluctuation isn't a problem so long as the cumulative margin overall stays positive.


Monitoring these numbers, however, is vital, as it allows design firms to review and make tweaks to how they're billing and the value of the billings that will ultimately lead to an overall positive revenue stream.


If you're not using software that integrates both the accounting and project management functions of your design firm, however, it can be difficult to get this information. This is because you'd have to draw it from two different programs, ie. whatever program you're using to manage your projects and also whatever accounting program you're using to handle the financials, say Quickbooks, for instance.


However, with an all-in-one program like DesignDocs, it's easy to view an item's pricing at the minute detail, allowing you to adjust it as needed before sending any proposal to your clients.


The All Fields (Items) report, for instance, collects and presents all financial data about each item within a specific project. By customizing this built-in report, it's easy to immediately see the retail, selling, cost prices, budget variances, and margins on any items proposed in a project. Having access to this information puts the power in your hands to manage your interior design firm and its pricing. This will help you to ensure that each project is kept profitable at this item level so that long-term, your design firm is kept profitable at the company level.



How good would it be if you could get real-time financial information on a project as you progress through the design stages? Up-to-the-minute reporting can help you better track the costs of materials and labor.


For example, you might be billing a client using a flat fee model. However, on analysis of the tracked hours, it becomes evident that you've nearly reached the maximum hours you need to stay below to make this project profitable. Having visibility of these budget variances gives you the insight required to manage either your staff time or clients' expectations more effectively.


The project-specific sales and profit report is a powerful tool to help you do just that. Run it before finalizing a client proposal to check in and see at a glance the cost price, selling price, and margin for all items in a project. By using this report, you'll easily be able to spot any pricing that's a miss or where you might need to tweak something here or there to ensure your profit expectations are being met.


Compiled over time, project-level reports such as this can show you trends and patterns - where you're spending too much, why projects go over budget, and how you can spend money more effectively to help increase profit.



Because DesignDocs is capturing all of these smaller instances of profitability at the item and project level, as discussed in the previous points, you can have confidence in the knowledge that the view on your firm's bigger picture profitability is also accurate and exact.


When looking to understand the overall long-term profitability and growth of your design firm, income statements are fundamental and considered the backbone of understanding a company's profit and loss over a period of time.


Within a few clicks in DesignDocs, you can generate your firm's income statement detailing the cost of goods sold, gross profit, total income, total expenses, and net income before and after taxes. Easily compare this to the prior year or to any date range you choose to identify the bigger-picture profit trajectory your business is working towards.


Another insightful company-level report available to you in DesignDocs is the Gross Margin report. This report allows you to see sales, margins, fees, and commissions for the entire company, broken down by project or product category. In the same report, see your fees, commissions, and company totals.


This is another telling report that puts the power in your hands to lay a strong pricing foundation that can lead your design firm to overall profitability. Use it to answer all kinds of questions, such as:

  • What is my total revenue on goods, fees, and commissions across all projects this year?
  • What did I bill in fees last year?
  • Which element categories do I make the most (or least) margin on?
  • Which vendors did I spend the most money with last year, and who have I made the most commission with?

With this kind of intel, you can get a clear view of the big picture of your firm's overall earnings. Does the way you're charging clients make sense? You might think it does, but you might see another story unfolding in your ledger. You can also analyze how you're spending your time - are you wasting time on projects with little to no return? DesignDocs gives you the tools and the metrics by which you can measure - and adjust - your interior design firm's profitability and, ultimately, its success.



Jaime Bako

As Business Development Manager, Jaime specializes in working with small to medium-sized design firms. By helping to implement DesignDocs into their daily processes, Jaime helps interior design business owners improve their firm's productivity and gain stronger financial insights.
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