Starting an interior design business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful interior design business.
Importantly, a critical step in starting an interior design business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start an Interior Design Business:
- Choose the Name for Your Interior Design Business
- Develop Your Interior Design Business Plan
- Choose the Legal Structure for Your Interior Design Business
- Secure Startup Funding for Your Interior Design Business (If Needed)
- Secure a Location for Your Business
- Register Your Interior Design Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Interior Design Business
- Buy or Lease the Right Interior Design Business Equipment
- Develop Your Interior Design Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Interior Design Business
- Open for Business
1. Choose the Name for Your Interior Design Business
The first step to starting an interior design business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your interior design business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your interior design business.
2. Develop Your Interior Design Business Plan
One of the most important steps in starting an interior design business is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your own business.
- Company Overview – this section tells the reader about the history of your interior decorating business and what type of interior design business you operate. For example, are you a residential interior design business, commercial interior design, hospitality interior design, institutional interior design, product design, or a design contractor?
- Industry Analysis – here you will document key information about the interior design industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your interior design business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your interior design business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Interior Design Business
Next you need to choose a legal structure for your interior design firm and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the interior design business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small business owners. It is an agreement between two or more people who want to start an interior design business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for an interior design business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for an interior design business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your interior design business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Interior Design Business (If Needed)
In developing your interior design business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for an interior design business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in an interior design business that they believe has high potential for growth.
5. Secure a Location for Your Business
When looking for a location for your interior design business, it is important to consider your operational needs. You will want an office space that is large enough to accommodate your design studio, as well as storage and workshop space. You will also want to be in a location that is convenient for your clients, with good transportation access and plenty of parking.
6. Register Your Interior Design Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your interior design business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your interior design business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
You will need a business license and a trade name registration. You may also need a zoning permit, depending on the type of business. For more information, contact your local licensing and permits office.
10. Get Business Insurance for Your Interior Design Business
The type of insurance you need to operate an interior design business depends on the type of business.
Some business insurance policies you should consider for your interior design business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Interior Design Business Equipment
To run your interior design business, you will need some basic equipment. This includes a computer with design software, a printer, office supplies, and furniture. You may also want to invest in a scanner and a camera to help with your designs.
Additionally, you will need to purchase some specialized equipment, such as a drafting table, measuring tape, and a level. These items are necessary for creating accurate drawings and blueprints of your designs.
12. Develop Your Interior Design Business Marketing Materials
Marketing materials will be required to attract and retain customers to your interior design business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your interior design business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional interior design business website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your interior design business.
13. Purchase and Setup the Software Needed to Run Your Interior Design Business
You will need a few software programs to run an interior design business. The first program you’ll need is a computer-aided design (CAD) program to create three-dimensional designs. The second program you’ll need is an image editing program to help you touch up your designs and make them look realistic. The last program you’ll need is a presentation program. This program will allow you to create presentations for your clients that showcase your work.
14. Open for Business
You are now ready to open your interior design business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start an Interior Design Business FAQs
Is it hard to start an interior design business?
It is not too hard to start an interior design business, but there are a few things you’ll need to do to make it successful. You’ll need to make a business plan and research your target market. You also need to have the design skills and experience necessary to be successful in this industry.
How can I start an interior design business with no experience?
You can start by doing some research on the internet or in books to learn about the basics of interior design. You can also take classes on interior design to get more specific knowledge and skills. Finally, you can start by designing simple projects and working your way up to more complex projects. With hard work and dedication, you can be successful in starting your own interior design business.
What type of interior design business is most profitable?
The type of interior design business that is most profitable is one that specializes in high-end projects. This type of business usually has more expensive materials and labor costs, but the customers are typically willing to pay more for the finished product.
How much does it cost to start an interior design business?
To start an interior design business, it will cost you between $5,000-$50,000. This includes the cost of setting up your business, securing a facility, marketing materials, and other initial costs.
What are the ongoing expenses for an interior design business?
The ongoing expenses for an interior design business are typically the cost of doing business, such as advertising, travel, and supplies. In addition, many interior designers have additional costs such as rent, salaries, and benefits.
How does an interior design business make money?
A successful interior designer can make money by providing services such as space planning, color consulting, and furniture selection. Another way is to sell products such as furniture, fabrics, flooring, and window treatments. Additionally, some businesses may offer services such as remodeling or new construction.
Is owning an interior design business profitable?
Owning an interior design business can be profitable because there is a lot of demand for interior design services from individuals and organizations. Many businesses are willing to pay for interior design services to create a professional and appealing appearance.
Why do interior design businesses fail?
One of the main reasons interior design businesses fail is a lack of planning. This failure can include a lack of planning for finances, marketing, and even day-to-day operations. Businesses can also fail because they don't have enough experience, don't understand the target market, or provide poor customer service.