Since the recession, cashflow is the toughest thing to manage for designers because clients want longer payment terms and suppliers put bills in earlier.
The free flow of business and projects prior to the recession has long gone. Budgets and payments are more controlled, as are completion deadlines. The flow of work is not consistent and somewhat unpredictable, which means it is difficult to forecast long-term business goals.
Competition in the market has prompted interior designers to take a global approach to business. Some companies have survived the downturn and some have gone bust. Cash flow is the most important part in running and maintaining a successful business.
“Everything has changed in my business since the recession. I decided very early on that if you do not find ways to work in this new environment, you face potential failure,” said Melissa Greenauer, founder and principal designer, Greenauer Design Group (GDG).
“Ultimately, you have to focus on what makes the best business sense and generates profit for your business. Given the fact that there is not enough work to go around, you have to outskill the competition, be increasingly creative and unique yet remain commercial in your design approach.”
John Rabone, MD, R&R Design, agrees with Greenauer on taking a global approach. He said the firm has been very lucky because most of its work has been outside of Dubai for the past year-and-a-half.
“Looking back, decisions on who we work for certainly helped us to get through the recession, too many companies were over exposed in terms of working almost solely on high risk projects which, once they were put on hold, meant the bulk of their income ceased overnight,” he said.
“In our area of design you tend to work with the family owned franchise business or direct for the brand as opposed to the developer so cashflow is far easier to predict especially when you’ve been working with clients for many years.
“In some instances, payment terms may have changed but so long as you’re aware of this you can allow for it, it’s when you’ve no idea and there’s no contact from a clients accounts office that it can create problems.”
Greenauer believes her biggest challenge since the recession is trying to capture enough consistent and solid work in one region.
“I have expanded my services so clients get more for their fees, and I have learned not to turn away any work unless it truly doesn’t fit within our business model,” she added. “My new strategy is two-fold; I am focusing on new markets for projects, as well as checking in with old clients so I can work with more repeat business that is referral based, and therefore less risky.
“As a designer, you want to work for the best possible clients and make sure you exceed expectations because this is your best opportunity to land new work with like people and good budgets,” she added.
Trisha Wilson, CEO and president, Wilson Associates, has also re-examined its business model by tapping into different aspects of the market – healthcare, commercial, senior living, and specialty food and beverage design.
It has launched three studios; Blueplate specialty food & beverage studio, Inn-Box Global Turnkey Solutions and Medica Design, healthcare design solutions.
“I have always believed that flexibility is the key to weathering the storm, and those who survive are usually the most adaptable to changing circumstances,” she added.“The market ahead is cautiously optimistic.