Design Business Advice: Make 2021 Your Year!

Original article posted at Studio Designer by Lauren Espineli.

There’s no better time than now to assess the operations of your design firm and make changes that will boost your business for the rest the year. Numerous Studio Designer users rely on the expertise of our network of consultant partners to manage their businesses. Many of these talented individuals have worked closely with Studio Designer for decades and know our software inside and out. The featured consultants in this post offer tips on planning, organizing, taxes, PPP loans, reports, and the importance of hiring industry specialists.

Setting a Budget and a Business Plan

To set your business up for growth this year, consider establishing an overall budget for your business. Caroline Van Wassenhove of CVW Accounting recommends setting a budget for your staff, your overhead, and for professional services. She explains that a well-defined budget will help establish a clear roadmap for how you run your business for the year and what types of activities you want to prioritize. She recommends creating a budget directly in Studio Designer, under Settings/Budget. A budget is essential to plan for a desired goal, provide a target for future performance, and help determine variances from expected performance.

Taking the time to develop a comprehensive fee structure is also essential for businesses looking to expand. Angela Roork of Designer Business notes that a well-thought-out fee structure is the path to a profitable business. Every structure is different according to the size and scale of a business, but it’s essential to be confident in your hourly fee (or design fee), mark-up percentages, client deposit percentages, retainer fee, and minimum project fee. Interior designers are more in demand than ever so realize that potential clients may be willing to pay a premium for services.

Using Studio Designer to Organize and Streamline

Organizing both financial and project data in the cloud is one of the major benefits of Studio Designer. Julia Nikishina of New Age Financial Consulting urges her clients to take advantage of this integrated functionality. She emphasizes that Studio Designer can easily recreate Excel reports or replace a monthly Quickbooks subscription to save money and headaches so that you can have current financials tie directly to your projects. Bank import is the most convenient way to connect your bank and credit card transactions to your projects. You can also get training on accounting in Studio Designer by visiting our Learning Hub.

From a project management perspective, Lisa Bradshaw of Bradshaw Designer Bookkeeping recommends that clients can establish a prosperous workflow for the year by using Item numbers and components so that information for one Item can stay together. This is especially true for designers who want to manage and sell their inventory in Studio Designer. Sometimes, inventory Items have multiple components, and it is important to create an Item for each component. Read more details here.

Getting your defaults right in Studio Designer will streamline your work and will set up vital efficiencies for all projects this year. Angela Roork recommends taking the time to properly set up Studio Designer defaults, even if you’ve used the platform for a while because your business may have evolved. By going to Settings > My Company, and then clicking on the Codes tab, you can set up or modify your standard selling mark-up percentages, sales tax deposits, and more and these will default when you create a new Item. She notes it may be worth it to create a client sample project so you can bulk copy it for future projects. For more detailed advice, watch this webinar about how to streamline your workflow in Studio Designer.

Manage Cash and Workflow in Studio Designer

Julia is a firm believer in using Studio Designer as a cash management tool rather than online banking, which does not reflect outstanding checks (which is necessary to be fully aware of your cashflow the whole year). Your Studio Designer cash balance should be up to date at all times so you can assess pending payments at any time. She also has a mantra to her clients—“Reconcile, reconcile, reconcile”—and to only be a month behind in reconciliations to ensure cash accuracy and report accuracy. Check to make sure your Balance Sheet balances at the end of every month to make year-end tasks a breeze in December.

Caroline emphasizes that the design industry is very capital-intensive, requiring upfront client and vendor deposits. Setting up a cash flow management process in Studio Designer can prevent the co-mingling of funds and potentially running out of funds for this year’s projects. She turns to Studio Designer reporting to implement this process and different strategies include a Profit First System that offers real-time cash position information, cash flow projects, or a cash-flow statement. For more details, read her helpful blog post with important advice for the whole year.

PPP Loans and Taxes

Because of the pandemic, some designers have had to manage their expenses with the help of PPP loans and tax expert Cameron Mansur of CM Tax & Consulting, Inc. has some useful tips. Regarding the 2020 income tax law about PPP loans, he states that for federal income purposes, the Consolidated Appropriations Act (CAA) provision allows taxpayers to claim deductions for expenses paid with forgiven PPP loan amounts. For users in California, the state law does not currently conform, and the taxpayers should exclude the PPP loan forgiveness amount and reduce their expense deductions. Just because laws and bills are currently being decided, he recommends that designers file an extension for tax return purposes until it is clear what the state law and federal law demands.

Denise Peloquin of My Studio Desk believes that having financials stored in Studio Designer is especially useful for small business owners who need to prepare financial documents for PPP fund applications. As more PPP funding is potentially available—or you are just strategizing how to keep business alive—she stresses the importance of keeping your books balanced and accounting up to date in Studio Designer to be better positioned for loan approval.

Planning ahead for 2021 taxes now will do a world of good throughout the year to ensure no major tax calculation errors occur. Caroline knows that sales tax compliance can be complex but it’s important to understand what triggers sales tax nexus to ensure your business maintains compliance for both in-state and out-of-state projects. Julia also recommends that designers ask new vendors they add on this year for W-9s as soon as possible to avoid scrambling during the tax season.

The Value of Studio Designer Reports

Consultants and bookkeepers are great champions of Studio Designer reports that help designers organize and analyze their business for the year. Cameron stresses that reviewing and maintaining reports like client deposits, vendor deposits, work-in-progress , accounts receivable, and accounts payable—allow you to see the full picture of your business and will help you focus on your firm’s most critical needs on an ongoing basis. He thinks it’s crucial that designers work throughout the year to strive for a 100% clean set of these reports by the end of the year to be well positioned for tax season.

Julia’s favorite reports are project worksheets and declares that they should be any designer’s “go to” because they capture purchase and selling cost and allow you to see if any Item price reconciliations need to occur. She notes that if you are owed a refund from a vendor, zero out your selling cost so you will quickly see that money is owed to you on reports.

A best practice Caroline recommends is determining which reports you need to help ensure for accurate financial reporting (i.e. WIP review) as well as reports that can help you with business decisions throughout the year (i.e. Project Profitability reports). The reports will vary according to a designer’s needs and her services include figuring out which reports are most helpful to her clients. Read about report categories.

Angela also believes that reports can not only help you plan for the year but can also make sure you’re on the right track—especially if you work in a team. For instance, WIP reports allow everyone to be on the same page when it comes to project progress. Reports are highly valuable for client relations as you can generate accurate and detailed status reports in Studio Designer, so your client values your business savvy almost as much as they appreciate your design work.