[00:00:00] Speaker A: Foreign.
[00:00:07] Speaker B: Hey, welcome back to the Interior Collective. I'm your host, Anastasia Casey, and today's conversation is one that every interior designer needs to hear. Especially if you've ever felt like you're running your business on the outside but struggling to make sense of the numbers behind the scenes, I'm joined by Gabriella Eisenhart, founder of award winning Silo Design Studio based in Atlanta, Georgia. Known for her sophisticated storytelling interiors that push boundaries while honoring comfort and function, Gabriela leads a growing team creating homes and boutique commercial spaces across the country. But beyond her incredible aesthetic, what really struck me about Gabriella is how seriously she takes the business of design, especially when it comes to profitability, cash flow, and keeping your head in the books as you scale. In today's episode, Gabriela opens up about the early mistakes that shaped her financial approach, the KPIs she's watched like a hawk, and why staying personally connected to your bookkeeping is one of the most creative decisions you can make as a business business owner. We're talking pricing strategy, cash flow, profit margins, and how to build a team while staying lean, nimble and profitable. If you're ready to trade burnout for sustainability and guesswork for clarity, this conversation is your permission slip to get intimate with your numbers and build a business that truly supports your life.
[00:01:21] Speaker C: We are so excited to invite you to dive deeper into the Interior Collective. Podcast episodes now on Patreon unlock access to in depth analysis, helpful downloads and worksheets created with each podcast episode. Subscribers gain behind the scenes access to additional resources like examples and screenshots of guest spreadsheets, construction documents, and so much more. Your subscription also gets you immediate access to our private community of interior designers and our team of industry experts ready to answer your questions? Subscribe
[email protected] the Interior Collective or linked in the Show Notes. Join the Interior Collective Patreon community and let's continue this conversation.
[00:02:02] Speaker B: If you've been listening to the Interior.
[00:02:04] Speaker C: Collective for a while, you probably have.
[00:02:06] Speaker B: Heard all kinds of software recommendations and maybe even tried a few. But if your system still feels kind of all over the place, I totally get it. That's exactly why I wanted to share Materio that's M A T E R I O. It's an all in one platform built just for interior designers. From concept to install and everything in between. You can try it for
[email protected] and Interior Collective. Listeners get 50% off their first month.
Hey Gabriella, welcome to the show. I'm so excited to have you on. I know you have been listening to the show for a while, so it just feels so kissed to have you on Live with me today.
[00:02:44] Speaker A: Oh, it's. It's surreal. I'm very excited to be on, so thank you for having me.
[00:02:49] Speaker B: I also just want to thank you for honestly, the. The topic that you pitch to discuss, because it is my favorite topic to discuss. And not everybody is open to, like, really diving into their numbers and. And being transparent about how there can be mistakes and how you have to learn from them and just kind of like what that journey is with truly understanding how to be a profitable business, not just a great design studio.
[00:03:20] Speaker A: Well, I'm happy to talk about it. It's honestly one of my favorite subjects, so.
[00:03:25] Speaker B: All right, well, let's dive in, and let's go ahead and start off with painting a clear picture of Silo Studio Design. How long have you been in business and what does the team look like today?
[00:03:35] Speaker A: So it's been a bit of a journey, and I'm going to take you back on it. I started my business 13 years ago, so I've been doing this for 13 years. It started with just myself, and then I branched out and had a company that was bi coastal and did that for seven years.
And just three years ago, it was time to recalibrate things and do things a little differently. And that is when Silo Studios launched, so. Or Silo Studio Design. So now, as I've been in business for 13 years, but it's been a little bit of a journey with the different, you know, different branches of the business. But I'm feeling really and great now where I'm at. We're based in Atlanta, but we work all over. We're a small but mighty team. There's three of us right now. It's been.
[00:04:21] Speaker B: We've.
[00:04:21] Speaker A: We've had more, but we've recently scaled back. We have operations, and I have a designer on staff right now and myself who wears a lot of hats. We actually all wear a lot of hats.
[00:04:32] Speaker B: Absolutely. It seems like the best studios always do.
So I know a lot of designers listening right now are craving both creative fulfillment and financial stability because things are feeling a little less, like, guaranteed than they maybe did three to five years ago when Covid was booming and everybody wanted to redo the house that they're living in. I'm curious, now that you say you're feeling really good about where you guys are right now, how have you structured your business to support both the creative fulfillment side of things and also making sure that you are Financially stable and you have projects coming in.
[00:05:09] Speaker A: I think, you know, it's a. It's a bit of a. Of a juggle, really, learning how to forecast, I think, in the business and understanding, you know, because tomorrow's business is never promised, it just really isn't. And I think, you know, I talk to a lot of my peers and I think the industry as a whole is feeling it a bit right now where things have slowed down, you know, 20, 20, 21, 22, 23. Wow, wonderful years for all of us. And, you know, I'm someone who does very heavy construction with the business, and especially in that world, it's. It really has slowed down. So I think, you know, first and foremost is understanding your. The business and the business of home and the.
And where your revenue streams are coming from and making sure that that is healthy. And then, you know, figuring out what you need. I. How many projects you need to be taking on. And if that means, you know, you're creating a backlog and you're scheduling out projects, I think that that's always ideal so that you have a pipeline, you know, of upcoming projects and you can really forecast a year at a time. I think that that's healthy. But I also.
Not everybody is there yet, right.
So sometimes it's hard to navigate. And that's partially why I scaled my team back a little bit last year, because I was feeling the weight of some of the changes in the industry and it was killing my creativity.
I was chasing payroll, I was chasing expenses, and I just, I said, you know what? I need to take a breather and I want to be able to take on projects that feel right for us and continue to create projects that I'm proud of. And in order to do that, I think I need to scale back. So I think it's important to know when to shift to.
[00:06:52] Speaker B: One of the things I most admire about you over, you know, the last 13 years of having your business or businesses, iterations of it is your ability to pivot and like, how you're very comfortable doing that. And like, you just gave the example of it was like, hey, this is not working for me. What do I need to shift? And, you know, slightly tweak to make that better. Was there specific point in your career, like a turning point, when you realized that design talent wasn't going to be enough, that you really needed to understand your numbers to run a truly healthy business early on?
[00:07:28] Speaker A: Absolutely early on. Because there's so many wonderful talent out there. Right. I mean, it's a very competitive business, but you have to get your head in the books. And I'm not saying, like, hey, everyone needs to run their books. It's not. That's not approachable for everyone. But you have to understand it and you have to be able to catch the mistakes. And, you know, you, as a small design firm, you cannot survive off of just your design fees alone. It's impossible. You know, So I think understanding sales and markup and where your revenue is really coming from early on and what that needs to be is incredibly important to keeping. To steering the ship, you know, okay.
[00:08:13] Speaker B: That I love and believe in so fundamentally, and I know a lot of people. That part sounds really scary. It is really scary because they're creatives and they like to make things beautiful. And if there's cash in the bank, it can feel like we must be fine because there's still money in that account. And just even personally, from my own experience, like, cash in the bank is not enough because that quickly can change after one project falls through. And you still have that overhead. So I'm curious, like you said, you know, you can be outsourcing your. Your bookkeeping and financial planning, which I absolutely recommend. It isn't something that you need to be doing, but you just mentioned you need to be able to catch the mistakes. And I think that that's so fascinating because as someone who trusts all of our financials to someone else, I can naturally kind of fall back on. Well, it's already being taken care of. I don't need to. I don't need to know that much because it's already being handled and delegated to someone.
So can you explain how you personally stay involved in the bookkeeping and financial review process at Silo Studio Design, even though your team and your project load have scaled and shifted? Like, how. How often are you reviewing the numbers yourself?
How often are you meeting with a financial person if you are outsourcing that at all? And how do you keep. Where do you find the sweet top between I am in the know and I know what's going on. And also, I've delegated this to someone else, and I need to trust that that's happening.
[00:09:49] Speaker A: Yeah. And I think. I mean, here's the thing. Having a great bookkeeper is important.
And I will say, you know, people think I'm insane. I've heard it multiple times. I still. We have an accounting team we work with, but work with, but I still do our books, mainly because it's easy for me.
It might not be easy to everyone. I'm looking at those financials monthly, quarterly and annually. Sometimes I'm. If it's a heavy procurement month and you have a lot of sales, I might be looking at it weekly, you know, but I have those systems and processes in place that it's easy for me to check. I'm not like inputting everything, but I'm just checking it. And here's the thing. You have a. You're outsourcing a bookkeeper. That's awesome. But they aren't in the projects where with you they don't know the ins and outs. They don't know about what's going on. So they can't catch those mistakes. But you do. And my operations manager does. And once we pass it through those hands, we catch those mistakes so much quicker. And there's a lot of money on the table in this business and people, designers are throwing away a lot of, a lot of money because they're not catching it until it's too late.
[00:10:58] Speaker B: Interesting. Can you give us a couple examples? They can be, you know, personal experience or just like in general when you're saying catching mistakes, like what are some of the things that just commonly can come up with, like the way a bookkeeper would categorize something, for instance. And you being in the know of the projects are like, okay, that actually is not how that should have been either categorized or transacted. What are some of the things that you see pop up most commonly?
[00:11:27] Speaker A: That's a good question. I mean I feel like I see things on the daily. Now I'm going to come up with an example.
We, I would say, oh, this, this would.
Let me, let me talk about construction a little bit. I think that this is. And we do full service construction and we bring it on our build partners, of course they're under a separate contract for legalities, but we still handle a lot of the procurement and our are purchasing. And you know, errors can be anything from. Yes. How something has been categorized in the system being wrong, markup structure being wrong, not charging enough for shipping. And then those shipping costs are getting charged to us later and then that can be thousands of dollars. And then I think what's so important and what I've really found as a leak in the business is just losses. How many times as, as a company have we gone, oh, you know what, this, this just seems unfair. We're going to take the loss and we're going to cover it, but we're not recording it. So when we're looking at the end of the project and trying to collect the data from the end of the project of our profit and loss, we're looking and going, wow, we've really done well. Our profit, our net profit's really great on this project. But we did not calculate any of those losses properly or we didn't record them properly. And you know, when you look in it, look at that at the end of the year, it could be a lot. And that's something that needs to be caught.
[00:12:53] Speaker B: Okay, those are very specific, wonderful examples. Thank you so much for bringing those down on the spot.
[00:13:00] Speaker A: Didn't come to mind. So I'm glad, I'm glad.
[00:13:04] Speaker B: Okay, so kind of in the same vein, what are some specific KPIs that you are tracking regularly in your business and how do they, how do those specific ones that you, you know, think to call out inform your decision making?
[00:13:20] Speaker A: Yeah, I think there's a, there's a few and I'll go over all of them with you. You know, I think it's important.
Again, I talk a lot about data and I'm sure we're going to discuss a little bit of how I charge project rate versus hourly. So I won't go into that too deeply right now. But without that data, we don't know how to charge for a project. We don't know how to again, forecast. Right. So I'm looking at, you know, on a project by project basis, what was our gross and net with that project? How many hours did it take? You know, I'm constantly monthly. We're looking at that profit and loss statement and that's everything from our services side, you know, revenue and the sales side, you know, what are those numbers looking like? Are they healthy, you know, the hours billed versus hours worked? I think this is where things get a little bit tricky.
Sure. Some of us are doing project rate and I think that that's really great.
But I think in order to do that successfully, you have to know what it takes to operate a project. So you have had to possibly charge hourly at some point because we, you know, there's, there's oftentimes where, and I am hourly, but there's often times where, you know, we're, we're, we're busy, we're like, well, you know, and we undercharge, we undercharge and then a new project comes in and we're estimating under what it's actually going to be. So I think it's so important to be reviewing that monthly. Might be a lot, but on a project to project basis just to make sure, you know, we're updating things as needed.
And then, you know, the last one I'm going to say is your utilization rate. And that's going to come down to your employees.
What are.
What are they actually? What are their billable hours? That's the best way to think. You know, your designer billable hours, I think should fall between 80 and 90% of their time because they are doing a lot of the things that are billable in a design firm versus me. My gosh, my util. Utilization. Utilization rate sucks. It does, you know, because I can't bill for anything that I do. I'm so behind the scenes. So I think understanding that too, really, really helps with how you're structuring the internal things within the business.
[00:15:33] Speaker B: Yeah, absolutely. I'm curious because you have an operations person. Does your operations person handle procurement as well? Yes. Okay, great. And so are you. For her utilization rate, are her procurement hours billed back? How do you set up procurement in your firm as far as how that's billed or paid for?
[00:15:56] Speaker A: We bill our procurement hourly. So. And it's worked out well for us.
And I really love having procurement in house and with our operations manager because, again, it's close to home and we can catch mistakes quickly. It's really, really worked well for us.
[00:16:12] Speaker B: So I'm just curious. I know you said for your designer, you're looking at like 80 to 90% is really where your. Your designer should be billable on operations, do you try to get that high of a percentage as well?
[00:16:23] Speaker A: No, that's not possible because we can't. You know, there. There's a lot of admin tasks, the things that are more internal within the business that we can't bill for the same. So the utilization rate really is the highest for our designers or designer right now.
[00:16:39] Speaker B: Yeah, absolutely. Okay, great. Thank you. Were there any financial tools or systems that you implemented really early on that like, change the game for you? Are you using QuickBooks, for instance? Are you using something like Studio Designer and managing all of your financials through that kind of. What systems are you working with? And are you happy with that?
[00:17:02] Speaker A: Yes, I actually am, but I had to. I had to not overthink it. So we were like, we loved Ivy. I'm sure you're familiar with Ivy. And so now we're on the Houzz platform when they bought Ivy, and it's worked really, really well for us. It works. We again, use it for billing and having the client portal and all of those systems. However, it's not enough.
So we have, you know, different. Honestly, Google Sheets and profit and loss statements and purchase profit statements and things like that that we're passing through with, with all of our numbers, so that it's basically double checking. Houzz. Even though we have. We have all the reports that we can run. I like the. It takes a little more time, but I like the process during procurement to go. Okay. You know, these orders are also going in to these sheets, and we're making sure everything is lining up properly.
[00:17:54] Speaker B: Amazing. Okay, great. So how often are you reviewing your profit margins? I know you were saying, like, reviewing.
Making sure that, like, your billable hours were accurate and there wasn't money that is left on the table because you were busy and didn't log those three hours that then turns into 22 hours by the time the end of the project is over.
How are you making sure you're not just staying busy, but you're really actually staying profitable? So how often are you looking at those profit margins and your P. Ls? I know you mentioned, you know, you're looking at those on a monthly basis, but just I know in my own business, monthly sometimes isn't even frequently enough to be looking at it. So walk us through kind of the cadence of your reviews.
[00:18:37] Speaker A: Yeah, no, sometimes monthly isn't. There are some times where I'm in it a couple times a week, you know, trying to figure things out and, you know, it doesn't. It's not incredibly time consuming because the systems are set up. It's really nice to. There's always a tab on tabs on my windows that say financial. And I can go into each document super quickly to check things.
So I am doing it pretty frequently, but weekly to monthly, for sure.
[00:19:00] Speaker B: And can you walk us through kind of the delegation between the numbers that are being input into your Google sheets by you versus your operations person? Like, how does that workflow happen?
[00:19:14] Speaker A: Yeah, so she really, since she's handling procurement, she's working on what we call and what we might have made up a purchase profit sheet. Okay. And that's where all of our sales filter through. She's. She oversees that. She hates if I touch it. Right. I'm not allowed to touch it.
I'm allowed to look at it.
So. So it passes through her first. And then I will be inputting information after reviewing it and inputting it into our profit and loss statement, which then, you know, of course, goes to the higher ups and our accountants, you know, and I think. I don't know if I mentioned I'm usually meeting with them quarterly.
[00:19:52] Speaker B: Okay, great.
[00:19:53] Speaker A: Awesome.
[00:19:54] Speaker B: Okay, what are some of the things I really liked? At the top of the show you already were talking about projections and understanding, like how many projects you should be taking on per year or the frequency of taking on projects. What are some of the ways that you've learned to navigate understanding that? Like, what do you look to. To be like, okay, what? We're going to be slower at this point, so that's when we should be onboarding someone. Or you know, we are placing all of our procurement orders at this point, so we're going to have a cash influx.
How are you starting to figure out what those projections could look like?
[00:20:34] Speaker A: Yeah, I think that's good. And for my. I will be transparent is I don't have crazy minimums. I like, I love to take a one room project on. I love to take on a kitchen design. You know, it doesn't have to be a whole home. So I think when we have projects that span from something more quaint to a very large home, that it's harder to project. Right? It's harder because each project, you know, revenue is so very different.
But I think learning. The first point I want to make is that, you know, again, if you're looking at your books monthly, which I think you should be, not every month is going to be crazy profitable. You want to look at that quarterly and annual, you know, statement because you want to make sure you're profitable at the end of that. But like you said, we have months that are heavy in procurement and oh my gosh, we are booming and then we have months, hey, we might break even or we could even be in the red, right? And it can str. It could really stress you out if you're looking at it all the time. But that's the natural ebbs and flows of this business. So you really want to be gathering that information and looking at the bigger picture. But back to projection, the way I do things is really under really understanding the amount of time the project is going to take. So estimating, okay, this is where we're looking at for services, understanding that number and then going, hey, this is a construction project, which we're not always as profitable in. This is what I'm looking at for my sales revenue on this project. And this project is going to take all of my bandwidth, right, because I'm going to be on site and there's going to be issues and blah, blah, blah, blah, blah, and understanding, you know, that full picture and then going, okay, it's going to take this much of my, my team to execute this, but we're only making X amount. Is it worth it? Right. And we're going to be on the job for two, two years. Is it worth it? So I think understanding all those metrics is, is a good way to understand whether or not you should take on the project.
[00:22:34] Speaker B: Can you break down for me? Because I don't know that we've ever had someone on the show like really explain why. And I feel like you're the person.
Why is it that a construction project tends to not be as profitable as a furnishings project? Can you explain that for someone who just like maybe hasn't done construction only and doesn't really comprehend.
[00:22:56] Speaker A: Well, because I mean, let's face it, we make, we make our money on furnishings, on custom items. We really do. That's where we get the best rates or, and everyone structures things a little bit differently. But of course we have a good markup policy in place. But I don't like the practice of marking up over retail. So with that, you know, my clients are getting a certain level of, I wouldn't want to say discount, but a certain, a certain level of pricing. But it in return could hurt the profit on, on a construction project. And I just spoke on another podcast about this. There's so many different ways that people run construction.
Some designers are just partnering with the builders and the builders are cost plus and they're wanting to do all the procurement. Right. So you're just make, what are you making there? You're just making your design fees that. I don't think that that works out so well as a design firm. So you need to be making sure you have some sort of referral structure with your partner.
However, the way we run things is we're overseeing that whole process. We're doing the project management and we're doing the procurement. So we're seeing, we're seeing that profit. However, it's just lower margins.
[00:24:11] Speaker B: Got it. I'm going to have follow up questions to that because that is amazing and so spot on. But let's go ahead and before we get into, you know, the relationship with a builder and how you negotiate that like you are doing the procurement for things because some builders won't let you. Let's go ahead and talk pricing. When we're talking about design fees, how you're approaching things, flat fee versus hourly building. I know you said that you guys are hourly. Is it hourly straight through from start to finish of a project? Do you use any sort of hybrid model?
[00:24:42] Speaker A: Yeah. So I will say I have worked on a flat fee before, earlier in the days and I felt personally I was leaving a lot of money on the table. However, I find, I wouldn't say this is a hybrid structure, but I find that this is my happy medium is.
[00:24:56] Speaker B: That we are hourly.
[00:24:57] Speaker A: And that is because of course, of course when projects come in, we have a scope of work and that's put in the contract and we move forward. But especially in, in the market I work in, a lot of people haven't worked with designers before. They're first timers and their, their project scope will grow tremendously throughout the process. And by me charging hourly, I'm able to be flexible with that and flexible with adding on scope without it being a whole other contract and so on and so forth. But what I do, and again, this goes back to having the property data, is I'm able to estimate how long your project is going to take within 30 hours. And I hit it every time. So clients feel really comfortable knowing, hey, their project's going to land between 150 and 200, whatever, you know, and they go, okay, that seems reasonable. That's what I wanted to invest on the design portion and we're good. But then it gives us that flexibility.
And in construction, you know, it's tough. We, especially if we're project managing, we absolutely cannot, we are, as much as we have wonderful build partners, we can't determine what is going to happen.
So I think it's a better practice to have that hourly in place just to protect yourself.
[00:26:15] Speaker B: Yeah. So I love the idea of giving a range and it sounds like you have all the data to be able to give like a really accurate range. But like you said, scope creep can happen, especially for someone who's working with a designer for the first time time or are custom building something, that creep can come in. How are you defining or updating the client as to like, okay, we can absolutely add on, you know, let's go ahead and furnish the kids bedrooms. That's going to be an additional X amount of hours. Like how are you navigating that as far as. Yes, we agree that it's hourly, but that does change our initial hour estimate.
[00:26:52] Speaker A: It's not a verbal, it can be a verbal conversation, but of course we're moving that verbal conversation over to email and maybe making sure it's confirmed. Depending on the size, I pull retainers. Right. So depending on the size, I might pull another retainer towards design fees. But typically, typically not once it's agreed upon, we, we are able to move forward and do the work. And I Haven't run into any issues.
[00:27:16] Speaker B: Great. Can you talk to us about your retainer collection and kind of like how you are handling that? So your retainer you're collecting, that is all going towards your design billable hours and you're paying yourself against that retainer or you're, how does your retainer work?
[00:27:32] Speaker A: Yeah, that is actually how I do it. And it's felt to be, it's, it's, it's been very approachable for my clients. So I, I, again, I'm estimating the big picture of how many hours and I'm asking for 70% of front those hours at the beginning of the project that we work against. And depending on the size, you know, once we get through those hours, you could build another retainer or you just get billed hourly at that point.
And that's the investment we're looking for upfront from there. Of course. You know something I'm a firm believer on, you are taking 100% of your invoices upfront. When it comes to product, I think it can get really messy or you have to have a bigger operations to be able to handle this deposit, that deposit, you know, like, I'm all for that. So we're taking a hundred percent up front and that's going to help with your cash flow as well.
[00:28:26] Speaker B: Okay. I love how you handle your retainer. I think that that's really, really smart. I'm interested in the 70%.
So let's say you guys are at, let's say you're 80% of the way through the project and you're, you've gone through that initial 70%. Like you've used up everything that you've pulled as far as the hours, billing back. How are you communicating with them that like, hey, I think we actually going to end up needing an extra 10 hours. We're 30 hours out from that. But just want to give you a heads up, has that come up and how do you navigate that when you are working on that retainer? I love the idea of collecting the money up front because it's like, yes, I agreed to this much. You now have the money and you have a lot more control. I feel like you aren't coming up against the. Okay, well, we're actually not going to go ahead and move forward with designing X, Y and Z because now we've run out of money because we're in construction.
So how do you handle if, if, and I'm assuming some point it's happened that, you know, you're getting closer to the end of that retainer budget, but you're feeling like the remainder that they owe you might not be enough because they've needed a lot of revisions. They like to see a lot of options. How are you communicating that?
[00:29:35] Speaker A: Yeah, good question. And I, and I do want to say, like, just to piggyback on something you said, I was finding there's just so much emotion with the clients. And when they're getting billed these design fees every month, that's when issues start arising. They're like, oh, you spent X hours on showing me the 25 chairs I asked to see, you know, and I wanted to wipe that out. I don't have time for that. So when you're. They still get the transparency of seeing what their time was spent on, but not till that retainer is exhausted and they're happy and we're farther along through the project. But to answer your question, like I said before, I am buffering in a good, a healthy 20 to 30 hours, depending on the size of, of project. So I typically am not going over that unless scope has, has expanded and I've had a conversation. But again, yes, things happen and that would be a conversation I'd have to have with them. And usually it goes, it goes well because again, client, we try to keep very happy client relationships. And typically, if it's our right fit and our right client, they understand.
[00:30:40] Speaker B: I love this retainer model. You're, like, completely changing the way I think about how this happens. And I think that that is double slum.
[00:30:48] Speaker A: Like, am I the only one doing this?
[00:30:49] Speaker B: You know, I, I'm surprised I actually haven't heard it more because I'm like, that makes so much sense. It does feel like a much happier client experience because they've. The money's already been spent. There's not that coming around at the end being like, oh, there's this many outstanding invoices. Sure, there's going to be for accessories and whatever else at the end, but, like, it's not for your time. And I also feel like people are probably less nitpicky, like you said over, like, where were these six hours spent? What was this? You're. You're probably having to outline every single hour a lot less when you're just billing against your own retainer. So super interesting.
[00:31:25] Speaker A: Yes, yes, yes. And can I, can I give another tip that's really worth.
[00:31:29] Speaker B: Yes, please.
[00:31:31] Speaker A: So, yes, that, you know that that's. I love the retainer model and thanks for validating me on that because sometimes I know some firms are, are taking that Retainer and then still billing hourly and they save it till the end. And now I just have seen pushback on it, but I'm sure it works for some. But something that's really worked is, gosh, we don't want to talk about the receiver fees. Right. And clients tend to not understand that and they hate seeing that bill at the end of a project after everything's done. So I have, we have started collecting that fee with the purchase of whatever the space is or the room.
And it's been such a happier process for them. That and the accessory budget. Right. Because clients, that's the first thing clients pull at the end of the project. They're like, you know, they're wiped out and then they don't get to experience the space the way we intended it. So, you know, of course, client power, they can pull it if they want, but we tried it. We estimate that in with every space and it, it's, it's taken out a lot of the trouble.
[00:32:36] Speaker C: It is so much better to see.
[00:32:38] Speaker B: And feel rugs, pillows and wall art in person. So if you are headed to High Point Market this month, make sure to stop by the LOY showroom to see all of their fall newness, including the debut of an exciting new partner. And make sure to follow the LOY rugs on Instagram and Tik Tok.
So interesting. Well, now I'm also like, really seeing, based on how your pricing model and your billing model works, projections are in some ways easier but also like, more imperative because, like, you would, you've collected all this money and it's sitting in your account and you're billing against it. But, like, if you don't have another project starting, like, you don't have additional billable hours that you're like getting more money for later on in the project. So you have to be really on top of like, where are we in this project?
And on top. Yeah, absolutely. But it also means that your butt's covered and your installs can be so much more smooth and in a lot of ways beautiful. I'm hearing so many people who are doing construction and full furnishing projects that they're getting through construction. And right now, in the climate that we're in, people are dropping the furnishings. They're like, we're not even going to get that far. So you are protecting yourself from that way at the beginning, which I think is so, so genius.
So for those listening who maybe don't have enough of their own data collected as far as how long it takes them to do things they're still doing, they're still sending out proposals based on like their gut.
What do you feel is like one step they can take towards a more strategic, data driven pricing model when they, you know, maybe only have a project under their belt and it was, was their mom's best friend and it was like sprinkled over a course of a lot of months and it wasn't like a true start to finish project. Do you have any tips for that?
[00:34:36] Speaker A: Yeah, I think. And I've been there and I've been there and I didn't know what the heck I was doing, honestly. So I think you gotta work backwards. So let's say you're a solo designer. You don't have a team yet, you don't have crazy overhead, you don't even have an office. We gotta work backwards. What do you need to make in a year? What. What not. What do you need to. We're not. This is a hard job. What do you want to make in a year? Okay, and let's break that down. Break that down to what that looks like monthly and then to hourly. And how much time are you going to be investing in this project? I'm sure you'd be able to figure out, hey, I'm going to spend 20 hours a week for six months on this project and then figure out the num. The math from there.
[00:35:18] Speaker B: You know, I think that's so helpful working backwards. What do you want to make? Not what do you need to make, what do you want to make? And then how do we make these projects fit into that? So.
[00:35:27] Speaker A: Right. And then, you know, on the bigger scale, it'd be like, you know, we have expenses and you work back from that. You know what you need to make to survive, to keep the business healthy.
[00:35:37] Speaker B: Yeah, absolutely. Okay. When you look back at your first few years running your own firm, what do you wish you had known about cash flow specifically?
[00:35:48] Speaker A: That's a good question. Because I think cash flow isn't talked about enough. And I think every.
I think it's a struggle for all designers. Just. It just can be so. You know, earlier I mentioned, I think taking those retainers up front is helpful towards at least the design fees, so you're not wasting energy running after that all the time, you know, and you're paid for the work, but making sure you are collecting 100% of what you're purchasing. And never, ever, ever, I don't care if it's the best client in the world, purchase on their behalf, because life happens and their payment might not come through. And then that puts you in the hot seat.
[00:36:29] Speaker B: Yep, absolutely. And you're not a bank, so.
[00:36:34] Speaker A: We're not a bank.
[00:36:35] Speaker B: Yeah, absolutely. Gabrielle, I'm wondering if there's a specific moment in your growth when you've experienced a revenue increase but your profitability dropped or dipped. And if so, what did that teach you and how to change the way you were operating?
[00:36:53] Speaker A: Absolutely that. I think that lesson happened early on in the construction days. You know, when I was so used to furnishings, I learned very quickly that it again took so much of our bandwidth with a lower profit margin.
And after, you know, experiencing that and going through a few hard lessons, I had to sit down and go, okay, what makes sense for my whole team to be pouring into this project and how can we fairly get there? Right. Because a client is investing so much already in a renovation, we can't be draining the project.
So I think that's when I learned that was in the construction world.
[00:37:34] Speaker B: I'm curious, you know, you're leading an award winning team and you're taking on projects all over the country.
You, you gave us an understanding of like, you have your designer, you have operations, and you were saying that your time is hardly billable because you're doing all this stuff behind the scenes. What does an average like day, day of responsibilities look like for you if you do have a lead designer and you also have an operations person? Because I feel like a team of three is a very attainable aspiration for people listening. Like a team of three feels like, that's what a lot of designers, that's a perfect size studio for a lot of people. So what does it look like for you as the principal when you do have those two people on your sides and your hours aren't necessarily billable? What, what are the tasks you're taking on?
[00:38:20] Speaker A: So I am a big fan of trying to. To time block. And I say trying because I get pulled in so many directions.
But a lot of my focus is going into business development. Okay. Whether that means I'm talking to you today, I'm talking to a new client. I'm client facing. So all, all of that client communication that takes up a huge portion. Obviously I'm heavy in the design, but I have been fortunate enough to have great designers or a good designer now who really understands my design voice. So I'm able to set up the project and almost, I'd say creative direct, but I'm, I'm doing, I'm, I'm dipping into the designs and edits and all of that on a daily basis and, and more like twice a week. Really blocking time to really sit down and do that because I have to carve out that creative time. And also project management, where I have passed that on to operations when we are really busy. Like, I have to take on project management too. With some of our projects, we divvy them up, so there's a lot of that as well.
I guess I didn't give you what an average day looks like because it's always different.
[00:39:33] Speaker B: There's no such thing. Yeah, absolutely.
[00:39:36] Speaker A: In the accounting, I'm looking at that as well.
[00:39:38] Speaker B: I'm curious, would you ever hand off your bookkeeping? I know you said that some people have called you crazy. I think it's fantastic and admirable that you still handle all your bookkeeping. Is it something that if, like, like, you know, budget was not a concern that you would hand off, or does that feel like something that you always want to have your hands on?
[00:39:58] Speaker A: No, I think we're getting, I mean, I scaled back a little bit last year with my team, but we're in a place, you know, that we're, we're gonna have to grow a bit again. You know, it's, there's, it's a bit of a, a seesaw knowing when to jump and do that. But, yeah, absolutely. I'm, I'm not. I just will always want to have a close relationship with the numbers. I'm sure I can learn some from someone too. You know, like, I just were.
[00:40:23] Speaker B: I'm curious, how, how financially transparent are you with your team? With a small team of three, are they aware of project budgets and profit goals, or are they really just focused on their own department's metrics? Like, for someone who's as financially adept as you are, I'm curious if this is a conversation that happens all the time or is it more on, like, a need to know basis?
[00:40:48] Speaker A: Often talking about things in our weekly meeting. And, you know, I don't, I don't want to weigh them down with too much information they don't need. Operations manager really does know a lot. And our designers obviously know project budgets and obviously the markup structure, so they know how to get to those numbers. So I, I, I think I am pretty transparent. It's a pretty simple process once you understand it. And I feel like we can all do our jobs better once, once if we understand it.
[00:41:16] Speaker B: You know, are there any, like, red flags in your bookkeeping that you look for as early warning signs that, like, something's not healthy? You've mentioned over 13 years, you've grown and you've decided it was time to scale back.
What are some of the things that helped you identify that might be where we're at?
[00:41:36] Speaker A: Yeah, I think there's a few things you want to look at and remember. You got to remember the ebbs and flows of the business and the way we work. And we could have very heavy sales months and we can have very quiet months because we're busy in the design. But I think overall it's important. You know, I had a business coach once who said, and this scared me and I, I don't know what you think, but that you should be. The design fees that you're bringing in should cover all the salaries in the business just on all the overhead. Right. And then your profit is extra. I will just be honest and say, I will thrive a strive for that. But. But I think it's harder. Easier said than done. Right. I think it is important that you are looking at that utilization rate. Okay. And that you are covering at least with the service side of the business. You're covering payroll with that.
And if, if you are not, and if you're not bringing in enough design fees to cover your payroll, I think that there's something off that you need to look into.
Right. And then also looking at what your markup structure is and at the end of a project, what do you. Did, did, did that equal out to be the same or is there something off there? And looking into that further and those are ways to quickly address if something is off and needs to be recalibrated.
[00:42:55] Speaker B: Okay, let's talk about money mindset, because I am a firm believer that it is a mindset. And I feel like in particular, women are conditioned to not talk about money.
And I feel like you so elegantly, completely own your numbers and know everything.
How, how do you navigate the emotional side of managing money? I mean, it is emotional when you do have to make those decisions of like, hey, maybe we need a smaller office or maybe we do need to let our junior go or whatever that might be, or it's really exciting and let's go ahead and get that bigger office and things are going great. Our industry feels incredibly personal as well because you're dealing with such high stress situations for your clients. So how do you, how do you work through the emotional side of it to just be like, this is not scary and this is something that just has to happen.
[00:43:47] Speaker A: Listen, I wear my heart on my sleeves. It's really hard. I will say it's really. I have to be honest, it's incredibly hard. I struggle with it still. And I got the advice once to treat your business like it's its own human. Like, you know, we're both mothers, it's your child, right. And how are you going to, to keep the health of that child? If your child needed to go to the emergency room, whatever you're going to, you're going to run them there right away, right? So I had to think about the health. I had to think about my business as, as if it was a human too. And I have to put that first. And I think it's a bit of a challenge for me because I do operate with my heart on my sleeve. But if the numbers are all and the business is being drained, it's not good. It's an emergency room scare and that's. And then. So that helps me a little bit at times. A little bit. Still hard, huh?
[00:44:42] Speaker B: That is so interesting and such a, kind of a beautiful way you put it. Because I was expecting like a cold, a cold response, like you just have to take the emotion out of it. But by humanizing the business, it actually makes it so much more clear that you just have to do what's right. Right for the business.
So that was, that was a surprising response. I love that. Okay, so as your firm has grown, how have your financial goals evolved? I'm curious as, like, are you looking at long term wealth building or are you more like short term? You know, year to year? Like this year, I want to make sure that we get to take the two boys to Africa or, you know, whatever, whatever that might be.
How has, how has that understanding of your financial goals changed? And also the goals themselves, how, how do they scale as well?
[00:45:31] Speaker A: I think, I think I, I'm striving to look towards long term more now. That's where my head is at after being in the business for so long. I think all of a. I don't want to speak for everyone, but I think we've had a bit of a shift when everyone was really flying for three, three or four years during the pandemic years. And now things have kind of settled and I know, I've thought like, hey, what are some additional streams of revenue within the business that would be healthy to just, just. Cause I'm getting tired and I want, I, I want a little more ease. But for me, it's looking more at the long term where I've been incredibly annually driven for so many years and going, okay, this year I want to increase the profit revenue by this much that's less important to me now. I, I don't want to chase the numbers. I want to chase what feels right. I want to chase those projects that, that feel great. And looking at like, you know, some long term projects or purchases for the business that will make this possibly a generational business or a family business for a very long time.
[00:46:34] Speaker B: I love that. Real quick, can we talk about what your process looks like when you're budgeting internally for like team salaries, if you're ready to bring someone else on, when is it that you feel like, okay, financially we are ready for that. Is there like a benchmark you work with or is it like, okay, we have, have three clients ready to onboard so we know that we're going to have that workload and then we have those billable hours and et cetera, et cetera. Like when do you feel like it's, you're ready to make that next step?
[00:47:06] Speaker A: Yeah, it's not always logical for me. Sometimes it's just intuitive and I just know. But it typically is, you know, hey, we have three projects sitting at the gate and, and we're not going to be. And I'm someone who, I don't like things to take too long. I'm very efficient with how long our process takes and I don't like a backlock of backlog of work. I don't think it's a good experience for my team or the clients. So that, that's when I'd go, hey, it's time to bring on another designer. Or where, where, where are we needing more help internally? Let's bring that, that person on. But you know, again, going back to that utilization rate and making sure the design fees that are coming in or projected are going to cover whatever that new salary is.
[00:47:50] Speaker B: I think something that I struggle with all the time, but I'm sure other people do, is like this balance between saying like, oh, I'm a designer. Like when someone asks you what do you do? I'm a designer. And the reality that like actually a very small portion of your time is actually spent designing. Really, you're a business owner and in your case like you're the cfo, you're the CEO, you have such a incredibly editorial, refined aesthetic, but this great, great operational side too. How are, how do you balance that? Or how do you, if you're okay with being the business owner and you're the cfo, how do you articulate your creative side to your team to make sure that the output of work is still aligning with what you would Want it to be, if you still got to be that designer.
[00:48:41] Speaker A: Yeah, I mean, I'm a good dancer. Let's just say that I know when to shift gears.
I. I think that I put the work in, in terms of aesthetically and my design philosophy and where that is as a company. And then I've been so lucky to have wonderful designers on my team that have really understood my voice. So it's allowed me to take a step back at some of those, you know, day to day design duties that really, really are time consuming. But I'm still very much a part of the design process and everything that goes, so everything still touches my hands. I make sure of that. And then when it comes to the business side, I don't know, this might sound cheesy, but I come from a family business. My dad was a immigrant. And I think it's just been in me, ingrained in me to work hard. I mean, I was a six year old that had a briefcase and a calculator as toys. I just wanted to play business all the time. It was fun for me.
And, and then the create. The creative side has always been very intuitive for me. It's how I like to experience and see the world. And I.
I just always know when to shift and where my energy needs to be. So as long as I trust myself, I've been able to show up for my business the way I need to.
[00:50:03] Speaker B: Amazing. Okay. For designers listening right now, and I have to admit, this was me. We were profitable for years before I realized I actually have no idea how much money we bank. Like, I have no idea there's money in the account and I'm good to go, that. So for designers listening who feel like they're drowning in their books, or like in my case, just ignoring them completely, just like, hey, there's money. It's still working.
Where should they begin? Like, what are the first steps for them to become more confident and literate in their own financials?
[00:50:39] Speaker A: I mean, see the easy answer to this, and it's so true, because I hear new designers that I talk to say, hey, I have X amount in the bank. I'm good, but I don't pay myself. And I'm like, well, that's not good. You know, I think we can, we can have X amount in the bank, but what, what do we owe? You know, what do we owe for these purchases? What do we owe in payroll? You start making those deductions and then you know what you really have in the bank. Bank. And I think it's important to keep an eye on that on a monthly basis so things don't get out of hand. You know, what do we owe our vendors? Like, we, we always, we owe, I always owe someone something, that's for sure. But I think understanding that right away, it's really actually easy. It's, it's easy if you understand, if you take a second to go, hey, these were, these are my sales.
These are my design fees. This is my operational expenses. Is, it's, it's, it's easy math.
[00:51:38] Speaker B: Gabrielle, before we wrap, do you have any upcoming projects, collaborations, secret launches you can share with us?
[00:51:46] Speaker A: I'm going to be boring and say I don't. Okay, I don't have anything crazy. But I will say after 13 years in business, I am just so happy to be where I am and I'm looking forward to keeping this balance and bringing in projects that feel authentic and true to this company.
That's what I'm looking forward to now. And I'm sure there'll be some surprises in the future.
[00:52:13] Speaker B: That may be my favorite answer ever because it is so where I am right now and just being content with where I'm at and working on projects that I really love, I think is such a healthy, wonderful way to look at it. So thank you so much for your time today. You are wise beyond words and I feel like I learned so much from you in today's episode.
[00:52:36] Speaker A: That's a compliment. Thank you.
[00:52:41] Speaker C: For more in depth analysis of this interview, including exclusive downloads, examples and more. Don't forget to subscribe to the Interior Collective on Patreon. We are building an amazing private community of interior designers and industry experts open to candid conversations and answering questions. Joining Join us on Patreon in the show notes
[email protected] the Interior Collective thank you so so much for tuning in to this episode. Producing this show has truly been the.
[00:53:09] Speaker B: Honor of my career and I cannot.
[00:53:10] Speaker C: Believe I get to have these conversations.
A big, huge thank you to our production team at IDCO Studio and Quinn made. Your contribution literally makes this podcast feasible and the biggest thank you to to you, our listeners. Your sweet notes, DMs and reviews mean so much to us as we work to keep our show free and always accessible.
Until next time, I'm Anastasia Casey and this is the Interior Collective, a podcast for the business of beautiful living.
[00:53:42] Speaker B: This October, Laloy is hosting exclusive events at High Point you will not want to miss, including a book signing party with Amy Ashley, Editor in Chief of Architectural Digest. Find out more
[email protected].
