What it costs to start an interior design business
All businesses require some upfront funding to get set up correctly (and legally!).
Luckily when you launch a service based business, like interior design, there aren’t a huge number of costs involved.
But far too many people start their design business without any start up funding at all. They think they can DIY everything (including legal contracts and design agreements, which always alarms me!) and as a result they don’t realise they are exposing themselves to quite a bit of risk.
There are also quite a few things you can be tempted to spend money on when you are establishing your business. And there are some things that are definitely worth spending on (e.g. professional advice) and things that people waste money on that aren’t necessary at all (e.g. a website designer or logo designer).
In this post I’m sharing some of the costs involved with starting an interior design business.
But before we get started here’s an important disclaimer -
None of what I am writing in this post is professional advice, it’s simply my experience of running my own design business. It’s important you get your own professional advice on everything I am sharing :)
Professional Costs
Your professional fees are what will cost you the most when setting your business up. But they are also the most important.
Far too many people try and DIY a lot of the things I’m listing below as these are the start up costs that generally cost the most. But I always coach new designers I work with to be more professional from the get go.
You are about to start working as an interior designer or decorator, which means you are going to be working with clients on their largest asset - their home.
This is not something to take lightly or to be unprofessional with and many designers don’t understand the risks involved in the work they are doing. It’s your responsibility to get professional advice on this and to make sure you stay within the boundaries of the work you should be doing with clients.
Here are some of the professional costs you should factor in to your budget when starting your interior design business
Business Set up Costs (e.g. establishing a Company or LLC)
Check your local laws around business establishment and seek advice from a lawyer or an accountant if you need help on deciding the right business structure for you.
Depending on where you live you may also need business licenses or resale permits as well.
There are many different business structures available to new business owners and what you choose really depends on circumstances that are unique to you and your financial position.
The cost:
Expect to pay up to a one or two thousand dollars to seek the appropriate advice you need and to then pay for business establishment costs with regulatory bodies.
Legal Costs
Many designers I work with started their business with DIY legal documents and design agreements that they either made up themselves or adapted from things they found on the web.
The problem with this is:
copying other people’s design agreements or legal documents is copyright
you are not protecting yourself or your clients by DIYing your legal work
you have copied an agreement or contact that is fit for purpose for another designer and may not cover you or your business if you get in trouble
you probably have no idea what the clauses you have included in the contract actually mean and whether or not they are necessary in your design agreement or contract.
DIY legal work is one of the biggest mistakes I see new designers making.
Yes, it is expensive to hire a lawyer and get your contracts set up but setting yourself up properly from the start:
helps you understand the risks involved in the type of work you are doing and helps you understand what you can and can’t do
makes you look and feel more professional when you start working with clients
allows you to understand what is actually in your contract/agreement and answer questions from clients if you get asked
actually covers the work that you do in your business - i.e. it’s a defendable document not something you have just made up yourself or copied from somewhere else
means you have a lawyer you can turn to if you ever find yourself in legal trouble, which does happen and can be quite serious
The cost:
Expect to pay at least a few thousand dollars to get your legal contracts, terms, website policies, design agreement and other legal documents created.
Insurance Costs
Around the world there are normally compulsory and non-compulsory insurances that businesses need to have.
My advice for getting insurance for your business is to, again, seek professional advice from brokers who have experience working with interior designers and understand our industry.
Also - be aware that insurance quotes can vary greatly between brokers so always get more than one (ideally around 3) quotes.
Also remember that insurance brokers will tell you every single type of insurance they think you need and depending on the type of work you’re doing some of this just isn’t worth paying for.
For non-compulsory insurance options the way I always assess business insurance is to think about the risks involved in the type of work I am doing and the decide whether or not I want or need to cover myself for those risks.
This is an individual decision based on how risk adverse you are, how much capital you have in your business to fight any claims people make against you and a whole bunch of other factors as well.
The cost:
From a few hundred to a few thousand dollars per year, depending on which types of insurance you decide to take out.
Accounting and Bookkeeping
You will need a way to keep track of your finances.
When I first started my business I paid an accountant to help me set up Xero so it had the correct set up and chart of accounts. I then taught myself how to do basic book keeping and I still do all my own book keeping (only takes me a few minutes each day).
When I first started my business I had an accountant who I could reach out to from time to time if I needed help and who also covered off the accounting side of my business (e.g. tax preparation etc.).
These days I pay an accountant on a monthly retainer to act in the role of a quasi external Chief Financial Officer. He prepares budget forecasts, provides me with tax advice and planning, manages all my tax affairs and helps me with other financial budgeting and planning now my business is larger. But this sort of advice isn’t necessary when your business is first getting started.
The cost:
software for tracking your finances - Xero is about $60AUD per month (but will save you hundreds of dollars on a book keeper if you teach yourself how to use it - not hard!)
an accountant to do your tax preparation - I used to pay a few thousand per year when my business was first getting started
Business and Branding Costs
Now we’ve spoken about the important professional costs, which are the most critical ones to factor in (in my opinion) let’s move on to some of the other costs involved with establishing and maintaining your business day to day.
Professional Design Software
If you want to look professional you need a way to draw up your designs for your clients.
You will find it hard to compete with other designers without a technical drawing skill and having professional documentation will help you stand out from the crowd.
There’s heaps of CAD (computer aided design) software on the market such as; AutoCAD, ArchiCAD, Revit, Rhino and SketchUp.
I have only ever used SketchUp in my own interior design business. This software is great for solo designers who are just getting started as it’s much cheaper than other drawing software on the market, is an industry recognised software and is much easier to learn than other options as well.
But you have lots of options so do your research and pick what is right for you.
There’s a lot of cheaper software on the market that can be tempting to use - so the only thing I recommend is you choose software that is industry recognised. Many of the cheap software options aren’t industry recognised or widely used by designers and do look more ‘hobbyist’. If you are going to use software then make sure it’s professional!
The cost:
Varies depending on what software you choose. SketchUp annual fee is about $400AUD per year and this is one of the lower cost pieces of software that is industry recognised.
If you want to learn SketchUp quickly come and join my online course for beginners
Project Management Software
There’s lots of project management software on the market for interior designers. In the beginning you really don’t need this and can easily manage your projects using tools like Notion or even just an excel spreadsheet.
The cost:
You don’t need to spend anything on this to start with but if you want some templates to set yourself up quickly and easily then check these out in my shop:
Business Templates for Designers
Website
This is another cost that many new designers are tempted to outsource and if they do this can cost many thousands of dollars.
It’s just not necessary to pay someone else to design a website for you. With tools like Squarespace or Wix you can literally create your own website in a few hours - even if that’s just a simple one pager to start with - and all this will cost is some of your time and the fee for the platform you choose.
The cost:
I have always had my website on Squarespace and do all my own web design, even now my business is much larger. A Squarespace annual subscription is a few hundred dollars a year
Professional email address
If you are communicating with clients with an email address that ends in gmail.com, hotmail.com, yahoo.com or anything else like that you look like a hobby business and clients will definitely notice this.
To look professional you need an email that ends in your domain - i.e. support@thelittledesigncorner.com NOT one that looks like this - e.g. thelittledesigncorner@gmail.com
It’s not hard or expensive to set up an email address under your own domain and it’s critical for you to look professional.
The cost:
A few dollars a month
Branding
Many people are tempted to spend hundreds or even thousands of dollars on engaging a graphic designer to help with logo creation and business branding.
But this is one of those areas that I strongly suggest you DIY to start with. Funnel the money you might spend on branding in to the professional start up costs above instead.
I highly recommend you get a Canva Pro subscription - or even just start with a free Canva account.
With Canva you can:
create a logo
create a brand kit (i.e. fonts, colours for your business)
create social media posts
create every other sort of graphic design asset you can think of
This is not something worth spending money on when you’re first starting. Once your business is making money you can always upgrade your branding and hire a professional to help you. But for the moment save that money for more important costs outlined above.
If you want a slight upgrade from a Canva logo then another option (which is what I did for my own logo) was to use a platform like Fiverr or DesignCrowd.
The cost:
Canva Pro is definitely worth it the money and is about $200/yr as of the time of writing this post. But there’s a lot you can do with a free Canva account as well.
A logo on a platform like Fiverr or DesignCrowd might cost a few hundred dollars.
So as you can see establishing an interior design business does require some up front investment and funding from you and this can range from a few thousand to many thousands of dollars.
This can be overwhelming when you’re first getting started and aren’t yet earning money but what I always tell new designers I work with that you need to set yourself up in the way that you intend to continue.
If you want to have a professional design business that people actually want to engage then you need to look and act in a professional way.
Otherwise you will be more likely to treat your business as a hobby and you will look more like a hobbyist to potential clients as well.
Courses and Templates for Designers and Architects
DO YOU WANT TO….
Improve your professionalism?
Find more clients?
Bring in more revenue?
Create better systems and processes?
Then check out my business courses and templates for designers and architects.
These courses and templates leave you with work done - not just a long list of things you need to do next. We have a really strong focus on taking action and getting things created that improve your business.
Enjoy the rest of your day!
Clare x
Dr Clare Le Roy
