Episode #9 Transcription - How Hiring Can Help your Bottom Line

Welcome to the designers Oasis podcast. I'm your host, Kate Bendewald, interior designer, mama and CEO of a thriving interior design business, built on authentic word of mouth referrals. It wasn't that long ago that I stepped away from my corporate architecture job to build my own dream, one that would allow me more time with the people that I love, the ability to serve my clients at the highest level, and to make a great living. It wasn't always easy, and I've made my share of mistakes along the way. Fast forward to today, and I've learned a thing or two. This podcast is for you - the inspired, creative, ambitious, and let's admit it,  occasionally overwhelmed interior designer who shares this dream of transforming lives by transforming homes. Join me and my guests each week as we walk through practical ways to build an interior design business you love, and helps you transform your clients' lives. You can do this. 

Well, hello, hello, hello, my friend. Thank you so much for letting me share part of this day with you. I am really excited about today's podcast episode. Whatever you might be doing right now, whether you're out for a walk, you're washing the dishes, you're in the car, I am just I just feel so grateful that I get to hang out with you for a little bit. So let's get right to it. One thing I wanted to mention, if you have listened to the last couple of episodes, you may have noticed a little new little challenge at the end. So I am going to try at the end of every episode two provide you with a challenge that is always related to the episode, and will always be at the end. So if this episode today sparks something inside of you or moves you to kind of make some more progress or do some things or change some things. I'm hoping that these challenges that I provide for you at the end, it's just a simple one simple task, right? I'm not trying to ask you to go fly to the moon here, it's just one simple thing to help get a little bit of momentum because with momentum, we know that you just need a little bit right and then the energy starts to work where your energy goes energy flows. So listen to the end for those quick little challenges. And by all means, if you take the time to do that challenge share with me. You can send me a DM and Instagram, you can send us a message to the website. But I want to know about it. I want to share that with you. So yeah, so I'm excited to include that part in the podcast episodes. 

Okay. Unless you're driving, I want you to just take a minute and close your eyes. If you're driving to new favorite, keep your eyes open. But you can still just kind of do this little imagination. exercise with me. Alright, so imagine this, you just returned from a much deserved two week holiday with your favorite person or people. And while you were away any one anyone or perhaps all of these things happened in your absence. You have a new client consultation on the calendar with a fully vetted client. You've received the as built drawings and site photos from a brand new projects that you're kicking off. drawings for a new kitchen renovation are nearly complete and fully detailed for next week's presentation and ready for you to review. The ordering is complete for a project you recently presented to a client and a light fixture that arrived to the warehouse that was damaged. No big deal or replacement is already in route. Sounds pretty good. Yeah. Well, I'm here to tell you that this level of support and growth is totally doable. Maybe you're not interested in running a buzzing firm with multiple full time employees. But man, wouldn't it be nice to have just just one person, maybe two who could help share the load, and oversee projects to the very end? Today, we're talking about how hiring can help increase your profits because you're ready to go after your most exciting business and life goals. And you're ready to serve more clients and give them a better experience. And maybe you're tired of the overwhelm that feels like you have to do it all.

Let me tell you, my friend, your first hire will always always be the hardest. That's kind of like having a baby. And I'm not talking about childbirth. You know, the stereotype of the first time expectant mom, that was totally me. I had all the questions I was trying to listen to all the Guru's reading all the books and researching and doing the math, we did all the prep work, the classes, the deep cleaning, we we implemented a no shoe policy, we researched the organic this and that and made homemade baby food and prepped an arsenal of cloth diapers, so much prep work. And then the second baby rolls around, you're like Baby, what baby? Oh, that baby's? Oh, that was me. And sorry, Mona, my second born, if you ever listen to this, it was just the reality. So the point is, you do it once, and then you kind of know what to do next time. So if you've never hired before, just know that hiring, your first person is always going to be the hardest. And once you do it, it's so much easier. And you kind of get excited to do it again, because you know, the benefits on the other side. So so today we're going to talk about the kind of the financial aspect of it right. And we're not going to get into super nitty gritty details. But I want to talk to you a little bit about mindset. But also, more importantly, how does how does hiring help your bottom line? 

Because that's one of those things that I didn't understand for a long time. And once I did the math, which we're gonna talk about the math here, and I was like, Oh, my God, how fast can I hire? So there's a couple of ways that hiring helps your bottom line. Number one, and this is a standard practice, right? For business, this isn't unique to interior design. And this is not exploitation in any way. It's standard business practice, the number one, you mark up your employees hours. So let's say you have an entry level designer, and you pay him or her an average of $30 an hour, regardless of whether they're hourly or salaried, that's the rate on average is $30 an hour, their billable rate to the clients would typically be around three times that rate. So for easy math will say $90 an hour. So when you're putting together your proposals for clients and calculating your fees, you're not calculating their pay rate, but you're calculating their billable rate. And those are two different numbers. So $30 an hour would be their pay rate, and $90 an hour, it would be their billable rate. I was I remember for the designers and the architecture firm that I worked for, I knew what I was paid what my hourly rate kind of worked out to be, whether it was hourly, or salary, and I knew what they were charging for my time. And that's just the reality. That's the reality of running a business. And it's the reality of what keeps the lights on and keeps your business healthy and successful. And, and most of the employee understands that.

So again, when you're putting together your proposals, and you're calculating your fees, remember, you're calculating their billable rate, not their pay rate, then you want to make sure that that person is working a minimum of 70% billable hours, meaning project hours. Now, they're always going to have some time that isn't billable. Let's say they are joining you on the phone for discovery call. Maybe you want them to attend a lunch and learn to experience their knowledge. And there's a lot of things that they could be doing that isn't necessarily directly tied to a client that's billable. But on average, I would say 70% should be billable. Okay, so now I want to do just a little bit of simple math, but I'm gonna keep this real simple because I know you're not looking at the same numbers that I am. I'm such a visual person. These will be in the show notes if you want to come back and look at them. But let's just go through this exercise, we're going to stick to the junior designer exercise, let's say you pay this person $30 an hour, and they work 20 hours a week. So 30 times 20. That's going to be $600 a week. And if you multiply that over, let's say they work 50 weeks out of the year crews we're gonna keep simple math here. That comes out to about $30,000 a year for the working part time as a junior designer, okay, so pretty good. Then let's do that same math but using their billable rate, so their billable rate would be $90 and hour, times 20 hours a week equals about $1,800 a week, or $90,000 a year, that 50 hours, 50 weeks. So, so they're earning $600 a week, and you're billing them out at $1,800 a week to your clients, okay? When you extrapolate that over the year, using that number of 50 weeks per year, the difference, so you're paying them 30,000, you're billing them out at 90,000. So that's a difference of $60,000 in gross income that you have the potential to make. But let's go back to what I said a minute ago that

about 70% of their time is billable, we're gonna use the we're gonna use 75% billable hours, that takes it from 60,000 to $45,000, in gross profit you've made on a part time assistant. So that's pretty good. So what's happening here is, not only are you increasing your capacity to do more work, but you're giving your clients a better experience. Because you have more you have more bandwidth, you're you're more available in for a number of other reasons. So if you're further along in your business, and you have a steady stream of projects, and you're commanding top dollar, the same math works if you have a senior designer who's making $60,000 a year. So this isn't, again, this isn't exploitation, this is business to sell all businesses work is especially or at least in the service industry. 

So keep in mind that you will mark up your employees hours you have to otherwise it just doesn't make sense financially for you to hire anyone. And then the second reason, the second way that hiring helps your bottom line is that it will increase your capacity to do more work and work through projects faster. So when you hire, whether it's a junior designer, or an expediter, or an administrative assistant, or whatever work they're doing, it's freeing you up to do other work. So it's essentially duplicating yourself, although you're doing different things, ideally, you're going to be doing the work that really lights you up and is your zone of genius. So for example, let's say you just completed a project, if you're on your own, you're going to be doing all of the ordering all of the project management. And that means you're not able to move on to the next project that somebody else has to wait in the wings for you to be available. But if you have an expediter or a project manager, to hand off that work to, then you have the ability to turn it on and kickoff the next project with your next client. While you're you're still assistant can get started in the next phase of that last project. So I hope you can see kind of how that works. It's really important to just imagine you, you get this opportunity to do a big project. But you don't have the staffing resources and can't take the project. That's that's not a fun experience. And I've been there before so you know, start saving, get try to get three months worth of salary saved up for the person that you want to hire, if you can. I'll be perfectly clear and frank with you. I never had that kind of money in the reserves. I was pretty bold, but I knew my projections that I knew what kind of potential we had. And I trusted that it would work out and it did. And in right out of the gate. It worked well for us. And I think it was because I had that staffing on hand that I had the boldness and the confidence to go out and say, Hey, let me do this project for you because I can do it and look I've got a team to back me up let's let's get get after it. And people were like, Yeah, let's do it. So you know, but ideally, having some money saved up is is important to get started.

Alright, so you might be asking yourself, okay, I'm on board. I get it. This is this is a no brainer, right? I'm not sure who to hire first. My suggestion is to hire for the work you dislike doing the most. So for me, I really don't enjoy the the paperwork administrative side of running a business. Some of it, I just have to do. But you know, the ordering and the tracking and all of that stuff just bores me to tears. And I'm actually not very good at it. Because I think that there are people out there who are more attuned into those details that would prevent mistakes than I would if I do it, there's a good chance there's going to be a mistake. My attention to detail shows up more in the design side of things. So do you think about what works for you, that's just been my experience. So maybe this is an administrative assistant or an expediter. An expediter is someone who handles the ordering and tracking and the scheduling for you. An administrative assistant that can book calls for you, they can handle coordinating trade day. Track receiving of items, they can run errands, but most important distinction is they don't need to be a designer. As long as they are trainable in the industry, you can teach them some of the industry lingo. That's, that's important. They need to have impeccable organization skills, absolutely impeccable. And they need to be able to clearly communicate across the spectrum of people that they might be talking to. So whether that's a client, whether that's a trades person, whether that's your vendors, they need to be able to communicate clearly and effectively. And be on brand you know, have that brand voice that you would want representing your your business. 

So you may decide that you want, you'd be better off hiring a junior designer, someone, perhaps recently out of design school that can help with drawings, maybe they can help you with sourcing, creating RFQ request for quotes. We talked a ton about that a few episodes ago in our trade Day episode. They can help you prepare client presentations, they can attend meetings with you and take notes, they can help you with site surveys. They can also run errands like there's so much that a junior designer could also help with. So I think that an assistant an expediter is usually the first best hire, sorry, the best first hire, if you have no one working for you, and then a junior designer. That's not necessarily how I did it. But if I had to do over again, that's probably how I would have organized myself. But in any case, you know your business the best. And nobody can make this decision better than you can you just need to trust yourself. And take that next step. 

Let's talk about the fear of hiring, what the biggest fear I hear is, what if I don't have enough work to keep them employed? Well, what if you do? What if you have this person or this team in place, and now you have more confidence to go after bigger jobs or better projects, start small if you need to hire part time, start them off as a contracted employee versus sorry, a contracted position versus an employee, all you need to do is talk to your bookkeeper on your state's rules about hiring contracted employees versus contractors. And the US government I think also has information on their website. But I do think that states have their own regulations. And the rules are a little bit different. But essentially, the idea is that with a contractor, they have more autonomy, they can kind of decide when they work and when they're off, you guys, you know, have to settle on, you know how many hours that kind of thing. But when they get that done, can you be something y'all would be flexible on and you would be able to negotiate with them. The other thing that I think is important is that they provide their own tools or equipment. So in our industry, that's typically just a laptop, meaning they would provide their own laptop. But I believe that you can pay for any software that they might need. And that's fine, double check in your area. 

But the difference between a contracted employee versus a contracted worker versus an employee. There's less liability on your end. So if there's not enough work, you just simply say, hey, you know what, we don't have enough work for you right now. And then you're not tied to unemployment insurance, that kind of thing. And there are additional costs to having an employee. So there are trade offs, but that's where I started and it was a really great fit. And I you know, and I told my first hires, you know, this is where I am, and this is the possibility and are you okay with that? You know, I certainly wasn't seeking out to hire somebody who will relied on this income to keep a roof over their heads that probably would have been too scary for me. So it's definitely looking, you know, I felt and I was pretty fortunate to find somebody who, you know, they weren't in it for the money, they were in it for the experience, but we grew together, and eventually I was able to pay them more, and there's more job security. And, and it really worked out well. So I just, you know, once you start to experience the levity of having more help, you may quickly have the capacity and the profits to, from going from one part time expediter, to having a team, you know, with a junior designer, senior designer, an expediter, and executive assistant, all working together like a well oiled machine that can help put your business in the best light, while also increasing your bottom line. If that's if that's what you want, right? If that's your goal, maybe you want to stay boutique and just have one or two designers. That's okay, too. Or assistants, that's fine, too, you decide. But if that's the direction you're headed, you want to build that buzzing team. This is a good place to start. 

So I hope this helps you envision the opportunity and take some of the fear out of hiring your first employee or scaling a team. You know, think about this, what would happen if the next time you called your dentist office to book your next teeth cleaning and your dentist answers the phone, and then you show up and she's sitting at the front desk to check you in or out. In fact, dentists don't even do teeth cleaning, they let their hygienist do that. And then they come in for one minute and scope things out. Let's also imagine that you're the last person on the dentist's office and she shuts the door for locking up and then grabbed the cleaning supplies. You just it would be comical, right? So you see where I'm going. They have a team in place, each person has a different role, and their level of genius. And it all works and it all hums. And it doesn't have to happen overnight. But if you start to set your sights on what it could look like, how differently would you treat your business? What decisions would you make differently if this was the goal, and you are getting crystal clear on that. So here's my challenge to you this week, I want you to write your job description of the role you want to hire first or next whatever the case may be. Define the skill sets that they need to have. Describe the environment. What kind of experiences do they need to have to possess, I'll tell you energy, because energy just do this one little step and see how things start to fall into place. 

And if you want to take it a step further, once you have that job description, then create a website on your web page that has this with instructions on how to apply. Put it on your social media, upload it to zip recruiter or LinkedIn. Start telling people about it. And then you don't have a plan to interview. But all you need to do right now is write the job description. Okay, thank you so much for being here with me today. I believe in you. And I'm so grateful to get to be with you on this interior design business journey. I'll see you next time, my friend. Thank you so much for letting me spend part of this day with you. If you're loving this podcast, please share it with a friend who you think might also love it. Or perhaps you can take just 30 seconds to open your podcast app and leave us a five star rating. And if you have just an extra minute, go ahead and leave a review. This helps me so much and it helps other designers like you to find the podcast. It also adds fuel to my motivation to keep making great episodes just for you. However you choose to help, please know, I appreciate you so very much. Thank you, my friend. Have a wonderful rest of your day and I'll see you next time