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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on December 8, 2021
Investment range
$4,150 - $15,100
Revenue potential
$50,000 - $500,000 p.a.
Time to build
0 – 3 Months
Profit potential
$40,000 - $150,000 p.a.
Industry trend
Growing
Commitment
Flexible
Essential points to keep in mind for a successful interior design business:
An interior design business has pros and cons that you should consider before you decide if starting your own business is the right path for you.
The latest trends in interior design include a shift to bolder, more maximalist styles, rather than the minimalist, Scandinavian sensibility that had long been popular. Bright primary colors and sculptural furniture are also trending, as are bold wallpapers and sustainable design choices with environment-friendly materials.
Trends in interior design include:
Challenges in interior design include:
The startup costs for an interior design business range from about $4,000 to $15,000, with an average of about $9,500. The high end includes renting an office space, so if you work from home when you start, your costs will be lower.
If you have no training or experience in interior design, it’s probably a good idea to enroll in a course or two at a nearby university or community college. This will cost $1,000-$2,000.
| Startup Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Licenses and permits | $200 - $300 | $250 |
| Insurance | $100 - $300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Office security deposit | $0 - $5,000 | $2,500 |
| Initial marketing budget | $2,500 - $5,000 | $3,750 |
| Interior design courses | $0 - $1,000 | $500 |
| Total | $4,150 - $15,100 | $9,625 |
The average interior designer charges about $1,000 per room, depending on the client and the size of the room. Profit margins usually range from 25% to 40%, though if you start with a home office your margin could be as high as 80%.
So, if you work from home and design 50 rooms in a year that would mean $50,000 in annual revenue and $40,000 in profit. As your brand gains recognition, you might design as many as 500 rooms in a year, which would also require you to rent out an office and hire staff, reducing your margin to 30%. From annual revenue of $500,000, you’d have a pre-tax profit of about $150,000.
There are a few barriers to entry for an interior design business. Your biggest challenges will be:
Now that you know what’s involved in starting an interior design business, it’s a good idea to hone your idea in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research other interior designers in your area to see what they offer. Do they do residential design, commercial properties, or both? See what specific services they offer as well. You’re looking for a market gap to fill or a way to differentiate your business.
Consider what services you will offer to your clients:
You can offer a wide range of high-end design services or just focus on one specific aspect.
You might also offer:
The client’s price for the interior design of a single room runs from $400 to thousands of dollars, with the average around $1,000. Keep in mind, this total is only for the design. The purchase and installation of any relevant items — paint, wallpaper, furniture, accessories, etc. — represent additional costs for the client.
Once you have established your business, you should aim for a profit margin between 25% and 40%. Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will depend on the services you offer. If you decide to offer full-service design, you’ll target a higher-end demographic of older and more established professionals. You’re more likely to find such people on sites like LinkedIn or Facebook, rather than Instagram or TikTok.
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states offer real advantages when it comes to an interior design business.((https://www.theaterseatstore.com/blog/best-worst-cities-interior-designers))
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your interior design business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding an interior design business. You might also try crowdfunding if you have an innovative concept.
Starting an interior design business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your interior design business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Smart Designer, Houzz, and HoneyBook, to help you create proposals, manage billing, schedule appointments, and more.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your interior design business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your interior design business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an interior design business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working as an interior designer for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in interior design. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an interior design business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Particularly today, everybody wants a home that is inviting and aesthetically pleasing. With your own interior design business, you can use your artistic talents to help customers design and build the home they’ve always wanted.
Interior design is a multi-billion-dollar industry that expects to see continued growth into the future. With proper research and an effective marketing campaign to create a strong brand, you can grow your company into a very lucrative one. You’re off to a good start already by gathering the best information. You’re now ready to design your future and start your entrepreneurial journey! Good luck!
A degree is not required, but it definitely adds to your credibility. You can take online courses to learn about design, or you could start by working for an interior design company to learn the ropes.
Profit margins are relatively high for an interior design business. You should be able to charge about $1,000 per room, and if you hire a staff, the sky is the limit to how large and profitable you can grow your company.
While some interior design businesses can be highly profitable, it is essential to conduct a thorough analysis of the local market and competition to determine the potential profitability of your specific business.
Interior designers get clients through networking with professionals like architects and real estate agents, creating a strong online presence with a visually appealing website and social media, utilizing targeted marketing strategies such as online ads and industry events, and obtaining client testimonials and referrals by delivering exceptional service.
Take interior design courses, attend workshops or seminars, and read books or online resources to develop a foundational understanding of interior design principles, aesthetics, and technical aspects. Offer to assist experienced interior designers, work as an intern, or collaborate with established professionals to gain practical experience and learn the intricacies of the industry.
Interior design can be a good side hustle if you have the necessary skills, passion, and time management abilities. It offers flexibility in terms of working hours and the potential to earn extra income. However, it is important to consider the demands of managing client projects alongside other commitments and to ensure you have a proper balance.
Interior designers typically need the following from a client: a clear budget to determine the project’s scope and scale, detailed information about the client’s vision and style preferences, and an understanding of the project timeline and any specific deadlines or milestones.
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