How to Start an Interior Design Business

Home is where the heart is, and everyone wants their place to feel comfortable and welcoming — especially nowadays, when many of us are spending more time at home. Interior design enables you to use your creative talents and help clients achieve the home of their dreams, and you can do it whether you have a degree in design or not. The US interior design industry is worth $17 billion and seeing strong growth, so the opportunity is there for a bold entrepreneur.

With hard work and patience, you can tap into that market and build your own business. But having the right information will be crucial. Fortunately, you’ve come to the right place, as this step-by-step guide will help you design your entrepreneurial future.

Step 1: Decide if the Business Is Right for You

Pros and cons

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.

Interior design industry trends

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.

Industry size and growth

• Industry size and past growth – US interior designers have seen steady growth in total revenue for the past decade. Despite the pandemic-driven slowdown in 2020, market revenue grew nearly 5% per year in the past 5 years to approach $24 billion in 2022.((https://www.ibisworld.com/industry-statistics/market-size/interior-designers-united-states/))  
• Growth forecast – Globally, the interior design services market is projected to grow 4% annually through 2025.((https://www.technavio.com/report/interior-design-services-market-size-industry-analysis)) 
• Number of businesses – The number of interior designer businesses in the US is approaching 140,000.((https://www.ibisworld.com/industry-statistics/number-of-businesses/interior-designers-united-states/))
• Number of people employed – The industry employs more than 175,000 people.((https://www.ibisworld.com/industry-statistics/employment/interior-designers-united-states/))

Trends and challenges

Trends in interior design include:

• An uptick in construction activities presents opportunities for interior designers
• Increasing use of digital technologies in interior design
• Growing preference for sustainable and wellness-focused designs

Challenges in interior design include:

• Many regulatory requirements
• Building your brand and finding clients

What kind of people work in interior design?

• Gender – 79% of interior designers in the US are female, while 21% are male.((https://www.zippia.com/interior-designer-jobs/demographics/#gender-statistics))
• Average level of education – Most, or 69%, of interior designers hold a bachelor’s degree.((https://www.zippia.com/interior-designer-jobs/demographics/#degree-level-types))
• Average age – The average age of an interior designer is 42 years old.((https://www.zippia.com/interior-designer-jobs/demographics/#age-statistics))

How much does it cost to start an interior design business?

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.

How much can you earn from an interior design business?

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.

What barriers to entry are there?

There are a few barriers to entry for an interior design business. Your biggest challenges will be:

• It will take time and marketing expense to become profitable
• You’ll likely need some interior design experience/training to draw clients

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Step 2: Hone Your Idea

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.

Why? Identify an opportunity

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.

What? Determine your interior design services

Consider what services you will offer to your clients:

• Luxury interior design
• Small space design
• Residential interior design
• Commercial interior design
• Sustainable/eco-friendly design
• Furniture selection and layout
• Color consulting
• Lighting design
• Custom cabinetry and woodwork
• Window treatments and soft furnishings
• Artwork and accessory selection
• Remodeling and renovation services
• Project management and coordination
• 3D rendering and virtual design
• Historic restoration and preservation

You can offer a wide range of high-end design services or just focus on one specific aspect.

You might also offer:

• Have furniture and other items delivered
• Bring in your own contractors to paint, restructure
• Full installation, or simply provide the design

How much should you charge for interior design?

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.

Who? Identify your target 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.

Where? Choose your business premises

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:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm an Interior Design Company Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “interior design” or “home design”, boosts SEO
• Choose a name that allows for expansion: “DesignVision Interiors” over “Retro Chic Interiors”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

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. 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.

Step 4: Create an Interior Design Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Provide a concise overview of your interior design business, highlighting your mission to create functional and aesthetically pleasing spaces for clients.
• Business Overview: Describe your interior design specialization, whether it’s residential, commercial, or both, and outline the types of design services you offer, such as space planning, color consultations, and furniture selection.
• Product and Services: Detail the range of interior design services you provide, including interior decorating, home staging, renovation planning, and any unique design packages or styles you specialize in.
• Market Analysis: Analyze the local interior design market, focusing on target demographics, trends in interior design preferences, and potential growth opportunities in your area.
• Competitive Analysis: Evaluate your competition within the interior design industry, identifying key competitors, their strengths, and areas where you can differentiate your services.
• Sales and Marketing: Explain your marketing strategies, which may include building an online portfolio, collaborating with local contractors, or using social media to showcase your design work and attract clients.
• Management Team: Highlight the qualifications and experience of your team, including interior designers, decorators, project managers, and any relevant certifications or memberships in design organizations.
• Operations Plan: Describe how your interior design projects will be executed, from client consultations and design concept development to sourcing materials, managing contractors, and overseeing project timelines.
• Financial Plan: Provide financial projections, including startup costs, revenue forecasts, and profit margins, outlining your path to achieving financial sustainability.
• Appendix: Include a portfolio of your past design projects, client testimonials, design concept boards, and any industry certifications or awards to demonstrate your expertise and credibility in the field.

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.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

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.

Choose your business structure

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:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

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.

Form Your LLC

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Step 6: Register for Taxes

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.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

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. 

Step 8: Apply for Interior Design Business Licenses and Permits

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.

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.

Step 9: Open a Business Bank Account

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.

Step 10: Get Business Insurance

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:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

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.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

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.

Marketing

Here are some powerful marketing strategies for your future business:

1. Social Media Showcase: Leverage Instagram, Pinterest, and Houzz to visually showcase your portfolio, share design insights, and engage with potential clients; use these platforms to build a strong visual brand presence.
2. Collaborate with Influencers: Partner with local influencers or bloggers in the home and lifestyle niche to expand your reach and gain credibility, reaching audiences who are already interested in design and decor.
3. Host Workshops and Webinars: Demonstrate your expertise by hosting design workshops or webinars, providing valuable insights into interior design trends, DIY tips, and solutions, positioning yourself as an authority in the field.
4. Referral Programs: Implement a referral program that incentivizes satisfied clients, contractors, or real estate agents to recommend your services, tapping into word-of-mouth marketing for a trustworthy client base.
5. Localized SEO Optimization: Optimize your online content for local search engine results by incorporating location-specific keywords, ensuring your business appears when potential clients in your area search for interior design services.
6. Participate in Home Shows and Expos: Set up a booth at local home shows or design expos to showcase your work in person, allowing potential clients to experience your designs firsthand and fostering direct connections.
7. Collaborate with Real Estate Professionals: Establish partnerships with real estate agents or home staging companies, offering your design services to enhance property appeal and create mutually beneficial referral relationships.
8. Client Testimonials and Case Studies: Build credibility by featuring client testimonials and detailed case studies on your website and marketing materials, highlighting successful projects and satisfied clients.
9. Email Marketing Campaigns: Implement targeted email campaigns to stay connected with your audience, sharing design tips, project updates, and exclusive offers to keep your brand top-of-mind.
10. Strategic Sponsorships: Sponsor local events or community initiatives to increase brand visibility, demonstrating your commitment to the community and aligning your brand with positive associations.

Focus on USPs

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:

• Design from beginning to end – you won’t lift a finger
• Home office expertise for the perfect life-work balance
• Soothing Feng Shui design for harmony and comfort

Networking

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.

Step 12: Build Your Team

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:

• Designers – Assist with design, purchasing
• Movers, Painters, Builders
• Office Manager – scheduling, staff management
• Marketing Lead – SEO strategies, social media, other marketing

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.

Step 13: Run an Interior Design Business – Start Making Money!

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!