FEATURED ON THIS EPISODE:

Free download: 

Use Coupon code WomanJS for one month free of Metrique Solutions 

Grab Michele’s free quiz where you can get a financial health check-up here

Find out more about Michele and follow her on social media here:

Instagram: @Scarletthreadatl, & @Metriquesolutions  

Facebook: @Scarlet Thread Consulting & @Metrique Solutions

Please join me for my free Webinar, Unlocking Profitability: Pricing Strategies for Interior Designers, on September 12th & 13th at 12:30pm EST >>>https://www.reneedevignierdesign.com/pricing-webinar<<< 

WHAT YOU WILL LEARN IN THIS EPISODE:

WHY YOU NEED TO UNDERSTAND YOUR FINANCES

HOW TO START FOCUSING ON PROFITABILITY

HOW TO SCALE YOUR BUSINESS FOR PROFITABILITY

THE KEY TO MAKING MONEY

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I am honored that Michele Williams is here today to talk with us about the finances that we need to get a hold of in order to establish, maintain, and grow our profitability. Without that, we are stuck in a hobby and not in a business. And while it can be anxiety producing to look at our numbers, listening today will not only help you understand how to look at them but also how to take charge of them!

Michele Williams is the dynamic owner of Scarlet Thread Consulting and Metrique Solutions, two companies focused on empowering creative professionals to own the financials of their business. With an eye for detail and a passion for innovation, Michele has carved a niche in providing strategic business coaching and financial analytics to help business owners navigate the complexities of entrepreneurship.

 At Scarlet Thread Consulting, Michele utilizes her extensive experience in finance and business management to offer tailored coaching and mentoring services. She is dedicated to helping her clients achieve financial clarity and operational efficiency, enabling them to make informed decisions that drive their businesses forward.

 Through Metrique Solutions, Michele offers a unique blend of technology and consultancy, providing cutting-edge software solutions designed specifically for the owners of small business. Her expertise in financial metrics and data analysis empowers her clients to optimize their pricing strategies and enhance profitability.

 Michele’s commitment to excellence and her unwavering support for her clients have established her as a trusted advisor and thought leader in the design community. Her work not only transforms businesses but also inspires creativity and growth, making her an invaluable asset to the industry.

How it started

Michele shares how when she started her business, she didn’t think about the finances. What she thought about more was sales and order fulfillment. And so the middle ground of, how much do I charge? What are all the processes to keep this moving consistently? That didn’t get done in the very beginning. 

So she had a few years of really hard lessons of negative numbers on my profit laws, losing money, and working long hours. She used to call it “Working for free for rich people.” 

She quickly realized she could not continue that way; it was not sustainable. She was going to go back into software or corporate, where she could make six figures without depriving her family of income. 

So then she went on this journey of, what does it look like to truly be in business? What does it look like to be a hobby?’ Where do I have good business practices? Where do I have hobby practices? One of those areas was her financials. 

She was still trying to manage through spreadsheets, and as Michele says, “It was getting to be a hot mess because this business was growing.” Once she moved everything into Quickbooks in 2002-2003, she didn’t have a good process for keeping it updated. So, she still had no idea what her numbers were because she wasn’t on top of them all the time. 

But once she got it right, she started teaching other people how to do it. “Because when I got it right, I thought, oh my gosh, nobody around me is doing this. And they need to be doing this; that’s why they don’t know how much money they make,” says Michele

“My whole goal has been to share this information, not to hold it back so that the men and the women in this industry that work so very hard to create beautiful spaces and functional spaces and safe spaces, and that we get paid appropriately so that we can pay those on our team appropriately so that we can have a sustainable business that allows us to be there the next time they need our products and services,” Michele says.

I really find that this is one of the biggest components holding designers back, and it’s not that they want it to; it’s that they don’t even understand that it’s holding them back. 

With our businesses, we all start with sales. We have to sell. We have to sell. We have to sell. At a certain point, then, we realize we have to be profitable. Then, we will start working on these profit processes. How do we take money in? Where does money come from? After that, we start to look at things like order. Where do we have consistent processes in the entire business? Where do we make sure our mission, vision, and values are aligned? Where do we start building these higher-level sets of structure around what we’re doing? And then the next two levels after that are impact. We’re trying to make a greater impact on our employees or clients. And then legacy. How do we have that management turn that allows the business to go on? 

Most businesses only get to order, and that’s okay. Eighty percent of businesses do this. Most of the time, we go back and forth from sales to profit to order.  We will go up and down, up and down. And that’s not sustainable. 

“You cannot outsell bad pricing,” says Michele. “So if your pricing is not set up and poised to make you money, to cover the bills and do what it needs to do and provide a profit, you can’t sell your way out of that.” 

How to Start Focusing on Profitability

Michele is offering a free quiz you can go to on her website and start there. It’s called a financial health check up. It’s going to help you get a score and then identify the areas that you need help in and then lead you on how to solve it.

“I started by looking at the real businesses that I admired. What were they doing? How did they show up? What does it look like? Not just the pretty. What I noticed for the companies that were doing really well was that they knew their numbers. They knew their financials,” says Michele.

Here’s what this means, I know my revenue streams. Meaning, I know where money comes in. I know that I’m selling design time. I know that I’m selling construction plans or drawings. I know that I”m selling furniture or lighting, whatever it is. 

The second part is that I know how that money comes in and when it goes out. I know how I’m being paid and what work that pay covers. 

I understand the job of every dollar that comes into my business. 

Then, I know how to markup and make money. 

Then, I know how to balance those accounts. 

Scaling for profitability

If you are doing everything yourself, like if you’re a beginner designer and maybe you’ve got bookkeeping and maybe a few other things. Primarily I see that they can bill half of the time they put into the work. The other half is working in the business. Such as emails, networking event or other kind of marketing. 

When you get to a point where you can hire people, first of all you have to be able to pay them, and not only be able to pay them but have extra that is coming in from that work to support the running of a company so that you can do the next thing you need to be doing. 

Sometimes, they are able to bill up to 75-80% of their time if they have assistance doing the other pieces and parts that might drag them down. So it’s really about how does the work get handled and who’s going to do what to determine what that billable time is.  This can depend on each designer, what they want to do, and the role they want to play.

Not only do we jump across the mechanics of the financials but we often don’t look at the financials and how it intersects with the strategy of what we want to do and where we want to go. Do we want to scale? How do we want to scale? What would my job description look like? 

Michele always tells designers to look 3-5 years out. “Everything we’re doing today or not doing today is setting us up for the business we want to have,” she says. So, us not looking at it or saying we don’t have time for it is really saying we don’t care about it at the same rate. But if we could just start the practice of asking ourselves, “What does the me, or the business of next year need from the business of me this year?” 

And now, how do I do that? 

Does it need more sales? Awesome. How do I do more sales?

Does it need to be profitable? Fantastic. How do I make sure that I’m looking at my numbers today to have me poised for next year?

Michelle pushes each of her clients to ask themselves, “What does it need to look like at the end of 2024 so that we feel like we’re starting 2025 from a place of strength?” If we’re not asking it, we’re just taking what comes and then wondering how we’re going to make it work versus going after what we want. Going after something with intention, pricing it with intentionality to make money. Looking at things to say, I’m trying to set this business up to be as healthy as possible. But every day, it’s taking one step towards becoming the business that we want to be. 

After hearing all of this you may be saying, yes, I need more profitability. I need more clients. But how? And I hear from a lot of designers how they are tempted to work for free for, say a realtor, to ‘see how it goes.’ 

Michelle gives great advice on this in today’s episode, as she, too, has experienced this herself. “I sold myself and my time to make somebody else happy without getting paid for it. That client is patting us on the back, telling us how happy they are; yes, that is the feedback that our hearts need, but I cannot pay my bills on that. I cannot pay my vendors on that. I have to have money. 

Making money isn’t hard, but it is a lot of work. 

In order to make money, Michelle tells listeners in today’s episode how to do that:

You sell the right service or product at the right price. And then you manage the heck out of it. So it has to be a product or service that you like and that is priced appropriately for you to make money. That means it has to be that ideal client. If they are not the right client, they are going to cost us more. More in stress, money, and time. When you have the right service or product at the right price and manage it well, you have a growth profit. 

I find that for designers, myself included, it’s the ideal client part. And this is where we took a twist, and Michelle coached me during our conversation! So be sure to continue listening so you don’t miss this part! There is so much value in this for every designer listening.

Financials are in the middle of everything. There is nothing we do in a business that doesn’t touch it financially. And we all don’t want to look at them. 

Talk kindly to yourself.

This matters so much, and in our experience, with age comes wisdom. My hope is that with conversations like in today’s episode, is that it allows the designers who may still be in the trenches and not seeing the sunlight, that people ‘like them,’ meaning Michelle and I have also been there. We recognize with hindsight, there is a way out. We are offering that hand back to lift up.

Where to start

If you are a brand new designer and wondering where to start, Michelle says to stay involved in podcasts like mine and Michele’s (The Profit is a Choice Podcast) or go take the free quiz on Michelle’s website and you can find out what you need to be focusing on in your business. “That is where you should start is by creating an awareness. Create a desire and an awareness to know what you don’t know so that you can get what you don’t have.” Michelle says.