Please, please don’t tell me that you run on the “honor system” with your clients and vendors. What this really means is that you are running a design business, yet not using any written agreements for your design services or your product sales.
I am glad that you trust everyone. But really… everything you do is by verbal agreement and a “handshake?”
First of all this situation is very risky, as you will never know if you are gong to get paid, or what your vendor’s bill will be.
Second, this practice is unprofessional and positions your business in the “decorator next door” category. This situation alone will prevent you from moving up into the high-end clients and bigger jobs that you are looking for.
Furthermore if you have no records of what you bought and sold, you leave yourself exposed,and you’ll never know what to bill your client.
I know that many of you have money leaks in your business, big time.
And sometimes there is some confusion about what form of contract should be used, when and where, and by whom.
Let me help you a little bit, so you not knowing is no longer an excuse to conduct your interior design business in an unprofessional manner.
The first thing that you need to know is that a Letter of Agreement, a Proposal for Product, and Purchase Orders are all forms of a contract.
A contract is simply an agreement between two parties where money changes hands, but ALL contracts need to be in writing so that there is no misunderstanding about what is being provided, when it will happen, and how much will be paid by whom.
Here are three simple tips to get you going on the right track.
Tip #1 – A Letter of Agreement is a contract between you and your client hiring you to provide design services to produce an end result, like an efficiently
remodeled kitchen or furnishing a vacation home. This agreement is fee-based and is for your time to complete everything, right up to the time of ordering.
Tip #2 – A Proposal is a contract to purchase products at a specific price. The product specifications were completed in the Letter of Agreement, and now
you are creating the contract for the products purchased, (furniture, window coverings, flooring, etc.). This document should have a backside that explains the terms and conditions of the sale. It should also explain how you handle back orders, discontinued items, and other incidentals like special order merchandise, which is not returnable, and must be paid in full by the purchaser before it is ordered by the designer.
Tip #3 – Purchase Orders are contracts between you and your vendors. They are always done in writing so that there is no question as to the detail of the item that is specified. When you submit a Purchase Order to your vendor you will receive back an acknowledgement. This is the formal acceptance of your agreement and purchase order. Be sure to check the acknowledgement against your purchase order to see that meets the
exact terms of your agreement.
Follow these simple steps and your business will run smoothly, your clients will be happier, and you will stop the money leaks in your business. The end result? You will take home more money!