Designs for Increasing Profit Margins

I've always been a great fan of lists. So, I wasn't terribly surprised when, going through the boxes that still litter the basement of my not-so-new-anymore home, I stumbled on an old "to do" list dating back nearly 20 years.

Sophomore year in college, my "to do" list went something like this: "Make Dean's List, write a best selling novel, try out for Star Search, learn to figure skate, stop dating musicians"

Twenty years and 14 musicians later, I still marvel at how ambitious I was in those days. I set lofty goals, convinced that if I only put the words on paper, I could somehow find a way to make them come true or at least make some of them come true. Granted, I've yet to be mistaken for Kristi Yamaguchi, and that old Star Search video is the stuff that blackmail attempts are made of, but I still find myself vaguely amazed at how many "impossible" things I attempted on a regular basis back in those days.

My "to do" lists these days are much less ambitious. "Buy dog food, pick up the dry cleaning, call my parents before they file a Missing Persons report, completely clear off my desk" Well, okay, so the last is perhaps a tad overly optimistic. But overall, facing the ever-growing demands of work, home, family and friends, I've learned to be more realistic in my goal setting and more forgiving when I fall a bit short.

If last month's K&BDN "Cost of Business" survey is any indication, I'm not the only one trying to set more realistic goals, and then expecting to fall short sometimes. In fact, many kitchen and bath dealers seem to be taking the same philosophy when it comes to setting profit margins. As one dealer explained it to me: "I'd like to do better, but there are so many market variables you have to deal with after a while, you have to be realistic."

Certainly we've all felt that way from time to time. There are factors beyond our control that impact every job we do, from economic shifts to installer problems, shipping delays to customers who can't commit to a countertop forget the myriad details integral to a full kitchen overhaul.

Yet, lately, I can't help but wonder if we're all selling ourselves a bit short, tying ourselves to "market realities" that might be more self-fulfilling prophecies than carved-in-stone truths. After all, it's easy to blame disappointing profit margins on the economy, the dearth of quality employees, late shipments or too-demanding customers. These are all out of our control, right?

Likewise, many designers avoid dealing with the profit margin issue because they'd rather focus on what they enjoy most 'the artistry of design. As one designer explains it: "I may not be the best business person in the world, but I'm a great designer, and that's what counts most. So that's what I focus on my strengths."

However, there are several misconceptions at work here. The first is that it's a good idea to ignore your weaknesses in favor of focusing on what you "do best." In reality, when you have to make a choice, the things you do best can usually afford a bit of temporary neglect. On the other hand, weak areas, left untended, can fast turn into giant, profit-draining black holes.
Perhaps more importantly, though, designers need to understand that creative design and profit margins are not two separate and unrelated animals.

Indeed, at the "Designing for Profit" seminar held last month in Boston, speaker Ellen Cheever, CMKBD, ASID, pointed out that increasing profit margins doesn't have to be about sitting behind a desk crunching numbers. Rather, it can be a wonderfully creative experience, easily integrated into the design process itself. From selling signature design pieces to avoiding costly over-detailing, there are hundreds of ways to use your design skills to increase profits. In fact, increasing profit margins can be as rewarding creatively as it is financially.

When we say, "I'll accept a profit margin of 29%," perhaps it's time to ask ourselves, are we truly being "realistic?" Or, are we just saying, "I don't want to invest in the creativity, planning and hard work necessary to do better?"

While my old "to do" lists may be long out of date, I'm increasingly convinced that the lessons learned from them are not: Aim high. Recognize that creativity doesn't have to preclude practicality. And, above all, don't get taken in by too much "reality." If you pride yourself on being creative above all else, why not use those talents to fashion the most successful, and profitable, reality you can?

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