How To Fund Your Interior Design Business

Running your own interior design business comes with plenty of challenges, but nothing is as daunting as figuring out the finances to get started. Whether you're setting up a new business or looking for financial aid to grow your existing one, here are all your financial need-to-knows in one handy guide.

Interior Design Business Plan

The very first thing you need for financial investment is a business plan. A business plan is a comprehensive blueprint showing your objectives, your income and expenses projection and the key ingredient: what sets you apart from everyone else. At the end of putting your plan together, you should know how much money you'll need and be able to show exactly what you're going to do with it. There are plenty of free templates online that you can use to get started.

Some key things to consider:

• Where are you working from? Working from home is cheaper, but it must be feasible both in size and comfort and the potential for hosting client meetings.
• Are you going solo or partnering up? Business partnerships require a clear map for investment and profit split as well as agreed work split.
• Think about what you've got vs what you need to buy to get started - office equipment, design software, business cards, etc.
• Unless you're going the DIY route, add in costs for services like marketing and bookkeeping.

Interior Design Business Finance Options

Loans

This is the most common way to finance a new or growing business. You can call on family or friends or, if you're not lucky enough to have that option, the bank. Whichever you choose, make sure the terms are crystal clear, even with friends and family. You don't want to damage future relationships through misunderstandings.

Bank loans usually come with reams of paperwork in complicated language. If you're not sure what you're signing, get someone you trust to have a look at it. Pay careful attention to the interest rate, your minimum monthly payments and how long you have to repay the loan. Also, check what penalties you’ll incur for late or failed payments.

Government-backed start-up loans are available for small businesses in the UK. These range from £500 to £25,000 and are unsecured loans, unlike those you'd get from a bank. If you qualify, you'll also get help writing your business plan and up to 12 months' free mentoring. Find out more here. 

Savings

If you have savings, this is a no-brainer. It's straightforward, there are no strings attached and you answer only to yourself. However, consider what those savings are for. Are you giving up a down payment on a house or a fund for holidays? Make sure you won't be significantly worse off financially if you choose this option.

Investors

Unlike a loan from a bank, an investor becomes a partner in your business. This is a good option if you don't qualify for a loan or you can't borrow as much as you need. Bear in mind though that just like with a bank loan, you'll need to be clear on the terms, especially as there will be expectations on the investor's side as well.

If you approach a relative or friend, you must decide if you want them to be a silent partner or an operational team member. Are you willing to compromise if they don't agree with the deal you offer and to what extent? If you're asking them to be a fully-fledged team member, you are essentially going into business together. You only want to do this if it's someone you feel strongly you can work well with.

Another option is to approach an Angel Investor. An Angel Investor is someone who provides capital in exchange for equity in your company or convertible debt. These investors are typically very successful with a net worth of more than $1 million, which is how they're able to invest in small, untested companies that are considered high risks. They may have some experience in the industries they invest in, but at the very least they come with excellent business acumen and often play a mentorship role. You can find a list of accredited Angel Investors in the UK here.

Grants

There are several organisations that offer grants and financial support for interior designers. The British Design Fund has a programme offering both money and mentorship, while at government level, local chambers of commerce may offer a tiered grant scheme depending on where in the UK your business is based.

Crowdfunding

If all of the above routes fail or you simply don't want to go that way, crowdfunding has become an increasingly popular way to raise money, not just for businesses but for a variety of causes. A big advantage is that you set your own terms - if people don't like them, they don't have to contribute. You can offer everything from an equity stake in your company in change for funding to nothing at all. Kickstarter is the best-known crowdfunding site and its global reach means you have an enormous pool of contributors at your disposal. It seems to attract creative type so is a good starting point. If you have a product to offer, Indiegogo is another great option. Do some research and find the best platform for your business - there are several thousand so you want to give yourself the best possible springboard.

FCI London's Trade Services

We may not be handing out financial aid packages, but we are experienced in offering comprehensive support. Our CEO, Firdaus Nagree, is in fact an Angel Investor himself. If you're lost and don't know where to start, sign up for a free trade account here and one of our team will be in touch.