How Profit First Can Transform Your Interior Design Business
As an interior designer, you pour your heart and soul into every project—blending creativity, vision, and countless hours of work to create spaces that truly transform how people live and feel.
You're talented.
You're passionate.
You're busy.
But if you’re like many design professionals, you might also find yourself quietly asking: "Why am I working so hard… yet still struggling to feel financially secure in my business?" If that resonates, let me assure you—you are not alone. And you’re not failing. You simply haven’t been given the right financial structure to match your creativity and ambition.
Because passion alone isn’t enough to build a sustainable business. It takes a plan and a system that protects your profits, empowers your decisions, and supports the business (and life) you're working so hard to create.
That’s where Profit First comes in.
Juggling Money Without a Clear Plan
When I started my first business back in 2000, I learned some hard financial lessons. I priced my services too low. I didn’t consistently save for taxes. I wasn’t setting aside profit intentionally.
Even when money was flowing in, it often felt like there was nothing left at the end of the month. I was stuck in the constant cycle of “robbing Peter to pay Paul”—paying bills, vendors, and unexpected expenses without truly paying myself. If you've ever:
Felt stressed about your cash flow
Worried about covering upcoming taxes
Skipped paying yourself to “keep the business afloat,”
then you already know how overwhelming and disheartening it can be. Without a clear financial strategy, it’s easy to get stuck in survival mode, working harder without building real wealth or stability for your future.
Introducing the Profit First Method
Profit First is more than a budgeting system. It’s a complete mindset shift that changes the way you think about, manage, and grow your money.
Here’s the foundational idea.
Instead of operating on the assumption that Profit = Sales - Expenses, Profit First flips the formula. Sales - Profit = Expenses. You take your profit first and then run your business on what’s left.
With Profit First, you intentionally allocate every dollar to specific purposes. Profit, owner’s pay, taxes, operating expenses, inventory replenishment or bonuses (if needed).
Each category gets its own bank account, making it crystal clear what money is available for each need. Instead of guessing, you know—and that knowledge gives you control.
Why Profit First Works for Interior Designers
Interior design businesses aren’t like other businesses.
You’re not just selling your time—you’re often managing massive budgets for materials, furnishings, contractors, and project installations.
It’s not unusual to receive tens of thousands, if not hundreds of thousands, of dollars from a client at once. But here’s the trap! When all that money hits your bank account, it’s easy to feel rich... even though most of those dollars aren’t yours to spend.
You’re responsible for ordering sofas, sourcing materials, paying vendors—long before you actually recognize the full revenue from a project. And because projects often span months (or even years), there’s a significant lag between spending money and being paid in full.
Without a clear money management system in place, it’s dangerously easy to fall into these three major pitfalls.
1. Spending Client Funds on Day-to-Day Operations
Picture this… A large client deposit comes in. Your operating account looks flush for the first time in weeks. You breathe a sigh of relief and immediately catch up on overdue bills, cover payroll, or invest in new marketing.
The problem? That money wasn’t yours.
It was earmarked for client purchases—and when it’s time to order custom furnishings or settle vendor invoices, the money is already gone.
Now you’re stuck scrambling, borrowing from other accounts, or delaying purchases—all of which damages trust with your client and puts your project timelines at risk.
2. Overestimating Available Cash
It’s easy to look at the top-line revenue number and assume it’s all spendable. But as you know, a huge portion of that money is already spoken for:
Product costs
Shipping and delivery fees
Vendor payments
Installations
Taxes
And operational overhead.
Without separating and protecting those funds early, your cash flow picture becomes dangerously distorted. You might invest heavily in new projects or overhead, only to realize later that you’ve overspent on obligations you already had.
3. Falling Short When Big Expenses Come Due
In the design world, large payments are often due at once. Fifty percent upfront for furniture orders, lump sums for custom drapery fabrication, massive shipping costs that hit all at once.
If you haven’t proactively separated the funds needed for those expenses, you’ll find yourself short when it matters most—leading to missed deadlines, strained client relationships, and sometimes even out-of-pocket costs.
How to Implement Profit First in Your Business
Implementing Profit First doesn’t have to be complicated. Here’s a step-by-step breakdown of how you can start today.
Step 1: Understand Your Cash Flow
Before you open a single new account, you need clarity on:
When money comes in
When it goes out
How expenses and revenue flow month to month.
Take time to track your cash flow for 30 to 60 days. Understand the timing of payments, project retainers, final invoices, and major expenses like product purchases. If you don’t know your cash flow, even the best system won’t work because you’ll be allocating money you don’t actually have yet.
Step 2: Set Up Two Key Accounts
Start simple. Open these accounts first.
A Profit Account
A Tax Account
Even if you can only transfer 1% of your deposits to your Profit Account at first, that small action begins building the muscle of intentional money management. Setting up a Tax Account ensures you’re prepared when quarterly taxes hit—no scrambling, no panic. Treat these accounts as sacred. Only use them for their intended purposes.
Step 3: Analyze Your Current Percentages
Don’t blindly follow the percentages listed in the Profit First book. Start by calculating your Current Allocation Percentages (CAPs):
What percentage of your revenue currently goes to expenses?
What percentage goes to owner's pay, taxes, or profit?
Then, establish your Target Allocation Percentages (TAPs) where you want to be over time. The goal is to gradually adjust your allocations quarter by quarter, not to overhaul everything overnight.
Step 4: Build a Financial Strategy
Profit First implementation without strategy is a recipe for frustration. Once you understand your numbers, ask:
What are my financial goals this year?
Am I paying off debt?
Am I building a financial cushion?
Am I planning to invest in my business?
Knowing why you’re saving profit helps you stay committed—and creates momentum. Create a quarterly review process where you reassess your allocations and adjust as needed based on growth and changing goals.
Step 5: Monitor, Adjust, and Celebrate Wins
Profit First isn’t “set it and forget it.” It’s an ongoing process.
Monitor your cash flow monthly.
Celebrate when you reach key milestones (like paying a quarterly tax bill from your tax account or giving yourself a raise from the profit account).
Adjust your CAPs as your revenue grows or your business evolves.
Over time, your financial stability will compound creating freedom, opportunity, and peace of mind.
Common Profit first Mistakes to Avoid
Even with a solid system like Profit First, mistakes can happen—especially if you're eager to fix everything overnight. But if you know what to watch for, you can avoid the most common traps and set yourself up for success.
Let’s walk through a few real-world missteps I’ve seen (and sometimes made myself!):
Mistake #1: Skipping the Cash Flow Analysis
Imagine building a beautiful home without ever looking at the foundation.
It might stand for a little while, but eventually, cracks will start to show—and everything you've built will feel unstable.
Skipping your cash flow analysis is exactly like that.
If you don’t take the time to understand how and when money flows into and out of your business, you’re building your Profit First system on guesses instead of facts.
And when allocations don’t line up with reality, it leads to shortfalls, overdrafts, and major frustration.
Before you open any new accounts or set percentages, step back and study your cash flow for 30 to 60 days.
Mistake #2: Copying Someone Else’s Percentages
When I first learned about Profit First, I was tempted to plug in the percentages from the book and call it a day.
It felt easier than doing the hard work of looking at my own messy numbers.
But here's the truth:
Your business is like your design style—completely unique.
Using someone else’s percentages without considering your real cash flow is like trying to fit a custom-designed sofa into a room it was never measured for. It doesn’t work.
You’ll either be too tight in some areas or leave huge gaps in others.
Start by calculating your own Current Allocation Percentages (CAPs).
Then create a plan to slowly move toward your Target Allocation Percentages (TAPs) over time. Progress, not perfection, is the goal
Mistake #3: Treating It Like a “Set It and Forget It” Plan
Profit First isn’t a crockpot. You can’t just "set it and forget it."
Your business evolves, your team grows, your revenue changes, your expenses shift.
If you set up Profit First once and never revisit it, you’ll eventually find that your system no longer fits your business reality.
I’ve seen businesses set up accounts perfectly... but a year later, they were still using the same percentages despite doubling their revenue.
What started as a solid system turned into a straitjacket.
Make Profit First part of your regular business check-ins. Review your allocations quarterly. Adjust percentages as you grow. Stay flexible, stay curious, and let your financial system evolve with your business.
What’s Possible When You Implement Profit First
Imagine a business where you confidently pay yourself every month, taxes don’t cause stress, and profit isn’t a hope—it’s a plan.
You have the clarity, structure, and discipline to invest in your team, your business growth, and your personal future. Profit First puts you back in the driver's seat giving you control over your financial destiny.
Take the Next Step: Join Master Your Profit
If you’re ready to move beyond guesswork and build a thriving, profitable interior design business, I’d love to invite you to join me in Master Your Profit.
This is a live coaching experience where you’ll:
Build your customized Profit First plan
Analyze your real numbers,
Develop a financial strategy tied to your bigger business goals
Get personalized coaching and feedback from me
Learn and grow alongside a community of motivated interior design business owners. Master Your Profit kicks off on May 8, and registration is open now!
Click here to learn more and join us.
Spots are limited to ensure a personalized experience, don't wait if you want to secure your seat.
Profit is Always a Choice
You have the talent, the creativity, and the drive. Now it’s time to put the financial structure in place to support the business—and life—you deserve.
Every day, you have a choice
Keep hoping for profitability...
Or choose it intentionally.
At Scarlet Thread Consulting, we believe that Profit is a Choice and we're here to help you make it.