I’m reviewing my 2014 business plan, and am wondering if I’ve included the right things in this plan?
I own a modestly successful staging business, and I think I’ll be a home stager forever, and ever. In 2014 I plan to invest in new inventory, and (hopefully) hire another assistant or two. Last year, was our best year. We increased our business (and our profits) by double digits, and our vacant staging programs were in great demand. It seems that the sky-is-the-limit to our success, but I do want to be cautious.
My business plan includes strict budgets for inventory, \general overhead expenses, payroll, marketing, advertising, insurance, and continuing education. Have I overlooked something? What is the one thing that you would recommend for me to do?
Signed: Cathy in Columbus
Thank you so much for writing, and congratulations on our your success. I think 2014 will be a banner year for many staging companies!!! The biggest thing that you’ve neglected is a budget, or plan that includes an exit strategy from your home staging business.
To answer your question, I’ve turned to my friends at Houston Home Staging. They’re in the middle of an exciting re-tooling of their business. They’ve also been in the business of home staging for over eight years (actually, they’ve been staging their own real estate since 1995).
In their opinion the most important part of their business plan, was to have a clearly defined exit plan. This year, they unexpectedly (and surprisingly) decided to discontinue their vacant staging programs. This meant that they had to sell-off their very large inventory of furnishings and accessories. To do so, required a major investment. Their warehouse would not have been an appropriate venue for the selling off of the inventory. Also, the liability of having customers tramp through a tightly packed warehouse made that an impossible choice. So, all of the inventory had to be moved from the warehouse to their garage, for a series of very profitable yard sales!!!
In the case of Houston Home Staging, they applied their marketing and merchandising skill sets to their sell-off of inventory. Unlike other yard sales, Houston Home Staging was able to offer their friends and neighbors curated collections of furnishings, artwork, and accessories. It wasn’t just a mish-mosh of cast-offs, the toss pillows matched the vases, and the vases matched the artwork…….. This resulted in many shoppers purchasing large quantities, and that reduced the frenzy that is often associated with yard sales.
Typically, used furnishings sell for about 10% of their original value. By aggressively marketing, and merchandising their events they saw a return of about 20 – 25%.
After many years of doing occasional inventory clearances, HHS discovered that public postings – such as Craigslist – attracted shoppers that were far too aggressive and annoying. Facebook, Google +, and emails to existing clients and friends, produced a pleasant shopping experience, and a higher than average return.
Our friend Cathy from Columbus feels that she’ll be staging forever, and ever. We have found that ‘forever’ is a much shorter period of time than it used to be. Most home stagers recognize that they’ve developed a skill set that takes them into more profitable, more gratifying, and less annoying careers. In this regard, home staging is most frequently a ‘gateway’ career.
Hopefully, the home stager who is changing careers is doing so as a choice, and is not being forced out of business. Most home staging companies in North America are one person operations. The stager, is the owner, or the President of the LLC that operates the staging company. Rarely, do they have an assistant, spouse, or life-partner who has any type of intimate knowledge of how the business operates. Should something happen to the owner, the entire house of cards comes tumbling down. Even a short-term disabling condition, can be disastrous for a staging company that now has no income, and furnishings that need to be removed from their existing listings. To say nothing of the complications that arise in the warehouse when the flow of merchandise being returned to the warehouse is not flowing outwards to new projects.
Our friends at Houston Home Staging were clearly at the top of their game last year. Many of their clients were stunned by their decision to discontinue their highly visible vacant staging programs. Many thought that the company was ‘quitting’. In actuality, Houston Home Staging was investing in the future of their company, and discarding a service that hindered their growth. The market in Houston was now demanding educational tools and programs from experienced, Houston-based stagers (as opposed to training from out-of-town, or out-of-state, inexperienced stagers). Houston Home Staging’s Creative Director (Tom Scanlon) studied for, and received the necessary credentials to become licensed by the state of Texas to provide training to Realtors on the topic of home staging. With the publication of HHS’s popular ‘Staging Stories – Volume II, The Essentials’ by Alicia Barrington HHS is now building a new, and exciting customer base. None of which would have been possible without their vacant staging programs.
“Always leave them wanting more….” , is a good show business adage. The gentlemen at HHS have always been known for their timing, and saw this top-of-the-market situation as a great launching point for new services and products from Houston Home Staging. Exiting the vacant staging business at the top of the market, and at the top of their game, actually created excitement that fueled the new version of Houston Home Staging. Their customers wondered: “What’s next?” Had they made this decision at the bottom of the market cycle, their customers would most likely have exclaimed: “Who cares?”
Our best advice to our readers (stagers or not) is to have a three month supply of cash on hand, so that a rainy day doesn’t turn into a tsunami!
A good exit plan, is a good business plan!
Thanks so much for writing Cathy!