Good news for those in a position to start an ID firm this year. Fox Business just put out a report from Sageworks, Inc. that lists the best 5 businesses to start in 2011. Design was included in 3 of those 5, if you include landscaping in its various forms (landscape design, architectural landscaping).
The list:
Food: Catering services.
Design: Graphic, Interior, and Industrial design firms.
IT: Computer Programming and Website Design.
Finance: Bookkeeping, Accounting.
Maintenance: Landscaping, Janitorial, Pest Control.
In bad times, people want to make the best of what they have. In real estate, for example, Horton said this trend is common.
“You have these design firms so you can compete with other homes on the market,” she said. “Design is a differentiator. People will want that, even if they have to spend market value for it.” This industry grew by 6.2% in the past 12 months.
Nice to hear, but with it’s association of Industrial Design to the real estate “industry”, I don’t think Sageworks has a clue about the role of Industrial Design.
That was my impression too, at first, but I’m more inclined to think that either the comments were heavily edited for a short article, or that it was a quick example of how interior designers could add value to the housing market in particular.
On it’s face, it seems plausible that industrial design grew by 6.2% last year nationally, when looking the growth of the industrial design scene in NYC specifically.
I believe the article is saying that the three creative industries (graphic, interior, and industrial design) each grew by 6.2% last year and that the rise is expected to continue, and that is the reason they are grouped together.
Interior design is hard in the best of times. I wonder how many of the new “interior designers” are really decorators. It’s also one of those fall back businesses. Someone gets canned from their accounting gig and can’t find a new job, they go around the neighborhood as an interior designer. I’m betting that if the business is up 6%, the number of businesses is up 36%, meaning less money for everyone.
Is it 6.2% increase in sales?
Is it 6.2% increase in projects?
Is it 6.2% increase in jobs?
I suspect sales and that is likely just an increase in price. It doesn’t mean there are more projects or jobs for a new or existing firm. As a matter of fact, if prices went up greater than 6.2%, there would be less projects or jobs.
Vague statistics are meaningless. I don’t know whether to celebrate an increase in business or worry about an increase in inflation.
Just as a BTW, recessions lead to the best stand-up comedy. The reason is volume. It’s a profession (like design really) with zero start up costs and seems like something anyone can do (and most can’t). If you get enough volume through, there will be some real gems that float to the top.
Not that my area is an indicator for the rest of the country, but I know a few corporate accountants who voluntarily left their jobs to set up accounting offices or consultancies of their own. Accounting is another one of those businesses where you don’t have to invest a lot of money, but use your education, training and experience to provide a service to businesses and individuals who need it. And they make a hell of a lot more money than most interior designers. An accountant who falls back on interior design is probably not resourceful enough to be successful in either career.
I highly doubt they’re only talking about price or sales, which are two different things, btw. A forecasting company wouldn’t be in business very long if they made predictions based on only one factor.
Take this report for example:
"Thus far little attention has been paid to a part of the economy that has experienced phenomenal growth over the past decade and for which New York holds a significant competitive advantage: design…
The design sector has also been expanding at a rapid clip. Between 2000 and 2009, design sector jobs in the New York metro area grew by 75 percent, with especially large jumps in the number of interior designers (which increased by 223 percent), graphic designers (139 percent) and industrial designers (127 percent)…
There is tremendous potential for future growth in design, and New York is well positioned to capture this growth."
~Center for an Urban Future as reported by Core77.
If the design scene in NY grew by 75% over 10 years, that’s an average of 7.5% per year. National growth of the industry of 6.2% seems reasonable. While it is clear that this particular study was referring to job growth, not sales specifically, the FBN article doesn’t offer enough information to draw the same conclusion definitively (although jobs forecasts are usually driven by a combination of the factors you mentioned above, one acting as an indicator of the other). The correlation between the report from the Center for an Urban Future in NY and Sageworks’ national report, seems to say that they are talking about the same kind of growth - job sector.
The difference between the two reports is where the jobs can be found. The report for NY ends in 2009, at the most drastic point of the economic downturn. The FBN report picks up in 2011. The employment numbers from CUF report talks about jobs in general (firms, corporate, freelance, etc.) while the Sageworks report talks specifically about start-up potential. It seems unlikely that designers would rush to start design firms when no one is buying their services.
Keeping in mind that the focus of the title is on the optimistic outlook of starting your own design firm, here’s my Perry Mason version of what I think happened. In 2009 the country began a sharp contraction. Companies let designers go to cope with decreasing revenue. A year later the market sees an uptick in the numbers of design consultancies, 6.2% in 2010. Now, in 2011, with an uncertain regulatory future, unclear government policy, and an unstable global economic forecast, businesses still have no incentive to hire permanent employees. Still, the need for design services has not diminished since 2009, and their ability to hire more in-house designers has not improved. So instead of hiring designers full time, they hire design consultants. This helps keep their costs down, while demand builds for designers to start their own firms.
I prefer concrete evidence which the FB report lacks. Without it, you and I could speculate another dozen or two other scerenios about this “growth”.
And btw, forecasting sales is an accepted measure of growth. As is productivity, assests, profits, market share, and employment. Again, what does 6.2% “growth” mean?
Okay…two articles pointing to the growth (specific employment in one, overall “industry growth” in another) of the industrial design market are not enough to show optimistic forecasts.
The FB article specifies sales increases for the food catering businesses this way, “Average sales growth over the past 12 months was 6.5%.”
But when talking about design firms, they say “the industry grew by 6.2%.” I think sales increases and industry growth point to two different things. Sales may show product strength, while industry growth shows expansion.
Sales is only an effective measure of growth when taken with other factors. Raising prices to adjust for inflation does not equal growth.
