Interior Design II
Objective 3.00
Work Assignments
Work Assignments and Test Due at end of objective (check calendar)
Objectives Taught:
3.01 Define factors influencing entrepreneurship
3.02 Determine managerial skills needs to operate a business
3.03 Demonstrate ways to compute a client’s cost of goods and services
3.04 Explain simple project techniques appropriate for residential and non-residential
design
Pages that could help you: pg. 180-182, 571
Work to be turned in at the end of the work assignment:
3.01
* List 20 businesses in interior design or housing field. Make and explain conclusions as to
how they were acquired
*After reading the PowerPoint, list the advantages and disadvantages of sole
proprietorship, partnership, corporation, franchise
*Prepare a partnership agreement with a partner (the two of you will work together) to
prepare a partnership agreement. Use 3.01 C as a guide
*3.01 D Paper on sole proprietorship needs to be done. You can find videos that answer
these topics as well
3.02
*3.02 B Types of Managerial Skills Worksheet
*Use 3.02F and read the scenarios to decide which management function is used
*Create a logo and a business card for a business pertaining to housing and interior
design industry
*Management Functions Worksheet
3.03
*Appendix A, C, E and calculate retail prices and markups
*Design a product with a partner to sell in class. Research cost of all parts of the product
and calculate the cost and how much markup is needed to make a profit
*Use the product to create a brochure to market product to others. Use logo from 3.02.
3.04
*Definitions for the following: portfolio, presentation boards, models, drawings and
renderings
*List the pros/cons of the following scenario: A client has request that you as a designer
send an example of your work to another client in California. As most of your work is in
model form, determine how you can best present your work to the client without sending
the actual models.
Notes for 3.01
Business Know-how
For Housing and Interiors
Entrepreneur
A person who assumes risk of
starting and operating a business for
the purpose of making a profit
Acquiring a Business



Take over a family business
Buy an existing business
Start a business on your own
Proprietorship
One Owner
Sole Proprietorship

Advantages





Easy start up
All profits to owner
Business pays no
income tax
Little government
regulations
Direct control

Disadvantages




Unlimited liability
Difficulty in financing
Limited life (death)
All losses
responsibility of
owner
Partnership

Two or more
owners
Partnership

Advantages




Easy start up
Business pays no
income tax
Limited
government
regulations
Shared financing
and losses

Disadvantages




Unlimited liability
Shared profits
Limited life(death)
Shared control
Partnership

General



All partners are
general
All partnersunlimited liability
All partners-full
management of
business

Limited



Usually an investor
Usually does not
manage day-to-day
activities
Usually limited to
the extent of the
investment
Corporation

Owned by
stockholders
Corporation

Advantages




Limited liability
Ease in raising
capital $$$
Continuity of
business
Ownership is easily
transferred

Disadvantages





Expensive to form
Profits depend on
investment
Double taxation
Lack of control by
owners
High government
regulations
Franchise

Décor and You

Color Your Carpet

Designs of the Interior

Decorating Den
Franchise

Advantages




Established name
Reduced risk of
failure
Benefit of national
name
Training provided
Disadvantages




Cost to purchase is
high
Additional fees for
local advertising
Percentage of sales
goes to franchisor
Lack of freedom in
running business
Appendix B 3.01: Ownership Comparison
Ownership Comparison
(double Jeopardy)
OWNERSHIP COMPARISON
(Double Jeopardy)
DIRECTIONS: Using the form below, list the major forms of ownership across the
top. Consider the factors listed down the left side. Under each major form of
ownership identify what the factor is for each. After identifying the factors, write
an A if it is an advantage or a D if it is a disadvantage. Each answer is worth 2
points.
Factors
1. Start up
2. Profits
3. Liability
4. Ability to raise
capital $$$
5. Taxes
6. Gov’t
regulations
7. Control of
ownership
8. Dissolution of
business
Appendix C 3.01: Partnership Agreement
Partnership Agreement
THIS CONTRACT, Made and entered into on the
By and between
day of
WITNESS: That the said parties have this day formed a co-partnership for the
purpose of engaging in and conducting business under the following stipulations,
which are made as part of the contract:
FIRST: The said co-partnership is to continue for a term of
from date hereof.
SECOND: The business shall be conducted under the firm name and address
of
THIRD: All investments are as follows
FOURTH: All profits or losses arising from said business are to be divided as
follows:
FIFTH: Each partner is to devote his or her entire time and attention to the
business and engage in no other business enterprise without the written consent of
the other partner.
SIXTH: Each partner is to have a salary of $
per month, the same to
be withdrawn at such time or times as he or she may elect. Neither partner is to
withdraw from the business an amount in excess of his or her salary without the
written consent of the other partner.
SEVENTH: The duties of each partner are defined as follows
EIGHTH: Neither partner is to be surety or bondsman for anyone without the
written consent of the other partner.
NINTH:
TENTH:
IN WITNESS WHEREOF, The parties aforesaid have hereunto set their hands and
affixed their seals on the day and year written above.
_______________________________________
_______________________________________
Appendix D 3.01: Paper on Sole Proprietorship
Paper on Sole Proprietorship
1. Primary Source
A. Why and how did you decide on this career?
B. What education was required for this career?
C. What are the advantages and disadvantages of this career.
2. Describe from 2-3 other sources the following:
A. Nature of the work (what is a typical day for this career; have 3-5
points)
B. Describe the work environment
C. Describe in detail the education or training needed
D. Describe the salary range from highest to lowest
E. What are the related occupations and how can education and
training help start a career
F. What is the future outlook for this career in the next 10-15 years?
This paper should be a minimum of 2 pages double-spaced with Times New Roman
12 font.
This paper should have proper internal citations and a correct works cited page.
3.02 Notes/Information
Appendix A 3.02: Types of Managerial Skills
Types of Managerial Skills
Networking and Communication Techniques
 Must be competent to turn out whatever correspondence that the business
requires on a regular basis. Be clear and concise in communication. Focus on
the client.
 Must be able to respond to phone calls, written correspondence, emails, and
other electronic correspondence.


Must be able to communicate with past, present, and prospective clients in
professional and social settings.
Must be able to communicate with employees to direct them in positive
outcomes in the business.
Human Relations Skills: most important skill needed in management
 Must be able to interact with employees, suppliers, and customers.
 Must lead and motivate employees.
Time Management Skills
 Must be able to allocate time effectively
 Set and prioritize goals
 Schedule activities on a planning calendar for overall picture of activities to
be accomplished in a specific time period
 Group activities together for most efficient use of time
Technical Skills
 The skills are acquired through education or experience in a particular
industry
 These skills involve the use of tools, equipment, procedures, and techniques
of the industry
 As business grows, the technical skills may be turned over to supervisors for
everyday operating business
Conceptual Skills: efficient use of thinking, reasoning, and logic
 These skills help in understanding the business as a whole and how parts are
related
 Can help in day-to-day decision making related to business
 Can help in making long-range plans and decisions for expanding the
business (forecasting)
Math Skills
 Helps in managing daily operation of business, such as accounting of sale
and payroll
 Evaluating the business performance on a regular basis (daily, weekly,
monthly, yearly) on a balance sheet or other accounting program
 Helps in making long-range projections as to where the business is headed in
terms of financing
Source: Entrepreneurship and Small Business Management, Meyer and Allen.
Glencoe/McGraw, 2000, page 242-244
Appendix B 3.02: Types of Managerial Skill Answer Sheet
Math
Technical
Conceptual
Management Skills
Human Relations
Decision-Making
Time-Management
Match the management skill listed above with the scenarios
below.
Generally considered to be the most important of all
management skills
Needed to interact effectively with employees and customers
Skill in being able to see the finished product when designing
a room.
Skill in defining problems and selecting the best solution
Skill in evaluating business performance
Skill in leading and motivating employees
Skill in making long-range projections
Skill in measuring, designing, and creating custom draperies
Skill in understanding and getting along with your customers
Skill needed for situations that must be dealt with immediately
Skill needed to have many projects going at one time
Skill needed to perform specialized task
Skill that helps owners/managers recognize new market
opportunities and/or threats
Skill that involves defining a problem and selecting the best
course of action
Skill to accomplish a multitude of objectives in a limited period
of time
Skill to tell employees what you have in mind for them to do
Appendix D 3.02: Approaches to Decision Making
APPROACHES TO DECISION MAKING
1. Rational Approach: a series of steps to insure that every aspect of the problem is
considered
 Identify the problem
 List the solutions or options
 Evaluate the alternatives
 Choose a solution
 Act and get feedback
2. Seat-of-the-pants approach: decision making that does not always consider all of
the possibilities.
 Owner may rely on personal experience, established procedures, or even
intuition
 This approach often seeks a solution that satisfies the moment
GROUP DECISION MAKING
3. Brainstorming:
 Goal is to generate a large number of ideas in a short period of time.
 No idea will be dismissed until all ideas are listed on paper
 After all goals are listed, start going through and discarding any that are not
feasible or were “wishful” thinking
4. Nominal Grouping: each member of the groups acts individually
 State the problem
 Individuals make a list of solutions and rank them
 Each person presents ideas to the leader, who records them on paper
 After all ideas are presented, questions are asked and alternatives are clarified
 New list is completed with all ideas and questions clarified
 Last step is to rank all new ideas to arrive at the top or most appropriate choice
5. Delphi Technique: This is a more formal approach to decision making. The goal is to
reach a consensus or agreement.
 Group does meet
 There is a questionnaire sent to the group that presents the problem
 Group members suggest potential solutions and return the suggestions to the
leader



Results of the questionnaire are tallied and sent back to the group along with a
more detailed questionnaire
Members complete the new questionnaire adding any new suggestions and
return to the leader
This process continues until a consensus is reached
Entrepreneurship and Small Business Management, Meyer and Allen,
Glencoe/McGraw Hill, 2000
Appendix E 3.02 Management Functions
Management Functions
Planning: Most important function of management
 Analyze the information
 Make decisions as to what needs to done to reach a desired outcome
 Set goals
Goals should be put into writing
Goals should be measurable
Goals should be attainable
Goals should set deadlines for achievement
 Develop strategies for achieving goals by following a plan
1. Strategic plans: plans for long term goals, where do you want the business to
be in 3-5 years
2. Tactical plans: plans for goals of one year or less. Specific objectives with
specific target dates. These plans make the strategic plan a reality
3. Operational plan: addresses short-range objectives for implementing the
tactical plans
Organizing
 Determine what jobs will be done
 Who will carry out the company’s plan
 Determine what materials, equipment, and other resources are needed
 Determine hiring and training policies as follows:
 Employee Recruitment
1. Define the job
2. Recruit through classified ads, employment agencies (head hunters), word of
mouth, and Internet sites
 Screening Prospective employees
Start with application or resume
1. Interview by asking general questions about background.
2. Test his/her technical skills if needed
3. Continue interview and request references to be checked
 Training and Development of employees
1. Can be on the job

2. Contract with outside consultant
Standards & policies must be provided to all employees, usually in booklet form
containing the following information:
1. Working hours: define the standard workday with breaks and lunch/dinner,
observed holidays, vacation and sick leave policies
2. Payment policies including dates/times of payment, overtime calculations,
salaried vs. hourly rates and pay
3. Benefits including health, dental, disability insurance
4. Termination policies: grounds for firing, layoffs, resignations, and
reemployment
Entrepreneurship and Small Business Management, Meyer and Allen,
Glencoe/McGraw Hill, 2000 page 239-240
Appendix E 3.02: Management Functions Continued
Promoting the Business
Referrals occur when one client tells another person looking for a service about a
particular business
 Cost is $0
 Be aware that referrals can work against your firm if there are problems or work
is not completed satisfactorily
 Deliver more than you promise and never promise what you cannot deliver
 Ask for referrals
 Develop a mailing list of existing and past clients. Send some type of
information each month to keep your firm in clients minds
Basic Promotional Tools
 Portfolios: selection of project photos taken by professional photographer to
show what the firm sells. Can also be digital, slides, transparencies
 Graphic images: Business cards, letterhead & other stationary, business forms.
1. This is usually the first impression a potential client may have with your firm.
2. The colors used, size and typeface, and size of finished format are all
important when creating graphics.
3. Employ a graphic designer for a more professional look
 Logo: a mark that is a symbolic image of the company. Can be used on all
materials related to the firm
Business cards: sometimes thought of as tiny billboards in which a company
can leave an impression
1. Generally 3.5 inches x 2 inches, black and white, colored, single or doublespaced.

2. List logo, name of company, employee name and position, address, phone and
fax number, e-mail address, cell or pager number,
3. There are companies that produce a multimedia business card in the form of a
CD-ROM, can store video, text, graphics, audio, and links to web pages.
1.
2.
3.
4.
5.
6.
 Brochures:
Gives the firm an opportunity to show selections of best work and to tell clients
something about the firm
Image on the brochure should mirror the firm’s image
Cover should be attention getting and interesting
Copy should be well written and brief
Copy should tell potential clients about the firm, services offered, list former clients
Copy and photos are meant to provide a “taste” of what the firm is about, but
should not “date” the brochure
*Professional Practice for Interior Designers, Piotrowski, Christine M.,
John Wiley & Sons, 2002, pages 353-369
Appendix E 3.02: Management Functions Continued
Directing:
“Directing means conveying your plans, assignments, and instructions to your
employees. Employees require guidance and supervision
An employer must be able to communicate goals and motivate employees to
perform at their best.
Effective direction also requires handling equipment, materials, and other resources.”
Entrepreneurship and Small Business Management, Meyer and Allen,
Glencoe/McGraw Hill, 2000, page 240
Controlling: Usually the last step in the management process
“Controlling is the process of comparing your EXPECTED results with ACTUAL
performance.”
Entrepreneurship and Small Business Management, Meyer and Allen,
Glencoe/McGraw Hill, 2000, page 240
Appendix F 3.02: Management Functions Activity
Management Functions
Planning
done
Analyzing information, making decisions about what needs to be
Determines goals.
Develop strategy for achieving those goals
Controlling
been met
Evaluating results to determine if the company’s objectives have
Monitoring a firm’s performance (set standards, monitor, measure,
correct)
Directing
(Implementing)
Carrying out the plans and helping employees to work effectively
Guide and motivate employees to meet the firm’s objectives
Organizing
Determining how plans can most effectively be accomplished
Arranging resources and activities into a coherent structure to
complete work.
1. When Millie was appointed president of Goodcare Designs, she notices that
the former president had all the major functions reporting directly to him. She
is analyzing the functions to see how they could be restructured to be more
efficient. She is engaged in which management process?
2. Each Monday the manager of an interior design store meets with all of the
employees to review the assignments for the week and to provide assistance
for those who need it. He is engaged in which management process?
3. Upon reviewing the sales results from the prior week, a manager noticed that
all but one employee was on target. While contemplating how to fix the
problem, he was engaged in which management process?
4. When the finance manager of Designs R Us set a goal of increasing the
company’s return on investment to 14 percent in the next three years, he was
engaging in which management process?
5. When Mary Homemaker broke Designs Incorporated down into several small
business groups and gave each one the responsibility for its own selling,
designing and marketing. She was engaging in which management
process?
6. When Louis Garner, CEO of More Designs, cut costs and committed More
Designs to new products and services he was engaged in which
management process?
7. The Mega Designs has a goal of reducing its manufacturing costs by 15
percent over the next three years. Each of the manufacturing managers has
been given directives to closely monitor efforts to reach this goal. The
managers are engaging in which management process?
8. Mega Designs has decided that within the next five years it wants to become
an industry leader in drapery design. The managers are engaged in which
management process?
9. Jill Brimstone, product manager of Exotic Furnishings concluded that profit
margins on several of its products were too small. As a result, she challenged
her operations managers to figure out exactly how to cut costs on each
product. Brimstone also gave them precise cost reduction targets and
deadlines for meeting those targets. She was engaging in which
management process?
10. Daniel Davis, the president of Daniel Davis Designs, is reassessing his
company’s goals with the expectation that the company's strategy would be
modified. He is engaged in which management process?
Leadership Styles
Power-oriented style:
 This type of manager tries to maintain total control over the whole operation.
 This style works in large organizations and in situations where employees are
untrained, inexperienced, or involved in a crisis
Routine-oriented style:
 These managers are primarily concerned with keeping the operation running
smoothly rather than accomplishing other goals.
 This style is most appropriate in middle management in a large corporation.
Achievement-oriented style:
 These managers are open to new ideas and seek out employee suggestions.
 This style is most effective where the manager is dealing directly with employees
who are turning out work.
3.03 Notes/Information
Pricing for Profits
Factors affecting price
Pricing Strategies
Do you have what it takes?
Pricing Policies
Pricing Techniques
Markup
Factors Affecting Price




Economic Factors
Businesses Involved in Distribution
Competition
Cost and Expenses
Factors Affecting Price




Economic Factors
Businesses Involved in Distribution
Competition
Cost and Expenses
Economic Factors
Supply: the amount of a good or service
that the producers are willing to
provide.
The producers are more willing to
supply products/services in greater
amounts when prices are high; less
willing to do so when prices are low
Pricing for Profits
Factors affecting price
Pricing Strategies
Do you have what it takes?
Pricing Policies
Pricing Techniques
Markup
Channels of Distribution
Each business that is involved in the
distribution of a product raises the price
of the product.
Competition
How the competition is pricing their
product/service may determine how
YOU will price yours.
Costs and Expenses
In order to make a profit, your prices
must be set so that they will exceed
your costs and expenses.
Pricing Strategies



Cost-based pricing
Demand-based pricing
Competition-based pricing
Cost-based Pricing
Cost of the product
+ Cost of doing business
+ Projected profit margin
= Customer price
Demand-based Pricing
Set your price according to what
customers are willing to pay
Must have a good understanding of
consumer’s perception of the
product/service
Competition-based Pricing
Determine your competitor’s pricing
After this, you must decide to:



Price below the competition
Price in line with competition
Price above the competition
Pricing Policies
One-Price Policy: All customers pay the
same
Flexible-Price Policy: Customers can
negotiate for the best deal they can get
Pricing Techniques
Psychological Pricing: Uses price to
affect the customers’ perceptions of a
product/service
Discount Pricing: Offers reductions from
the usual price of product/service
Pricing Techniques
Psychological Pricing
Prestige pricing: higher than average to
suggest exclusiveness, status, prestige
Odd/Even pricing


Odd prices suggest bargains
Even pricing suggest higher quality
Pricing Techniques




Discount Pricing
Cash: encourages customers to pay bills early
Quantity: offered to buyers for placing large
orders
Seasonal: offered to buyers who are willing to
buy in advance of customary buying season
Promotional: offered to buyers who are
willing to promote a product/service
Markup
1.
2.
3.
Amount added to the cost of an item
to cover expenses and ensure profit
Not generally decided on an item-byitem basis
A standard percentage
Markup Percentage
1.
2.
3.
Based on amount the business needs
per item to cover expenses
Matches the markup of competitors
Based on the average markup for the
industry
Markup Percentage
Markup
__________
Cost
= Percentage of Markup
Retail Price
Cost x Markup % = $ Markup
$Markup + Cost = Retail Price
Appendix 3.03B: Retail Pricing
3.03 Retail Pricing
Using the BASIC FORMULA for calculating the retail price given below, calculate
retail price for the following:
RETAIL PRICE (RP) = COST (C) + MARKUP (MU)
1. An item cost the business $7.50 and has a markup of $3.50
What is the retail price? ________________
2. A vase costs your boutique $35.00 and has a markup of $15.00
What is the retail price? ________________
3. A window tassel costs your shop $2.25 and has a markup of $1.50
What is the retail price? ________________
VARIATION OF THE BASIC FORMULA: MU = RP – C
4. The retail price of an item is $17.00 and the cost is $9.00
What is the markup of the item? _______________
1. The retail price for a twin fitted sheet set is $30.75 and the cost is $23.00
What is the markup? __________________
2. The cost of a pair of canvas tennis shoes is $15.85 and the retail price is
$26.00.
What is the markup? ____________________
7. The cost is an item is $7.00 and the retail price is $26.00.
What is the markup of the above item?________________
VARIATION OF BASIC FORMULA: C = RP – MU
8. The retail price of an item is $30.00 and the markup is $12.00.
What is the cost of the item? ____________________
9. The retail price of a calculator in your school store is $7.75 and the markup
is
$3.15. What is the cost of the calculator? ________________
10. The markup on an article is $5.95 and the retail price is $15.50.
What is the cost of the article? _____________________
MARKUP
While markup is the difference between retail price and cost, it can be
expressed and calculated in a variety of ways.
Determine the markup percentage based on cost. Use the following formula:
$Markup = Markup Percentage
Cost
Retail - $Markup = Cost
For each of the following problems, calculate the (a) dollar markup, (b) the
markup % based on cost.
1. Retail Price = $7.00
Cost
= $5.50
a. _________________
b. _________________
2. Retail Price = $34.00
Cost
= $26.00
a. _________________
b. _________________
3. Retail Price = $199.23
Cost
= $150.00
a. _________________
b. _________________
4. Retail Price = $10.00
Cost
= $ 5.00
a. _________________
b. _________________
5. Retail Price = $25.00
Cost
= $8.95
a. _________________
b. _________________
6. Retail Price = $75.00
Cost
= $45.00
a. _________________
b. _________________
Appendix 3.03D: Markup Continued
7. Retail Price = $37.50
Cost
= $10.50
8. Retail Price = $187.75
Cost
= $150.00
9. Retail Price
Cost
= $90.00
= $45.00
a. _________________
b. _________________
a. _________________
b. _________________
a. _________________
b. _________________
10. Retail Price = $67.00
Cost
= $43.00
a. _________________
b. _________________
11. Retail Price = $93.95
Cost
= $78.00
a. _________________
b. _________________
12. Retail Cost
Cost
= $58.49
= $39.50
a. _________________
b. _________________
13. Retail Cost
Cost
= $32.68
= $15.00
a. _________________
b. _________________
14. Retail Cost
Cost
= $50.00
= $25.00
a. _________________
b. _________________
15. Retail Cost
Cost
= $2.50
= $ .75
a. _________________
b. _________________
Calculate Price
Figure the Retail Price
1. Cost price = $115.00, markup in $ = $15.00
2. Cost price = $1.95, markup % = 25%
Retail Price = _________
Retail Price = _________
Figure the Cost Price
3. Retail Price =$7.25, markup in $ = $2.00
4. Retail Price = $78.00, markup in $ = $25.75
Cost Price = ________
Cost Price = ________
Figure the Markup in Dollars
5. Retail Price =$14.95, cost price = $10.74
Markup = ________
6. Retail Price = $124.00, cost price = $70.00 Markup = ________
Figure the Markup as a % of Cost
7. Cost = $25.00, markup in dollars = $25.00 Markup = ________
8. Cost = $1.00, markup in dollars = $1.39
Markup = ________
Figure the Retail Price
9. Cost Price = $4.00, markup % = 15%
10. Cost Price = $15.00, markup % = 50%
11. Cost Price = $50.00, markup % = 33%
3.04 Notes/Information
Retail Price = ______
Retail Price = ______
Retail Price = ______