Entrepreneur Magazine South Africa.
In 2012, Tashi Krost came up with the idea of creating a small interior design firm that could offer a bespoke service to clients who didn’t have the budget (or inclination) to make use of a large design firm. So, she started Tashi Krost Interiors alongside her brother, Ricky Silberman, who came on as CFO.
With a solid background in design and a good eye, Tashi’s designs quickly garnered attention. The first year, the company managed about R1 million in revenue — by the third year, this had ballooned to R15 million.
Despite this phenomenal growth, the siblings have managed to keep things impressively lean. Tashi Krost Interiors doesn’t even boast any permanent staff. How have they managed this? Here are their secrets to running a lean and lucrative operation.
As mentioned, Tashi Krost has a background in design. Her brother Ricky Silberman, meanwhile, completed a BCom in entrepreneurship, and has a real passion for numbers and problem-solving. This combination of Krost’s flair for design and Silberman’s head for numbers turned out to be crucial to the success of Tashi Krost Interiors.
“If I had been on my own, the company would have failed in its second month,” laughs Krost.
“As a designer, my tendency is to try and make a space look as great as possible, which often means not paying attention to the bottom line. Ricky pays attention to the numbers and makes sure that every design solution makes good business sense.”
Lesson: As the adage goes: Great founders often come in pairs. Very few people have all the attributes needed to make a success of a business on their own, which is why it is important to find a partner who adds the knowledge and skills you lack. This is as true of hiring high-level managers as it is of selecting a co-founder.
Most young companies struggle to resist the temptation of swanky offices who’ll impress clients and new employees that’ll help lighten the workload.
“From the beginning, we made the decision to keep things simple. Fancy offices and staff make some people feel like they are running ‘a proper company’. They also believe that if you don’t have a fancy office, people won’t want to use them. We always believed that if we provided people with beautiful items and great service, the word would get out and people would choose us because of our product, and not our office,” says Silberman.
“Tashi Krost Interiors has evolved immensely in scope, but we have kept our size the same,” adds Krost. “We have managed to keep our overheads small, which has been critical in maintaining our value offering. Every cent we save can be passed on to our clients, which means we can price very competitively.”
Lesson: A company such as Tashi Krost Interiors doesn’t really need a fancy office. The founders spend most of their time at clients or at suppliers, so there is little need for office space. You need to make sure that every expensive purchase or investment (whether that be a large office or an Italian espresso maker) is truly justified and not driven by vanity.
“There is a quote by Bill Gates that I absolutely love,” says SIlberman. “He says: ‘I choose a lazy person to do a hard job. A lazy person will find an easy way to do it.’ I think it is important to work smart, especially if you want to operate without staff. Outsource whatever you can, manage your time very well and implement robust IT systems.”
Lesson: Innovative IT systems now allow companies to, for example, capture data or generate documents with ease. What used to take hours can now be done in minutes. By working smart, a lot of time-intensive labour can be eliminated. Make sure that you know what IT solutions are available that can save you time and money.
“As a designer, you are really only as good as your suppliers,” says Krost.
“They play a massive role in delivering on the promise that you make to your clients. We have an amazing team of suppliers who we work closely with. They have enabled us to offer a full turnkey solution. In the beginning, we only provided furniture. This has expanded to include all appliances, cutlery, towels, and even linen. We can provide everything down to the final detail. This really helps clients who are looking for a one-stop shop.”
Lesson: Choose your suppliers very carefully. They will have a massive impact on the success of your business. Opting for the cheapest supplier is often a bad decision. Find suppliers that are as committed to getting the job done as you are, and who add real value to your offering.
All of the furniture offered by Tashi Krost Interiors is manufactured locally. For the founders, making use of local manufacturers was the only option that made sense.
“If you’re having thousands of items manufactured, making use of a company in China, for example, might make sense. For us, however, there really isn’t a business case for having items manufactured overseas. It wouldn’t offer meaningful savings,” says Silberman. “We also typically can’t afford to wait three or four months for items to arrive from the East. Our clients want things done quickly.”
Another advantage of a local manufacturer is that you have more control over commissioned items. You can make sure that things are manufactured as specified, and it’s easier to have items replaced if something goes wrong.
Lesson: There is nothing worse than opening a container and discovering what you received from an overseas supplier is not at all what you ordered. For this reason, having a local supplier can be a great advantage. Moreover, the current exchange rate is making local manufacturing look more attractive than ever.
Scaling a service-oriented business can be hard, especially when operating without a large number of employees. There are, after all, only so many hours in a given day.
Tashi Krost Interiors has found a clever solution to this limitation by focusing on turnkey solutions for investors purchasing furnished apartments that can be rented out. The company does traditional residential and corporate designs, but its focus for the moment is on upscale apartment developments that require furnishing. This allows the company to roll out a particular solution across dozens of units.
“Allowing people to purchase full furniture packs enabled us to reach those clients who were furnishing properties as investment propositions. In these cases, the owner wanted a higher return on their rental units but didn’t have the time or the design acumen to start furnishing a small apartment,” says Krost.
Lesson: It is important, especially within a service operation, to find ways in which your offering can be packaged to make it scalable. Taking on time-consuming one-off commissions will never be scalable — at least, not without hiring loads of experienced (and expensive) employees. Ask yourself how your offering can be packaged and rolled out multiple times.
“A key decision we made early on was to not start a job without getting a 60% deposit. Cash flow is very important in an SME. Getting a deposit reduces your risk, and also ensures that the customer is invested. We’re not afraid to lose business because of it — these are our terms,” says Silberman.
“The biggest mistake you could make is letting the client bully you into a deadline or price. Stick to your lead times so that your product is never compromised. We would rather walk away from a job if we can’t meet the deadline, as hard as that is. We hate having clients who are disappointed, so it is about being honest with yourself about whether the deadlines are deliverable,” says Krost.
Lesson: Don’t be afraid to walk away from work if your terms aren’t met. Trying to meet a client’s unrealistic time or cost demands will only result in a product or service you’re not proud of, which will harm your brand in the long run.
Make a list of all the expenses in your business that aren’t having a direct impact on the quality of your service or product. Why do they exist? How can you get rid of them?