Per-project margin, measured after the surprises
The question that changes studio behaviour is not what revenue was last quarter; it is which projects kept their margin once procurement finished with them. We build a per-project view that reports fee margin and procurement margin separately, with landed costs complete: freight, receiving, storage months, expedite fees, replacement pieces and the damage credits actually recovered. Patterns emerge quickly. Certain suppliers erode markup with freight; certain project types burn design hours past the fee; certain clients generate re-orders that were never re-priced. Our Fractional CFO engagement turns those patterns into pricing rules for the next proposal, which is where margin is easiest to fix.
Your fee model has a failure mode; know yours
Fixed, hourly and percentage-of-build fees each leak margin in a different place, and a studio running all three needs to watch three different gauges.
| Fee model | Where margin leaks | What we watch |
|---|---|---|
| Fixed fee | Scope creep absorbed without a change order | Design hours burned against each fee, monthly |
| Hourly | Quiet write-downs and unbilled admin time | Realized rate per hour actually collected |
| Percentage of build | Budgets re-estimated down after the work is done | Fee trued up at each budget revision, not at the end |
None of the three is wrong. The CFO question is whether each active project is on the model that fits its risk, and whether the markup policy on procurement is set deliberately or inherited from an old proposal template. Markup itself deserves the same scrutiny: a flat percentage across every category ignores the fact that case goods, upholstery and lighting carry very different freight, damage and storage profiles, and a category-by-category markup schedule usually recovers margin the flat rate was leaving behind.
Cash: deposits in, pro-formas out, and the gap in between
A procurement-heavy studio can look cash-rich while being cash-fragile, because much of the bank balance is client deposits owed out as furniture. We run a rolling 13-week cash forecast that separates the studio's own cash from deposits held, then lays supplier pro-forma payments, freight bills, payroll and HST remittances against the client draw schedule. Draw schedules themselves get designed, not defaulted: procurement draws timed to purchase orders, fee draws timed to design phases, so the studio is never financing a client's furniture on its own line of credit without deciding to. The forecast also ring-fences HST, because a big install month collects a large remittance that is easy to spend twice. Where a season genuinely needs financing, Walla's background in banking and corporate finance shapes a lender-ready case through our Business Financing Advisory.
People math: juniors, drafters and the next hire
Capacity is the other side of margin. A salaried junior designer is a fixed cost that pays off only if their hours land on billable work; a contract drafter is flexible capacity at a higher rate, with worker-classification rules to respect. We model the crossover on your actual utilization: how many project hours per month justify converting drafting spend into a salary, what a senior hire must bill to cover a loaded cost, and how much principal time each new project actually consumes. The answer changes the hiring decision more often than the interview does, and it protects the scarcest resource in any studio, which is the principal's design time spent on work only the principal can sell.
A quarterly rhythm a principal will actually keep
This works as a cadence, not a dashboard: monthly numbers from clean books, then a quarterly working session on the decisions those numbers raise, including markup policy, fee model mix, the keep-grow-or-specify question on procurement itself, and the hiring plan. The largest of those is the last one: some studios discover their procurement arm earns its risk and should grow, others discover the margin never survives the surprises and a specify-only practice with a stronger fee would net more. Either answer is a good outcome, provided it is reached with the numbers on the table. Studios across Mississauga and the GTA use it as the finance function they are not yet big enough to employ. Scope is quoted in writing after a free 15-minute discovery call, and it presumes books that already split fee from procurement margin, which is where our accounting engagement comes in.
