When starting a new architectural firm, there are many things to consider. Just thinking about the work and risks can be intimidating. Lucas Gray is a business consultant with Charette Venture Group who offers advice on how to start. These tips have been tested and are designed to help you begin your architecture business successfully.
1. Fear no more
The idea of doing something is usually scarier than actually doing it. Fear can paralyze you regarding the first step of starting your architecture firm. What if the business fails? How will you pay your bills?
You may have a thousand questions. It’s important to realize that the fear that you have built up is more frightening than the chances of you failing.
2. Moonlighting is not allowed
You can start your own business by taking on side jobs. This means working for clients on weekends and evenings while you hold down a regular position. This may seem like the safest business launch method, but better options exist.
Lucas Gray warns against moonlighting if you want to start your architecture firm.
Gray says it’s essential to be open, honest, and transparent with clients and your employer. If your employer finds out you are working on side projects, they could dismiss you.
He warns that this could also result in lower-quality work. You can’t produce your best work if you take on side projects. Gray says, “I don’t believe you will do your best work with the new client, and I also don’t believe you will do your best work with your current employer.”
Gray suggests that if you find a client who is willing to work with your firm, you can refer them to them and have them run the project. Start a new company by taking them on as your first customer.
3. How to write a business plan
A business plan makes you think about what it takes to start your own company. You must consider potential revenue sources, set a budget and determine how your business will grow. Also, you will need to consider marketing and business development strategies and define your Mission, Vision and Values. Creating a business strategy allows you to focus on the steps necessary to succeed. It also helps you set clear goals and achieve short- and long-term objectives.
Gray advises architects to focus on the vision and goals of their business and how they plan to spend their time. He warns that without a clear mission or purpose, the work is not driven by anything.
When I started my business, we didn’t do it because we had an inspiring business mission. It was more that we weren’t happy with where we were. We were aimless for the first two years; we took on projects we didn’t enjoy and worked with clients that needed to align with our interests or values.
Most architects open their own firms because they want more time to be creative and express their design ideas. They spend most of their time working for and not within. It can be a surprise. Gray suggests that when writing your business plan, you should fully understand your role and how much time you will allocate to running your business.
Here’s an example of how to break down the hours for a principal architect:
Marketing and Business Development (bringing in New York): 25%
Team management, administrative and financial tasks 25 to 35%
40% to 50% Architecture and Design
Be realistic about how much work you can expect to be able to do. You’ll spend less time on billable projects as the company grows.
4. Cash flow is essential.
is the main reason for the failure of businesses in the construction sector. Architectural firms must monitor cash flow to make sure they have enough to cover their critical expenses. If you have $50k of billable work this month but can only collect the money in November, then you cannot use it to pay for tomorrow’s expenses.
Staggering recurring payments or vendor expenses is one way to reduce the financial burden. Software is now available as “software-as-a-service” (SaaS), where you pay an annual, quarterly, or monthly subscription fee to use it.
Spreading out design and administrative software costs so that they all fall in different months can reduce cash flow issues. You can be hit with a significant cash loss if your subscriptions are due in the same month.
Start your architecture career in North Carolina.
The southeastern United States is home to North Carolina, a state renowned for its stunning natural scenery and thriving business ecosystem. With a strong presence in technology, research, manufacturing, and agriculture sectors, North Carolina offers an ideal environment for entrepreneurs looking to establish a business in the architecture industry. The state’s commitment to innovation and economic growth further enhances its appeal as a prime destination for aspiring architects seeking opportunities to flourish and succeed.
To ensure comprehensive protection against unexpected risks, purchasing errors and omissions insurance in North Carolina is worth considering, as it offers valuable coverage for you and your business.
5. Bill monthly to ensure consistent income
It may seem easier to charge your clients only when the project is complete. This will save you time and make billing more efficient. It is a good habit to develop to ensure your cash flow. You will be able to plan your monthly expenses and income.
Contractors use the percentage of completion billing.
6. Pay a down payment or a retainer
You can get more cash by asking your clients to pay a retainer or down payment for your project. This will also ensure that they are invested in your work.
Receiving cash upfront makes it less likely for your clients to ghost you by not paying their bills. This also allows you to get an idea of the time it will take for the client to pay so that you can flag any slow payers at the beginning of the project.
7. Paying customers should be easy
Don’t make your customer’s life harder by making it difficult to pay. Offer your customers a range of payment options to allow them to choose what works best for their needs. Credit cards and payment apps have become the most popular payment method for professional services. The convenience of these services is worth the cost, and you can write off the expenses.
You need to be aware of your legal rights if your clients must arrive on time to pay (a common problem in the construction industry). This includes your right to file for a mechanic’s lien. This is a powerful tool to ensure you are paid for your services.
Before you start work, research the laws in your state. To protect yourself, you may have to send out specific notices before the start of a project. A good collection policy will help ensure that everyone in your team follows the same rules to collect what they earn.
8. Social media is a great way to connect with others.
Social media can be a valuable tool when you are trying to establish your brand and build a clientele. Most platforms allow you to create a profile and post content for free. You can also pay for advertising to reach potential clients.
Gray suggests using platforms where your audience hangs out to target your message. For residential design, you may use Facebook, Instagram, or Pinterest. Instagram and LinkedIn work best for commercial design.
Spend time understanding your audience and what they enjoy. Gray suggests being creative when it comes to the content you post.
Gray suggests you “find ways to distinguish yourself from your peers.” Gray says that most architects will post photos of their completed work. But you should discuss your design process or how you approach design. You can share your sketches or information about your conversations with clients and the workshops you attend. Create content reflecting your work ethic, values, and what clients can expect from you.
9. Hiring a bookkeeper
Gray says that even though you might want to start with a low budget, hiring a bookkeeper at the earliest possible stage is best. Spend your time on important and valuable tasks for your business. Refrain from reconciling bank accounts or working in QuickBooks. You’ll also save money over time if you become busy and need help to do these tasks. You can use the time saved on marketing, business development and staff management.
