$10,000 and a laptop. That was Katherine Darnstadt, AIA’s accidental business plan. Newly licensed, newly pregnant, and newly laid-off at the height of the recession, she found herself with few options but to start her own architecture firm. The circumstances, she admits, were less than ideal.
“When everyone talks about: What was your marketing plan? How much did you have? What was your strategy? There was no strategy,” she says. “It was really a Plan B.”
Now, four years later, Darnstadt’s Plan B has become the four-person Chicago-based firm Latent Design. She is also one of six finalists in the first Architecture Business Plan Competition, which is inspiring firms to think more strategically about their businesses. First prize is $10,000, and the winning firm will be announced at AIA Convention 2014.
For Darnstadt, the competition is less about the prize than the process. “It was a prod and a catalyst to actually make the business plan that I thought we should have had since day one,” she says.
And that’s the point, according to Matt Ostanik, AIA, the competition’s founder. A registered architect who transitioned to developing software for the industry, he’s seen firsthand the benefits of having a clear business strategy. After winning a few business plan competitions with his technology company, Ostanik realized that architects were really in need of a plan. “Architects need to be as thoughtful about designing their own business as they are about designing a building,” he says. “And yet in a lot of cases how they build their firm is they stumble into it and it just kind of happens without that thoughtful design process.”
Though business plan competitions are fairly common in other fields, Ostanik had never seen one for architecture. He ended up getting 134 entries. Winners will be announced June 26. In the meantime, check out these four tips from Ostanik and other industry professionals about drafting a plan of your own.
Rena M. Klein, FAIA, an architecture business adviser and principal of RM Klein Consulting, says more architects should be taking the time to write business plans, even very basic ones: “You don’t necessarily need a big document that sits in a drawer, but you should be thinking and planning strategically.” She says a business plan should be “a vehicle for self-reflection.” It can help architects appraise how their firms perform and where they’re going.
The best business plans are comprised of just a few simple elements, according Mark R. LePage, AIA, who runs the architecture business advice website Entrepreneur Architect. “The first business plan that I completed was a one-page business plan,” he says. “It basically had my vision, my mission, it had goals, and it had actions in order to accomplish those goals. The goals have deadlines and the actions have specifics.” He says the one-page approach will help make the process less intimidating, and help set a framework for adding more detail as the business evolves. Today his business plan is about 12 pages.
Ostanik says that a good business plan should cover marketing, acquiring customers, delivering services, financing, targeting a market, and creating a vision for the firm’s future. “You have to have a vision for what you want to create and what’s driving you to do it, but you also have to have the nuts-and-bolts stuff, to some extent – where to find income and how you’re going to execute is very important,” Ostanik says. “A good business plan starts with stuff that’s in your head, but then it’s got to add in those nuts and bolts.”
It’s a process that shouldn’t stop. Ostanik argues that a business plan is out of date as soon as it’s written, and should be updated regularly to reflect changes in the market, in the practice, and in the firm’s aspirations. It will never be an exact document, but rather a guidebook for how the firm should operate and where it’s going. With a good plan, architects can step out into the wilderness of the business world with at least a little confidence. The business plan can be your navigator through unknown territories, even if all you have is a handful of cash and a laptop.
Want more advice to help you start and run your firm? Check out all of the stories in this Up and Running series of articles here.