Business advisors hear it all of the time: “If our firm is good enough at design, success as a business will just follow.” This is rarely the case, however. Creating a thriving business takes attention, time, and effort that is separate from the work of providing architectural services. Like most good design solutions, this is an endeavor worthy of deliberate thought, creativity, and values-based action.
As a firm approaches a size of 10 full-time employees, the need to focus more energy on business functions becomes abundantly obvious. Often principals are beginning to feel overwhelmed and unable to track everything that’s happening at the firm, and they worry about mistakes slipping through the cracks. The old ways of management that worked when the firm was five or six people no longer work. Firms in this position tend to see growth in top-line revenues but a reduction in profits.
“This is the time to get serious about running your firm as a business,” says Rena M. Klein, FAIA, vice president of Investment Partnerships at Charrette Venture Group, a business consultancy that guides the growth of small and mid-sized architecture firms. “A firm’s prosperity will be measured by the sustainability of revenue flow, project profitability, and growing the value of the business entity.”
Excellence in design can contribute to your firm’s success but will go unnoticed without marketing efforts. Revenues rarely increase in a sustainable way without consistent attention to business development. Talented staff seldom stay for the long haul at a firm that offers no future for their careers.
As a firm grows, it’s no longer effective to approach firm development tasks, such as recruiting, marketing, and financial management, on an ad hoc basis. This approach will keep you on the treadmill, working harder and harder to stay in the same place. Your firm will continue to be subject to the ups and downs of the economy, and will likely have difficulty maintaining profitability and retaining valued staff.
Understanding the leadership and management roles required within your firm is the first step in getting serious about the business aspects of practice. “Ask yourself, ‘What are the critical business aspects of practice and who will be the champion for each?’ ” notes Charrette Venture Group CEO Todd Reding. “For example, who is responsible for seeing that the business development pipeline is full? Who is focused on projects being delivered on time, mistake-free, and profitably? Who is responsible for the staff being engaged or ensuring that design excellence is fostered?”
Apply your passion for good design to the fundamentals of your business. Draw an organizational design diagram that reflects your thinking. Don’t forget to include both business management functions and project execution functions.
“I had years of experience at the management level in a large architecture firm,” says Matt Aalfs, AIA, founder of BuildingWork. “When I decided to start my own small practice, I knew the business challenges would be different. I also knew I could use guidance, so I engaged a business consultant to set me on the right path. Making decisions based on a plan put me back in control. That’s something you don’t necessarily learn in design school.”
Learn more about design firm business strategy and how to effectively lead your firm's growth.
