There’s a lot to think about when it comes to starting your own architectural firm. It can be scary just to think about the amount of work and the risks involved. We spoke with Lucas Gray, a business consultant for architects with Charette Venture Group, to share advice to get started. These tips are well-tested and designed to get your architecture company off to a successful start.
1. Move past fear
With anything, the idea is often scarier than just doing it. When it comes to taking that first step to starting your own architectural firm, fear can immobilize you. What happens if it fails? How will you pay the bills?
There are a thousand more questions you may be asking yourself. The key is knowing that all the fear you’ve built up is actually scarier than the actual chances that you won’t succeed.
In her book, Feel the Fear and Do It Anyway, Susan Jeffers advises us (in all caps, no less), “THE ONLY WAY TO GET RID OF THE FEAR OF DOING SOMETHING IS TO GO OUT AND DO IT.”
Although it may feel like you are taking a step on a tightrope with no safety net below, the fear will remain until you act. Start with small steps, building on your momentum. All you need is one client to get started.
2. Don’t moonlight
One way to start your own firm is to take on side work, working for customers on evenings and weekends while holding down a day job. While this seems like it may be the safest way to start a firm, it may not be the best way.
Lucas Gray advises against moonlighting when trying to start an architecture firm of your own.
“You want to make sure that you’re being open, transparent, and honest with your clients, as well as the company you’re working for,” Gray says. “If you’re taking on side projects without telling your current employer and they find out about it, it could be grounds for dismissal.”
He cautions that this arrangement could also lead to lower quality work. “I don’t think you can do your best work while taking on side projects. I don’t think you’ll do your best work for the new client, and I don’t think you’ll do the best work for your current employer,” says Gray.
If you do find a client willing to work with you, Gray recommends referring them to your current employer and running the project through the firm — or take the leap in starting a new firm by using them as your first client.
3. Write a business plan
Writing a business plan forces you to think about the reality of opening your own firm. You have to think about potential revenue sources, budget for costs, and project how your company will grow in the future. You will also have to think about marketing and business development strategies and define your Mission, Vision, and Values. Creating a business plan helps you focus on the specific steps necessary to make the business succeed, and by setting clear goals it also helps you achieve your short-term and long-term objectives.
Gray recommends that architects focus on their company vision and goals and how they will spend their time in the business. “Without a strong mission or reason behind what you’re doing, there’s no real driving force behind it,” he cautions.
“When I started my first business we started not because we had a compelling business mission, but it was mostly that we weren’t satisfied with the place we were at. The first year or two we were aimless, took on a lot of projects that we didn’t like, and worked with a lot of clients who didn’t really align with what we were interested in or what our values were.” Ask yourself what your vision for the firm is and what values you care about.
Most architects start their own firms because they want to spend more time being creative and expressing their design ideas. The reality is that they spend a majority of their time working on the business, not in the business. This can be a shock. When writing your business plan, Gray recommends that you fully understand what your role will be and how much time you will allocate to different aspects of running a business.
For example, here’s a recommended breakdown of a principal architect’s hours:
- 25% marketing and business development (bringing in new work)
- 25 to 35% administrative and financial tasks, team management
- 40 to 50% architecture and design
Make sure that you have a realistic expectation of how much design work you’ll be able to do. As the company grows, you’ll probably spend more time running the business and less time working on billable projects.
4. Pay close attention to cash flow
Architects live or die by their ability to manage cash flow — it’s the primary reason why businesses in the construction industry fail. Architectural firms need to monitor the cash coming in and going out of the business to ensure they have enough on hand to cover critical expenses. You may have $50k in billable work this month, but if you can’t collect it until November, you can’t use that revenue to cover expenses that are due tomorrow.
Learn more: An architect’s guide to cash flow
One way to ease the cash burden is to stagger recurring expenses or payments to vendors. These days, software is available in a “software as a service” (SaaS) model, where you pay a subscription fee each month, quarter, or year to use the software.
Staggering design and administrative software expenses so they don’t all fall at the same time can help to reduce cash flow problems. If all your subscriptions fall in the same month, you can take quite a cash hit.
5. Bill monthly for consistent income
You may be tempted to bill your projects only upon completion because it’s easier and takes less time. While this may work for short-term projects, to maintain your cash flow, you need to get in the habit of billing monthly. This ensures that you will have a regular stream of income and allows you to budget for monthly income and expenses.
Each month you can bill for the percentage of the project that is complete, similar to percentage of completion billing used by contractors.
Learn more: How architects get paid (and why they don’t
6. Get a retainer or down payment
Asking your clients for a retainer payment or a down payment on a project helps you get cash flowing and ensures that your clients are invested in the work that you’re doing.
Getting cash up front makes it less likely that your clients will ghost you and not pay their bills. It also gives you a preview of how long it will take the customer to pay you, allowing you to flag slow payers early in the project.
7. Make it easy for customers to pay you
It’s hard enough getting a customer to pay you, don’t make it more difficult for them. Offer a variety of payment options so your customers can choose the one that works best for them. These days, credit cards and payment apps are the most popular ways to pay for professional services. These services cost money, but the convenience is well worth it — and the expense is a tax write-off.
If your clients are slow to pay (a common problem in construction), you need to know your legal rights, including the right to file a mechanics lien. It’s a powerful way to ensure that you get paid for the services you provide.
State laws differ when it comes to whether design professionals have lien rights, so before you begin work, do your research. You may need to send specific notices at the beginning of a project to protect yourself. A good collections policy can help make sure everyone on your team follows the same playbook to get what you earn.
8. Use social media
When you’re trying to build up a clientele and establish yourself and your business, social media can be an invaluable tool. On most platforms, creating a profile and posting content is free. They also offer paid advertising that can help you reach your potential clients.
Gray recommends that you target your message to a specific audience and use the platforms where they hang out. For residential design, you may use Facebook, Instagram, or Pinterest. For commercial design, Instagram and LinkedIn are better.
Take time to understand your audience and the kind of content they like. As far as what content to post, Gray recommends being creative.
“Find ways to set yourself apart from your peers,” Gray advises. “Most architects are probably posting photographs of their built work, but maybe you want to talk about your design process and how you think about design. It may be better to post pictures of your design sketches and information about conversations that you’re having with clients or workshops you’re attending. Be authentic with how you work and create content that’s a reflection of what your values are and the experience your clients will have when working with you.”
9. Hire a bookkeeper
Although you may want to keep costs low when starting out, Gray recommends hiring a bookkeeper as soon as possible. You want to spend your time doing important, valuable things for your business, not reconciling bank statements and working in QuickBooks. Plus, you’ll save money in the long run when you get busy and don’t have time for these tasks. Use the time you save on business development, marketing, and managing your team.
If you have questions or would like more information about starting a firm and developing a business plan feel free to reach out to Lucas Gray on LinkedIn, or check out CVG’s free learning tools.