Are you considering branching out on your own as an Architect or maybe you‘ve already taken the plunge? First off, congratulations on taking this big step. Making the decision to go out on your own is half the battle. Being your own boss is one of the only ways for you to have true autonomy over your work life and to create the architecture firm you want to work for. Now that you’ve made the decision, you may be asking yourself, what do I do now? All the decisions are on me, the sales, the marketing, the planning, project management. Where do I even start? We cover what we believe are the four key principles to set yourself up for success when building your own architect business.
#1 Come up with a Business Plan
Lots of new architects are so excited to get started that they just go! Although this entrepreneurial attitude is good to have, it’s important to carve out a clear plan to avoid missing key start-up tasks and headaches in the future.
So, what is a business plan? It is a comprehensive document outlining all the details of your proposed business idea, including its goals and strategies for achieving them. It serves two key purposes. It serves as a roadmap for starting the business and as a tool for anticipating and managing economic challenges. As your small business grows, the plan becomes a valuable reference for guiding future decisions and scaling operations.
How to Create a Business Plan
Typically, there are six key components that go into a business plan, the company description, the market analysis, your services, your marketing plan, operations plan, and projected financials.
Company Description
Here you’ll outline your business model, what needs your business fulfills, your organization chart, your mission statement, and sometimes even your core values. This is your business in a nutshell or your elevator pitch. Although you might think to start here, the company description is often the last piece of your plan to be written because it summarizes the entire business strategy, goals, and objectives based on the details from the next five components you will build out.
Market Analysis
This is when you’ll define your market and business model. This involves identifying your target market, competitors, their strengths and weaknesses, and how you can differentiate yourself from them. In this section you’ll also describe your architectural services comprehensively, including any planned offerings. Take this opportunity to ask yourself who has the need that your business fulfills?
Marketing Plan
This is a step-by-step plan on how you will market yourself and your architectural practice. It involves considering your target demographics, determining how to reach them, setting pricing strategies, and defining metrics for success, such as number of closed business leads or total revenue generated over time.
Operations
In this section you’ll focus on logistical and equipment requirements for both you and any team members. Beyond physical equipment needs, it’s important to consider internal administrative processes to streamline functions like accounting, HR, and sales. Visualizing the entire customer transaction process, from initial inquiry to job completion and delivery, can help identify the necessary components for efficient operations. This holistic approach ensures a comprehensive plan for running your own business smoothly.
Projected Financials
As a business owner, having a detailed understanding of your finances is crucial. Beyond immediate financial scenarios, consider projecting your finances for the end of year one, year two, and beyond. Identify key financial milestones for decisions such as expansion or acquiring new equipment. While projections may differ from reality, this exercise helps you grasp your company’s potential, enabling effective scaling as it grows.
#2 Learn To Price Yourself Right
New business owners tend to price themselves at a number that sounds good but that might not be profitable, causing them to lose money with each job. To ensure success, it’s crucial for business owners to calculate rates based on their specific expenses and profit goals rather than merely mirroring competitor rates. By following a straightforward process that considers business and personal expenses along with profit objectives, you can determine your total earnings goal for the year. This involves calculating business expenses, personal annual expenses, and desired profit margins, then estimating billable hours to derive an hourly or project rate.
➡ Walk through this pricing process step by step in our online video CE course.
#3 Have a Financial Plan – Reports you should understand & utilize as a business owner
Beginner Bookkeeping
When establishing bookkeeping systems, choosing and configuring accounting software is crucial. Consider ease of use and suitability for your agency’s size and scale during selection. Proper setup entails configuring your chart of accounts, transaction workflows, and monthly end-of-month close checklist. Establishing an efficient workflow from the beginning saves time and ensures accurate information in the long run.
Maintain A Chart of Accounts
This is essentially a list of all of your accounts to keep your finances organized.
- Include categories such as Income, Direct Costs, Expenses, Assets, and Liabilities.
- Review monthly to ensure all clients are invoiced, bills are entered, and expenses are accounted for.
The Top 5 Reports You Should Create
- Budget
- Income Statement
- Balance Sheet
- 13 Week cash flow
- Forecast
➡ Learn the importance of each of these reports and how to build them in our video CE course.
Tips on Documentation & Storage
Now that we’ve got a hold of all of your reporting and bookkeeping, it’s important to maintain accurate records and backups should there be any questions regarding your financials.
- Store as much as you can electronically
- Create a system that is straightforward and easy to maintain
- Be sure to keep detailed notes on what each income or expense item is
#4 Market Yourself
With your business plan and financial plan organized, the next step is to focus on acquiring new clients and building your pipeline. The marketing plan outlined in your business strategy becomes crucial at this stage, as it guides you in implementing key marketing principles effectively.
Networking
When building your network, leverage connections with key industry players like civil contractors, property dealers, and builders at the local level who can refer you to potential clients. Utilize personal connections such as friends, family, and past colleagues. Consider joining professional organizations and attending relevant events. No matter how small your project is, make sure you produce high-quality work so you get referrals. This is the key to bringing in prospective clients.
Manage Your Pipeline
This is where you outline and track your prospects and what point in your communications you are with them and the likelihood they will book you for a project. During this process keep these best practices in mind:
- Follow up
- Focus on the leads you find most promising
- Review your process
- Maintain your pipeline
Remember…
Building your own architect business requires meticulous planning. It’s crucial to craft a comprehensive business plan as a roadmap for growth and to address economic challenges. Learn to price your services appropriately, understand essential financial reports, and implement effective marketing strategies. Leverage networking opportunities, manage your client pipeline, and embrace the rewards and risks of business ownership. Enjoy the autonomy and creative freedom of owning your own architectural business and hopefully these steps will help you reap greater financial rewards as your business grows.
Learn step by step how to set up your marketing plan, price yourself correctly, and set up your business finances for success with our video CE course: Business Finance Basics.