Big Risk for Bigger Reward in Small Architecture Firms, Part 1

Are you an architect who always had that special entrepreneurial drive? Were you mentored by another successful architect or by a friend or family member who was successful in their own business endeavor and aspired to be like them? Perhaps you were forced to open your own firm by necessity after getting downsized by a previous employer during the recent recession?

No matter what your background is, you as an entrepreneur and owner of a small firm comprise a strong portion of the architecture industry. According to Kermit Baker, chief economist at The American Institute of Architects, 63 percent of all AIA member-owned architecture firms have five or fewer employees.

Good news, smaller firms have reported a growing share of professional billing. Baker reported that for firms with five or fewer employees, the overall share of professional billing increased from 8 percent in 2005 to 9 percent in 2013. On the other end of the spectrum, firms with 100 or more employees saw their share of billing drop significantly, from one-third of overall billing in 2005 to just 22 percent in 2013.

So does this mean that smaller firms have it easier? Of course not. This article explores three areas that new firm owners need to consider when starting their own firm. An upcoming "Part Two" of this article will explore several upsides of starting a firm and the rewards of doing so if the risks are managed accordingly.

1. Competing for the Best Employees

You may never need to hire another architect as an employee. According to "The Architect's Handbook of Professional Practice", roughly 25% of all firms are one-person shops. For the other 75% of firms, however, growth is a primary business objective that involves hiring more employees. If you want the best and brightest staff, you must compete against larger firms for the same talent pool.

Some employees will want big-firm perks - countless hours of training, full-time staff librarians to assist with research, and fewer deadlines because of larger projects. Can you explain to these prospective employees why your smaller firm offers a better employment opportunity than a larger firm?

2. Selling and Marketing Your Services

It probably won't come as a surprise that performing architecture-related work isn't the only (or sometimes most important) task on your daily to-do list as a new firm owner. For most business owners, the number one priority is selling and marketing.

The first place to turn to for new leads is your current network. Referrals from friends and colleagues often turn out to be some of your best clients. Other methods for generating high-quality leads are giving presentations to business groups and writing articles for local and national business publications.

Regardless of your preferred method for generating leads, the key to successful marketing is having a system that helps you be consistent with your efforts. If it's writing, compose one article a month. If it's speaking, give one presentation a month. For your existing contacts, make a phone call or send an e-mail every three or four months.

3. Efficiently Managing Projects

Starting your own firm doesn’t mean abandoning the architecture-related work you love; just be aware of the many other tasks you are now responsible for. High on this list of new tasks is efficient project management.

Do you currently have any automation software that lets you quickly assign employees to different phases of a project? Can you generate reports that show which project phases are either under-budget or over-budget? How do you organize hundreds and sometimes thousands of documents associated with a particular project? With all of these capabilities and more, ArchiOffice is a powerful time tracking and project management solution that simplifies your workflow so that you have more time to focus on designing beautiful architecture.

Learning to be a manager doesn't have to be difficult or stressful if you have the right tools. Talking to other firm owners and investing in automation software, such as ArchiOffice that tailors to the architecture industry, are two good places to start your management education.

Let’s recap – finding the best employees for your firm, building a robust sales funnel and learning how to be an efficient manager are three tasks that are vital to your success as a new architecture firm owner. If these tasks aren't handled properly, your firm's existence could be short-lived. In my next article I will explore how you could reap big rewards if these three tasks are handled the right way.