Macro and microeconomics for your firm from Steven Burns, FAIA, on how you should combine a top-down vs bottom-up hybrid approach.
How to Write a Business Plan for Architects
From executive summary to exit strategy, Steven Burns FAIA guides you on how to write a business plan for architects.
I’m not going to waste your time giving you the standard how-to-write a business plan basics that you’ll be able to find by doing a simple internet search. Let’s be honest, most architects start their firms as sole proprietors. They don’t have grand aspirations of one day having offices around the globe and hundreds if not thousands of employees. They just want to practice their craft.
Assuming you’re not so naive as to simply quit your job and hang out a shingle, you’ll want to think about this new business that will be responsible for giving you financial security, paying your bills, and taking care of your family. This is, after all, a big step you’re taking and as an adult, you probably have (or will soon have) responsibilities that extend beyond your own needs.
Most architectural firms are lifestyle businesses. Based on surveys, less than 30% of these firms have a business plan. It’s no surprise that architects consider themselves to be underpaid and not given the respect they deserve. Frankly, if you’re not thinking seriously about your business, why should your client?
If you’re not invested in building a business, you are probably better suited to be an employee of a firm that will benefit from your skills. According to the US Bureau of Labor Statistics, 50% of small businesses fail within 5 years, and 70% fail within 10 years. If you want to be part of the 30% that succeed, you’ll need to focus on the business with no less passion and effort as you apply to your craft
I’m about to share with you 10 sections of a business plan that I want you to create. Please understand that the final document doesn’t need to be an inch thick. It could be as small as two pages. The length of this blog article is about as long as your business plan needs to be. I’m not going to stop you from writing a 50-page business plan, but if that is what you have done, I’d like to suggest you go back to it and turn it into a 5-pager. And after you’ve completed that exercise, whittle it down to 2-pages.
How to Write a Business Plan for Your Architecture Firm
While the focus is on an architecture firm, these instructions on how to write a business plan can be applied to any professional services firm.
Regardless of the final format of your business plan, the following topics need to be discussed:
1. Executive Summary
This is a brief and compelling overview of your business plan. Here, you’ll also want to highlight your unique qualifications and experience that equip you to operate a successful architectural firm.
Write this after finishing the other sections.
Although this section is written last, it’s placed at the beginning of the plan, providing a roadmap to the details contained within the subsequent sections.
2. Personal Business Description
Describe yourself as a professional. Include your training, experience, specialties, and why you're now launching your own firm. If you have any specific certification or niche expertise, include that here.
In addition to discussing your professional journey, highlight the values and philosophy that guide your approach to architecture. Detail any notable projects or achievements that demonstrate your capabilities and make you stand out in the field.
This section is your chance to build a personal connection with the reader and present yourself as a trusted and passionate professional.
3. Market Analysis
This is extremely critical for a sole proprietor, as you'll need to carve out your own niche in the market. Identify the services that are in demand in your target market, and match these with your own skills and interests.
Also, identify the strengths and weaknesses of your competition and use this information to differentiate yourself.
4. Service Description
Detail the specific services you offer, your process for delivering these services, and your pricing structure. As a sole proprietor, you may choose to specialize in a particular niche that aligns with your skills and the market demand.
Expand on your service description by highlighting the benefits clients will derive from your offerings. This could include the unique design philosophy you bring, your commitment to sustainable practices, or your proven track record in delivering projects on time and within budget. This will help potential clients visualize the value they will receive from engaging your services.
5. Marketing and Client Acquisition Strategy
As a sole proprietor, your personal network can be a valuable tool for acquiring clients. You'll also want to leverage online marketing strategies, such as social media and content marketing, to reach a broader audience. Referral programs can also be an effective way to attract new clients.
Beyond immediate strategies, present a long-term marketing plan that includes your approach to brand building, partnerships, and community engagement.
6. Operational Plan
Describe how you'll run your business day-to-day. This includes where you'll work (home office, co-working space, etc.), the tools and software you'll use, how you'll manage projects, and how you'll maintain quality and client satisfaction.
7. Financial Projections
Even as a sole proprietor, it's important to forecast your income and expenses. This can help you set a budget, price your services appropriately, and understand how much you need to work to meet your financial goals.
Also, outline your financial management strategies, including how you'll manage cash flow and maintain financial records.
8. Professional Development Plan
As a one-person firm, your own skills and knowledge are your business's greatest asset. Include a plan for continuing education and professional development to keep your skills sharp and stay up-to-date with industry trends.
Don’t look at continuing education as an unfortunate requirement of licensure, think of it as an opportunity to build more skills that serve the business you are building.
9. Risk Management
Identify potential risks to your business, such as injury, illness, or market downturns, and how you'll mitigate these risks. This could include things like insurance, emergency savings, and diversification of services or clientele.
Discuss how you'll ensure business continuity and client service during such events. This reassures potential stakeholders of your preparedness and resilience, increasing their confidence in your firm's long-term sustainability.
10. Exit Strategy
Even as a sole proprietor, it's important to have a plan for when you're ready to retire or move on to something else. This could involve selling your client list to another architect or bringing on a partner who could eventually take over.
What you don’t want to do is simply wind down your business over time. You’ll have spent decades building a business that is the single greatest opportunity for wealth creation. It is far greater than investing in real estate or the stock market. You are investing in something you control and are putting your own effort into nurturing this business every day. At the end of your career, you should not walk away from it and hope your other investments will pay for your future. This is your golden nest egg.
Write a Solid Business Plan for Your Firm
Remember, the purpose of a business plan is to guide your business decisions and demonstrate your viability to any potential lenders or partners. As such, it should be tailored to accurately reflect your unique business situation. You should revisit it annually since the needs of the market and the overall economy are never static.
By making this document short and sweet, the effort required to update it is far less than that 50-page plan you started with. That means you have no excuses! Of course, the other essential document you’ll need to focus on is your strategic plan.
But that’s for another day.
For more advice on running a successful architecture and professional services firm, visit BQE University.