I started my firm 13 years ago with about $10,000 in savings. If your bootstrap it, you really don't need much cash. I already had a computer and a drawing board (yes, back then I used a drawing board!!). I bought a used copier for $800, got a blue print machine from a pal, and was in business. I didn't even by stationary- I just printed it out on the computer. I started out of my attached garage semifinished space. Insurance for a small company would be about $3000 a year. Mostly, it is based on billings, so a small firm does not have much cost. Also, it is based on the type of work you do, and your history. The AIA used to have a small practice professional liability insurance program- see if they still do, even though you hate them. You need to have work to start. Can you do moonlighting and still keep your job while you build a reputation and a client base? otherwise, you will get killed- getting the clients is probably the hardest part.
There are plenty of books that have been written on starting a practice, not by the aia by the way. Go on Amazon and browse and see if any of them seem to click with you. Charge by the hour when you can. You can assess your rate by what your firm charges for you now per hour. I started at $60 per hour, and am now at $120 per hour. Most clients will want a fixed fee, though, so you will have to estimate how long it will take you to do the job, what your expenses will be, etc.
Typical firm overhead is about 1.7 times the salary cost of the person. So if you make $40,000 a year, say about $20 per hour, your overhead would be another $34 per hour, for a total break even of 54 per hour. HOWEVER, in a small firm, the overhead is much less. Remember though, overhead includes your time marketing, time you spend running to kinkos, plus all those prismacolors pens, etc. FYI, after all these years, my overhead is much much less, so I make about 2 times the average percentage in profit of a normal architectural firm. (most firms make about 9% of their billings as profit if they are doing well.
Here is an idea to save on overhead- do you have any friends who are owners of a larger firm? Many firms now a days have spare desks they are not using. If there is trust there that you will not steal each others clients, maybe you can sublet space, use their equipment like copiers and pay them per copy. Perhaps you can use their staff to help you when you get busy, and they can hire you when they get busy. It could work out for both of you. This would work especially well if your areas of work are different, for example, if they do institutional and schools, and you want to specialize in residential.
My biggest advice to you is to work your butt off for your clients and really build your reputation and repeat client base. There is no easier client to get than the one who already loves you, and they will pay you more too. You need to have a good network built to keep the work coming in. By the way, I would NEVER go back and work for someone else. I make much more money than I would have working at my old firm, and I am happier. I do work longer hours, though, like 45 to 50 hours a week, and sometimes the responsibility of keeping work coming in to keep my 16 employees at work is a drag, but it is worth it.
good luck

archi

That is excellent advice. Actually you took care of many deamons for me. thanx

Thanks for the advice. I should note that do find some of the information from the AIA informative, but I was just trying to avoid getting a bunch of posts telling me I am an idoit and to just look at the numerous AIA manuals.

'81, thank you for asking the questions for me. am thinking about doing the same thing (except i'll be taking the moonlighting track).

archie, thank you so much for that great body of advice.

archie,

could you define for me how much time you spend between marketing/ business development, actual design and sketching, and firm management. i would like to get an idea of how much time is alotted to each of these parts.

do you have partners or other principals in your firm?

one partner brought on after about 4 years, same experience level as me. Because we have sought out clients that give us repeat business, we do very little marketing. This is rare for an architectural firm, so it is probably not a good guideline. The two of us each spend about 3 to 5 hours a week each on marketing and business development, about 3 hours a week on firm managment which is mostly scheduling, employee issues, interviewing employees, etc. (we have a book keeper who does invoicing and paying bills), and the rest is either design or project managment. When I first started, I spend about 8 hours a week on marketing, and I did the books, the invoicing, all of the business managment stuff on the weekends, about 20 hours per month.

thanks for the numbers. that is a little atypically low for marketing/ business development. do you or he belong to any ARC/ DRC's, country club, etc that is used as business development?

i worked for a guy who never sought out clients, they all came to him via word of mouth, repeat or reputation. he did however invest a substantial amount of tiime on three ARC/ DRC's plus at the golf community he lives in, he would get the addresses of any new lot owner and write them a letter introducing himself and how he could help them. several custom home clients came about that way.

it's good to trust someone with the books for billing and invoicing. that's actually a significant amount of time that people forget to account for.

i would have thought that more time would be spent marketing/ business developing and bookkeeping. it sounds like you're pretty good at delegating those tasks and saving the fun stuff for yourself.

thanks for the knowledge.

We both go to networking groups, belong to some civic groups etc., but no country club things. Most of the work is referral, and actually, a lot of the residential comes from our web site. We are one of the few architects in town to have a decent web site. Most of our work comes from our existing clients. We have the same clients as when we started (plus new ones), and they have given us steady work for years. it is a combination of institutions, private developers, and non-profits, as well as businesses. Residential is only about 15% of our work. 100% of that comes as referrals from past clients, people seeing an award we won, or from our web page. I agree the marketing time for our firm is low- thats one reason we have been so profitable is that most of our hours are billable. I think that if architects spent half of the amount of time they spend courting new clients and doing RFP's with their existing clients, and working hard to keep them happy and do good work, they would find that the work would come in the door naturally, instead of being dragged in!

As I was talking about starting a firm one day with all the struggles that comes with it, my cousin, who has started his own lawfirm a year ago, calls the architects struggles puberty problems. In some sense he does have a point. Starting a law firm the way he did, has way more overhead. First of all, starting a lawfirm means showing the bling right from the first day you start. You cannot house your firm in a garage or addict like what many architect starters do. Having a luxurious and prestigious image means more clientele. Expensive suits are not a luxury item but a must. Off course, all of this depends on what kind of clients you want to attract, but the thing that all lawfirms deal with is the extremely expensive insurance. Architects in general don’t need that kind of insurance that blows your overhead over the top. Looking at all of this, I could agree on that architects don’t have it necessarily it tougher that other (starting) professionals. Then again, a starting lawyer just need 3 continuous clients to break even appose to architects that need to continuously seek new projects.