Hello, I've finally decided to take the plunge and start up a firm with a friend. Before we open the doors, we are working up a business plan & determining how to get work in this cruddy economy.
I'd like a bit of specific advice from those who are already in business for themselves (quizzical, liberty bell, etc?)
The two main questions right now are:
1) pricing / fee - how do we set fee? Right now, I'm estimating our overhead (including our own salary), and multiplying by our profit and by our expected billable hours each month to come up with an hourly billing rate. However, this rate is at $140/hour, which seems high to me (more than we can charge at first?).
How do we set a fee (or fee structure) that is:
a) not too low
but
b) not higher than the market will bear?
2) how do we get the types of jobs we want? while both of us have experience - it's difficult for us to put together a set of experience that demonstrates the type of experience that would get us larger projects.
for example, while I've worked on healthcare projects, I don't have something like 5 hospitals under my belt - how would we get a healthcare project?
or, I've done some offices, but don't have 5 large office projects - how to get more small (or large) office projects?
even possible?
essentially I'm asking "what is the trick for turning limited experience into real jobs, that get increasingly larger?"
I don't want to get stuck doing residential remodels and additions forever...
Without wanting to sound negative, Gruen, I second mdler's very good advice.
You're proposing starting a business, not just as sole practitioner but including a second person. This is a complicated enterprise. Your questions are legitimate but very, very basic. If you need to ask these here, you're not ready.
I would go to work for a small firm for two years or so, and watch everything the principals do relative to the business end of things. This will answer your questions and many others _before_ you spend a lot of time and money trying to figure these things out on your own.
I agree with mdler... The questions you ask are a bit scary! Its like if you go buy an expensive car and have to ask the price then chances are its too expensive.
I didnt want to sound like an ass (which I usually do)...
the people that I know who have started their own offices and have been successful did so while working as project architects at other offices. They start out by doing small projects after work , on weekends, etc. I think that it is important to have a source of income while trying to get your own stuff started. Once they established themselves (they marketed like crazy) they were able to quit thier other jobs and focus full time on thier own practice.
As the offices where they used to work grew as well, my friends were given the smaller jobs from their previous office that were just too small for that office. DONT BURN BRIDGES!!!!!!!!!!
We operate on a wing and a prayer, basically, stumbling from one project to the next and trying to put out the fires along the way.
I'm partially kidding. What we have going for us is a network: every job we get is word of mouth, and we bend over backwards to keep those people happy so they will recommend us to their friends. We have a great social and professional network, and the jobs (knock wood) keep coming in.
But it's all residential remodels and additions, which we're both happy doing; we're not trying to break into a healthcare market eek.
I'll tell you what my husband did recently: he and his partner have purchased a CNC machine of some type. Brian put together an email with a couple of pictures of things they have made using this technology and emailed it to EVERYONE HE KNOWS announcing that he is starting a fabrication business and is looking for work. He immediately got leads on half a dozen jobs. None of them have come to fruition - yet - but his name is out there. Now he is constantly following up, checking in, reminding people that he can do much more than what he shows in the email.
So using that as a model: can you get together *enough* images of the type of projects you guys would like to do, and send them to EVERYONE you know announcing the birth of your firm? And by everyone, I mean even people you only know peripherally: your brother-in-law's sister may be a doctor in a practice looking to build a building, can he hook you up with her? Do you know anyone in the medical office space leasing field?
Dig deep. And have huge start-up capital. We bill $150/hour for design and $75/hour for drafting - but again, that's in custom residential: I don't think commercial work can go that high, not when you're starting up.
mdler - thanks for the reply. this is exactly my plan.
my first question (regarding fee) is so that I'm actually able to build the business (not price too low) yet get work (not price to high). I know I can price myself very low to get work, but that's not the marketing plan - the marketing plan is to build the business towards doing the type of work, and build a solid financial foundation.
my second question (re: how to get jobs) is also about building the business - looking towards a larger future. I'd like to hear how others have gotten more complex project types, building on the experience they do have.
currently the plan is to continue our day jobs (FWIW, I am a project architect at one of the larger firms), marketing about 80% and doing about 20% work of the type, and at the fee, we ultimately want.
but I don't want to price myself outside of the market (high or low) & as I'm discovering it's hard to get people to talk about fee.
And, I want to market towards where we want to go.
liberty bell - thanks much, very clear. I don't really want to get into healthcare either, it was just an example.
we'll be happy to start with residential too.
I need to solve the "how many hours will it take" question too - I know this is a function of scope - we are compiling data to get a rough idea, but I've done residential projects that took hundreds of hours, or some that've only taken 40 or so. Again, a function of scope.
Oh, PS: Lately we're asking for and getting 10% of construction cost for some jobs, too. Whether to go hourly or percentage tends to depend on the scope of the project and how discrete it is: is it a straight-up kitchen remodel, or is it some work in the kitchen, some in the bathrooms, maybe new furniture for the family room and oh, do you think this attic could be converted to a play space later? For those messier jobs, we try to stay hourly.
Also: I'm in a conservative mid-sized midwest city. In a big city or on the coasts, I imagine we could charge 15% or more for what we do, and more hourly, as well.
LB - aren't you in Philly - a major coastal city? =)
so, if I'm reading you right - if someone comes to you with a $300,000 straight up addition project, you'd try to get $30k (10% of const. cost) which would translate to something like:
70 hours design time @$150 = $10,500
260 hours drafting time @$75 = $19,500
Well, our drafting time is actually pretty low, as we do a lot of on-site coordination and field sketches. In fact - and I should go back through some of our disastrously disorganized paperwork to verify this - our time is probably more like 75% design time (including construction visits) and 25% drafting, at most.
Also, we typically have about 8-12 jobs going on at one time. Personally, I'd rather take on fewer jobs and charge more, but so far we're pushing the limits of what our market will pay. We've thankfully been in the position to turn down a few jobs recently that couldn't pay us what we asked.
I'm in Naptown, Indianastan.
Also bear in mind: we have exceptionally low overhead costs: no employees, no office, no server, no big printer, no company car, we each own our own laptops and printers and cell phones, etc. I'd suggest you guys try working out of your garage for awhile at first!
keep in mind the practices in the study were in the UK so while the numbers may not translate the organizational philosophies, establishment of firm structure, etc. will.
LB - wow, how long have you been doing business that way? we're thinking of doing it that way. trying to work out the technical detail of "where do the files live" w/o a server. I think I can handle that one ;)
sounds like you'd invest about 230 hours in a $300k project:
170 @ $150 & 60 @ $75. a rough 75/25 split. Of course, this is assuming the job is $30k. It sounds like your jobs are smaller, but where I live (larger, coastal city) $300k is not out of line.
we're thinking of working out of an airstream trailer, or some such thing to keep overhead down. although the garage is a possiblity.
Three years. If we ever have an employee, things will have to change dramatically - which is why we are both resistant to having an employee.
Working on people's homes, we can afford to be a bit more casual, more "homey", in our client relations. It actually enhances my marketing that I run into my clientele in the local cafe, where I often work. If we were doing office fitouts - Old Fogey, are you around? - we would need to have a more professional image. Although, the whole world is getting more casual, and with technology the way it is, I bet a guy in blue jeans and an Airstream could crank out a $5 million commercial project no problem!
The only problem with our setup is I don't have a lot of face time with my partner, which could help us be more organized and efficient in addressing what needs to be done this week. We both put in a LOT of face time with our clients, instead. Getting a super-inexpensive office space would help that, depending on how you two like to interact.
right now, our 'office' is the corner bar. i want to resist the big overhead items too - office / employees
maybe you've hit the nail on the head: guy in bluejeans in an airstream, doing bigger projects than you'd think. That's sorta my goal. (and being a bit choosy about the projects...)
i'm guessing you don't really spend 75% of the time designing, but rather are billing everything that ISN'T cad time to design. (IE: meetings, site visits, those field sketches, etc..)
I have managed to make a lot of inroads with local contractors, they seem to be contacted first when something is going to get built. I have standing agreements with some of them for fees and they contact me first when they have work. I also joined the local ULI group, lots of real estate money guys to bump elbows with, no real projects yet.
I am thinking about joining the local builders association, as they provide meeting spaces and access to code books to members, much cheaper than I could provide those myself.
j
I started my firm in my house, just me, and I now have over 30 employees, 14 years later. Some advice:
on pricing: You need to find out what other architects charge on an hourly basis, and how they charge for different types of jobs. You can do this lots of ways: ask contractors, ask around at work what your current billing rate is, and the rates of others, have a friend call other firms and ask, etc. public entities keep answers to RFP's o nfile, and they are viewable by the public. These usually list rates and fees. If in your market a big established firm charges $125 an hour for a principal, you can't charge that much. You would probably need to be at $100 or less, but that would be ok, because your overhead is going to be lower. I just raised my personal rate over $100 per hour, after 14 years. I wanted to still work on projects, go to job sites, etc. and I did not want clients to think that I was too expensive. Other principals in my area charge $150 to $175 for their time. Believe me, my firm still makes as much or more money than their firm. For fixed fee jobs, you need to research what the market will bear for each type of project. You do not have to be the lowest priced firm, but it is going to be hard to start out at the top. Anyway, if you structure your firm correctly, you can charge average prices and still make above average profits.
If you are really effecient, and can keep your ratio of how many hours you bill to how many are not billable, this will in effect greatly reduce your overhead, and you will make money. My firm "runs hot". We are incredibly effecient and have low overhead, even though we pay for some of the best benefits in the city, have the latest software, computers, nice office space, etc. I do most of the marketing, all of the management, and I still bill out about 75 to 80% of my time. We do not waste one minute.
So one thing that we did differently than other firms that has worked well for us: instead of seeking out that giant holy grail of large jobs, we sought out clients that gave us a steady diet of smaller jobs, with no competition on fee. YEAH FOR REPEAT BUSINESS! So instead of going for that big developer office building with the developer who tells you there will be more jobs then beats the fee down, then drops you after the job (this is also the job that all the other architects in town were chasing and slashing fees to get) we quietly pursued the developer who owned a bunch of buidings and had a small stream of steady tenant build outs, for example. We got our foot in the door, did the best work possible, with fabulous customer service. That same client that was one of my first clients still gives me all of their work 14 years later. I bet the fees have been in the range of $150,000 to $200,000 every year, with no competition, no risk, no marketing expense. Get the idea? Go for clients like Universities, Housing Authorities, developers, retailers, building owners, contractors, etc that have lots of recurring work. Don't chase the big giant job, work at getting their smaller projects to start, and then work up from there. We have one client who pays us over $1 million in fees each and every year for the past 7 years since we started working together, straight hourly wages, no marketing, pays within 15 days of our invoices.... AHHH< it's love..... That kind of cash flow lets you do all kinds of non-profit work, fun lose-your-shirt projects if you want. Design your own house. Or you can just send your kids to college without worrying about the cost.
We still do mostly small projects by the way. A big project for us is over $1 million. Big is not necessarily better, it is just bigger. Bigger risk too, bigger loss if the owner goes bankrupt and you don't get paid, bigger headaches, bigger engineer and sub bills to pay....
While I am not an Architect, I work (and study, and live) with a lot of you.
No-one has mentioned the competition route (to big work). How good are your renderings, your design skills, your management skills (even though you won't necessarily need people management for the competition, you will on winning), how good is your (electronic) presentation?
If you have the steady job that doesn't eat all of your hours, and a willing partner, and access to suitable staff should you win, and perhaps an engineer to play with, it's another route to look at. Check Heneghan and Peng, who we have just started working with on their Grand Egyptian Museum. They exemplify competition winners. Similarly Softroom started from some sweet marketing & a competition win.
On an aside: If you are considering your skills good enough to win business, yet are not already being offered business, why are you not being offered business?
There's no mention above (though with ten years experience you'll know this already) of the necessary investment in tendering. Once your marketing works, how much can you invest in a serious bid, and what percentage of bids do you have to win, and does your upfront start-up overhead include these potential losses?
If you think that your portfolio isn't up to it (as you effectively say above) the competition work becomes portfolio, a part of the iterative process of betterment (on a scale and type that your present work does not grant you). Of course it's only one strand of many. Primarily, as per the many posts above, make yourself available, and make it clear to everyone you know that you are available.
Either, either, whichever, whatever, good luck in the generation of wealth. Develop your success and pass it on, find more, and find joy in the sharing, make others happy to have known you and better for having paid you, or being paid by you (and not the other guy), As the google ethos: Don't be evil. Good luck.
archie gives great advice re: finding the small, steady work and building those into great ongoing relationships. If a developer seems skeevy and untrustworthy, s/he is - try to find people to work for who share your values.
And gruen you called out exactly what I should have explained to zipgun: everything that isn't drafting is billed at our "design" rate. Twenty hours of "design" is more likely 4 hours of actual design plus 16 of site visits, client meetings, managing the materials budget, talking on the phone, coordinating rough-ins, etc. - all of which, in my mind, is an integral and very enjoyable part of "design".
also, gruen, another option for a start-up firm is doing contract work for other firms... obviously this is much easier if you have really good relationships with previous employers or other architects with smaller but more established firms... that's what i've been doing for the past six months in addition to a few solo projects... it's worked well for me... although i only have to make it until august when i go back to school after working for 5 years...
**you guys friggin rock** now I go to the corner bar to drink more beer & work on my business plan.
yeah, I know I need to build my network, paradoxically, that is part of the reason I want to do this - my current job is getting me relationships, but limited in scope - my old business allowed me to branch out and develop more relationships.......................................
I appreciate the *FROM THE TRENCHES* reports - it's what I need.
When I say $140/hr, that is the ONE billable hour, that comes after many that are not billable. So yeah, I know how much work has to happen to get that job.
I'd love to be offered jobs right now, but I think I'll have to work in the medical healthcare game for another 10 years before that'll happen, and I'm impatient, a bit, and would rather do simpler building types on my own time and turf.
I'm getting some really great ideas and advice from all of you, adding it to my *ideas data*base*
LB - yes, I am writing a "real" business plan - as real as I can make it anyway - my last business wasn't as successful as it could be, because I didn't have a document to guide it - like building a house with no drawings...
it's important to me to get this as right as I can, on paper, try to figure out the problems like "how can I make my portfolio look as good as possible" & "how can I start a business with no investment" etc.
Anyway - I know I want to take this plunge, and have been thinking/planning/scheming for years now & know that there's no good time & no bad time to do it, just has to be done.
Maybe I've got stars in my eyes, but I want to remain optimistic, as I know that pessimism only brings you less success.
If your going to drink, make sure you drink at the right bars. The ones where the clients drink. i live in downtown Chicago and have met a ton of executives after work at good bars - not nessessarily the nicest bars - where you can chat up spenders and decision makers. Just always leave on high note, dont get sloppy drunk, and be entertaining. if your charming/ funny people think your capable of handling anything.
one thing business school has taught me is to never underestimate the power of 'networking'...so yea, i second that whole relationships thing. everything else (yes, even design skill) is secondary.
thank you meta. I know I don't have it all together, but I want to go for it anyways. when I started my last business, I had NO FRIGGIN CLUE how to do the work. I told people I was an expert anyways, and got tons of work. Amazing. And I did the work well, also amazing.
My business plan is more about "we need to make this much money to keep the doors open & get what we want" and also "where do I want this thing to go" (as in - make sure I can see the forest for the trees after 3 years of business...problem I had last time...)
Yeah, Just Why, you caught me. Still no business plan, but still in business! I've settled into a relaxed attitude about the business itself, but am focusing pretty intently on making my clients happy. Got a call from one of them at 5:30 today, in fact, telling me how happy they are with us. Yay! Makes the working til 1am and rushing through rush hour traffic to get them the drawings on time all worth it.
This thread is getting me towards brighter side of things. I see some thoughtful input.
In my third year of college I got a business license and hung it up at my studio desk as Studio Atom. That paid my way through college. After college I folded and eight years later I'm on my third try at a business. When I get my stamp I have day dreams of opening a legit practice. I listen avidly to the success stories and I admire those that can really make a firm without having to hang around in a hierarchy to buy in. But sometimes I wonder if there is a finite demand for services and if a legacy buy-in is just old junk or the only way in.
Clients want to work with people they know and trust. I've said it here a hundred times "this is, and always will be, a personal service business." It's not really about your design ability - it's about your ability to solve your client's real problem.
Don't underestimate how hard it is to establish a sustainable firm. Don't underestimate how hard you will need to work. Don't underestimate how long it will take to achieve sustainable positive cash flow. Don't underestimate how much time you'll spend doing stuff you don't want, or know how, to do. Don't underestimate the financial and professional risk you face. Whatever conservative estimate you make for the points above, double them.
But, also don't underestimate how much fun it can be and how rewarding it is when it does start to work.
Forget the office (you've got a kitchen/livingroom/bedroom, garage, right?), forget the new computer (you've got one, right), etc., etc.
No/low overhead means no/low risk.
Find some good student or hungry graphic firm to help you establish an identity and website. Bizcards are one of the best investments, don't cheap out on these (you don't need fancy foil stamps, but don't get the flimsy glossy crap), they make a HUGE impression.
I can't tell you how many of my clients cheap out (mostly developers) and pay the price later on. Still boggles my mind how cheap some companies can be on their image and marketing (again, you don't need a high buck brochure, you don't need any brochure, but you do need well designed, well thought out website and identity, keep it simple and it will be affordable if you get the right person).
For me, I prefer to put the profit in the bank than throw it away on renting office space. Might buy/build an investment property to use as an office, but that's another story.
If it won't help increase profit/productivity, then it is not needed.
there are other professionals that are more knowledgeable to give financial and legal counsel. don't rely too much on your inner circle.
i agree...
also, most major cities have business assistance centers that can help with some of the details of launching a new small business... and if your municipal government prequalifies businesses as certified small business enterprises then make sure that you go through the hoops to get on their SBE list...
and find out who at the city/county is in charge of construction projects and go introduce yourself and your company... government work can be one of those steady sources of small but profitable work...
I love this thread. Honest, hopeful, open and not near as depressing or scary as opening a practice has been for me. I say opening because like most things I believe it is a process...its been about a decade in the making, and at one point I was operating as a design consultant doing some decent portfolio filling residential projects for little return.
I don't think I need to add any points for you, but in the manner that is architecture I'll flap my lips anyway.
. 2 partners - 2 bars 2wice the business opportunity...spread your potential.
. arrange with bars/restaurants to be the go to place...make an account with them, work the potential.
. business plans nowadays unless you are f.500 company are usually simple operational strategies on powerpoint - I kid you not, I've recently reviewed the port of Hong Kongs...less than 50 pages and its operational. If you are unsure about it, or think its unnecessary hire a life/coach business coach to record business as you presently practice, and recommend in writing how minimize waste, risk, loss, etc. This might be a helpful alternative to you as well Liberty.
.consult with a PR agent...forget about retaining them just yet - speak about the potential. You'd be surprised.
.try coffee shops in the day time to catch the mil...uhmm the soccer mom crowd (if you are in a more suburban area) + the bar in the evening leave contact information at the bar as well.
you seemed to have been blessed by some truly good advice and a lack of snarky sniping (and amen to those of us who remember archinect when it was more of the former).
i'll contextualize my comments - we've been out 4 years, are at 7 people, and are probably getting the kinds of work you want (small to medium sized institutional work - museums, libraries, visitor's centers etc.)
first, as it's been hammered home here, everything you will do in this business is about relationships. give others 10x as much as you get - if you can help make things happen for other people, you'll get it all back. we still have former clients who not only give us great references but are active in trying to help send work our way. we wouldn't have half the work we have without that network and we're always trying to expand it by going to where the clients are, not waiting for them to come to us.
second - keep the overhead very, very low (again, no big surprise). go without yourself instead of borrowing money. we've been pretty lucky in that regard - we're only now having to tap our line of credit to get through a couple of slow billing months. we'll cover it in spades 3 months from now. but, being in debt sucks. you never, ever want to do it - that's what gives you the freedom to call your shots. don't hire full time unless you have so much work your head is swimming. and when you do, look for people who can do more than 'just' produce. we love people who, for example, have degrees in landscape and architecture or product design and architecture.
third - you have to put yourself in the right place at the right time. one example - we're doing a project which will have an alessi flagship store. i basically had the north american president as my captive audience for a morning to review it (we're doing the design, a departure for them). but, with him in town, you think i'm going to pass up a chance to show him some of my product designs that i think would be a good fit for them? not a chance. will it come to fruition? who knows, but at least they're going to take a much harder look at it (he liked what he saw). and i guarantee it wouldn't go anywhere if i sent it in blindly.
fourth (and lastly for now) - you have to remember that you, as the company head, are always- ALWAYS- 'on'. everything you do is a reflection of your company. everything you have to trade on right now is your personal word, skill, and drive. you are IT. there is no one else. never forget that, but never let it go to your head. stay optimistic even when privately you're despairing (and we've all been there), and just be prepared to fight like hell for the next 20 years. if you don't have that in you, find another gig. seriously.
*one last thing - don't worry so much about the money yet. figure out what you all need to live on, shoot for that plus your overhead the first couple of years. don't worry about turning a huge profit early on. quizzical mentioned it takes a long time to be truly stable. i'll second that reality. just take a 20 year time horizon...
good luck with it - we're always happy to have another member in the fraternity (so to speak). and let us know how it turns out...
gruen - one more thought. To the maximum extent possible, start as you mean to go forward.
by that I mean don't just take any crap work that comes your way simply for cash flow purposes. chase work you really want to do - work that gets your juices flowing and offers client relationships you enjoy and value.
taking on scut work diverts you from what you do best and builds your reputation in unhelpful ways. taking on crappy clients will suck the life out of you.
of course, this advice assumes a certain economic "staying power" -- starting on a shoestring is tough and may cause you to head down a path that will be difficult to shake later on. if you can, build up some significant economic reserves before you walk off the plank.
Great advice, quizzical, especially that last bit about turning down work that isn't the right fit. Do it gracefully, though, and without hurting anyone's feelings!
trace, we spent a lot on really nice business cards. They do make an impact.
Skip the Web site and flashy business cards, Personal contact and cold calls will get you going faster. Just try and spend time setting up meetings will people that one day you want to do business with, both clients and consulting engineers. Its about setting up a network. Building a business and reputation takes time and needs to be nurtured. I spent a lot of time with contractors and real estate types for many years, both learning how they do business and getting to know what works for them. I do work for many builders because they build something every year and make for great repeat clients. Many have moved from home builders to commercial projects and our business has grown with them as well.
I tend to not do a ton of business development and most if not all work is word of mouth, most of my business development seems to mostly be saying "no" lately. Which oddly is an bizarre tactic but clients then are prepared to wait to fit in with our schedule. Yes you can work the cocktail circuit but honestly I would rather let good work speak and picking up a few projects that offer good exposure helps. I also try to try to get a good mix of client types, residential, commercial, civic at a variety different scales ( mostly for your own interest, budgeting and staging of your work program. )
planning for start up archi firm - help?
Hello, I've finally decided to take the plunge and start up a firm with a friend. Before we open the doors, we are working up a business plan & determining how to get work in this cruddy economy.
I'd like a bit of specific advice from those who are already in business for themselves (quizzical, liberty bell, etc?)
The two main questions right now are:
1) pricing / fee - how do we set fee? Right now, I'm estimating our overhead (including our own salary), and multiplying by our profit and by our expected billable hours each month to come up with an hourly billing rate. However, this rate is at $140/hour, which seems high to me (more than we can charge at first?).
How do we set a fee (or fee structure) that is:
a) not too low
but
b) not higher than the market will bear?
2) how do we get the types of jobs we want? while both of us have experience - it's difficult for us to put together a set of experience that demonstrates the type of experience that would get us larger projects.
for example, while I've worked on healthcare projects, I don't have something like 5 hospitals under my belt - how would we get a healthcare project?
or, I've done some offices, but don't have 5 large office projects - how to get more small (or large) office projects?
even possible?
essentially I'm asking "what is the trick for turning limited experience into real jobs, that get increasingly larger?"
I don't want to get stuck doing residential remodels and additions forever...
gruen
sounds like you need to go work for someone...
Without wanting to sound negative, Gruen, I second mdler's very good advice.
You're proposing starting a business, not just as sole practitioner but including a second person. This is a complicated enterprise. Your questions are legitimate but very, very basic. If you need to ask these here, you're not ready.
I would go to work for a small firm for two years or so, and watch everything the principals do relative to the business end of things. This will answer your questions and many others _before_ you spend a lot of time and money trying to figure these things out on your own.
_One architect's opinion
I agree with mdler... The questions you ask are a bit scary! Its like if you go buy an expensive car and have to ask the price then chances are its too expensive.
I'm sorry, maybe I wasn't very specific.
I actually have some solid experience - 10 years in firms, and 3 years of running my own firm (previously).
However, I want feedback from others, who are currently doing this, in order to check my assumptions.
I know these questions are basic, and hence, important. If you don't check your basic assumptions, you will not have good results.
gruen
I didnt want to sound like an ass (which I usually do)...
the people that I know who have started their own offices and have been successful did so while working as project architects at other offices. They start out by doing small projects after work , on weekends, etc. I think that it is important to have a source of income while trying to get your own stuff started. Once they established themselves (they marketed like crazy) they were able to quit thier other jobs and focus full time on thier own practice.
As the offices where they used to work grew as well, my friends were given the smaller jobs from their previous office that were just too small for that office. DONT BURN BRIDGES!!!!!!!!!!
We operate on a wing and a prayer, basically, stumbling from one project to the next and trying to put out the fires along the way.
I'm partially kidding. What we have going for us is a network: every job we get is word of mouth, and we bend over backwards to keep those people happy so they will recommend us to their friends. We have a great social and professional network, and the jobs (knock wood) keep coming in.
But it's all residential remodels and additions, which we're both happy doing; we're not trying to break into a healthcare market eek.
I'll tell you what my husband did recently: he and his partner have purchased a CNC machine of some type. Brian put together an email with a couple of pictures of things they have made using this technology and emailed it to EVERYONE HE KNOWS announcing that he is starting a fabrication business and is looking for work. He immediately got leads on half a dozen jobs. None of them have come to fruition - yet - but his name is out there. Now he is constantly following up, checking in, reminding people that he can do much more than what he shows in the email.
So using that as a model: can you get together *enough* images of the type of projects you guys would like to do, and send them to EVERYONE you know announcing the birth of your firm? And by everyone, I mean even people you only know peripherally: your brother-in-law's sister may be a doctor in a practice looking to build a building, can he hook you up with her? Do you know anyone in the medical office space leasing field?
Dig deep. And have huge start-up capital. We bill $150/hour for design and $75/hour for drafting - but again, that's in custom residential: I don't think commercial work can go that high, not when you're starting up.
mdler - thanks for the reply. this is exactly my plan.
my first question (regarding fee) is so that I'm actually able to build the business (not price too low) yet get work (not price to high). I know I can price myself very low to get work, but that's not the marketing plan - the marketing plan is to build the business towards doing the type of work, and build a solid financial foundation.
my second question (re: how to get jobs) is also about building the business - looking towards a larger future. I'd like to hear how others have gotten more complex project types, building on the experience they do have.
currently the plan is to continue our day jobs (FWIW, I am a project architect at one of the larger firms), marketing about 80% and doing about 20% work of the type, and at the fee, we ultimately want.
but I don't want to price myself outside of the market (high or low) & as I'm discovering it's hard to get people to talk about fee.
And, I want to market towards where we want to go.
liberty bell - thanks much, very clear. I don't really want to get into healthcare either, it was just an example.
we'll be happy to start with residential too.
I need to solve the "how many hours will it take" question too - I know this is a function of scope - we are compiling data to get a rough idea, but I've done residential projects that took hundreds of hours, or some that've only taken 40 or so. Again, a function of scope.
Oh, PS: Lately we're asking for and getting 10% of construction cost for some jobs, too. Whether to go hourly or percentage tends to depend on the scope of the project and how discrete it is: is it a straight-up kitchen remodel, or is it some work in the kitchen, some in the bathrooms, maybe new furniture for the family room and oh, do you think this attic could be converted to a play space later? For those messier jobs, we try to stay hourly.
Also: I'm in a conservative mid-sized midwest city. In a big city or on the coasts, I imagine we could charge 15% or more for what we do, and more hourly, as well.
Good luck!
gruen
figure out what makes your work special (design, expertiese, etc) and market and price based on that...
LB - aren't you in Philly - a major coastal city? =)
so, if I'm reading you right - if someone comes to you with a $300,000 straight up addition project, you'd try to get $30k (10% of const. cost) which would translate to something like:
70 hours design time @$150 = $10,500
260 hours drafting time @$75 = $19,500
correct?
Well, our drafting time is actually pretty low, as we do a lot of on-site coordination and field sketches. In fact - and I should go back through some of our disastrously disorganized paperwork to verify this - our time is probably more like 75% design time (including construction visits) and 25% drafting, at most.
Also, we typically have about 8-12 jobs going on at one time. Personally, I'd rather take on fewer jobs and charge more, but so far we're pushing the limits of what our market will pay. We've thankfully been in the position to turn down a few jobs recently that couldn't pay us what we asked.
I'm in Naptown, Indianastan.
Also bear in mind: we have exceptionally low overhead costs: no employees, no office, no server, no big printer, no company car, we each own our own laptops and printers and cell phones, etc. I'd suggest you guys try working out of your garage for awhile at first!
gruen, check out Wonderland Magazine. It's a three part publication on architectural entrepreneurship. Very comprehensive.
My friend sent it to me recently and I've found it to be a great resource. Hope it helps!
keep in mind the practices in the study were in the UK so while the numbers may not translate the organizational philosophies, establishment of firm structure, etc. will.
LB - wow, how long have you been doing business that way? we're thinking of doing it that way. trying to work out the technical detail of "where do the files live" w/o a server. I think I can handle that one ;)
sounds like you'd invest about 230 hours in a $300k project:
170 @ $150 & 60 @ $75. a rough 75/25 split. Of course, this is assuming the job is $30k. It sounds like your jobs are smaller, but where I live (larger, coastal city) $300k is not out of line.
we're thinking of working out of an airstream trailer, or some such thing to keep overhead down. although the garage is a possiblity.
Ah, the brave ones... I salute you.
75% design time and 25% drafting? Is that firm based in heaven? And you're sure you haven't got any job openings?
Three years. If we ever have an employee, things will have to change dramatically - which is why we are both resistant to having an employee.
Working on people's homes, we can afford to be a bit more casual, more "homey", in our client relations. It actually enhances my marketing that I run into my clientele in the local cafe, where I often work. If we were doing office fitouts - Old Fogey, are you around? - we would need to have a more professional image. Although, the whole world is getting more casual, and with technology the way it is, I bet a guy in blue jeans and an Airstream could crank out a $5 million commercial project no problem!
The only problem with our setup is I don't have a lot of face time with my partner, which could help us be more organized and efficient in addressing what needs to be done this week. We both put in a LOT of face time with our clients, instead. Getting a super-inexpensive office space would help that, depending on how you two like to interact.
right now, our 'office' is the corner bar. i want to resist the big overhead items too - office / employees
maybe you've hit the nail on the head: guy in bluejeans in an airstream, doing bigger projects than you'd think. That's sorta my goal. (and being a bit choosy about the projects...)
i'm guessing you don't really spend 75% of the time designing, but rather are billing everything that ISN'T cad time to design. (IE: meetings, site visits, those field sketches, etc..)
ryanj.
Does anyone in the USA carry that magazine Wonderland?
make : not that i am aware of, but it is available for download on the site.
just click download on the left hand side of each publication page 1, 2 and 3.
I have managed to make a lot of inroads with local contractors, they seem to be contacted first when something is going to get built. I have standing agreements with some of them for fees and they contact me first when they have work. I also joined the local ULI group, lots of real estate money guys to bump elbows with, no real projects yet.
I am thinking about joining the local builders association, as they provide meeting spaces and access to code books to members, much cheaper than I could provide those myself.
j
Joshcookie: ULI as in Urban Land Institute? cool
I started my firm in my house, just me, and I now have over 30 employees, 14 years later. Some advice:
on pricing: You need to find out what other architects charge on an hourly basis, and how they charge for different types of jobs. You can do this lots of ways: ask contractors, ask around at work what your current billing rate is, and the rates of others, have a friend call other firms and ask, etc. public entities keep answers to RFP's o nfile, and they are viewable by the public. These usually list rates and fees. If in your market a big established firm charges $125 an hour for a principal, you can't charge that much. You would probably need to be at $100 or less, but that would be ok, because your overhead is going to be lower. I just raised my personal rate over $100 per hour, after 14 years. I wanted to still work on projects, go to job sites, etc. and I did not want clients to think that I was too expensive. Other principals in my area charge $150 to $175 for their time. Believe me, my firm still makes as much or more money than their firm. For fixed fee jobs, you need to research what the market will bear for each type of project. You do not have to be the lowest priced firm, but it is going to be hard to start out at the top. Anyway, if you structure your firm correctly, you can charge average prices and still make above average profits.
If you are really effecient, and can keep your ratio of how many hours you bill to how many are not billable, this will in effect greatly reduce your overhead, and you will make money. My firm "runs hot". We are incredibly effecient and have low overhead, even though we pay for some of the best benefits in the city, have the latest software, computers, nice office space, etc. I do most of the marketing, all of the management, and I still bill out about 75 to 80% of my time. We do not waste one minute.
So one thing that we did differently than other firms that has worked well for us: instead of seeking out that giant holy grail of large jobs, we sought out clients that gave us a steady diet of smaller jobs, with no competition on fee. YEAH FOR REPEAT BUSINESS! So instead of going for that big developer office building with the developer who tells you there will be more jobs then beats the fee down, then drops you after the job (this is also the job that all the other architects in town were chasing and slashing fees to get) we quietly pursued the developer who owned a bunch of buidings and had a small stream of steady tenant build outs, for example. We got our foot in the door, did the best work possible, with fabulous customer service. That same client that was one of my first clients still gives me all of their work 14 years later. I bet the fees have been in the range of $150,000 to $200,000 every year, with no competition, no risk, no marketing expense. Get the idea? Go for clients like Universities, Housing Authorities, developers, retailers, building owners, contractors, etc that have lots of recurring work. Don't chase the big giant job, work at getting their smaller projects to start, and then work up from there. We have one client who pays us over $1 million in fees each and every year for the past 7 years since we started working together, straight hourly wages, no marketing, pays within 15 days of our invoices.... AHHH< it's love..... That kind of cash flow lets you do all kinds of non-profit work, fun lose-your-shirt projects if you want. Design your own house. Or you can just send your kids to college without worrying about the cost.
We still do mostly small projects by the way. A big project for us is over $1 million. Big is not necessarily better, it is just bigger. Bigger risk too, bigger loss if the owner goes bankrupt and you don't get paid, bigger headaches, bigger engineer and sub bills to pay....
While I am not an Architect, I work (and study, and live) with a lot of you.
No-one has mentioned the competition route (to big work). How good are your renderings, your design skills, your management skills (even though you won't necessarily need people management for the competition, you will on winning), how good is your (electronic) presentation?
If you have the steady job that doesn't eat all of your hours, and a willing partner, and access to suitable staff should you win, and perhaps an engineer to play with, it's another route to look at. Check Heneghan and Peng, who we have just started working with on their Grand Egyptian Museum. They exemplify competition winners. Similarly Softroom started from some sweet marketing & a competition win.
On an aside: If you are considering your skills good enough to win business, yet are not already being offered business, why are you not being offered business?
There's no mention above (though with ten years experience you'll know this already) of the necessary investment in tendering. Once your marketing works, how much can you invest in a serious bid, and what percentage of bids do you have to win, and does your upfront start-up overhead include these potential losses?
If you think that your portfolio isn't up to it (as you effectively say above) the competition work becomes portfolio, a part of the iterative process of betterment (on a scale and type that your present work does not grant you). Of course it's only one strand of many. Primarily, as per the many posts above, make yourself available, and make it clear to everyone you know that you are available.
Either, either, whichever, whatever, good luck in the generation of wealth. Develop your success and pass it on, find more, and find joy in the sharing, make others happy to have known you and better for having paid you, or being paid by you (and not the other guy), As the google ethos: Don't be evil. Good luck.
archie gives great advice re: finding the small, steady work and building those into great ongoing relationships. If a developer seems skeevy and untrustworthy, s/he is - try to find people to work for who share your values.
And gruen you called out exactly what I should have explained to zipgun: everything that isn't drafting is billed at our "design" rate. Twenty hours of "design" is more likely 4 hours of actual design plus 16 of site visits, client meetings, managing the materials budget, talking on the phone, coordinating rough-ins, etc. - all of which, in my mind, is an integral and very enjoyable part of "design".
hey liberty bell...
*looks at subject of thread*
....
*looks at liberty bell*
....
*blink*
.....
(did someone say business plan?) :)
ryanj,
thanks for the link to the wonderland magazines... there is some really great stuff in there...
also, gruen, another option for a start-up firm is doing contract work for other firms... obviously this is much easier if you have really good relationships with previous employers or other architects with smaller but more established firms... that's what i've been doing for the past six months in addition to a few solo projects... it's worked well for me... although i only have to make it until august when i go back to school after working for 5 years...
I've got a 1972 21' Airstream if you are interested. US$10K
**you guys friggin rock** now I go to the corner bar to drink more beer & work on my business plan.
yeah, I know I need to build my network, paradoxically, that is part of the reason I want to do this - my current job is getting me relationships, but limited in scope - my old business allowed me to branch out and develop more relationships.......................................
I appreciate the *FROM THE TRENCHES* reports - it's what I need.
When I say $140/hr, that is the ONE billable hour, that comes after many that are not billable. So yeah, I know how much work has to happen to get that job.
I'd love to be offered jobs right now, but I think I'll have to work in the medical healthcare game for another 10 years before that'll happen, and I'm impatient, a bit, and would rather do simpler building types on my own time and turf.
I'm getting some really great ideas and advice from all of you, adding it to my *ideas data*base*
LB - yes, I am writing a "real" business plan - as real as I can make it anyway - my last business wasn't as successful as it could be, because I didn't have a document to guide it - like building a house with no drawings...
it's important to me to get this as right as I can, on paper, try to figure out the problems like "how can I make my portfolio look as good as possible" & "how can I start a business with no investment" etc.
Anyway - I know I want to take this plunge, and have been thinking/planning/scheming for years now & know that there's no good time & no bad time to do it, just has to be done.
Maybe I've got stars in my eyes, but I want to remain optimistic, as I know that pessimism only brings you less success.
~*(out)*~
If your going to drink, make sure you drink at the right bars. The ones where the clients drink. i live in downtown Chicago and have met a ton of executives after work at good bars - not nessessarily the nicest bars - where you can chat up spenders and decision makers. Just always leave on high note, dont get sloppy drunk, and be entertaining. if your charming/ funny people think your capable of handling anything.
Oh - and ABC mutherf*cker - always be closing
no problem phil.
it's got some pretty dense info, especially if you ever want to practice in the UK...i don't know how i didn't coming across it sooner.
one thing business school has taught me is to never underestimate the power of 'networking'...so yea, i second that whole relationships thing. everything else (yes, even design skill) is secondary.
mr. platypus, I know that rule. =)
oh and the culture of architectural education is such that architects are still far too clickish/introverted (sp?).
thank you meta. I know I don't have it all together, but I want to go for it anyways. when I started my last business, I had NO FRIGGIN CLUE how to do the work. I told people I was an expert anyways, and got tons of work. Amazing. And I did the work well, also amazing.
My business plan is more about "we need to make this much money to keep the doors open & get what we want" and also "where do I want this thing to go" (as in - make sure I can see the forest for the trees after 3 years of business...problem I had last time...)
Yeah, Just Why, you caught me. Still no business plan, but still in business! I've settled into a relaxed attitude about the business itself, but am focusing pretty intently on making my clients happy. Got a call from one of them at 5:30 today, in fact, telling me how happy they are with us. Yay! Makes the working til 1am and rushing through rush hour traffic to get them the drawings on time all worth it.
This thread is getting me towards brighter side of things. I see some thoughtful input.
In my third year of college I got a business license and hung it up at my studio desk as Studio Atom. That paid my way through college. After college I folded and eight years later I'm on my third try at a business. When I get my stamp I have day dreams of opening a legit practice. I listen avidly to the success stories and I admire those that can really make a firm without having to hang around in a hierarchy to buy in. But sometimes I wonder if there is a finite demand for services and if a legacy buy-in is just old junk or the only way in.
What Old Fogey said.
Clients want to work with people they know and trust. I've said it here a hundred times "this is, and always will be, a personal service business." It's not really about your design ability - it's about your ability to solve your client's real problem.
Don't underestimate how hard it is to establish a sustainable firm. Don't underestimate how hard you will need to work. Don't underestimate how long it will take to achieve sustainable positive cash flow. Don't underestimate how much time you'll spend doing stuff you don't want, or know how, to do. Don't underestimate the financial and professional risk you face. Whatever conservative estimate you make for the points above, double them.
But, also don't underestimate how much fun it can be and how rewarding it is when it does start to work.
Good luck.
Forget the office (you've got a kitchen/livingroom/bedroom, garage, right?), forget the new computer (you've got one, right), etc., etc.
No/low overhead means no/low risk.
Find some good student or hungry graphic firm to help you establish an identity and website. Bizcards are one of the best investments, don't cheap out on these (you don't need fancy foil stamps, but don't get the flimsy glossy crap), they make a HUGE impression.
I can't tell you how many of my clients cheap out (mostly developers) and pay the price later on. Still boggles my mind how cheap some companies can be on their image and marketing (again, you don't need a high buck brochure, you don't need any brochure, but you do need well designed, well thought out website and identity, keep it simple and it will be affordable if you get the right person).
For me, I prefer to put the profit in the bank than throw it away on renting office space. Might buy/build an investment property to use as an office, but that's another story.
If it won't help increase profit/productivity, then it is not needed.
(Pardon an old geezer's lament:
Remember when most threads on Archinect.com were this helpful, focused, interesting and collegial?)
my two cents of the day.
yes, but business advice from other architects can only take you so far...
certainly, there are other professionals that are more knowledgeable to give financial and legal counsel. don't rely too much on your inner circle.
i agree...
also, most major cities have business assistance centers that can help with some of the details of launching a new small business... and if your municipal government prequalifies businesses as certified small business enterprises then make sure that you go through the hoops to get on their SBE list...
and find out who at the city/county is in charge of construction projects and go introduce yourself and your company... government work can be one of those steady sources of small but profitable work...
*scribbling notes madly* thanks for all the great advice - esp. about getting contacts & where to find them. light bulbs coming on...
I love this thread. Honest, hopeful, open and not near as depressing or scary as opening a practice has been for me. I say opening because like most things I believe it is a process...its been about a decade in the making, and at one point I was operating as a design consultant doing some decent portfolio filling residential projects for little return.
I don't think I need to add any points for you, but in the manner that is architecture I'll flap my lips anyway.
. 2 partners - 2 bars 2wice the business opportunity...spread your potential.
. arrange with bars/restaurants to be the go to place...make an account with them, work the potential.
. business plans nowadays unless you are f.500 company are usually simple operational strategies on powerpoint - I kid you not, I've recently reviewed the port of Hong Kongs...less than 50 pages and its operational. If you are unsure about it, or think its unnecessary hire a life/coach business coach to record business as you presently practice, and recommend in writing how minimize waste, risk, loss, etc. This might be a helpful alternative to you as well Liberty.
.consult with a PR agent...forget about retaining them just yet - speak about the potential. You'd be surprised.
.try coffee shops in the day time to catch the mil...uhmm the soccer mom crowd (if you are in a more suburban area) + the bar in the evening leave contact information at the bar as well.
gruen -
you seemed to have been blessed by some truly good advice and a lack of snarky sniping (and amen to those of us who remember archinect when it was more of the former).
i'll contextualize my comments - we've been out 4 years, are at 7 people, and are probably getting the kinds of work you want (small to medium sized institutional work - museums, libraries, visitor's centers etc.)
first, as it's been hammered home here, everything you will do in this business is about relationships. give others 10x as much as you get - if you can help make things happen for other people, you'll get it all back. we still have former clients who not only give us great references but are active in trying to help send work our way. we wouldn't have half the work we have without that network and we're always trying to expand it by going to where the clients are, not waiting for them to come to us.
second - keep the overhead very, very low (again, no big surprise). go without yourself instead of borrowing money. we've been pretty lucky in that regard - we're only now having to tap our line of credit to get through a couple of slow billing months. we'll cover it in spades 3 months from now. but, being in debt sucks. you never, ever want to do it - that's what gives you the freedom to call your shots. don't hire full time unless you have so much work your head is swimming. and when you do, look for people who can do more than 'just' produce. we love people who, for example, have degrees in landscape and architecture or product design and architecture.
third - you have to put yourself in the right place at the right time. one example - we're doing a project which will have an alessi flagship store. i basically had the north american president as my captive audience for a morning to review it (we're doing the design, a departure for them). but, with him in town, you think i'm going to pass up a chance to show him some of my product designs that i think would be a good fit for them? not a chance. will it come to fruition? who knows, but at least they're going to take a much harder look at it (he liked what he saw). and i guarantee it wouldn't go anywhere if i sent it in blindly.
fourth (and lastly for now) - you have to remember that you, as the company head, are always- ALWAYS- 'on'. everything you do is a reflection of your company. everything you have to trade on right now is your personal word, skill, and drive. you are IT. there is no one else. never forget that, but never let it go to your head. stay optimistic even when privately you're despairing (and we've all been there), and just be prepared to fight like hell for the next 20 years. if you don't have that in you, find another gig. seriously.
*one last thing - don't worry so much about the money yet. figure out what you all need to live on, shoot for that plus your overhead the first couple of years. don't worry about turning a huge profit early on. quizzical mentioned it takes a long time to be truly stable. i'll second that reality. just take a 20 year time horizon...
good luck with it - we're always happy to have another member in the fraternity (so to speak). and let us know how it turns out...
gruen - one more thought. To the maximum extent possible, start as you mean to go forward.
by that I mean don't just take any crap work that comes your way simply for cash flow purposes. chase work you really want to do - work that gets your juices flowing and offers client relationships you enjoy and value.
taking on scut work diverts you from what you do best and builds your reputation in unhelpful ways. taking on crappy clients will suck the life out of you.
of course, this advice assumes a certain economic "staying power" -- starting on a shoestring is tough and may cause you to head down a path that will be difficult to shake later on. if you can, build up some significant economic reserves before you walk off the plank.
Good luck.
Great advice, quizzical, especially that last bit about turning down work that isn't the right fit. Do it gracefully, though, and without hurting anyone's feelings!
trace, we spent a lot on really nice business cards. They do make an impact.
Now if we could just get a dang website up!
Skip the Web site and flashy business cards, Personal contact and cold calls will get you going faster. Just try and spend time setting up meetings will people that one day you want to do business with, both clients and consulting engineers. Its about setting up a network. Building a business and reputation takes time and needs to be nurtured. I spent a lot of time with contractors and real estate types for many years, both learning how they do business and getting to know what works for them. I do work for many builders because they build something every year and make for great repeat clients. Many have moved from home builders to commercial projects and our business has grown with them as well.
I tend to not do a ton of business development and most if not all work is word of mouth, most of my business development seems to mostly be saying "no" lately. Which oddly is an bizarre tactic but clients then are prepared to wait to fit in with our schedule. Yes you can work the cocktail circuit but honestly I would rather let good work speak and picking up a few projects that offer good exposure helps. I also try to try to get a good mix of client types, residential, commercial, civic at a variety different scales ( mostly for your own interest, budgeting and staging of your work program. )
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