Providing great architectural services and running a financially successful firm are not mutually exclusive. It’s quite the contrary. If you are as good an architect as you think, you’ll be successful and it won’t be because of your design skills. However, what separates the great–struggling designers from the great-successful designers isn’t just luck.

It’s not your fault that after all the years of education and training you endured to become an architect, you don’t know the first thing about how to run a business. Sure, you can design – like nobody’s business – but do you truly understand the difference between income and revenue? How about a credit and debit? Do you know what an overhead factor is and why it’s so critical? Do you know what your minimum billing rate is? Did you ever sit down and map out your firm’s operating budget?

Chances are the answer to all these questions is no. So let’s get to work and get you on the right track to understanding your firm’s finances.

I’m always amazed at how architects spend more time perfecting the designs of their projects and learning things such as sustainable design practices but don’t put much effort into making their own firms sustainable. Let me put this as succinctly as possible. No Profit equals no Business. Unless you have a big fat trust fund or married rich and you can be a gentleman (or lady) architect, my advice is before building someone else’s house…

get your own house in order.

It may be a sad, sobering fact, but making money is what allows us to do the things we want. It gives us power. And if all you want is to be a good designer, then make sure you bring people into your office who want to make money. Then, and only then, will you be able to flout your talents, pick your projects and reap the glory that allows you to sit back and say you are successful.

When you hire people to work in your firm, you have a responsibility to them too. After all, they are also using your business as a way to bring income home. Your cash flow has to cover both your Work and Home families. And as the owner of the firm, you’re the last to get paid.

Being a strong businessperson also earns you the respect of your clients. Being able to stand toe-to-toe with someone who has the means to afford an architect – to speak in a language that they understand business wise – demonstrates that you’re not a push over. You understand the rules of the game and you wield them to the benefit of your firm, your projects and your clients. Clients are attracted to winners.

In the end, understanding financial management is like understanding building codes or doing a zoning and code analysis. Even though you think you understand everything, it’s essential that you stop and go through the process. I wouldn’t undertake a project without preparing a zoning and code analysis. Even if I worked on a similar project across the street, I would start all over each time.

Take nothing for granted. Things change, conditions vary slightly and there’s always the possibility that you might miss something important if you just take it for granted.

If you’re still with me, I would encourage you to continue reading this blog where I’m reviewing basic terminology and looking at a few examples to show you how to set and reach your profit goals.

About the Author:

Steven Burns, FAIA, spent 14 years managing his firm Burns + Beyerl Architects. After creating ArchiOffice®, the smart office and project management solution for architectural firms, he brought his management expertise to BQE Software, where he is perfecting the business strategy and product development as Chief Creative Officer.

About BQE ArchiOffice:

BQE ArchiOffice is an award-winning time tracking, billing and project management software created by architects, for architects. With simple usability, smart functionality and a streamlined user-interface, ArchiOffice is brilliantly designed to organize and analyze all of your business information.