Archive for the 'Architects' Category

10 Ways Architects Can Make More Money

medium_4052671706

To successfully complete a project, an architect is responsible for making thousands of critical decisions. To complete the development of a standard residential additions and alterations project, it takes several months of focus and dedication. Many of us work long hours, long into the night, through weekends and holidays.

The innovative ideas and concepts we create can often only be born after hours (sometimes days) of intense thought and several dozen layers of sketch paper. The personal emotion, attachment and dedication that each project receives is unequaled in any other profession.The time and effort required to properly develop a design and complete a thorough set of construction documents is difficult for most anyone outside the profession to understand.

As a requirement for licensure, registered architects are responsible for the health, safety and welfare of every occupant in every project we design. Like any small business, architects must pay the typical operating expenses required to remain buoyant, such as utilities, professional service fees, consultants’ fees, insurances and several other overhead expenditures. But wait… for architects, there’s more. To protect us from the liabilities inherent in our responsibilities as licensed professionals, most architects also purchase an additional Professional Liability insurance policy costing several thousand dollars each year.

Then, there’s that little thing called profit.  Every business, including architecture firms (yes, its true!), must earn a profit. It’s one of the rules to “the game”. In order to continue pursuing our success as architects, we must not only cover our expenses and take home a salary, we must make enough to reinvest into the business.

Most sole proprietors and small firms I know, struggle to meet the minimum requirements of operation. Forget about profit.

Simply stated… Architects just don’t make enough money.

We deserve to earn more. So, in the spirit of pursuing our passion and attaining the success we dream of, I have compiled the following ten ways architects can make more money.

Additional Services. Every architectural services agreement should include a section on Additional Services. These are services available to your client, but are NOT included in your basic architectural services.

Are you giving away services that you should be compensated additionally for? Many architects are doing just that.

In our Agreement for Architectural Services at Fivecat Studio we clearly identify several Additional Services. Services such as Existing Conditions Surveys, Interior Design, Kitchen Design, 3-D Modeling, Illustration, Rendering and Estimating are all offered to our clients as additional services.

Construction Services. Since we launched our firm in 1999, most every prospective client I meet asks if Fivecat Studio offers construction services. Many people have the perception that architects build buildings and many others wished they would. So, in 2007 we stopped saying no and launched our Construction Management Services. In doing so, we more than doubled the revenue we collect from each project for which we perform these services.

Through the years we have learned that not every project and not every client is a good fit for these services though.

If we feel that the project and the client are compatible, we offer Construction Management Services as an Advisor, not as Constructor. It is important to differentiate the difference between the two services. I will publish a more thorough post on this topic in the future,  but the basic difference is in the agreements between the owner and the multiple contractors. As an Advisor, the contracts are direct between the owner and contractor. The architect is responsible for managing costs, sequencing, scheduling and payments. The full liability for the construction falls upon the contractors. The architect is simply an agent to the client with no liability for the construction.

As a Constructor, the owner contracts directly with the architect for construction services. The architect is then responsible for constructing the building, hires the contractors directly and inherits the associated liability. More liability means more liability insurance, which increases your firm’s expenses and your firm’s exposure to legal action. Until the volume and revenue from our CM Services allow for more investment in growth, we will stick with offering Construction Management Services as an Advisor.

Selection of Fixtures and Finishes. During the Design Development Phase of each project, we provide our clients with a “shopping list” and contact information to suppliers and sales people we know, like and trust. While our clients shop, we develop the design. We are always available to support them, answer any questions and guide them in selecting items appropriate for our proposed design.

In the case where a client would rather not be responsible for this task, we offer the selection of fixtures and finishes as an Additional Service and take on the full responsibility for the choosing these items.

Each client is different and their desired involvement in the process varies. Offering multiple ways for this process to occur keeps each client happy and allows for the firm to be properly compensated for the additional work required to perform the task.

Purchasing and Delivery. Once all the fixtures and finishes are identified, we then document the selections and include their specifications in our Construction Documents. During construction, the purchasing of these items is the responsibility of the contractor, or the owner purchases the items themselves prior and furnishes them at the appropriate time.

As a courtesy to our clients, we offer a Purchasing and Delivery Service which makes the acquisition of these items our responsibility. The additional attention assures our clients that the items ordered will be correct and delivered on time.

This process takes lots of time and effort. It is not typically the responsibility of the architect to perform this service and if you take on the additional work, you should get paid for it. Although, that does not necessarily mean that it should cost the client much more.

Fivecat Studio is compensated for this service as a percentage of the cost of the items we are handling. We then forward all our trade discounts to the client, which will often equal the amount that we are being compensated for the service. The client has less responsibility, the order is properly handled, we make more money and the client pays little or no more than they would have without our involvement. It’s the classic “win-win” scenario.

Sell Products. There is an alternative approach to the Purchase and Delivery Service described above. You can purchase the products at the your discounted trade price, mark up the price to cover your time and effort to handle the transaction, include an amount for profit and offer the products selected by your clients at their full retail price.

Most every project includes lighting, plumbing fixtures, furnishings, accessories and finishes such as tile and stone. Who better to sell those products to your client than you?

Reimbursable Expenses. Most architectural service agreements identify out-of-pocket expenses that will be reimbursed to the architect, separate from and in addition to compensation. Many architects though do not keep a record of these expenses and therefore, do not properly collect the amounts owed to them for the project-related expenditure.

Quantify your reimbursable expenses and collect.

Reduce Waste. This one may be the easiest way to make more money. It does not require performing any additional work and there’s no waiting for clients to pay you.

Prepare a thorough evaluation of all the money your firm spends. Categorize the list into “required”, “not required” and “waste”. Spend only what you need to grow, eliminate waste and end up with more money each month.

Monetize Your Website. Most architects have websites to market our firms. If you don’t… you should. We built Fivecat Studio from the ground up, with no money and no clients, using our first website. There is no way that we would be where we are today without fivecat.com.

Most firm websites includes basic contact information, a bio describing the firm and a portfolio of select projects. With any amount of traffic, you can add features to your site and start making some additional money to supplement the services your provide as an architect. As an expert, you can offer e-books for sale. Prepare a Resources page with affiliate links to items or services for sale that people visiting your site will find useful. You can also sign up for Google AdSense and make money through advertising on your site. If designed well and presented properly, your site can become a source of additional income for your firm.

The more traffic visiting your website, the more money you can make. Continuously updating your site with new work and additional information can help attract visitors. Adding a blog and consistently writing on a topic interesting to a niche market (say maybe “custom residential additions and alterations”) can help to create a following and build trust. Trust will help you sell more through your site and maybe even convert a prospect into a paying architectural services client.

Increase Volume. Recently, due to the slow down in the economy, many architects have reduced their fees in order to be more competitive. This may work to win the project, but if your fee is not high enough to cover expenses, overhead and profit, you will not be in business for very long.

If you choose to reduce your fees, you must also increase volume and complete your projects quickly. The smaller fees made on each project must add up to provide enough revenue to cover expenses and make a profit each month.

Raise Your Fees. The alternative to increasing volume is to raise your fees. Provide value by spending more time on design, more thoroughly developing your documents and serving your clients well throughout the entire process. This business model allows you to take on less work and spend more time on each project.

As mentioned above, most of us are already devoting the time and extra effort to our projects. We are passionate about what we do and we want our designs to reflect our true talents as architects.

The problem most of us have though, is that our fees do not reflect the dedication and investment we bring to each project.

Calculate your expenses, quantify your time and effort, add an appropriate profit margin and get paid what you are truly worth. You are a licensed professional and your services are worth a higher fee. Raise your fees. You are an architect… and you deserve to earn more.

Do YOU make enough money? There are other ways architects can make more. What are some ways you have found? Please share your thoughts in the comments. I’d love to hear from you.

***

photo credit: Mukumbura via photopin cc

The 8th A.R.E. Division: Practical Construction Experience

I come from a family of auto mechanics and contractors, so repair and construction are in my blood.

Before I was registered as a New York State architect, I worked as a carpenter and mason during summers and school breaks. As a child, I would hear my carpenter uncle speak negatively about architects and I wanted to know why, first hand. (…and boy, did I?)

One of the topics often debated over at the Entrepreneur Architect Linkedin Group is whether practical construction experience should be required for professional registration. The current Architect Registration Examination (A.R.E.) consists of seven divisions, which include multiple-choice, fill-in-the-blank, and check-all-that-apply questions as well as graphic vignettes.

Not one hour of practical construction experience is required.

The lessons I learned swinging that hammer each summer are utilized every time I step onto a job site. Reading architectural drawings as a tradesman and executing each detail as documented, reinforced the importance of clear concise construction documents. As a member of a construction crew, I heard the unfiltered criticisms of architects thrown by disgruntled carpenters. I learned quickly how architects could build stronger relationships with the people responsible for bringing their designs to life.

Today when I visit a job site to review progress or meet to resolve an unforeseen condition, I come to the discussion with a very different point of view than if I had forgone these experiences as a young aspiring professional. My relationship with the people building my projects are based on mutual respect and understanding, and my projects are built better in return.

Practical construction experience should be the eighth division of the A.R.E. Jobsite relationships would be stronger and buildings built better.

What say you? Should practical construction experience be required for the registration of today’s architect?

photo credit: justinbaeder via photopin cc

Letter To My Beloved Profession (Guest Post)

Today I have the pleasure of introducing you to Marie-Claude Soulard, an architect based in the San Diego area and the owner of Soulard Architecture. Last week I posted a new discussion at the Entrepreneur Architect Linkedin Group titled Architecture is Dead: Let’s Reinvent the Profession.

The following is Marie-Claude’s response to my challenge to imagine what our profession could be if we started from scratch with a blank sheet of trace paper.

I’d love to know your thoughts on both my challenge to reinvent the profession and Marie-Claude’s response.

Hope you had a blessed and very happy Thanksgiving.

Marie-Claude Soulard writes:

During this Holiday week, as I reflect on the last few years, I find myself feeling thankful.

Thankful for the recession. Yes you have read correctly.

I am thankful because from this deep and long lasting economic crisis, a light finally has been shed on the true state of the profession. Architecture as a profession and a business is in serious need of overhaulin’.

A coming together of all participants in the business of the built environment needs to happen. I would like to see collaboration, sharing of ideas, partnerships.

1 – Starting at the academic level, the architecture schools’ curriculum of the 21st century need to include collaboration with contractors, developers and business owners. Business classes: how to start your own firm, social media marketing, old fashion networking, clients relation building, business plan writing, construction skills: how to build.

2 – After graduation, the newly minted architectural intern should enter a dedicated network of architecture firms. The firms would have for their mission to mentor and form the next generation of architects; truly guiding the interns towards licensing. This mentorship should be one of true collaboration between the interns and the architect firms where each party gains and learns from each other. This network of architecture firms should be based on a new business model that embraces collaboration and possibly even partnership between contractors/developers/architects. These firms should be on the cutting edge of technology, sustainability and laboratories of new ideas.

3 – Lawmakers at the City, State & National level need to eliminate lobbying and loop holes and require that the services of an architect be utilized for all types of buildings. No exceptions.

4 – The residential market should be recaptured by architects. In collaborating with major land developers, contractors, designers, in an integrative approach to design. By developing a marketing campaign aimed at homeowners to increase their awareness of architecture and design.

5 – NCARB and AIA will need to be revamped to stay relevant. Their missions should include the propagation of architecture to the masses and the support of the business of architecture.

Why not for 2013 have a Mega Symposium on architecture and the business of the built environment. I would like to see a brainstorming of ideas to establish the blueprint of the collaboration of all in the creation of the next generation of buildings and cities.

Take this list, add to it, share it and make it your own. Take action, Make things happen.

With gratitude and hope,

Marie-Claude Soulard
California Licensed Architect #C-33310
LEED AP BD+C
email: mariesoulard@aol.com
Tel: 858-455-6672

photo credit: nicoventurelli via photopin cc

Architectural Interns: Read This Now!

Bob Borson from Life of an Architect blog published a great post today about Architectural Interns. It includes tips, suggestions and requirements from some of Bob’s friends, including me.

If you know an architectural intern or a recent grad looking for work, this is a must read.

We Are Architects. We Can Help Them Heal.

I apologize for the lack of development this post may seem to exhibit. Thrown into complete darkness by Hurricane Sandy, I am writing this from my warm bed on a Droid Incredible smart phone. We have not had power since 3PM Monday (October 29).

We are blessed to have survived the storm of our lifetimes with very little damage and are doing just fine. Thank God. Electricity is our only need. We will be patient as the ConEdison crews work overtime to help us return to normal routines.

We sent the kids off to the inlaws where they have heat, light and chocolate cake. My mom and dad surprised us yesterday and delivered a portable Honda generator. It’s tiny, but its enough to plug in Aunt Maureen’s old ceramic heater and warm up the bedroom.

This coming week is going to be very busy for us at Fivecat Studio. As our region begins to recover from the hurricane, there will be many homes in need of repair. In the wake of the storm, we have already scheduled three interviews and signed contracts for one major project, all directly related to storm damage.

Interestingly, all are prospects or clients with projects previously “on hold”. The damage caused by the storm gave them incentive to proceed with projects which were delayed due to the economy.

So, as dark as the clouds have been, we are seeing a very thin lining of silver glistening on the horizon.

My thoughts and prayers go out to those who lost loved ones or watched as their homes burned to the ground. My heart is with the people at the Jersey Shore, a very special place where Annmarie and I both spent summer vacations as kids. The boardwalk and amusements we enjoyed with our own children have all been destroyed.

It is our responsibility as architects, in times of crisis such as these, to help our neighbors in need. Our expertise in building design and construction can help this region heal. As people start to evaluate the damage caused by the storm, we can be there to assist and be there to rebuild.

Please do what you can. Say a prayer. Send a donation. Volunteer your time. There are people who need us. Be there for them.

Michael Gallin: Entrepreneur Architect

While at Carnegie Melon University’s school of architecture in the early 90’s, Michael Gallin developed a passion for finding innovative solutions combining design and technology. Although his primary interest has always been architecture, computer technology has been a close second.

Gallin founded his architecture firm just north of New York City in 1999. He recently merged his practice with another firm, forming Gallin Beeler Design Studio. The current office, with a staff of nine, has a reputation for exceptional design quality and is a frequent recipient of regional design awards, including 11 AIA awards in the last ten years.

Frustration is often a catalyst for innovation. In 2009, Michael’s frustration over how his office was managing information brought his passions for architecture and technology together.

A client requested a paint color used on a past project. After spending hours sifting through archived drawings and construction submissions, Gallin concluded that there had to be a better way. He thought that his firm’s project information and specifications should be stored in a single searchable database. The database should be instantly available for reference from one project to the next and users should be able to refine the information over time. In a controlled and managed way, clients, consultants and contractors, should all be able to access and contribute to the database during and after the project is completed.

This simple idea, to put all project information into a single accessible database, has revolutionized how Michael’s practice runs.

Initially, Michael created the database using a software called Filemaker. After refining the user interface and optimizing the database structure to be flexible and intuitive, he moved the database and user interface online. The resulting website is available to everyone at ADOSAR.com.

According to Gallin, “We can now find what we specified, as well as what was actually installed on a project, in a matter of seconds. This information is available for refinement and reuse on our upcoming projects. Time consuming tasks such as producing finish and hardware schedules, managing submissions, disseminating bidding information, and managing construction contracts have all become dramatically more efficient. We have tried many ‘time saving’ and ‘quality improving’ products and nothing has had the dramatic impact that ADOSAR has in improving project quality and efficiency. The key difference is that ADOSAR is simple. Its always available online and doesn’t try to do everything. It focuses only on the information that is ideally suited for database storage while leaving the drawings and models to other better suited tools.”

The more people use ADOSAR, the better it gets. The database grows and is refined continuously.

Problem: Inefficient recovery of information from past and current projects.

Solution: Michael Gallin’s ADOSAR.com.

Michael Gallin is an Entrepreneur Architect.

***

Anyone interested in helping to test and improve on the “ADOSAR” concept should reach out to Michael via email. Free access to premium features is available to users willing to help refine Adosar by providing constructive feedback.

The Passion Profit Cycle of Success

Prior to starting our own firms, we business-owner architects experienced an “entrepreneurial seizure”, as Michael Gerber so accurately described in his book, The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It. It’s the precise moment when a passionate employee commits to starting her own firm. Frustrated by the process (or lack of process) established by her employer, she decides that she can do better.

Do you remember that moment?

The passion required to overcome the fear and uncertainty of launching a start-up business is a very powerful emotion. It’s what takes us from “business-owner architect” to Entrepreneur Architect. It’s what gets us out of bed every morning and keeps us going years later.

Passion for what we do though, will only take us so far. To become a great firm, a truly great business success, we must also have a passion for profit. I know… Profit. To some, profit is a dirty word, but the reality is that without profit, your passion for being an architect will very quickly evaporate. It is the passion for profit that allows us to grow our firms and continue to build successful practices.

Much like winning a game, earning profit feels great. Not just emotionally, but physically. Neuroscientist and clinical psychologist Ian Robertson writes about the the neuroscience of success in his book, The Winner Effect. Earning a profit (winning in business) physically alters our brain chemistry and increases the production of dopamine. It sharpens our focus and desire for continued success. Earning profit literally causes us to become passionate about earning more profit.

The lack of profit alters our brain chemistry as well (unless your business is set up to run as “non-profit” of course). Running a firm without profit is frustrating and frightening. We become depressed, disinterested and our passion for the profession fades. During times of economic slow down, the dangers threatening our firms not only come from outside pressures but literally from inside our heads.

So what can we do? Here are five approaches to earning more profit.

Cut your expenses.

Look at your books. (You do keep a record of your earnings and expenses, right?) Review your expenses and eliminate any unnecessary or wasteful spending. You may be surprised by how much of your earnings are used for supplies and services you don’t really need. Remember, the goal during this economic crisis is survival. Wait for the “good times” to return before spending your hard earned revenue on coffee service or extra phone lines you don’t use.

Eliminate debt.

When times are tough it is so easy to get snared in the trap of business debt. Credit cards and lines of credit shift from “safety net” to reliable source of “income”. Before you know it, you’re maxed out, paying massive amounts on interest and working with no net at all. Make a plan to reduce or eliminate your debt and start working with retained earnings to pay for expenses. Check out this Entreleadership podcast about the importance of running a debt-free firm.

Increase payroll.

Huh!? Increase payroll to earn more profit? Yes. Healthy businesses must grow. You can’t do it all yourself. With the right team in place, you can take on bigger and better projects. Expenses will be distributed among more income sources and you will earn more profit. Be careful though, hiring the wrong people may cost you much more than you’ll be paying them.

Raise your fees.

Competition has increased among architects and some prospective clients are selecting firms based on cost.  Many architects have cut their fees to the point where profit is impossible. Remember, without profit our firms will fail. Higher fees will not only keep your firm running strong, but will indicate the true value you bring to a client.

Expand your services.

Architects must think beyond the traditional design studio business model. In 2007, with the current economic storm heading our way, my firm expanded services to include Interior Design and Construction Management Services. This change in offerings allowed us to increase potential revenue with every project. Fees, once paid to outside designers and contractors, are now earned by our firm. Not only has potential profit resulting from each project increased significantly, but we have more control over the final quality of our projects resulting in happier clients.

Without passion there will be no profit and without profit you will soon lose your passion. To be a successful Entrepreneur Architect we must have both. It is the Passion Profit Cycle that builds great firms and allows us to continue to do what we love most; practice architecture.

Stay tuned to Entrepreneur Architect. (Click here to have my posts delivered directly to your inbox.) I will share more ideas in future posts on becoming more profitable and building great architecture firms.

Are you passionate? …about profit?

You should be.

In this crazy tough economic environment, what are some ways you have found to become more profitable?

* * *

To learn more about the neuroscience of winning, check out this recent interview with Ian Robertson and Leo Lopate on WNYC Radio.

Speak to Them in a Language That They Will Better Understand

Residential Architect magazine sent me an email today introducing a new video series, Value of Residential Architecture. Each video will feature an architect discussing his/her thoughts on why residential architecture is important and where residential architecture is headed in the future. If you subscribe to Residential Architect, you may have received the link in your inbox as well.

The description included with the email is as follows:

Residential Architect magazine introduces a new video series that explores the importance of residential design and the value architects bring to the housing industry. Throughout the year, we’ll talk with residential architects who are passionate about their profession, so please join us for the entire series and find out how the spaces we occupy in our everyday lives shape us as human beings and as a society.

I was excited. I thought this would be a great tool. I could send it to clients to help them better understand residential architects and the importance of working with an architect. I thought with the title, Value of Residential Architecture, it would be geared toward everyday people, showing them that architects are not only for the elite few, but for all. That EVERY house should be “architecture”. That when architects are involved, families are strengthened, lives improve, people are healthier and, in fact, happier.

The first video features acclaimed architect, Will Bruder, AIA.

Although I am in agreement with much, if not all, of what Mr. Bruder says, I will not be sharing this video with any of my clients. I do not fault Mr. Bruder or the publisher, but once again we are faced with an architect proclaiming the virtue of architecture and the beauty of proportioned space.  It is a video produced for consumption by architects and Mr. Bruder speaks in a language that only architects will understand. We love to speak about architecture in such poetic terms, but unfortunately it reinforces the notion that architecture is for the elite and that architects are only for people who seek art and poetry.

I understand the passion Mr. Bruder has for architecture. I feel it too. I understand the language in which he speaks… but most of my clients will not.

A recent discussion at the Entrepreneur Architect Linkedin Group has been about how the American Institute of Architects may better assist small firms. We are discussing the importance of communicating with the general public and educating them about the role of the architect. I understand that this video is not intended for the general public, or to educate them about the role of residential architects. It is what it is; a celebration of architecture for the viewing pleasure of other architects. It is though, a perfect example of what we are up against when attempting to shift the paradigm of the people.

Mr. Bruder designs beautiful houses; most certainly worthy of the term “poetic”, but if we are to ever position the residential architect as “important” and “necessary” in the eyes of the general public, we better speak to them in a language that they will better understand.

***

How can we educate the general public about the importance of the residential architect? Do we celebrate the “art” and “poetry” of architecture too much? Do publications reinforce the false image that architects are only for the elite? What are your thoughts? I’d like to know.

Things I Didn’t Learn at Architecture School (But Need to Know): How do I start and keep a business alive?

No one told me that I needed to know how to run a business. I’m an architect. I just need to tack up my shingle, design great buildings and clients will come knocking. Right?

Maybe… but whether clients come knocking or not, its not so simple to keep them knocking.

The solution? Write a business plan.

I know, I know; “I don’t need a business plan,” you say. “It takes too much time and effort.”

Wait! Before you discount my suggestion, think about it from a different perspective. A simple, stripped down perspective. Your first business plan doesn’t need to be a 100 page document, with financial projections and fully developed marketing strategies. In fact, I recommend that it not be. Start with just one page.

Jim Horan, author of The One Page Business Plan series of books says, “The greatest value in creating a business plan is not the final document. It’s the communication, prioritization, focus, clarity and learning that make the process worthwhile.”

Get started by taking a single sheet of paper and writing a single paragraph describing your vision. What will your business someday look like? Then scribe your mission. Why are you starting this business? List a few simple strategies. How do you get there? Then a few specific goals; benchmarks that will lead you to executing your strategies. With goals set, commit to paper an action plan. What specific tasks will you accomplish to reach your goals? When will you accomplish them? Who will accomplish them?

That’s it… a business plan. Done. It really is that simple.

I revisit and revise my business plan at least twice a year. As our firm grows and evolves, priorities change, markets shift, economies collapse. My business plan needs to evolve too. It’s also a great source of inspiration and motivation. A periodic reminder of my big ideas and reasons-for-being, keeps me focused and wanting to push Fivecat Studio to the next level.

So, go do it. Now… Don’t wait. Reach over and grab a sheet of paper.

What’s your vision?

Oklahoma State University: Architecture & Entrepreneurship

Oklahoma State is developing a program called Architecture & Entrepreneurship. Every architecture school should be doing the same.

Do you know of any other programs teaching entrepreneurship to architects?


The Entrepreneur Architect Podcast

Listen Now

Direct to your Inbox

Follow me on Twitter

Join Our Linkedin Group


%d bloggers like this: