“A third of architectural practices made so little profit in the boom times that they could go bust with the onslaught of the credit crunch, an RIBA survey has revealed.
This year’s RIBA Business Benchmarking Survey, released to BD this week, shows that just 67% of firms met the industry safe standard of profits equalling 15% of total turnover.”
Survey Warns of Low Profit Margins:
Building Design 7 November 2008 (Will Henley)
Read more of this article here
I’ve been managing architects practices for over a decade now, and I’ve met many architects and young graduates looking to have their own businesses too. The one thing which seems to be of most concern is the business of having a business.
It’s all very well having an architectural mission (and don’t get me started!) but in the cold light of day, those of us not blessed with deep pockets or wealthy benefactors have to make a buck. Enough bucks to do what we want.
Now it’s not rocket science, but it can be as scary, so I thought it would be useful to invite some rather special people to make a contribution to the thread which runs through this blog, the one about money and running a business. [Keep up at the back there!]
Over the coming months a group of people who help architects (and a range of other people who have businesses) will be sharing their ideas and encouragements with you here, no obligation, just to prove that it is possible, and people are making money, and keeping their principles, right now. Maybe you might learn something. I know I will.
Let the discourse begin…
Tommy Manuel says
This looks to be extremely timely. Look forward to the conversation.
Collier Ward says
I look forward to the discussions. I wonder what the corresponding percentages are here in the States.
I have been running an architects practice for over 5 years, it was in trouble when I took over and now, in a recession we are doing ok. In that time I have been approched by so called ‘business guru’s’who have tried to lecture me about business and they always tell me that architecture as a business is the same as any other and isn’t unique. The fact is, for me, and many others, it is. If I had taken (paid) their advice I would probably be bankrupt. It is a hard, hard business for any small design orientated practice in a country where making lots money comes before investment in quality, innovative architecture and it it is impossible to get past a PQQ unless you are a well established sizeable practice and not necessarily a decent designer.
I look forward to the discussion.
I have been in private practise for 18 years. The firm grew quickly during the last recession (early 90’s).
My education included Architecture, Managerial economics and the economics of Real Estate development. I learned early on while working in an architects office during college, it was absolutely necessary to understand the business context of practising architecture. I watched my then boss agonize over setting and then trying to collect fees, very often, unsuccessfully.
Being able to explain the value of my services to clients, in their terms, has made it much easier to obtain reasonable fees and more importantly, actually collect those fees. Even now, I have no trouble receiving timely payment of my fees,
AND my fees are not the lowest around. Clients will respect your fees if they understand the value you bring to them directly.
Over the years, I learned something else. I did not go to architecture school to run a business. It is imperative to create balance in your artistic and business professional duties. Your skill set must include deep understanding of both aspects.
Running a business means reasonable fees must be collected to support the expenses of a practise.
“It Really Is about Money Stupid” NO! It is more About Collecting the “Stupid Money”! So you can go on doing what you love! Helping people, and making a difference applying the unique collective talent of your architectural firm!