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Architect as Entrepreneur: Lessons in Establishing a New Practice
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by Ian Smith, RA AIA NCARB LEED AP, Principal, Ian Smith Design Group LLC
There are more people of color running firms and leading firms to winning awards in the future. How did we get there? The Pre-conference Session for the 2021 AIA Tri-State conference, “Architect as Entrepreneur: Lessons in Establishing a New Practice,” was a great success. However, due to time limitations there were a few things I wanted to cover with more depth. Items that I would like to cover are: 1. Which typologies currently generate the more lucrative labor-to-revenue ratios? 2. How to acquire knowledge in a typology that someone did not learn while working under another architect? 3. How to build a client base, and how long does it take to expand a network? There is a new enthusiasm for diversifying the practice and stewardship of the architectural practice, yet it is difficult to stay in the practice and acquire licensure for architecture. The multitudes of increased barriers get in the way of developing the confidence to hang out one’s shingle. By the numbers from the AIA 2020 report, out of 116,246 licensed professionals in 2019 approximately 2.8% are Black. A similar percentage factor is published from NCARB. We don’t have data about how many black-owned firms exist but, with that same percentage factor out of the total approximate 24,176 AIA member firms (per 2021 AIA Firm Directory) in the United States, we could estimate there are approximately 677 AIA black-owned architecture firms (2.8%). Clearly the goal now is to increase the numbers of licensed practitioners and it should not go unsaid that agency in this profession comes with ownership and ownership stakes. Given the additional social barriers surrounding obtaining capital, business confidence, cultural code-switching, socio-economic revenue generation, potential client network, and perception, starting a firm would be additionally difficult. Although reports on this value don’t yet exist, the expectation is far less than the 25% of the average conversion from the +3,000 licensed black individuals transitioning to starting a firm. The purpose here is to encourage and prepare them to develop the confidence to start a firm. I am presenting six key figures to know prior to going out on your own. The first three factors can be reflected inside the data presented in 2020 AIA Firm Report and the AIA Professional Practice Guide. The second three are primary business notes for anyone going into business.
KEY FACTORS:
1. Generating Revenue Per employee - $159,000 of average. 2. It would take approximately eight people to get to generating annual Revenue of 1M. 3. Why? It is difficult to manage five independent people on a multitude of tasks. This is where the pyramid begins, and the type of firm one plans to build.
4. The 10-year rule — It may take that long to create the expertise and a following in the niche(s) that one selects as well as a body of work that can tell a story of consistency. 5. Three years’ experience before to speaking to a bank.
Know your market, get to know your client. 6. Hiring your first full-time staff person. When you can project procurement that you can generate 50% of both your own revenue and theirs and acquire a line of credit for a minimum of $25K (if not 50K). Probably a minimum of three years. Otherwise, they may be part-time employees or freelancers.
The more lucrative typologies for someone within the one to four employee range are: healthcare, college and university work, custom single-family homes, and industrial facilities. In a nutshell, each of these disciplines require expert knowledge from contract agreement through to completion that generally ranges more than 10 years of continual experience. The recommendation would be to know these disciplines well or make sure that the people who hire for these disciplines know who you are.
This is more difficult and most anecdotal reports present the opportunity of luck. However, the gritty way of acquiring this work is to use similar work that has been accomplished to acquire work that contains more of the typology that one hopes to acquire. The most important thing to remember is that one most likely will need to see the successfully completed project or hear from someone else that success had been attained. We as architects know that there are strong similarities along the production end of completing work. However, it may be harder to convince the individual or institution who is buying that this can be achieved without question. Think of work typology like entropy. It is much easier to go from a hotter energetic state to lower energetic state in order to find equilibrium, but much more difficult to go the other way. The example would be that it may be much harder to develop a firm from a knowledge base of residential design and construction process only as opposed to a knowledge base of a variety of project types. Although all one needs is one project to obtain the next, to appear as an expert (which is the prevailing expectation for winning high profile projects), one might need to show that they have accomplished more than one project. In order to frame this in reference to the title of the article, an informative book, The Crisis of the African-American Architect by Melvin L. Mitchell, FAIA originally published in 2001 digs deeply into the socio-cultural boundaries and the economic challenges of revenue generation that more likely confronts an African American in a successfully run design firm. Thus, successfully starting a firm may be impacted highly by the expertise one can prove or present. A better way to put this is more expertise may be directly proportional to one’s ability to present the firm’s value to a client. If one only had completed one project, they are less likely to be considered qualified for a new commission. However, in a future position
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by completing several, meaning (five or more) projects in equal or greater scale, improves the likelihood of winning a contract competitively against firms that may not.
One of the best means of building a client base is using one of the most valued means of influence in the North American business culture, the principal of reciprocity. This is also known as the loss leader. What does this really mean in time? A great example would be volunteering for businesses and/or organizations that you like. This will be translated through your commitment and allow for a trusted exchange. This grounds for trust will directly relate to being likable and thus encourage an equivalent reciprocal response. The art will then be dependent upon how you make the recall on the effort. However, I personally think it is just in the pleasure of letting someone know that you are going out on your own. You may be surprised how they respond if they are already aware of your contribution in volunteering. l Ian Smith is the founding principal of IS-DG, an award winning full service design architecture firm in Philadelphia, PA. IS-DG is a member firm of the Philadelphia Chapter of the American Institute of Architects as well as a certified DBE in Pennsylvania. Ian’s combined accomplishments from the Rhode Island School of Design and at Yale University have trained him to pursue perspectives in design, architecture and urbanism to expand best practices. His cumulative experiences have afforded him opportunities in the design of healthcare, commercial, residential and institutional buildings. One of the core values of the firm, Ian firmly believes that, “Much of who we are as people comes from the stories we have been told, as well as the ones that we are a part of. We work to identify the intertwined emotional narratives upon which we depend. This allows us to have a sensitivity to the many challenges that may influence the outcome of the project. Not only did we find that this came easily when pursuing memorial, dedication, and legacy projects, but also became relevant to single family homes and utility additions.” Ian continues to serve the civic discourse through teaching occasionally at local universities in addition to his current appointments on the PhilaNOMA, Philadelphia Preservation Alliance Board, and Inglis House.
