Business of Architecture Series

The business of running an architectural practice requires ongoing focus from business leaders, yet is often neglected in the process of servicing clients and delivering projects. Management for Design addressed these issues in a series of monthly webinars for the Association of Consulting Architects. Rob Peake investigated the main elements that make up an architectural business. Looking at people, strategy, business and financial management, legal, brand, systems and delivery, Rob simplified the complexities of business management. The webinars were presented as a 3 part series — we have covered the first six foundations to building a successful architecture practice in previous issues of this eMag.

The 10 foundations to building a successful architecture practice are:

Let’s take a look at Sessions 7 and 8.

Session 7: Risk and Legal

It is important that your business adopts strategies that will mitigate risk. Some strategies include business structure, agreements, contract management, terms and conditions, exclusions, fees, insurances and advisors.

How your business is set up can have an impact on the level of risk you take on and there are different legal implications to consider with each different structure. Some of the more common business structures are company, unit trust and partnerships. Deciding on a business structure is not a decision that should be made without research and careful consideration.

When creating shareholder or unit holder agreements it is important to consider ownership obligations and transfer of ownership, insurance, restraint, decision-making, other business interests, exiting the business, percentage of profits linked to performance, employee share plans and buy/ sell agreements.

In the architecture business, all profit comes from clients. It is therefore important that you have a signed agreement or contract in place. These documents should define your responsibilities and what happens when things are not working out. You should be providing as detailed a scope as possible and itemise the exclusions and where additional fees are applicable to avoid making a loss due to scope creep. Some items to consider are: what happens when there is a delay in gaining approval?; engagement of secondary consultants; change in documents due to change in scope; additional drawings; negotiation related to Novation; and limit defect inspection.

Fee negotiation is an important part of ensuring your business is profitable. You should base your quotes on historical data rather than estimating and reinventing each time. You need to have a system that will track your past performance on projects, this will allow you to more accurately track your profits and create quotes for your work. Look into fixed fees, they do have their advantages, for starters they simplify the invoicing process, they are built around the efficiency of your operation and eliminates the uncertainty for your business. Fixed fees also create certainty in the minds of your clients. You should also provide service guarantees and ask for feedback on performance.

Additional things to consider are having adequate PI insurances (relationship with your insurer) and protection of copyright, moral rights etc. You should also have a clause for increasing rates and fees, be clear about indemnity clauses and what their implications are. You should have written documentation on decisions and instructions, comprehensive employment agreements with staff and stay up to date with changing legislation and regulation. As an architecture business you should anticipate downturns, manage cash flow and have a proactive attitude to addressing problems.

To have great legal support, establish a relationship.

Session 8: Marketing

Marketing efforts have a singular focus: “to win work”. Once you start your business it is up to you to help it grow. You should be tracking the amount of work generated and backlogged. To do this you need to think about two elements: business development and communications. To be successful in marketing you need to have a strategy, a plan, a system and measurement criteria.

Marketing Business Development

You need to be clear about the work you are trying to generate, the project type and client types. By tracking your work generated you can predict your future workload. In Architecture 75–85% of work comes from repeat clients. Develop objectives around this and capitalise on client relationships.

You should identify sectors, clients and a plan on how to connect with them. Some ways to connect with clients is public speaking, philanthropy, industry activities and events, networking and work on relationships, business associations as well as tenders and submissions.

Involve and mentor your staff in business development by sharing your strategy and client meetings, attend business development meetings, involve them in contract reviews, engage them in networking and event attendance and develop a business development program. Look for staff/people who have clients who want to work with them, always seem to have more work than they can do, and are able to both delegate and retain responsibility. Keep track of and reward performance in areas such as work generated, networking, new clients introduced etc.

Marketing Communications

The essence of marketing is to communicate who you are and why a client should use you. This should include both internal and external communications and comprises websites, post project communication, social media, corporate identity, corporate collateral and corporate submissions, event and sponsorship, surveys, client feedback, e-comms, public relations and awards.

Communications focuses on exposing your business to as large an audience as possible. Business is easier when people know who you are. You can’t ignore social media now, it is your online community — your audience is on social, so reach out to them there. Your work, your people and your communications are the core components of your brand; and there is value in your brand to be leveraged. Magnify the characteristics of your business and position your business with words. You should be marketing and getting your name out there when you are at your busiest, one way to do this is to reach out and get to know the editors of key publications that your clients are likely to read. Developing a communications plan and system is key, as this will keep all of your marketing efforts structured, targeted and on track.

Marketing Systems

It is important to have a good CRM (Client Relationship Management) system for managing business development and communications activity. A good CRM system will help you to track projects and clients, identify and track activity with potential clients and potential projects. It will also track business development activity. There are many CRM systems out there for you to choose from, for example Salesforce, Sugar and iAccess.

Having a good CRM system is one thing, you also need to make sure you maintain it and keep information up to date, you can do this by demonstrating leadership, involving your staff, creating a system and asking questions. Superior client service is based on tight systems that should lead to continued client satisfaction and consistent and sustainable growth.