business plan for architectural practice

Architecture Business Plan Template

Written by Dave Lavinsky

Architecture Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their architecture firms. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an architecture business plan template step-by-step so you can create your plan today.

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What is an Architecture Business Plan?

A business plan provides a snapshot of your architecture business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for an Architecture Firm

If you’re looking to start an architecture business, or grow your existing firm, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your firm in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Architecture Businesses

With regards to funding, the main sources of funding for an architectural firm are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the bank will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for architecture firms.

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How to write a business plan for an architectural firm.

If you want to start an architecture business or expand your current one, you need a business plan. Below we detail what you should include in each section of your architecture firm business plan template.

Executive Summary

Your executive summary provides an introduction to your architecture firm business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of firm you are operating, and its status. For example, are you a startup, do you have a firm that you would like to grow, or are you operating a firm in multiple markets?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the architecture industry. Discuss the type of architecture business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of firm you are operating.

For example, you might operate one of the following types of architecture firms:

• Residential Architecture : this type of architecture business will focus on designing and developing homes. These architects collaborate with homeowners, builders and developers and design various types of houses.
• Commercial Architecture: this type of architecture specializes in projects for businesses entities. The most common non-residential building projects are office buildings, though hospitals are a close second.
• Municipal and Historical Architecture: this type of architecture company works on local government buildings or focuses on historic building restorations.

In addition to explaining the type of architectural firm you will operate, the Company Analysis section of your architecture firm business plan needs to provide background on the business.

Include answers to questions such as:

• When and why did you start your own business?
• What architectural services will you provide?
• What milestones have you achieved to date? Milestones could include the number of buildings designed, number of positive reviews, number of projects completed, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the architecture industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the architecture industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your business plan:

• How big is the architecture industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your architectural firm? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your architecture firm business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: homeowners, governments, businesses, contractors, developers, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of architectural firm you operate. Clearly, a homeowner would respond to different marketing promotions than a local government, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most architecture firms primarily serve customers living in the same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other architecture firms.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes interior designers, home builders, and construction managers. You need to mention such competition as well.

• What types of customers do they serve?
• What types of architecture services do they specialize in?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regard to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide a wider variety of architectural services?
• Will you provide special discounts or perks for customers?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an architecture firm business plan, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of architecture company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to architectural services or products, will you provide other services such as interior design consultations or landscape planning?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the architectural services you offer and their prices.

Place : Place refers to the location of your architecture company. Document your location and mention how the location will impact your success. For example, is your firm located in a busy commercial district, an upscale office building, etc.? Discuss how your location might be the ideal location for your customers.

Promotions : The final part of your marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Advertising in local papers and magazines
• Reaching out to local websites
• Social media marketing
• Local radio advertising

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your firm, including marketing your business, working on current projects, preparing for upcoming projects, and overseeing the entire project.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to design your 100 th building, or when you hope to reach $X in revenue. It could also be when you expect to expand your firm to a new city or expand your architectural services.  

Management Team

To demonstrate your architecture firm’s ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in architecture. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in overseeing construction projects or successfully running their own architecture or engineering businesses.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your architecture business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an architecture business:

• Location build-out including design fees, construction, etc.
• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or an overview of upcoming projects.  

Putting together your own business plan for your architecture company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will have an expert architecture firm business plan; download it to PDF to show banks and investors. You will really understand the architecture industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow your own business.

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.

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Free Download: Architect Business Plan

• Enoch Sears
• • June 10, 2013

If someone asked me a few years ago whether as an Architect I ever considered having a business or marketing plan in place, I would be very tempted to snap back saying we are designers and not measly marketers or businessmen.

Well, however true that might sound even today, let me ask you a simple question, how do you get new clients?

Let’s look at it this way – say you are thinking of taking a short holiday with your spouse and kids. What if you just step out one fine day without any idea as to where you are going (business plan) & how will you get there (marketing plan)? You will be clueless as to what you’ll need and how much money the trip will cost, it just wouldn’t work. Just as a charted course will keep a ship from the shore, your business plan will help you reach your goals.

Well, this article is not about throwing a bunch of business jargon at you but to give you an overview of some of the useful aspects of a business and marketing plan. You won’t believe how simple yet powerful this small exercise could be for the growth of any business until you do it. Let’s take a quick look at the various elements that I have tailored exclusively for architecture firms.

• Company Vision, Goals and Objectives – This defines where the company is going in terms of facts and figures e.g. To become a leading architecture firm in town by year 2020 or generate 15% profit on 100 million dollars by 2020.
• Company Mission – This states what the company does and how they do it. You could identify services you offer and clients you cater to e.g. XYZ firm offers contemporary business interiors for mid sized corporates.
• Market Overview or Audit – This section helps put together an analysis of the overall market, competition and internal assessment of the company itself. Here you can learn how much business in your niche is available for grabs using various research tools. You will lay the groundwork for marketing your architecture firm .
• Market Segmentation – Select the segments or niche that your firm can best serve in terms of geographic location, industry or any other measurable e.g.: New corporate interior projects in Northern California.
• Competitive Advantage – This is an extremely critical aspect of a business plan in any industry as it identifies what are the firm’s strengths and weaknesses compared to that of competition. Why should any customer come knocking to your door and not go to the architecture firm down the street? How are you better or different?
• Strategies and Tactics – Now that you’ve identified your niche and point of differentiation, its time to list how to get those customers in the door. Lunch meetings, scouting for references, free consultation offers, social media outreach – what is it that will bring in new customers?
• Budget & Timelines – Here, you can allocate resources to achieve maximum return on investment. It’s better if you can account for the smallest overheads and tentative time frames for each project. This will help you determine realistic fee quotes per project and cut down on unnecessary expenses.
• Tracking and Monitoring – It is important to keep track of what works, what doesn’t and how much has been allocated to each project. A simple way is to establish quantifiable goals and budgets for each project and review the performance metrics after each big project or at least twice a year.

Free Business Plan Worksheet

To help you get started with your architect business plan, join the Business of Architecture email list for solo architects and small architecture firms and I’ll send you a free business plan worksheet. Just tell me where to send it:

YES! SEND ME THE BUSINESS PLAN TEMPLATE

Just as a ship needs to chart a course to reach it's destination, an architect without a business plan runs the risk of ending up shipwrecked on the shore. Don't feel like you have to make an exhaustive business plan 100 pages thick. That might keep you from ever getting started. The important thing is to answer the 8 questions above, write them down, and review them on a regular basis with your partners and team members.

So what do you say? Do you have a business plan? If you don't, why not? Do you think a business plan is important for a solo architect? Tell me your thoughts in the comments below!

ENOCH SEARS

Enoch Bartlett Sears is the founder of the Architect Business Institute, Business of Architecture and co-founder of the Architect Marketing Institute . He helps architects become category leaders in their market. Enoch hosts the #1 rated interview podcast for architects, the Business of Architecture Show where prominent guests like M. Arthur Gensler, Jr. and Thom Mayne share tips and strategies for success in architecture.

5 Responses

Great, simply put, important advice.

In a business plan, should we mention the strategy including how the business will run? ex: partnership, associates, or other business model, because we know that architect is well known as a self employee, but the other side the business and its services could be as bigger as a big scale corporation with a lot of employee.

Regards, Miphz

Great question! I would definitely consider those factors if they heavily impact my finances. And with a firm as big, the business plan in general will have to much more detailed along with a financial growth plan for next three to five years. The above post is intended to jump start small firms on a thought trail that will help them be on track and potentially grow. Hope this answers your question.

Thanks for this- very simple prompts on subjects requiring thought for successfully development of a growing practice

I agree with you

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Architecture Business Plan

Starting an architecture business can be a lucrative venture, but the process of starting a business may feel complex and overwhelming to get started.

You should thoroughly understand the legal regulations, client acquisition strategies, and industry and business dynamics before you start crafting designs.

Having a foolproof business plan will not only help you understand your business better but will also play a key role in raising capital for your business.

Need help writing a business plan for your architecture business? You’re at the right place. Our architecture business plan template will help you get started.

Free Business Plan Template

Download our free architecture business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

How To Write An Architecture Business Plan?

Writing an architecture business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

• Introduce your Business: Start your executive summary by briefly introducing your business to your readers.This section may include the name of your architecture business, its location, when it was founded, the type of architecture business (E.g., residential architecture, commercial architecture, interior design.), etc.
• Market Opportunity: Summarize your market research, including market size, growth potential, and marketing trends. Highlight the opportunities in the market and how your business will fit in to fill the gap.
• Architecture Services: Highlight the architecture services you offer your clients. The USPs and differentiators you offer are always a plus.For instance, your architecture services may include architectural design, site analysis and planning, construction documentation, interior design, and project management.
• Marketing & Sales Strategies: Outline your sales and marketing strategies—what marketing platforms you use, how you plan on acquiring customers, etc.
• Financial Highlights: Briefly summarize your financial projections for the initial years of business operations. Include any capital or investment requirements, associated startup costs, projected revenues, and profit forecasts.
• Call to Action: Summarize your executive summary section with a clear CTA, for example, inviting angel investors to discuss the potential business investment.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

• Business Description: Describe your business in this section by providing all the basic information:
• Residential Architecture
• Commercial Architecture
• Landscape Architecture
• Interior Designing
• Industrial Architecture

Describe the legal structure of your architecture company, whether it is a sole proprietorship, LLC, partnership, or others.

• Owners: List the names of your architecture company’s founders or owners. Describe what shares they own and their responsibilities for efficiently managing the business.
• Mission Statement: Summarize your business’ objective, core principles, and values in your mission statement. This statement needs to be memorable, clear, and brief.
• Business History: If you’re an established architecture service provider, briefly describe your business history, like—when it was founded, how it evolved over time, etc.Additionally, If you have received any awards or recognition for excellent work, describe them.
• Future Goals: It’s crucial to convey your aspirations and vision. Mention your short-term and long-term goals; they can be specific targets for revenue, market share, or expanding your services.

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

• Target market: Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.For instance, businesses and organizations in need of architectural services can be an ideal target market for a commercial architecture business.
• Market size and growth potential: Describe your market size and growth potential and whether you will target a niche or a much broader market.
• Competitive Analysis: Identify and analyze your direct and indirect competitors. Identify their strengths and weaknesses, and describe what differentiates your architecture services from them. Point out how you have a competitive edge in the market.
• Market Trends: Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.For instance, there is a growing demand for sustainable and environment-friendly design solutions; explain how you plan to deal with this market trend.
• Regulatory Environment: List regulations and licensing requirements that may affect your architecture company, such as business registration, insurance, building codes, contractual agreements, intellectual property protection, etc.

Here are a few tips for writing the market analysis section of your architect business plan:

• Conduct market research, industry reports, and surveys to gather data.
• Provide specific and detailed information whenever possible.
• Illustrate your points with charts and graphs.
• Write your business plan keeping your target audience in mind.

4. Products And Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

• Architectural design
• Site analysis and planning
• Construction documentation
• Interior design
• Sustainable design and green building
• Urban design
• Describe each service: Provide a detailed description of each service you provide, including the process involved, the time required, and any specific details you may include.
• Quality measures: This section should explain how you maintain quality standards and consistently provide the highest quality service.This may include monitoring quality control processes, compliance with codes and standards, staff training, and performance evaluation.
• Additional Services: Mention if your architecture company offers any additional services. You may include services like master planning, space planning, landscape design, and building performance analysis.

In short, this section of your architecture plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

• Unique Selling Proposition (USP): Define your business’s USPs depending on the market you serve, the equipment you use, and the unique services you provide. Identifying USPs will help you plan your marketing strategies.For example, design excellence, specialized expertise, and sustainable design solutions could be some of the great USPs for an architecture business.
• Pricing Strategy: Describe your pricing strategy—how you plan to price your services and stay competitive in the local market. You can mention any discounts you plan on offering to attract new customers to your service.
• Marketing Strategies: Discuss your marketing strategies to market your services. You may include some of these marketing strategies in your business plan—social media marketing, Google ads, brochures, email marketing, content marketing, and print marketing.
• Sales Strategies: Outline the strategies you’ll implement to maximize your sales. Your sales strategies may include offering consultations, fostering referral partnerships, and offering incentives or special promotions.
• Customer Retention: Describe your customer retention strategies and how you plan to execute them. For instance, maintaining excellent communication, exceeding client communication, and providing value-added services could be some of your customer retention strategies.

Overall, this section of your architecture firm business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your architecture business, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

• Staffing & Training: Mention your business’s staffing requirements, including the number of employees or architects needed. Include their qualifications, the training required, and the duties they will perform.
• Operational Process: Outline the processes and procedures you will use to run your architecture business. Your operational processes may include project management, client communication, design and documentation, business development, and other administrative tasks.
• Equipment & Machinery: Include the list of equipment and machinery required for architecture, such as computer hardware and CAD/BIM software, large format printers, presentation equipment, measuring tools, etc.Explain how these technologies help you maintain quality standards and improve the efficiency of your business operations.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your architecture business’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

• Founders/CEO: Mention the founders and CEO of your architecture company, and describe their roles and responsibilities in successfully running the business.
• Key managers: Introduce your management and key members of your team, and explain their roles and responsibilities.It should include key executives, senior management, and other department managers (e.g., project manager.) involved in the architecture business operations, including their education, professional background, and any relevant experience in the industry.
• Organizational structure: Explain the organizational structure of your management team. Include the reporting line and decision-making hierarchy.
• Compensation Plan: Describe your compensation plan for the management and staff. Include their salaries, incentives, and other benefits.
• Advisors/Consultants: Mentioning advisors or consultants in your business plans adds credibility to your business idea.So, if you have any advisors or consultants, include them with their names and brief information consisting of roles and years of experience.

This section should describe the key personnel for your architecture services, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

• Profit & loss statement: Describe details such as projected revenue, operational costs, and service costs in your projected profit and loss statement . Make sure to include your business’s expected net profit or loss.
• Cash flow statement: The cash flow for the first few years of your operation should be estimated and described in this section. This may include billing invoices, payment receipts, loan payments, and any other cash flow statements.
• Balance Sheet: Create a projected balance sheet documenting your architecture business’s assets, liabilities, and equity.
• Break-even point: Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.This exercise will help you understand how much revenue you need to generate to sustain or be profitable.
• Financing Needs: Calculate costs associated with starting an architecture business, and estimate your financing needs and how much capital you need to raise to operate your business. Be specific about your short-term and long-term financing requirements, such as investment capital or loans.

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

• Add a table of contents for the appendix section to help readers easily find specific information or sections.
• In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
• Provide data derived from market research, including stats about the architecture industry, user demographics, and industry trends.
• Include any legal documents such as permits, licenses, and contracts.
• Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your architectural firm business plan should only include relevant and important information supporting your plan’s main content.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

This sample architecture business plan will provide an idea for writing a successful architecture plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our architecture business plan pdf .

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Frequently asked questions, why do you need an architecture business plan.

A business plan is an essential tool for anyone looking to start or run a successful architecture business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your architecture company.

How to get funding for your architecture business?

There are several ways to get funding for your architecture business, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

Small Business Administration (SBA) loan

Crowdfunding, angel investors.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your architecture business?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your architecture business plan and outline your vision as you have in your mind.

What is the easiest way to write your drone business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any architecture business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software .

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Practice FAQ: How do I create a business plan to start an architectural firm?

When discussing the creation of their firms, many architects will state “I went to school to be an architect, not a business owner.” Ironically, that is the exact position aspiring leaders find themselves in when they’ve decided to start their own firms. A business plan is one of the key components to convey the organizational structure and goals for your new business.

Creating your business plan

The AIA Small Firm Exchange has researched various business models to determine which are the best options to sustain an architectural practice. The SFx Business Plan Template has been created to assist architects in developing and evaluating sustainable business practices. Though created with small firms being the primary audience for the business plan template, the information provided can be adapted to firms of any size.  

Other resources to explore when creating a business plan offer various tips to consider when building your plan.  In “ How to Draft a Business Plan ”, Nate Berg states a good business plan is a living document and should be updated to keep up with the changes of the firm, market and business goals.

Find a mentor

A mentor is an effective way to tap into knowledge from a firm owner that can provide firsthand experience with developing a business plan as well as provide effective business strategies. The significance of a mentoring program is described in the Architect’s Handbook of Professional Practice. One of the key benefits of a mentoring program is stated as “helping a firm achieve its vision by supporting… long-range strategic and business plan goals” (DeBernard, 491).

Building your firm

Setting aside time to thoroughly map out the potential course of your business will make a great impact in the future. Planning for the highs and lows associated with running a business as discussed in “ How to build a small firm ” will help you think critically about your business’ future and give you the foresight to handle any situation accordingly.

Works Cited:

Berg, Nate. “How to Draft a Business Plan.” Architect Magazine , July 15, 2014, http://www.architectmagazine.com/practice/how-to-draft-a-business-plan_o

DeBernard, Deborah M., AIA, NCARB, Architect-AIBC, LEED BD+C “8.4 Professional Development and Mentoring”.

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Architecture Firm Business Plan

Start your own architecture firm business plan

NW Architecture

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

NW Architecture will be an architectural firm specializing in residential, commercial and industrial architecture in domestic and international markets based out of the Bay Area near San Francisco, California. The firm will provide architectural services using technologically superior processes, providing greater value for clients and enhanced design and construction.

The target client is segmented into four categories; home owners, developers, government, and contractors. NW Architecture’s competitive edge will be the knowledge of digital-based design resources. Superior customer service will also be a point of firm differentiation.

First year sales are expected to reach $102,000 and increase to $500,000 by the third year of operation. We will be profitable within three years of starting.

The most significant challenges ahead include securing a suitable location, establishing the initial client base, and ultimately positioning the firm to be able to have a presence in a larger, global market.

This business plan outlines the objective, focus, and implementation of this start-up firm.

1.1 Mission

NW Architecture offers a new type of digital interactive media for both the client and the builder. This media will clearly show the client and the builder exactly what the design will look like and the method of construction.

With this new form of media the client doesn’t have to know anything about architectural graphics or terminology (floor plans, sections, elevations & construction documents) to have a clear understanding of what the end result will look like. This is possible through the use of computer-rendered images and interactive video.

This media will be taken one step further by using it in the construction documents as well. The builder will be provided with an interactive video rendering of the entire building containing both visual photographic quality images and construction specs. Every last detail will be worked out in three dimensions in such a way that anyone who knows how to use a computer will be able to access and understand this new means of architectural presentation.

1.2 Keys to Success

• Provide a service that is technologically superior to the competition’s.
• Utilizing a diverse staff of architects to provide a wide variety of product styles.
• A large array of global connections.

1.3 Objectives

• Sales of $500,000 in Year 3 and $700,000 by Year 4.
• Market expansion of 20% per year via the Internet.
• Creating new niche in market by Year 4 of three dimensional construction documents and interactive digital presentation to clients.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

NW Architecture will provide a service of architectural design via digital media to the limits of technology. This approach will offer optimal efficiency to the firm and superior value, design processes, and construction methods to the client.

2.1 Company Ownership

NW Architecture will be created as a California corporation based in the Bay Area near San Francisco. It will be owned by its principal investor and operator, Nathan Sawyer.

2.2 Start-up Summary

NW Architecture’s start-up costs total $36,540. The most significant purchases needed are a blueprint machine, plotter, and drafting supplies. Nineteen thousand dollars is needed in cash to sustain the business for the first year to cover rent and wages until a profit is made.

2.3 Company Locations and Facilities

The interim office of NW Architecture will be located in Walnut Creek, California until dedicated office space is secured.

NW Architecture will provide many levels of service to cater to large and small corporations, along with making it affordable for middle and upper socioeconomic classes.

3.1 Service Description

In order for NW Architecture to provide this new innovative service of digital media, the company will use high speed computers running programs such as AutoCad and Form-Z. To keep up with changes in technology, NW Architecture will investigate all up and coming software related to digital 3-D design to stay at the forefront of the market.  Again, this is a key strategic component to differentiate the firm and to optimize productivity and efficiency.

Market Analysis Summary how to do a market analysis for your business plan.">

NW Architecture will provide it’s service to home owners who are looking to remodel, as well as developers, contractors and government agencies in the domestic and international markets. Although we are going to cater to a relatively broad scope of customers, the company will decide what the target market is based on sales and trends experienced in the initial months of operation.

4.1 Market Segmentation

Potential clients for NW Architecture’s market is broken down into four categories: home owners, developers, government, and contractors. Home owners are the largest group based on shear population and this will be emphasized in all of the firm’s marketing and promotional efforts. Targeting the remaining three groups will be dependant upon establishing meaningful relationships, and responding and qualifying for request for proposals.

4.2 Service Business Analysis

The architecture business across the country is primarily made up of small- to mid-sized firms specializing in a particular architectural type. But there are also a few large firms that have almost dominated the design of large commercial and industrial facilities.  NW Architecture’s main competitors will be the larger firms.  The reason for this is that the larger firms have more capital to work with, which enables them to keep up with technological changes much quicker than a small firm.

Strategy and Implementation Summary

In the first year of business, NW Architecture will focus on the bay area in California. As the firm grows, sales will expand throughout California and across the country, eventually spreading worldwide.

5.1 Sales Strategy

“Sales” in this business is a direct result of exceptional client service. It is based on the firm’s image and the referrals that result. The more clients this company pleases, the more referrals are given. We will work to provide a positive experience in all cases so our clients will refer and return to us for future work as well.

5.1.1 Sales Forecast

Sales are broken down into three categories: design, production, and construction. These three categories put together make up one architecture project. The totals for each project are based on a 10% cut from the total construction costs of each job. The following table and chart provides an overview of our forecast sales.  Actual sales could vary depending on the project size and budget.

5.2 Competitive Edge

This company will have a competitive edge over both the larger and smaller firms because it will be composed of the new generation of architects which are fluent in the digital world. Many firms today employ an older generation of architects which find the computer a mystery, and those that do use the computer only have the ability to design in 2-D.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

This company will start with one AutoCAD/Form-Z architect and the founder. In August of 2007, a clerical position will be added. By 2010, Other CAD/Form-Z architects will be hired to compensate the increased work load.

6.1 Personnel Plan

The following table summarizes our personnel expenditures for the first three years of operation.

Financial Plan investor-ready personnel plan .">

NW Architecture will increase growth and technology with cash flow as it increases through the years. Further money will be set aside to pay for further consulting as needed.

7.1 Important Assumptions

The annual assumptions made in the following table are based on a stable economy. We will adjust these assumptions as changes occur in the now tumultuous ecomony the Bay Area is experiencing.

7.2 Key Financial Indicators

The following benchmark chart indicates our key financial indicators for the first three years.

7.3 Break-even Analysis

The following chart and table summarize our break-even analysis.

7.4 Projected Profit and Loss

Net profit is virtually nonexistent for the first two years of operation, with respectable increases after that time. Our projected profit and loss is shown on the following table, with sales starting at $102,000 for the first year and climbing to $500,000 the third year.

7.5 Projected Cash Flow

Cash flow is vital to the well being of this company because of the duration of payment. The following chart and table below show cash flow projections.

7.6 Projected Balance Sheet

The following table shows our projected Balance Sheet and net worth over the next three years.

7.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7383, Independent Artists (including Architects), are shown for comparison.

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Aug 15 2017

How to Write a Business Plan for Your Architecture Firm in 60 Minutes or Less

A simple business plan for architects.

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.”

The knowledge you gain by the process of developing a business plan may be more valuable to you than the actual plan itself.

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.”

A 5 Step Process for a Simple Business Plan for Architects

Here is a simple 5 step process to develop a completed business plan for architects in 60 minutes or less.

• 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.

Revisit your Business Plan Often

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 my architecture firm to the next level.

So, go do it. Reach over and grab a sheet of paper. Do it now… Don’t wait. It will take less than 60 minutes.

What’s your vision?

Question: Do you have a written business plan for your architecture firm?

Photo Credit: Shutterstock /  Jan Faukner

January 21, 2019 at 2:31 AM

yes i want to make business plan

November 17, 2021 at 2:40 AM

I want to make plan

February 14, 2022 at 9:19 AM

I want to prepare a business plan for a very high ended Architectural firm. I want to target elite projects in uk.

October 3, 2022 at 1:46 PM

I like the idea that “a business plan is less complex than your anxiety is telling you, so just into it and you’ll suddenly be done!” So this is very appealing. I’d been envisioning this more as a living document. Something like an employee handbook or BIM Execution Plan, it’d contain steps, resources, standards, etc. I’d imagine this also as a tool for investor relations, something that can be shared with insiders to show that it’s worth putting money into. Writing one page over the course of 60 minutes – I get this as a get-started exercise, but couldn’t it be doing much more for you once you get it to a certain point?

October 3, 2022 at 1:49 PM

Yes. 100%. The intent is to prepare a document that you can call “done”, then use as the basis for a more detailed guiding business plan.

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How to Start an Architecture Firm in 14 Steps (In-Depth Guide)

Updated:   February 22, 2024

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The global architecture industry earns over $359 billion annually. With the demand for various building design and construction services continuing to grow, now can be an opportune time to start your own architecture firm.

When beginning your own firm, you’ll need to consider critical steps like determining your legal business structure, establishing an office, acquiring the necessary licenses and insurance, investing in architecture software, hiring talented staff, and most importantly, attracting clients.

This guide will walk you through how to start an architecture firm. Topics include market research, registering an EIN, forming an LLC, obtaining business insurance, optimizing accounting, and more. Here’s everything to know about this rewarding entrepreneurial endeavor.

1. Conduct Architecture Firm Market Research

Market research is integral to starting your own business in the architecture industry. It offers insight into finding potential clients, sourcing materials, getting to know your target market, and other details needed for your own architecture company business plan.

Some details you’ll learn through market research on architectural firms include:

• Commercial building and healthcare projects will drive much of this growth as businesses expand facilities and medical centers upgrade real estate.
• Renovation design services also represent potential business, projected to constitute over 50% of construction spending over the next decade.
• With strict sustainability standards and goals to refurbish aging infrastructure, existing building upgrades will necessitate the involvement of architecture professionals.
• Firms that specialize in redesign and retrofitting have an especially strong opportunity to fill regional renovation needs.
• Focusing service offerings in defined architectural niches also allows newer practices to compete with large generalist firms.
• Developing expertise in areas like hospitality building design, multifamily housing, or commercial interiors can establish a firm’s reputation and referral network.
• The profession as a whole faces the challenge of a tight labor market, but this offers prospects to distinguish a firm’s culture.
• With nearly 1 job opening for every 1 architecture employee, retaining top talent through competitive compensation, workplace policies, and professional development incentives will be key.

While launching a profitable and thriving architecture firm requires substantial early financing and years of building a client base, the typical revenue per firm now exceeds $690,000, proving the industry can ultimately provide financial stability. The market outlook has room for new practices to find a niche and succeed.

2. Analyze the Competition

Understanding the competitive landscape is vital for launching a successful architecture practice. When assessing rivals, focus both on competing brick-and-mortar firms in your region and those with an online presence.

Some ways to get to know competitors as you open your architectural firm include:

• Identify architecture companies that promote services similar to your planned offerings.
• Research their years in business, clients, number of architects/employees, and projects.
• Drive by offices to evaluate location, signage, and parking as indicators of client traffic.
• Subscribe to industry associations to network and glean insights on peer firms.
• Online, search key phrases like “Chicago commercial architects” and scan related results.
• Compile a list of competitors ranked highly.
• Visit each website and social media to analyze services, marketed expertise, processes, and portfolios.
• Note stale or infrequent posting as possible opportunities.
• Use Alexa.com to gauge visitor traffic to competitive sites over time – higher and growing figures suggest more engagement.
• Install Google Analytics on your site to eventually compare.
• Sign up for Google Search Console to request inclusion in results for relevant searches.

Ongoing competitor analysis informs everything from your brand positioning to service rates. But most importantly, it allows adapting quickly to shifts in your regional market while differentiating your firm’s strengths.

3. Costs to Start an Architecture Firm Business

Embarking on opening an architecture practice brings extensive upfront investments before the business can even begin operating and billing clients. From licenses and equipment to office space and initial staff, starting an architecture firm requires capital to set the foundation.

Start-up Costs

• Registration and permits are around $2,500. Architecture practices must register legally in their state.
• Expect fees for forming an LLC or corporation ($500+), along with securing necessary state architecture permits ($200/individual) and municipal business licenses ($50+ annually).
• Small commercial office spaces average $25/sq ft in monthly rent, with 1,000 sq ft recommended for a practice with 2-5 employees – equating to roughly $30,000 per year.
• From high-performance computers and architecture software (Autodesk, Rhino) to printers, cameras, and supplies, key equipment to operate totals approximately $15,000. Ongoing software subscriptions can run $5,000 annually.
• General business liability insurance is non-negotiable, covering potential errors and injury claims. Expect to budget $5,000 per year.
• Estimating average annual salaries of $50-$80,000 per architect and $35,000 for admin, first-year staffing costs can easily surpass $200,000.

In total, the first-year investment to open doors likely falls between $250,000-$350,000 between fixed and recurring monthly costs.

Ongoing Costs

On the ongoing side, maintaining salaried employees comprises the architecture firm’s highest regular expenditures. But further major line items like rent, software, equipment leases, insurance, advertising, and professional services need inclusion in yearly budgets.

• Workspace leasing costs continue, along with heating, electricity, and high-speed internet amounting to around 30% extra per month.
• Payroll consumes 50% or more of a service business’ operating costs. Employer taxes and benefits also add 25%+ onto salary amounts. Building the architect team is imperative to scaling client work, but affording skilled talent remains the largest financial hurdle.
• While computing hardware may last 3-5 years, ongoing software subscriptions for essential programs like AutoCAD or Revit push technology costs into five figures annually.
• Insurance can run $10,000 per year. Premiums often rise as the firm’s client capacity and payroll expands.
• Expect to spend $15,000 or more on ads. Architecture is still largely word-of-mouth referral-driven. Digital marketing, print ads in contractor directories, sponsoring industry events, and direct mail all play a role in lead generation amounting to around 5% of gross revenue.

Keeping expenses lean early allows firms time to incrementally grow client work and cash flows. Yet providing competitive wages that retain talented architects remains the largest, inescapable operating hurdle. Achieving consistent profitability necessitates securing a steady stream of billable client projects.

4. Form a Legal Business Entity

When establishing an architecture practice, selecting the right legal entity merits careful evaluation regarding liability protection, taxation, and long-term goals. While sole proprietorships offer simplicity for solo entrepreneurs, incorporating as an LLC or corporation better shields personal assets.

Sole Proprietorship

Opening a shop as a sole proprietor avoids complex registrations but leaves architects personally vulnerable to debts and lawsuits. Tax filings also remain entwined with the individual’s returns lacking corporate deductions. As the majority of firms rely on growing multi-person teams, sole proprietor limitations warrant evolving beyond this basic structure.

Partnership

Partnering with fellow architects spreads liability exposure and may expand collective expertise. However, each partner assumes equal fiscal duties for expenses, creditors, and legal claims against just themselves or the partnership. Income passes directly to partners for tax payments too. Without limited protections, general partnerships give little advantage over sole proprietorships for architecture professionals.

Limited Liability Corporation (LLC)

For small service businesses like architecture practices, LLC status offers the best elements of pass-through taxation, limited liability, and operational flexibility to add partners. As the business itself possesses a distinct legal identity from owners, an architecture firm LLC shelters personal assets if sued. LLC income also bypasses corporate taxation, avoiding double payments.

Corporation

Formal corporations ensure fully limited fiscal and legal liability given the separation of company finances from employee shareholders. However extra administrative filings, corporate taxes on earnings, and increased accounting formality can overwhelm small practices. Most architecture firms only incorporate once establishing sufficient recurring revenues over $500k/year.

5. Register Your Business For Taxes

Securing an Employer Identification Number (EIN) marks a crucial first step to formally register your architecture firm with state and federal agencies. The EIN serves as your business’s social security number used when opening bank accounts, paying taxes, and hiring employees.

While sole proprietors can operate using SSNs, establishing an architecture LLC or corporation necessitates getting an EIN. The Internal Revenue Service (IRS) issues EINs to business professionals for free and the online process takes under 15 minutes from start to finish:

• Navigate to the IRS EIN Assistant and select “View Additional Types” including Limited Liability Companies.
• Choose the appropriate applicant category for your architecture firm’s legal business structure.
• Provide basic information about your company and its responsible parties when prompted.
• Review your architecture firm’s details for accuracy then submit the EIN application.
• The assigned 9-digit EIN appears on the screen to save for your records.

In addition to the federal EIN, architecture firms must complete state-level licensing and tax compliance steps related to sales and payroll. Your Secretary of State website outlines prerequisites to legally conduct business based on your firm’s location and services.

While no fees apply for the EIN itself, individual state architecture practice registration, transaction taxes, and employer requirements do carry costs. Consult state and local governments to ensure full compliance wherever you practice to avoid penalties.

Proper legal and tax registrations establish credibility with clients while allowing architecture companies to hire employees. Taking the time upfront to formalize your business secures the ability to scale operations smoothly in the future.

6. Setup Your Accounting

Proper financial record-keeping provides the foundation for a thriving architecture business. From tracking deductible expenses to accurately billing clients for services, an organized approach to accounting lends major advantages. The right software and professional guidance facilitate smooth bookkeeping.

Accounting Software

Rather than manual ledgers, architecture firms should utilize digital accounting systems like QuickBooks that seamlessly integrate with bank and credit card accounts. QuickBooks downloads transactions, generates financial reports, and even invoices clients automatically. The software subscription averages just $25 per month, easily offset by the hours saved on manual data entry.

Hire an Accountant

While quality software empowers accurate DIY accounting, the services of a dedicated bookkeeper or accountant still prove invaluable for architecture enterprises. Professional guidance nets expertise in setting up charts of accounts, depreciation, payroll tools, and QuickBooks customization specific to design practitioners.

Open a Business Bank Account

Even sole proprietor architecture practices should open dedicated business checking accounts and credit cards solely for company expenditures. This clearly distinguishes employee, rent, equipment, and materials costs from personal finances. Come tax time, properly categorized expenses readily qualify as write-offs alongside client income.

Apply for a Business Credit Card

Applying for a business credit card utilizes the architecture firm’s details including EIN rather than social security number and personal credit score. This facilitates higher limits and cards tailored towards common merchant categories like office supply retailers relevant to commercial enterprises.

7. Obtain Licenses and Permits

Before an architect starts practicing, all licensure and permits must be obtained. Find federal license information through the U.S. Small Business Administration . The SBA also offers a local search tool for state and city requirements.

State Architecture Registration Each state oversees restrictions on offering professional architecture services based on an individual’s residency location, not where clients reside. Every architect owner or employee providing design work must apply for and carry an active architecture license issued by their state board. For example, Illinois policies differ distinctly from requirements in California or New York.

Candidates submit proof of completed education and experience prerequisites, then pass the Architect Registration Examination (ARE) to demonstrate sufficient standards of competency. State registration involves fees of around $200 initially and recurring biennial renewals. Architects display license numbers on documentation to confirm active status in good standing with state boards.

General Business Licenses Local municipalities like cities and counties also impose general business licensing systems applicable to architecture firms. Annual tax certificates purchased validate compliance with zoning ordinances while contributing revenue through modest fees.

Building & Construction Permits For architects undertaking hands-on construction or renovation projects on owned properties, acquiring permits remains mandatory before breaking ground. Local permit offices review proposals to ensure adherence to building codes, safety standards, and zoning regulations before approving requests and conducting site inspections at multiple project milestones.

8. Get Business Insurance

Given the client services nature of architecture, adequate insurance plays a pivotal role in safeguarding firms financially. Policies cover costly property damage, lawsuits, employee injuries, and more that threaten operations. Despite the regular premium expenses, insurance represents fundamental protection every practice must secure.

Without coverage, just a single incident could spell disaster for a small firm’s survival. Imagine facing any of the following scenarios uninsured:

• Construction Defect Lawsuit – Resulting building flaws prompt million-dollar claims.
• Server Theft – Burglars steal computers with client data and design IPs.
• Employee Injury – Architect breaks leg onsite needing surgery and work leave.

The astronomical costs underlying these common mishaps could sink firms instantly minus insurance buffers. Comprehensive policies also convey reputability with commercial clients, contractors, and partners.

Navigating Insurance Options The optimal insurance mix for architecture enterprises balances affordability with sufficient coverage scopes:

• Professional Liability – Shields against malpractice claims from client project losses earning 6 figures potentially.
• General Liability – Property/personal damage from onsite accidents and architecture firm negligence.
• Commercial Property – Protects leased office spaces and owned building assets.
• Workers’ Compensation – Mandated coverage for employee injuries/claims.
• Cyber Liability – Data breach response assistance.
• Business Owner’s Policy (BOP) – Bundles general liability, property, and loss of income.

Securing Coverage Independent agents represent multiple insurers, simplifying tailoring the ideal insurance portfolio. Expect to submit past financial records and risk details relevant to architecture. Costs vary based on revenue, payroll, office valuation and more averaging approximately $10,000 annually for robust protection.

9. Create an Office Space

Establishing a professional office lays the integral groundwork for architecture practices by providing client meeting capacity and efficient designer workspace. While home offices convey convenience for solos, location, and facilities factor greatly when staff expands.

Home Office

Solo entrepreneur architects can minimize early overheads by launching firms from home studies. Deductible advances like drafting tables, computers, and high-speed internet setups cost under $5,000. However, focusing amidst family interruptions proves challenging. Nor can residences host client meetings adequately beyond video calls. As firms grow, home limitations warrant upgrades.

Coworking Space

For small teams of 2-3 architects, co-working spaces like WeWork provide turnkey offices faster and cheaper than traditional leases. Modern desk spaces, conference rooms, printing/scanning amenities, and flexible lease terms maintain professionalism from $300+ monthly per architect. Yet inventory, sample, and equipment storage access restrictions persist.

Commercial Office

Leasing full-floor office suites within business complexes best suits firms with 4+ architect employees. Expect commercial leases spanning 3-5 years for 1,000+ square foot spaces costing $30/square foot monthly inclusive of cam fees and parking availability. Benefits include a prominent regional presence and custom architectural interiors & interior design befitting design practitioners alongside scalability.

10. Source Your Equipment

Outfitting a practice with technology and supplies represents significant upfront outlays when equipping teams for architecture work. However, buying brand new items at full market prices hardly proves necessary with alternative rental sources and secondhand marketplaces available.

Direct retailers like Dell, HP, and Apple offer the newest computers and design hardware under warranty for maximum useful lifespans of around 3-5 years. Photography gear, printers, software, and accessories can also be sourced through B&H Photo or Adorama with steep education discounts.

Buying Used

Gently used equipment with years of utility remaining commonly sells on Craigslist and Facebook Marketplace at 50-80% discounts off original retail prices. Ex-corporate fleet laptops, pre-owned drafting tables, and showroom 3D printers offer immense value.

Longer-term rentals secure cutting-edge equipment without extreme upfront capital. National chains like Rent-A-Center offer flexible 12-36 month leasing or rent-to-own programs on anything from wide-format scanners and printers to the latest computers and tablets. Plans average around $100-200 monthly per high-demand item.

11. Establish Your Brand Assets

Beyond just designing buildings, architecture practices must architect their brands to stand out. A cohesive identity conveys professionalism and recognition vital for client procurement. From logos to websites, branding elements work cohesively attracting ideal projects.

Getting a Business Phone Line

Toll-free phone numbers supplied by modern voice-over-IP providers like RingCentral suit architecture firms much better than landlines. RingCentral systems offer call routing, voicemail transcriptions, and unlimited US calling plans starting at around $30 monthly. Branded phone numbers establish credibility and discoverability for sales calls.

Creating a Logo & Brand Guide

A thoughtfully crafted logo crystallizes an architecture practice’s visual identity, emotions, and reputation. Bold, memorable iconography like the imagery of famous buildings, structures, and cityscapes effectively represents design prowess. Logo maker Looka creates thousands of custom options incorporating input on preferred styles, colors, and symbols signatures to firms.

Printing Business Cards & Signage

Vistaprint offers affordable architecture business cards showcasing logos, taglines, names, phone numbers, emails, addresses, and social channels so contacts easily reach firms. Executing designs with finishes like foil stamping qualitatively signals design excellence. Expect 500 cards for under $50.

Securing a Domain Name

Purchasing a .com domain via registrars like Namecheap enables professionally owning namesake digital properties long-term for branding and emailing. Ideal architecture domains contain firm names, locations, and services. Securing domains early prevents competitors from acquiring URLs confusingly similar to companies.

Building a Tailored Website

Well-designed websites charmingly showcase project photography while detailing firm services and processes. Through website builder Wix , stunning sites compile seamlessly without coding. For more complex functionality, specialized architecture web developers abound on freelance marketplaces like Fiverr to execute bespoke designs around $1000-$5000 matching brand styles for enhanced qualified leads.

12. Join Associations and Groups

Beyond just designing buildings, architect entrepreneurs must strategically network locally and nationwide to prosper. Industry associations, trade events, and online communities all provide invaluable connections, insights, and services helping firms win clients and execute complex projects.

Local Associations

Joining regional chapters of prominent architecture associations like the American Institute of Architects (AIA) and the National Organization of Minority Architects (NOMA) lend access to specialized training programs, job boards, conferences, mentorships, and discounts on tools or insurance. Membership conveys credibility while surrounding firms with potential contractor partners and referral sources.

Local Meetups

Event discovery platforms like Meetup catalog countless casual and professional architecture meetups happening monthly across all metro areas to mingle with area practitioners. Local continuing education events, speaking engagements, facility tours, and open houses also circulate there.

Facebook Groups

National architects Facebook Groups like Interior Designers and Architects Group USA and regional groups like California Architects & Consultants share job leads, industry news, software tips, and inspirational designs daily. Firms gain feedback critiquing works-in-progress. Participating in these massive idea exchanges with potential future partners around the globe.

13. How to Market an Architecture Firm Business

Implementing ongoing promotional initiatives proves fundamental for architecture firms aiming to continually secure new client projects as the lifeblood of operations. Word-of-mouth referrals from satisfied customers and partners serve as the most valuable source over time.

Customer Retention

Leveraging existing happy clients provides the most conversion-focused channel for new sales through authentic testimonials. For example, offering modest referral bonuses for any project over $10,000 generates excitement to actively suggest preferred architects. Maintaining positive long-term relationships earns projects as previous customers expand real estate portfolios.

Digital Approaches

Digital channels present architecture brands 24/7 minus geographical constraints using optimized content.

Potential tactics include:

• Search ads on Google and Bing targeting buyers of related building services near firm office locations.
• Facebook/Instagram ads highlighting impressive past projects with video walkthroughs and tagline captions.
• Launching YouTube channel tutorials guiding homeowners through design processes from concept sketches to final construction.
• Email newsletter campaigns sent to subscribers and past inquiry leads announcing recently completed works.
• Guest blog posts for industry trade publications discussing architecture techniques or innovations.

Traditional Techniques

Despite digital dominance, traditional physical marketing still holds relevance for architecture depending on regional demographics.

Tactics incorporating firm branding include:

• Sponsoring local chamber of commerce networking events, university architecture programs, conferences, or real estate conventions to meet stakeholders.
• Running special offer coupons in community newsletters, apartment guide magazines, or industry trade publications.
• Direct mail postcards showcasing past civic or commercial projects with project manager contact info mailed to targeted developing neighborhoods.
• Eye-catching large format billboards or radio spots advertising services in zones with planned new constructions announced.
• Hosting pop-up miniature model galleries or meet-the-architect happy hours at co-working spaces near target client office towers.

Architecture firms can go far with traditional marketing techniques. Digital channels cast wider nets engaging prospective leads more passively over time as well. Using both is essential to successfully draw in potential clients.

14. Focus on the Customer

Providing an incredible client experience throughout the design process and construction differentiates thriving architecture firms from counterparts struggling to stay afloat. How architects make customers feel proves equally as important as technical aptitudes in drafting eye-catching plans.

Consider that each sizable commercial project often engages multiple stakeholders from developers, corporate owners, and contractors. Exceeding expectations at each phase positions firms to organically win future work as pleased clients expand portfolios.

Similarly, refined homebuilders working closely with architects on custom residential properties may jointly craft promotional case studies as portfolio pieces if the process runs smoothly. Displaying these referenceable works can sway other developers’ shopping services.

Maintaining clear communication, meeting deadlines, and promptly responding to inquiries also reduce client frustrations that lose business. If developers sense lags, oversights, or reworks stemming from architecture mismanagement, replacements get considered for future works.

Essentially architects thrive based on capabilities to not just design aesthetically stunning spaces, but also to expertly guide clients through complex journeys that heighten confidence in their vision and leadership. Satisfied customers eagerly reward those diligently serving their ever-evolving needs across projects.

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Business model canvas for an architect practice (examples).

Get a watermark-free, fully customizable business model canvas in our business plan for an architect practice

In the dynamic realm of architectural design, having a clear and effective business strategy is essential for success.

Welcome to your detailed walkthrough of the Business Model Canvas, customized for the unique needs of architect practices.

This piece deconstructs the framework into manageable sections, enabling you to pinpoint your core value proposition, target client demographics, essential activities, and much more.

Should you be in search of a ready-to-use Business Model Canvas that's fully customizable, feel free to explore our architectural practice business plan template .

What is a Business Model Canvas? Should you make one for your architect practice?

A Business Model Canvas is a strategic tool designed to help you visualize and plan the building blocks of your business. It's like a map that guides you through the different aspects of your business, from your unique value proposition to your customer relationships and revenue streams.

Imagine it as a structured diagram that helps you to lay out and understand how your architect practice will operate, who your clients are, and how you plan to manage your finances.

In the context of an architect practice, the Business Model Canvas serves as a framework that illustrates how you plan to offer innovative design solutions, attract and retain clients, and ensure your practice is financially viable.

Why do people create a Business Model Canvas? For architects, it's about gaining clarity and focus. It prompts you to define the core elements that will make your practice successful. You'll consider what design services you'll offer, how you'll differentiate yourself from competitors, and how you'll effectively meet the needs of your clients.

For an architect, this might involve detailing your approach to sustainable design, your expertise in certain building types, your marketing strategies, and your cost management plans, among other things.

The benefits are substantial.

It encourages strategic planning and helps you to concentrate on your practice's key priorities. It can reveal unforeseen challenges or opportunities, allowing you to refine your approach before you fully commit to your business plan.

For example, you might discover that your focus on large commercial projects isn't as in demand as residential renovations in your area. This insight could steer you towards a more profitable niche.

Should you create one if you're starting a new architect practice? Definitely.

It's an essential part of the planning process that can shape your strategies and decision-making. It enables you to communicate your vision to potential investors, partners, or employees in a clear and succinct manner. A well-thought-out Business Model Canvas, similar to the one you can find in our business plan template tailored for architect practices , can transform a concept from a risky proposition to one that's strategically poised for success.

Is it useful for you? Without a doubt, especially if you aim to establish a clear direction for your architect practice. It compels you to systematically work through your business model and assess the practicality of your practice's concept.

Moreover, it's a dynamic document that you can modify as your practice evolves or as the market landscape shifts.

How to create a Business Model Canvas for your architect practice?

Creating a Business Model Canvas for your architect practice should be straightforward.

You can simply adapt the one we have already crafted and filled in our business plan template tailored for an architect practice .

Need more guidance? Let's dissect each section of the canvas, and we'll walk you through how to complete it with relevant ideas and insights, using a clear and concise method.

Value Proposition

Let's begin with the Value Proposition.

This is the core of your architect practice. What sets your services apart? Is it your innovative design approach, sustainable building solutions, or perhaps your personalized client engagement?

Consider what will compel clients to select your practice over competitors.

It might be your expertise in a specific architectural style, your cutting-edge use of technology in design, or your reputation for completing projects on time and within budget.

Customer Segments

Moving on to Customer Segments.

Who are your clients? Are you catering to residential homeowners, commercial developers, or perhaps government entities for public projects?

Understanding your target clients will inform many of your strategic choices, from service offerings to communication style.

Now, let's consider Channels.

How will you connect with your clients? This may include a combination of digital and traditional methods.

Think about leveraging professional networking sites, maintaining a portfolio on your website, and attending industry events to build relationships.

Remember the importance of referrals in the architecture industry and think about how you can foster those connections.

Customer Relationships

Customer Relationships are about how you engage with your clients and ensure their satisfaction and loyalty.

Personalized service, regular project updates, and responsiveness to client needs are crucial.

Explore how technology can facilitate project visualization and client communication, perhaps through virtual reality presentations or a client portal for project management.

Revenue Streams

In the Revenue Streams section, you'll reflect on how your architect practice will generate income.

Beyond project fees, consider other sources such as consulting services, design licensing, or offering educational workshops and seminars.

Be innovative and think about what aligns with your expertise and client interests.

Key Activities

On the flip side of the canvas, we have Key Activities.

These are the critical tasks required to run your practice. This includes design and drafting, project management, client consultations, and staying updated with industry trends and regulations.

Identify the activities that are essential to delivering your value proposition and how you can perform them effectively.

Key Resources

Key Resources are the assets vital to support your value proposition.

This encompasses your design software, skilled team members, a strong portfolio, and perhaps your office space. Reflect on what you need to excel in your practice and how to secure these resources.

Key Partnerships

Key Partnerships might involve collaborations with construction companies, engineering firms, or material suppliers that can support your projects.

For example, partnering with eco-friendly material suppliers could enhance your sustainable design offerings.

Cost Structure

Finally, Cost Structure.

Running an architect practice entails various expenses, from employee salaries and software licenses to marketing and office overhead. Understanding these will aid in managing your finances effectively.

It's crucial to distinguish between fixed costs, like office rent, and variable costs, such as model-making materials, to budget wisely.

What should be included in each section of the Business Model Canvas for an architect practice?

Unsure about how to tailor the Business Model Canvas for your architect practice? You might want to start by customizing the template we've included in our business plan template .

Let us guide you through some examples that could fit each section of the Business Model Canvas for an architect practice.

Examples of Business Model Canvas for an architect practice

Below are examples of business model canvases for three different types of architect practices: Residential Architecture Firm, Commercial Architecture Firm, and Sustainable Design Consultancy.

Residential Architecture Firm Business Model Canvas

Commercial Architecture Firm Business Model Canvas

Sustainable Design Consultancy Business Model Canvas

You can also read our articles about: - how to build a marketing strategy for your architect practice - how to segment the customers of your architect practice - how to make a competition study for your architect practice - how to become an architect (guide)

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Architectural Company Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Construction & Engineering

Are you about starting an architectural company? If YES, here’s a complete sample architectural firm business plan template & feasibility report you can use for FREE to raise money .

Okay, so we have considered all the requirements for starting an architectural business . We also took it further by analyzing and drafting a sample architectural service marketing plan template backed up by actionable guerrilla marketing ideas for architectural firms. So let’s proceed to the business planning section.

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All over the word the real estate business is such that have done so well in terms of patronage and it isn’t a news that those in the architectural line are one of the people who makes erecting buildings possible. It is for this reason that a lot of people are known to throng into the trade from all parts of the world. It is indeed a great business to delve into as well as live on.

One of the first steps to take in starting the business is to first of all be sure that you are conversant with the trade. You may want to consider studying an architectural related course in school so that you can learn all the basic ropes that have to be learnt.

Thereafter, you will need other researches to pull through. Run a feasibility research on the industry in general; speak with experts and what have you. As you plan to launch out in trade, you will also need to write a good and detailed business plan.

This might pose a threat especially if you do not know a thing about drawing up a plan. This is where working with a template comes to play Here is a sample Architectural business plan for your use:

A Sample Architectural Firm Business Plan Template

1. industry overview.

Architects play a major role in the construction industry, as a matter of fact, architects are responsible for the planning and designing of residential, institutional, recreational, commercial and industrial buildings and structures by applying their knowledge of design, construction procedures, zoning regulations, building codes and building materials et al.

Hence, the architectural services industry is made up of firms who primarily engaged in planning and designing residential, institutional, leisure, commercial and industrial buildings and structures by applying knowledge of design, construction procedures, zoning regulations, building codes and building materials.

A close watch shows that he Architectural Services industry has finally begun to experience steady recovery from the economic downturn, although revenue remains below the industry’s 2007 peak due to the prolonged effects of the market crash of the real estate industry.

On the other hand, the construction market has recently shown sign of recovery, with the values of both residential and nonresidential construction rising over the last five years. Furthermore, firms’ cost-cutting efforts during the economic downturn have improved profit margins, even as the industry’s workforce has once again begun to expand.

Going forward, environmentally friendly design will increase in importance to architecture firms as downstream construction markets continue to improve and the industry proceeds with its recovery. The Architectural Services industry is indeed a large industry and pretty much active in countries such as United States of America, United Kingdom, France, Italy, Holland, Switzerland, Japan, China, Germany, and Canada et al.

Statistics has it that in the united states of America alone, there are about 80,948 registered and licensed Architectural Services firm responsible for employing about 217,640 and the industry rakes in a whooping sum of $38 billion annually.

The industry is projected to enjoy 2.9 percent annual growth. It is important to state that there is no establishment in this industry that has a lion market share. Over and above, the Architectural Services industry is characterized by many small-scale consultants, often individual proprietors and partners who operate in narrow geographic markets.

Although a majority of industry establishments do not have a payroll, non – employers generate only about 10.0 percent of the industry revenue. The fragmented nature of this industry is also evident when comparing the size of enterprises that have employees.

IBISWORLD projected that in 2016, an estimated 67.4 percent of firms with a payroll have fewer than five employees and only 1.0 percent of firms have more than 100 workers. The industry’s low level of concentration means that no firm holds a dominant position in the market.

It was also estimated that the four largest players in this industry account for less than 5.0 percent of the total revenue to be generated in the industry in 2016

One thing is certain about starting an architectural firm, if you are able to conduct your market research and feasibility studies , you are more likely not going to struggle to secure clients because there are always individuals, constructions companies  and corporate organization who would want to hire your services from time to time.

Lastly, as an architectural firm, you can afford to partner with other firms that are into construction and building services. You can partner with construction companies, you can partner with real estate firms and you can partner with the government et al.

The bottom line is that, if you have a robust network and you are well positioned, you can indeed maximize your architectural services business.

2. Executive Summary

Kent De Clark® Architectural Firm, LLP is a registered and licensed architectural services firm that will be based in New York City – New York.

The firm will handle all aspect of architectural design related services; services such as planning and designing residential, institutional, leisure, commercial and industrial buildings and structures by applying knowledge of design, construction procedures, zoning regulations, building codes and building materials and other related tax return preparation services.

We are aware that to run a standard architectural services firm can be demanding which is why we are well trained, certified and equipped to perform excellently well. Kent De Clark® Architectural Firm, LLP is a client – focused and result driven architectural services firm that provides broad- based services at an affordable fee that won’t in any way put a hole in the pockets of our clients.

We will offer a standard and professional architectural design services to all to our individual clients, and corporate clients at local, state, national, and international level. We will ensure that we work hard to meet and surpass our clients’ expectations whenever they hire our services.

At Kent De Clark® Architectural Firm, LLP, our client’s best interest would always come first, and everything we do is guided by our values and professional ethics. We will ensure that we hire professionals who are well experienced in the architectural services industry

Kent De Clark® Architectural Firm, LLP will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.

We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely. We will cultivate a working environment that provides a human, sustainable approach to earning a living, and living in our world, for our partners, employees and for our clients.

Our plan is to position the business to become the leading brand in the architectural services industry in the whole of New York City – New York, and also to be amongst the top 20 architectural firm services businesses in the United States of America within the first 10 years of operations.

This might look too tall a dream but we are optimistic that this will surely be realized because we have done our research and feasibility studies and we are enthusiastic and confident that New York City – New York is the right place to launch our architectural services firm before sourcing for clients from other cities in The United States of America.

Kent De Clark® Architectural Firm, LLP is founded by Kent De Clark and Willy Brian, his business partner for many years. The organization will be managed by both of them since they have adequate working experience to manage such business.

Kent De Clark has well over 5 years of experience working at various capacity within the architectural services industry in the United States of America.

Kent De Clark is a graduate of Columbia Graduate School of Architecture, Planning, and Preservation Columbia University and Willy Brain graduated from Yale School of Architecture, Yale University. They both have the required experience and qualifications to build a world class architectural firm.

3. Our Products and Services

Kent De Clark® Architectural Firm, LLP is going to offer varieties of services within the scope of the architectural services industry in the United States of America. Our intention of starting our architectural services firm is to favorably compete with leading players in the architectural services industry both in the United States of America and in the world at large.

We are well prepared to make profits from the industry and we will do all that is permitted by the law in the United States to achieve our business goals, aim and ambition. Our business offering are listed below;

• New project architectural services
• Renovation and rehabilitation architectural services
• Basic designing
• Providing construction phase services
• Planning and providing predesigned services
• Interior designing and providing building fit-out services
• Construction project management
• Planning and predesigned
• Feasibility studies
• Landscape and urban design
• Building and Facility restoration
• Building architectural design services
• Other architectural design services consulting and advisory related services

4. Our Mission and Vision Statement

• Our vision is to build an architectural services brand that will become the number one choice for both smaller businesses and corporate clients in the whole of New York City – New York. Our vision reflects our values: integrity, service, excellence and teamwork.
• Our mission is to position our architectural services firm to become the leading brand in the architectural services industry in the whole of New York City – New York, and also to be amongst the top 20 architectural services firms in the United States of America within the first 10 years of operations.

Our Business Structure

Normally we would have settled for two or three staff members, but as part of our plan to build a standard architectural services firm in New York City – New York, we have perfected plans to get it right from the beginning which is why we are going the extra mile to ensure that we have competent, honest and hardworking employees to occupy all the available positions in our firm.

The picture of the kind of architectural services business we intend building and the business goals we want to achieve is what informed the amount we are ready to pay for the best hands available in and around New York City – New York as long as they are willing and ready to work with us to achieve our business goals and objectives.

Below is the business structure that we will build Kent De Clark® Architectural Firm, LLP;

• Chief Executive Officer

Admin and HR Manager

Marketing and Sales Executive

• Customer Care Executive/Front Desk Officer

5. Job Roles and Responsibilities

Chief Executive Office:

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
• Creating, communicating, and implementing the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization
• Responsible for creating building designs and highly detailed drawings both by hand and by using specialist computer-aided design (CAD) applications
• Responsible for liaising with construction professionals about the feasibility of potential projects
• Responsible for working around constraining factors such as town planning legislation, environmental impact and project budget
• Works closely with a team of other professionals such as building service engineers, construction managers, quantity surveyors and architectural technologists
• Applies for planning permission and advice from governmental new build and legal departments
• Responsible for writing and presenting reports, proposals, applications and contracts
• In charge of choosing the materials to be used and specifying the requirements for the project
• Adapts plans according to circumstances and resolving any problems that may arise during construction
• Responsible for making sure the project is running according to schedule and budget
• Plays a part in project and team management
• Travels regularly to building sites, proposed locations and client meetings
• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Design job descriptions with KPI to drive performance management for clients
• Regularly hold meetings with key stakeholders to review the effectiveness of HR Policies, Procedures and Processes
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defines job positions for recruitment and managing interviewing process
• Carries out staff induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Updates job knowledge by participating in educational opportunities; reading professional publications; maintaining personal networks; participating in professional organizations.
• Oversee the smooth running of the daily office activities.
• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of relevant projects.
• Writes winning proposal documents, negotiate fees and rates in line with company policy
• Responsible for handling business research, marker surveys and feasibility studies for clients
• Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
• Develops, executes and evaluates new plans for expanding increase sales
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company
• Responsible for preparing financial reports, budgets, and financial statements for the organization
• create reports from the information concerning the financial transactions recorded by the bookkeeper
• Prepares the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
• Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting for one or more properties.
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the company
• Serves as internal auditor for the company

Client Service Executive/Front Desk Officer

• Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the manager in an effective and timely manner
• Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
• Receives parcels/documents for the company
• Distributes mails in the organization
• Handles any other duties as assigned my the line manager

6. SWOT Analysis

Kent De Clark® Architectural Firm, LLP engaged the services of a core professional in the area of business consulting and structuring to assist the firm in building a well – structured architectural services firm that can favorably compete in the highly competitive architectural services industry.

Part of what the team of business consultant did was to work with the management of our organization in conducting a SWOT analysis for Kent De Clark® Architectural Firm, LLP. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Kent De Clark® Architectural Firm, LLP

Our core strength lies in the power of our team; our workforce. We have a team that can go all the way to give our clients value for their money; a team that are trained, qualified and equipped to pay attention to details and to deliver excellent architectural designs. We are well positioned and we know we will attract loads of clients from the first day we open our doors for business.

As a new architectural services firm, it might take some time for our organization to break into the market and gain acceptance especially from big corporate clients in the already saturated architectural services industry; that is perhaps our major weakness. So also we may not have the required cash to give our business the kind of publicity we would have loved to.

• Opportunities:

The opportunities in the architectural services industry is massive considering the number of construction and real estate companies who can’t do with key services provided by only the architectural industry. As a standard and well – positioned architectural service firm, we are ready to take advantage of any opportunity that comes our way.

Some of the threats that we are likely going to face as an architectural service firm operating in the United States are unfavorable government policies , the arrival of a competitor within our location of operations and global economic downturn which usually affects purchasing / spending power.

There is hardly anything we can do as regards these threats other than to be optimistic that things will continue to work for our good.

7. MARKET ANALYSIS

• Market Trends

The architectural services industry is indeed a very large industry and of course it is one industry that works for businesses basically within the real estate industry and construction industries.

It means that to survive as an architectural firm, you would need to network with major players in the aforementioned industries and not ignoring government because in most countries of the world, the government at all level are the major players in the construction industry.

It is a bit challenging for new entrant to come into this industry; the primary barrier to the entry for new establishment is the stiff registration requirements applicable in most countries not just the United States of America.

As a matter of fact, architectural firms cum Architects must comply with local licensing criteria set out by registration boards and professional associations to obtain registration in their country or the state they want to operate from. This usually requires applicants to hold an accredited tertiary qualification before they can undertake written tests of skills, knowledge and abilities; and often to gain practical experience working with a local architect’s office.

A close watch of happenings in the architectural services industry shows that over the last five years, global investment into commercial building developments collapsed, leading to faltering demand for the industry’s services, particularly in the United States, Europe and Japan.

However, growth in emerging economies mitigated some of the industry’s declines. In the coming years, rising business sentiment will boost investment in building construction and for architectural design services. In addition, rising demand for environmentally friendly building will provide growth opportunities for operators.

8. Our Target Market

The demographic and psychographics composition of those who need the services of architectural services providers cuts across both small businesses and large corporations.

Kent De Clark® Architectural Firm, LLP will initially serve small to medium sized business, from new ventures to well established businesses and individual clients, but that does not in any way stop us from growing to be able to compete with the leading architectural service firms in the United States.

As a standard and licensed architectural service firm, Kent De Clark® Architectural Firm, LLP offers a wide range of financial consulting services hence we are well trained and equipped to services a wide range of clientele base.

Our target market cuts across businesses of different sizes in both the construction and the real estate industries. We are coming into the industry with a business concept that will enable us work with the small businesses and bigger corporations in and around New York City – New York and other cities in the United States of America.

Below is a list of the businesses and organizations that we have specifically design our products and services for;

• Construction Companies
• Real Estate Firms
• Individuals
• Blue Chips Companies
• Corporate Organizations
• Religious Organizations
• Hotels and Restaurants
• The Government (Public Sector)

Our Competitive Advantage

The level of competitions in the architectural services industry depends largely on the location of the business and of course the business model . If you can successfully create a unique brand identity for your architectural services firm or carve out a unique market, you are likely going to experience less competition.

For instance if you are one of the few architectural service firms in your locations that has the most qualified and experienced architects under your payroll, you are likely going to have a competitive advantage over your competitors.

We are quite aware that to be highly competitive in the architectural services industry means that we should be able to deliver consistent quality designs and services, our clients should be able to pay for our services and we should be able to meet the expectations of clients.

Kent De Clark® Architectural Firm, LLP might be a new entrant into the architectural services industry in the United States of America, but the management staffs and owners of the business are considered gurus. They are people who are core professionals and licensed and highly qualified architects and design experts in the United States. These are part of what will count as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category (start – ups architectural services firm) in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Kent De Clark® Architectural Firm, LLP is established with the aim of maximizing profits in the architectural services industry and we are going to go all the way to ensure that we do all it takes to attract clients on a regular basis and sign retainer – ship with most of our clients especially government clients.

Kent De Clark® Architectural Firm, LLP will generate income by offering the following architectural services for construction companies, real estate firms, and the government and for corporate organizations et al;

10. Sales Forecast

One thing is certain, there would always be construction companies, real estate firms, and the government and for corporate organizations et al who would need the services of professional architectural services providers.

We are well positioned to take on the available market in New York City – New York and other key cities in the United States of America and we are quite optimistic that we will meet our set target of generating enough income / profits from the first six month of operations and grow the business and our clientele base beyond New York City to other cities in New York and other states in the U.S.

We have been able to critically examine the architectural services market and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projection is based on information gathered on the field and some assumptions that are peculiar to startups in New York City – New York.

Below are the sales projection for Kent De Clark® Architectural Firm, LLP, it is based on the location of our business and the wide range of architectural related services that we will be offering to our clients;

• First Fiscal Year-: $250,000
• Second Fiscal Year-:  $450,000
• Third Fiscal Year-:  $1 million

N.B : This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and natural disasters within the period stated above. There won’t be any major competitor offering same additional services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

• Marketing Strategy and Sales Strategy

We are mindful of the fact that there is stiffer competition amongst architects and architectural service providers and other related building design service providers in the United States of America, hence we have been able to hire some of the best business developer to handle our sales and marketing.

Our sales and marketing team will be recruited base on their vast experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization.

We will also ensure that our excellent designs and job deliveries speaks for us in the marketplace; we want to build a standard and world – class architectural service firm that will leverage on word of mouth advertisement from satisfied clients (both individuals and corporate organizations).

Our goal is to grow our architectural service firm to become one of the top 20 architectural service firms in the United States of America which is why we have mapped out strategy that will help us take advantage of the available market and grow to become a major force to reckon with not only in the New York City – New York, but also in other cities in the United States of America.

Kent De Clark® Architectural Firm, LLP is set to make use of the following marketing and sales strategies to attract clients;

• Introduce our architectural services business by sending introductory letters alongside our brochure to construction companies, real estate firms, corporate organizations, households and key stake holders in New York City and other cities in New York.
• Promptness in bidding for architectural design contracts from the government, construction companies, real estate firms and other corporate organizations
• Advertise our business in relevant construction and real estate related magazines, newspapers, TV stations, and radio station.
• List our architectural services firm business on yellow pages ads (local directories)
• Attend relevant international and local finance and business expos, seminars, and business fairs et al
• Create different packages for different category of clients (start – ups and established corporate organizations) in order to work with their budgets and still deliver quality architectural design cum services to them
• Leverage on the internet to promote our architectural services firm
• Engage in direct marketing approach
• Encourage word of mouth marketing from loyal and satisfied clients

11. Publicity and Advertising Strategy

Any business that wants to grow beyond the corner of the street or the city they are operating from must be ready and willing to utilize every available means (both conventional and non – conventional means) to advertise and promote the business. We intend growing our business which is why we have perfected plans to build our brand via every available means.

We know that it is important to create strategies that will help us boost our brand awareness and to create a corporate identity for our architectural services firm business. Below are the platforms we will leverage on to boost our brand and to promote and advertise our business;

• Place adverts on community based newspapers, radio stations and TV stations.
• Encourage the use of word of mouth publicity from our loyal customers
• Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook ,Twitter, LinkedIn, Snapchat, Badoo, Google+  and other platforms to promote our business.
• Ensure that we position our banners and billboards in strategic positions all around New York City – New York
• Distribute our fliers and handbills in target areas in and around our neighborhood
• Contact construction companies, real estate firms, and the government and corporate organizations et al by calling them up and informing them of Kent De Clark® Architectural Firm, LLP and the services we offer
• Advertise our business in our official website and employ strategies that will help us pull traffic to the site
• Brand all our official cars and trucks and ensure that all our staff members and management staff wears our branded shirt or cap at regular intervals.

12. Our Pricing Strategy

Pay per design, project and hourly billing for architectural design services is a long – time tradition in the industry.  However, for some types of architectural design services, flat fees make more sense because they allow clients to better predict service costs.

As a result of this, Kent De Clark® Architectural Firm, LLP will charge our clients a flat fee for many basic architectural design services et al.

At Kent De Clark® Architectural Firm, LLP we will keep our fees below the average market rate for all of our clients by keeping our overhead low and by collecting payment in advance.  In addition, we will also offer special discounted rates to start – ups, nonprofits, cooperatives, and small social enterprises.

We are aware that there are some clients that would need regular access to architectural consultancy and advisory services and assistance, we will offer flat rate for such services that will be tailored to take care of such clients’ needs. So also, we aware of government contracts, we will ensure that we abide by the bidding requirement for such contracts.

• Payment Options

The payment policy adopted by Kent De Clark® Architectural Firm, LLP is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Kent De Clark® Architectural Firm, LLP will make available to her clients;

• Payment via bank transfer
• Payment with cash
• Payment via online bank transfer
• Payment via check
• Payment via bank draft

In view of the above, we have chosen banking platforms that will enable our client make payment for farm produces purchase without any stress on their part. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for our services.

13. Startup Expenditure (Budget)

When it comes to calculating the cost of starting an architectural firm, there are some key factors that should serve as a guide. Factor such as have printing machine you need in house or outsourcing your printing jobs to other services providers.

Besides, in setting up any business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting / leasing a big facility, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for workers to be creative and productive.

This means that the start-up can either be low or high depending on your goals, vision and aspirations for your business. The tools and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked.

As for the detailed cost analysis for starting an architectural services firm business; it might differ in other countries due to the value of their money. Below are some of the basic areas we will spend our start – up capital in setting up our architectural services firm;

• The total cost for hiring Business Consultant – $2,500
• The Amount needed to acquire a suitable Office facility in a business district 6 months (Re – Construction of the facility inclusive) – $40,000
• The total cost for payment of insurance policy covers (general liability, workers’ compensation and property casualty) coverage at a total premium – $9,400
• The Total Fee for incorporating the Business in the United States of America – $750.
• The Cost for equipping the office (computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $5,000
• Marketing promotion expenses for the grand opening of Kent De Clark® Architectural Firm, LLP in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
• The cost for purchase of the required software applications (CAD Software, Architectural software, CRM software, and Accounting Software et al) – $10,500
• The Cost of Launching your official Website – $600
• Budget for paying  at least three employees for 3 months plus utility bills – $10,000
• Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
• Miscellaneous: $1,000

Going by the report from the market research and feasibility studies conducted, we will need over one hundred and fifty thousand ( 150,000 ) U.S. dollars to successfully set – up a small scale but standard architectural services firm in the United States of America.

Generating Funding / Startup Capital for Kent De Clark® Architectural Firm, LLP

No matter how fantastic your business idea might be, if you don’t have the required money to finance the business, the business might not become a reality. No doubt raising start – up capital for a business might not come cheap, but it is a task that an entrepreneur must go through.

Kent De Clark® Architectural Firm, LLP is a business that will be owned and managed by Kent De Clark and his business partner Willy Brain. They are the sole financial of the firm, but may likely welcome partners later which is why they decided to restrict the sourcing of the start – up capital for the business to just three major sources.

These are the areas we intend generating our start – up capital;

• Generate part of the start – up capital from personal savings
• Source for soft loans from family members and friends
• Apply for loan from my Bank

N.B: We have been able to generate about $50,000 (Personal savings $40,000 and soft loan from family members $10,000 ) and we are at the final stages of obtaining a loan facility of $100,000 from our bank. All the papers and document has been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

14. Sustainability and Expansion Strategy

The future of a business lies in the numbers of loyal customers that they have the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.

One of our major goals of starting Kent De Clark® Architectural Firm, LLP is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning customers over is to offer our architectural design services a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.

Kent De Clark® Architectural Firm, LLP will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner of our business strategy.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List / Milestone

• Business Name Availability Check:>Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts various banks in the United States: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress.
• Application for business license and permit: Completed
• Securing a standard office facility (renovation of the facility inclusive): Completed
• Purchase of All form of Insurance for the Business: Completed
• Conducting Feasibility Studies: Completed
• Generating part of the start – up capital from the founder: Completed
• Applications for Loan from our Bankers: In Progress.
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents: In Progress.
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Packaging Marketing / Promotional Materials: Completed
• Recruitment of employees: In Progress.
• Purchase of the Needed software applications, furniture, office equipment, electronic appliances and facility facelift: In Progress.
• Creating Official Website for the Company: In Progress.
• Creating Awareness for the business (Business PR): In Progress.
• Health and Safety and Fire Safety Arrangement: In Progress.
• Establishing business relationship with vendors and key players in the industry: In Progress.

Setting Up an Architecture Practice – Getting Started

You have carried out your feasibility study and decided to jump in. You are starting your own practice. But where do you actually start? In this part of our Setting Up Practice series we will look at some of the first things you need to consider and prepare as you start your new design studio.

Business Plan

In the first part of this series, the feasibility study, we asked a tonne of questions. The business plan now needs to provide solid answers.

Your business plan can include an overview of the following:

• Company format

Business potential

Services you will provide, marketing plan, finance plan.

From the more generalised feasibility study, we can now delve a lot deeper into your new business proposals.

One suggestion is to start with a SWOT analysis – strengths, weaknesses, opportunities and threats. This is outlined well in the RIBA Good Practice Guide to Starting a Practice .

A SWOT analysis will help you evaluate your skills and weaknesses, areas you might need to focus on, and potential dangers or problems the business might face. It also might show opportunities that can present themselves in the future. The outcome of the analysis may show that you need to seek specialist advice in terms of financial management, marketing, local business and many more. Getting advice and speaking to people in these early stages of the business development will be invaluable.

While we can’t cover the full details of what a business plan should include in this post, we can go through some of the main sections of the plan and highlight some of the points to consider.

Company Format

Who makes up the company, what is the structure, and how is it managed. What are the business objectives, how will it grow.

Business potential looks at the market as a whole and how your company fits into it. The research you have carried out should inform you of your clients and competitors and what the potential of the business is likely to be.

What services are you providing to your clients and how does that make you different from other architectural practices in your area? How are you pricing your services? What kind of capacity does your business have, and how will you adapt should things change.

How will you promote the business to find new projects and clients? Will you do this yourself or employ a marketing team. Who will develop your marketing strategy?

What are your financial forecasts for the business and your overheads. Who will be in charge of the financial side of the practice and manage issues such as funding and fee collection?

Getting Set Up

If you are currently working in another practice, you will need to check your contract before you get started. Check for any clauses that may prohibit you from taking clients, leaving to work for a competitor or taking colleagues with you. This is an important step – if your current contract contains a clause that is of concern, it would be prudent to seek legal advice.

Even if it is possible to get started, you want to avoid stealing your current employers clients, or indeed staff. It may not be written in your contract, but at the same time, it’s just not cool. Over time people may gravitate towards your new practice but allow that to happen organically rather than aggressively seeking to take everything with you.

Setting up your own practice comes hand in hand with a mountain of admin! Like it or not, you are now the HR department, accounts department, admin team and much more. Making sure you get everything set up correctly is a priority.

Professional

Make sure you are registered with the appropriate professional bodies and those memberships are kept up to date, and records are correct. You should be registered with ARB if you are a qualified architect. ARB also provides helpful documentation with regards to setting up your own practice amongst other guidance.

Insurance is very important. Things can go wrong, and it is key to make sure you are covered just in case. You can take out professional indemnity insurance. ARB can assist with this and provide guidance in sourcing suitable insurance. Consider also if it is necessary for you to take out public liability insurance.

If you decide to set up a limited company you will need to register with Companies House. It it possible to do this yourself, or you could engage an accountant to assist you with this and some of the other aspects of setting up the company, tax, payroll, PAYE etc.

If you plan to take on staff you will need to consider Payroll and PAYE along with employer pension contributions. Your accountant can assist you with all of these things.

You may want to register your practice as a RIBA Chartered Practice. This can help with marketing and will get you listed on the RIBA directory.

If you don’t set up a company but decide to work as a sole trader you will need to register for Income Tax self assessment. You will also need to do this if you are a director/partner of a company.

If your turnover is expected to exceed the VAT threshold, you will also need to register for VAT with HMRC.

[Please note First In Architecture is based in the UK so our articles lean toward UK practices and standards, make sure you always check your local regulations and seek appropriate legal advice if required.]

General standards

It is a good idea to get your standard documentation set up in the early days. This includes some of the less exciting things like:

Terms of engagement – client

Prepare a standard template that can be adjusted for each project, covering things such as scope of work, fees, responsibilities, dispute resolution. While standard templates are available, you could consider having this document checked over by a legal professional to make sure you are covered in all eventualities.

Fee Proposal

Having a standard fee proposal document ready will save time later. This could take the form of a simple letter, or something more detailed.

Other contracts

Any other contracts that will be required for carrying out your work should be considered at the early stage of setting up. Rather have everything ready than realising too late that you should have had something in place.

Office procedures

If you plan to take on staff it is worth getting some general office procedures and standards in place so that you can easily induct new employees and help them to settle in to the practice well.

Drawing standards

Creating drawing standard templates, drawing layout sheets and general examples will help any other staff be on brand with their drawing output. Things like logos, practice branding colours, fonts and so on, should be readily available so that all documentation leaving the practice is professional and formatted as standard.

All practices need to have a complaints procedure, just a simple document setting out how a complaint is dealt with and the procedure for doing so.

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Where to get help

There are many professional services and organisations who can help with the setting up of a new practice. Some of the people you may consider engaging with the seek advice include the following:

• ARB and RIBA
• Bank manager
• Business advisor
• Insurance broker or advisor
• PR and Marketing consultant
• Ex colleagues who have set up their own practices
• Organisations such as Business Link and Constructing Excellence

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Architects setting up their own business for the first time

Introduction.

Setting up your own architectural business for the first time can be an exciting, if daunting challenge. No matter what business structure you intend to create, there will inevitably be different issues for you to face than those if you were an employee at someone else’s practice.

The first step will be for you to decide what kind of business it is you will be running, and then understand the legal responsibilities that will flow from that choice. The government provides detailed guidance on such matters for all those people considering setting up a new business ( www.gov.uk/browse/business/setting-up ), so this guidance note will focus on issues specific to being an architect.

The name of your business

Careful consideration of your business name is recommended. It must not be misleading – the use of the plural ‘Architects’ is not precluded from sole traders, the impression that more than one architect is in situ when there is not is unacceptable (for example ‘Jones & Smith Architects’ when Mrs Jones is an architect but Mr Smith is not).

While you do not need express permission to use the word ‘Architect(s)’ in your trading name, you will need a letter of permission from ARB to register it at Companies House. Further details can be found on ARB’s website under Company Formations .

Please do remember to update any new details of your practice name and address on the Register.

Professional Indemnity Insurance

All architects in practice are expected to have adequate and appropriate professional indemnity insurance in place to cover their liabilities. As the owner of a business it will be your responsibility to ensure that proper cover is in place to cover you, your business, and any employees.

Undertaking work yourself is a significant commitment, in that you will likely be liable for at least six years, and so will need to budget for future insurance premiums.

ARB has published specific guidance on PII, which can be found here .

Standard documentation

It may be pragmatic and efficient to have a number of standard documents prepared.

It is imperative that you provide all clients with your Terms of Engagement, and while they will vary from project to project, you may find that drafting a standard template which will allow you to fill in additional details will save you much time. There are a number of standard documents you can purchase; however if you want to draft your own then it should cover the main points found within Standard 4.4 of the Code of Conduct. At the very least it should always be covering the scope of the work; the fee (or method of calculating it); who is responsible for what, and what will happen in the event of a dispute. There may be other legal requirements depending on the nature of the project. You may be well advised to have your standard terms checked over by a lawyer, for they will be invaluable if you ever run into a dispute with a client.

Architects are also expected to have a complaints procedure, even when they are a sole trader. This does not have to be a complex document, but simply set out who will deal with any complaint about the practice, and the procedure for doing so.

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5 Tips to Make Your Architecture Firm Ready for Growth

Running an architecture practice is not a sprint. it takes years and countless hours of dedication and careful planning to create a business that can weather crises and grow sustainably..

Bringing in new work while handling the daily ins and outs of running a company requires a combination of talent, skill, team effort, a great business plan and smart organization. Particularly in the moments that call for scaling up, it becomes apparent that architecture is an industry in which technical knowledge, management, and business understanding are as important as good design.

The Hinge Research Institute recently released their new their 2018 High Growth Study which took an in-depth look at AEC firms in order to determine why some grow faster than others. More than 1,000 companies participated in the study and architecture, engineering and construction services firms made up more than 21 percent of the sample.

The study showed that the habits and priorities that drive higher than average growth numbers can be broken down into three categories. High growth firms are:

• Focused on understanding the marketplace and are nearly four times more likely to perform regular research on their target markets.
• More likely to specialize and recognize skills that set them apart from the competition.
• Quicker to adopt digital marketing tactics and content marketing. They also attend more conferences and events.

#1 – Develop Policies and Procedures

In today’s competitive market, effective strategic management is paramount for sustaining a business. Committing to a new strategy can be daunting and seem at risk of somehow cutting off possibilities and options. To avoid this, firms are advised to develop a structure that will increase the odds of success. To start, create a list of shared, general goals which are then broken down to specific, measurable objectives with precise targets. These decision-making processes should relate to organizational structure, staff recruitment, sales message, pricing, management, leadership and marketing approach. By setting office standards, you make the onboarding process for new hires faster and more efficient. This will save time, cost and avoid the frustration of training simple processes and answering repeated questions.

#2– Research Markets for Growth Opportunities

In an interview with Architect Magazine, new HOK CEO Bill Hellmuth explained the firm’s recent foray into sport and hospitality: “We re-established our sport practice a little over a year ago when we merged with 360 Architecture, which had some original HOK-ers in it. So, we’re back in the sport practice. Where growth opportunities occur is not just in sport but the intersection of sport and master planning and what happens when you add a sport venue to an urban district… We also recently merged with a [global] hospitality firm [BBG-BBGM] and we’re now looking at the intersection between hospitality and healthcare.”

Don’t be afraid to enter a new sector. Architectural thinking and project experience can be valuable across various building markets and you may surprise yourself by offering more than you think.

#3 – Work on Your Brand and Market Positioning

In order to differentiate themselves from the competition, business owners need to understand what they do and where they want to go. What will naturally emerge from this understanding is an idea of marketing as a natural extension of their company’s work ethics, company culture and service quality. Sheela Maini Søgaard, CEO and Partner AT Bjarke Ingels Group, confirms this stance in her piece for Design Intelligence : “As long as we continue to create stories from the way we genuinely approach design, our marketing will be organically derived rather than contrived. Once you have originality and integrity in your communication it is simply a question of finding the right tools and outlets.”

#4 – Strike a Balance between Exploitation and Exploration

In a popular TED Talk business strategist Knut Haanaes identifies the main reasons why companies fail. According to Haanaes successful companies create a balance between exploration and exploitation, competently doing more of the same as well as doing what’s new. Focusing only on exploitation–providing the same proven services or product–may not be risky in the short-term, but it is a risky strategy in the long-term. Investing in research and development is crucial, as it will allow you to stay on top of business, technology and marketing trends.

#5 – Hire Smart

Once in position to take on larger projects, hiring new people can make a huge impact on the stability of the firm. If the firm plans to work on several larger projects simultaneously, it needs reliable employees who understand the company culture and project managers that can help come up with realistic goals and set achievable deadlines. It could be useful to create a list of essential competencies for new hires and a set of responsibilities for each position within the firm. The way you select new hires will have an impact on whether your firm’s culture thrives or crumbles. In fact, CB Insights found that among the top three reasons why startups fail is not having the right team.

It’s important to remember that there is no one-size-fits-all strategy for scaling up. Read up on the experiences of successful archipreneurs, talk to experts in scaling up, friends and colleagues who have done it before, and come up with a solution custom-tailored for your business.

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Business architecture: a guide to definition and best practices.

If an enterprise wishes to remain competitive, it must constantly seek to optimize operations, improve agility, and drive growth. Business Architecture (BA) emerges as a critical discipline that connects business strategy and execution. By defining the core components of an organization and their interrelationships, Business Architecture provides a clear roadmap for aligning business processes, information flows, and technology with strategic objectives.

This article provides a comprehensive discussion of Business Architecture's meaning and application, exploring its core principles, key elements, and best practices for successful implementation.

What is Business Architecture?

What are the principles of business architecture, 7 benefits of business architecture, key elements of business architecture, common business architecture challenges, 10 best practices for successful business architecture implementation, reimagine business architecture with ardoq’s data-driven platform, faqs about business architecture.

Business Architecture is the practice of analyzing, designing, planning, and communicating an organization's core business capability, model, and processes. It provides a holistic view of how the business functions, focusing on the "what" and "why" behind business operations, rather than the technical "how". Business Architecture serves as a bridge between business strategy and IT Architecture, ensuring that technology solutions effectively support and enable strategic goals. While this is a reasonable explanation of what Business Architecture is, it’s helpful to additionally define Business Architecture in terms of what it is not.

What Business Architecture is Not

Misconceptions about the role and purpose of Business Architecture can lead to confusion and hinder its effectiveness in an organization. It’s worth clarifying some common myths to establish a clear Business Architecture definition and shed light on what it truly entails.

Myth 1: Business Architecture Is Just IT Documentation

Business Architecture delves deeper than simply documenting technical specifications. It focuses on the strategic direction of the business, analyzing business capability, processes, and information flows. Documentation is certainly an output, but it serves as a communication tool to link business and IT.

Myth 2: Business Architecture Is Only for Large Enterprises

Business Architecture principles can be applied to organizations of all sizes. Business Architecture helps streamline operations, improve efficiency, and foster agility regardless of a company's scale. A well-defined Business Architecture can be a significant advantage in today's competitive environment.

Myth 3: Business Architecture Replaces Business Process Management (BPM)

Business Architecture and Business Process Management are complementary disciplines. Business Architecture focuses on the strategic view—the overall structure and capabilities of the business. BPM, on the other hand, addresses the "how"—the detailed design and optimization of specific processes. Business Architecture provides the foundation for BPM by ensuring process design aligns with overall business goals.

Myth 4: Cloud Adoption Eliminates the Need for Business Architecture

Cloud migration presents a unique opportunity to revisit and refine the Business Architecture. Cloud solutions can enhance business capabilities , but a clear Business Architecture helps ensure the business is taking full advantage of the cloud's potential. It is important to understand the business needs and how the cloud can best support them.

Myth 5: Business Architecture Is a One-Time Project

Business Architecture is an ongoing practice. As the business evolves, its architecture should too. Regular reviews and updates ensure the Business Architecture reflects the current state of the organization and continues to support strategic decision-making.

Understanding these common misconceptions empowers Business Architects and their stakeholders to collaborate effectively. A well-defined and adaptable Business Architecture serves as a vital roadmap for navigating the complexities of the digital age.

Business Architecture Compared to Other Types of Architecture

Many architectural frameworks are similar to, overlapping with, or subsections of Enterprise Architecture (EA). Understanding the distinct roles and areas of focus within the IT landscape is important for successful cloud and governance initiatives. To help differentiate between some associated terms, the following table compares Business Architecture with other related architectural disciplines.

To summarize the role of each discipline:

• Business Architecture acts as the bridge between business strategy and IT capabilities.
• Enterprise Architecture provides a holistic view of the IT landscape, aligning with Business Architecture and informing other IT disciplines.
• Solution Architecture focuses on specific solutions, considering inputs from Business Architecture and aligning with the broader IT strategy defined by Enterprise Architecture.
• IT Architecture focuses on the infrastructure layer, supporting solutions designed by Solution Architecture and aligned with the overall IT strategy.
• Security Architecture ensures the security and compliance of the entire IT landscape, including cloud environments, working in conjunction with all other disciplines.

Business Architecture strategy is built upon a foundation of core principles that guide its implementation and ensure its value to the organization. While useful as a guide for reasoning, the principles also offer practitioners freedom in their application. By adhering to the principles, Business Architects can create a robust and dynamic Business Architecture that empowers the organization to achieve its strategic vision, optimize operations, and maintain a competitive edge in an evolving marketplace.

Principle 1: Business Architecture Is About the Business

At its heart, Business Architecture isn't about technology or IT infrastructure. It's about the core essence of the organization—the business itself. Business Architecture focuses on understanding the organization's goals, processes, capabilities, and the information flows that fuel its operations. This deep understanding allows Business Architects to translate strategy into actionable steps and ensure all business components are aligned toward achieving those objectives.

Principle 2: Business Architecture’s Scope Is the Scope of the Business

Unlike other disciplines with distinct boundaries, Business Architecture’s scope mirrors the organization it serves. It encompasses everything from the organization's strategic vision and operating model to the people, processes, and technologies that make it function. This holistic perspective allows Business Architecture to identify potential gaps and inefficiencies across the entire business ecosystem.

Principle 3: Business Architecture Is Not Prescriptive

Business Architecture doesn't dictate a one-size-fits-all approach. Instead, it provides a framework for understanding how business strategy can be realized. Business Architects act as facilitators, guiding discussions, analyzing options, and presenting different solutions that address the organization's unique needs. The chosen path should be tailored to the specific context and business challenges.

Principle 4: Business Architecture Is Iterative

The business landscape is constantly evolving. Markets shift, customer expectations change, and new technologies emerge. Business Architecture reflects this dynamic nature. It's an iterative process, constantly adapting and refining the business model based on new information, changing priorities, and the ongoing evaluation of implemented solutions.

Principle 5: Business Architecture Is Reusable

Business Architecture deliverables, such as capability models, process maps, and information catalogs, are valuable assets that can be reused and repurposed across various initiatives. These artifacts provide a common language and understanding for the organization, saving time and effort when undertaking new projects or addressing emerging challenges.

Principle 6: Business Architecture Is Not About the Deliverables

While Business Architecture produces valuable artifacts, its true worth lies in the underlying thinking and analysis. It's the process of defining the business model, identifying dependencies, and facilitating communication across different business units that unlocks the true power of Business Architecture. The deliverables are simply tangible representations of this ongoing conversation about the business.

Establishing that connection between strategy and execution, so the business can optimize operations, improve decision-making, and achieve sustainable success, is the general intended outcome of Business Architecture. But it’s possible to get more specific than that.

Effectively implemented Business Architecture will bring numerous advantages to organizations of all sizes and across industries. Here are some key benefits:

1. Strategic Alignment

Business Architecture translates high-level strategic goals into actionable business capabilities and processes. This ensures all business activities directly contribute to achieving strategic objectives and eliminates misalignment between strategy and execution.

2. Improved Decision-Making

Business Architecture provides a comprehensive view of the organization's capabilities, processes, and information flows. This holistic perspective empowers leaders to make informed decisions based on a clear understanding of the business landscape and potential impacts.

3. Enhanced Operational Efficiency

By identifying and eliminating inefficiencies within business processes, Business Architecture streamlines operations and optimizes resource allocation. This leads to increased productivity, reduced costs, and improved overall business performance.

4. Increased Agility and Flexibility

Modern organizations need to adapt quickly to changing conditions. Business Architecture promotes the creation of modular and adaptable business components that can be easily adjusted or reconfigured to meet evolving requirements.

5. Effective Communication and Collaboration

Business Architecture serves as a common language for business and IT stakeholders. By establishing a standardized business vocabulary and fostering communication channels, it bridges the gap between business needs and technology solutions.

6. Improved Governance, Risk Management, and Compliance

Business Architecture provides a framework for identifying and managing business risks associated with processes, capabilities, and information flows. This enhances governance practices, facilitates regulatory compliance, and mitigates potential risks.

7. Stronger Foundation for Cloud Migration and Digital Transformation

Business Architecture principles are essential for successful cloud migration initiatives. By clearly defining business capabilities and information flows, Business Architecture lays the groundwork for migrating to cloud-based solutions that effectively support strategic goals. Additionally, its principles promote the flexibility and agility necessary for digital transformation initiatives.

By realizing these benefits, Business Architecture empowers organizations to operate more efficiently, make data-driven decisions, and achieve their strategic objectives in a competitive landscape.

The core elements of Business Architecture provide a foundational framework for understanding and optimizing an organization's operations. Here's an introduction to some of them:

Organizational Structure

Business Architecture defines the organization's structure, including departments, roles, and responsibilities. This clarifies ownership of business processes and facilitates effective communication and collaboration across the organization.

Business Capabilities

Business capabilities represent the core functions of the organization that enable it to deliver value to its customers. Business Architecture identifies and defines these capabilities, ensuring they are aligned with strategic objectives.

Value Streams

A value stream depicts the flow of activities required to deliver a specific product or service to the customer. Business Architecture maps these value streams to identify and eliminate bottlenecks, optimize workflows, and improve overall efficiency.

Strategy and Goals

Business Architecture serves as a bridge between the organization's overall strategy and its operational execution. It translates high-level strategic goals into actionable business capabilities and processes.

Information Flows

Business Architecture defines the flow of information throughout the organization, including data sources, data transformation processes, and information ownership. This ensures data integrity, facilitates collaboration, and enables effective decision-making.

Technology Landscape

While not the sole focus of Business Architecture, the technology landscape plays a crucial role in enabling business capabilities. Business Architecture ensures technology solutions are aligned with business needs and effectively support strategic objectives.

By clearly defining these core elements, Business Architecture creates a comprehensive blueprint for optimizing the organization's operations and achieving its strategic goals.

Despite its vital role, the path of the Business Architect is not without its challenges. The constant flux of the digital age presents hurdles that Business Architects must overcome to maintain relevance and effectiveness. Here we present some of the most common challenges arising in Business Architecture, along with strategies to navigate them successfully.

Static Documentation

Static documents can quickly become outdated. Spending weeks on a comprehensive architecture overview, only for the business landscape to change a month later, feels like a Sisyphean task. It can also lead to difficulties in measuring the effectiveness of business capabilities due to poor data quality. Dynamic, data-driven architecture platforms like Ardoq keep information constantly updated, reflecting real-time changes in applications, processes, and infrastructure. This keeps data relevant and actionable, ensuring stakeholders have access to the latest information. 

Siloed Understanding

Other business users can find Business Architecture documentation cryptic and irrelevant, while IT developers struggle to translate the concepts into actionable insights. Painstakingly prepared documentation can end up being left on the shelf. This siloed understanding creates a communication gap that hinders collaboration and slows down decision-making. 

Modern applications possess user-friendly and intuitive interfaces that allow complex architectural concepts to be presented in clear visuals like interactive dashboards and customizable heatmaps. Democratizing access to information through shared workspaces encourages business and IT teams to come together to discuss models, ask questions, and provide feedback, which helps stakeholders to understand how IT supports business goals.

Demonstrating Value

Justifying the investment in Business Architecture can be difficult. Executives often struggle to quantify the impact of improved architecture on business outcomes. Metrics like process efficiency or risk mitigation can seem abstract. Being able to convincingly demonstrate how a change in Application Architecture led to a 20% reduction in operational costs, or how a streamlined process flow resulted in a 15% increase in customer satisfaction, will help strengthen the case for Business Architecture and secure continued support from leadership. Modern Enterprise Architecture provides this value through data-driven reports and visualizations that demonstrate impact on business outcomes, allowing the Business Architecture team to focus on strategic initiatives.

Keeping Pace With Change

Change is a constant. Business Architecture tools need to adapt to technological change, shifting regulations, and evolving customer expectations. When models become outdated, this jeopardizes the Business Architecture process, leaving practitioners struggling to catch up. Flexible architecture, that easily integrates new data sources, helps Business Architects adapt models to reflect changing priorities. This agility means the architecture remains relevant and responsive to the dynamic technology and business environment.

Collaboration Bottlenecks

Effective Business Architecture requires close collaboration between business and IT teams. However, communication can easily fracture. Business users struggle to communicate their needs clearly, while IT teams get bogged down translating high-level concepts into technical specifications. These collaboration bottlenecks lead to misalignment and wasted resources. 

Using the shared workspaces of EA tools like Ardoq allows business and IT stakeholders to work on models together, promoting transparency and collaboration. Commenting functionalities facilitate discussions and generate clarification on specific details. Role-based access control makes information available to whoever needs it while protecting sensitive data. These types of functionality help Business Architecture teams to play a more strategic role in driving organizational success.

A well-defined Business Architecture serves as a vital roadmap for navigating the complexities of the digital age. By adhering to the following 10 best practices, Business Architects can overcome implementation challenges and ensure their initiatives deliver tangible value to the organization.

1. Secure Executive Sponsorship

Obtaining buy-in from senior leadership is paramount. Executive sponsors champion the Business Architecture initiative, securing necessary resources and advocating for its continued importance across the organization. 

2. Foster Collaboration

Break down silos. Effective Business Architecture requires collaboration across departments—business stakeholders, IT teams, and process owners. Workshops, communication channels, and joint task forces are crucial for gathering comprehensive information and ensuring alignment.

3. Focus on Business Value, Not Just Technology 

Business Architecture is not about technology for technology's sake. Keep the focus on the business benefits—improved efficiency, increased agility, or enhanced customer experience. Translate business needs into clear requirements that IT teams can understand and implement.

4. Adopt a Phased Approach

Implement Business Architecture in a phased approach, prioritizing critical areas and delivering quick wins. This demonstrates value early on and fosters continued stakeholder support.

5. Leverage Existing Documentation

Rather than trying to reinvent the wheel, use existing documentation like process maps, data dictionaries, and system specifications. Business Architecture should build upon and enhance existing knowledge, not duplicate efforts.

6. Embrace Continuous Learning

The digital landscape is ever-evolving. Encourage Business Architects to actively engage in professional development through conferences, online courses, and industry publications to stay updated on the latest trends and methodologies.

7. Develop Clear Communication Skills

Bridging the communication gap is vital. Business Architects need to speak the language of both business and IT. Use clear, concise language, and tailor communication style according to the audience.

8. Establish Metrics and Measurement

Demonstrate the impact of Business Architecture. Develop metrics that track process improvements, cost savings, or increased agility. Quantifying value ensures continued support for the Business Architecture program.

9. Become Flexible and Adaptable

Business needs can change rapidly. Design Business Architecture to be adaptable, allowing for adjustments and updates as the organization evolves.

10. Leverage Technology Tools

Use Business Architecture software and Enterprise Architecture platforms to streamline modeling, documentation, and collaboration. These tools can improve efficiency and enhance communication within the Business Architecture practice.

For those who understand its potential, Business Architecture is a powerful tool for aligning business strategy with execution and driving organizational effectiveness. Business Architecture is invaluable for clearly defining an organization's core functionalities, capabilities, and processes. By embracing the principles of alignment, value-orientation, standardization, agility, and communication, Business Architects can create a roadmap for optimized operations, improved decision-making, and sustained competitive advantage.

To find out how Ardoq can add value to your Business Architecture, schedule a demo today .

When Does an Organization Need Business Architecture?

Any organization seeking to improve alignment between business goals and IT initiatives can benefit from Business Architecture. Common scenarios include:

• Rapidly growing companies: Business Architecture provides a framework for scaling operations and ensuring technology supports growth strategies.
• Organizations undergoing mergers or acquisitions: Business Architecture helps integrate disparate business processes and IT systems.
• Companies facing IT complexity: Business Architecture clarifies IT capabilities and facilitates efficient resource allocation.
• Businesses embarking on digital transformation journeys: Business Architecture ensures technology investments align with digital transformation goals.

Is Business Architecture Relevant Only to Large Businesses?

Absolutely not. While large enterprises often have dedicated Business Architecture teams, the core principles of Business Architecture can be applied to organizations of all sizes. Well-defined Business Architecture can be a significant advantage for smaller businesses by promoting agility, improving efficiency, and ensuring alignment between business units.

What Are the Main Aspects of a Business Architecture Framework?

There are several Business Architecture frameworks, but common aspects include:

• Business Capabilities: Defining the core functions that enable the organization to deliver value.
• Information Management: Understanding and optimizing the flow of information throughout the business.
• Value Streams: Mapping the sequence of activities that create value for customers.
• Organization Structure: Aligning organizational structure with business capabilities and processes.
• Technology Architecture: Understanding how technology supports and enables business initiatives.

What is a Business Architect?

A Business Architect is someone who translates business strategy into IT requirements, ensuring technology investments support strategic objectives. For a deeper explanation on what a Business Architect is and does, see our guide on the role of Business Architects in modern organizations .

What Are Key Organizations in the Field of Business Architecture?

Several organizations play a vital role in the field of Business Architecture:

• The Business Architecture Guild (BAG): A non-profit professional association promoting Business Architecture best practices.
• Zachman Framework: A widely recognized framework for structuring business architecture information.
• Open Group Architecture Framework (TOGAF): A popular framework for Enterprise Architecture, which incorporates elements of Business Architecture.

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Guide to Financial Management for Architecture Firms

It’s estimated that around 1,000 new architectural firms start up every year. Sadly, only 25% of those new firms will be in business 3 years later. According to the American Institute of Architects , the number one reason they fold is lack of capital to see the firm through lean times. 

The news is constantly teasing us with estimates of an upcoming recession. Good design and passion alone won’t carry your firm through those future recessions. You owe it to yourself and your employees to manage your firm’s money well. 

Table of Contents

Create a business plan, the order of financial management.

• Revenue Projection

Talent Plan: Bridge the Gaps

Overhead expense budget, profit planning, financial management keeps the boat afloat, additional resources.

When you first set up your business, creating a business plan will be one of the most important things you do.

A business plan is a road map . It doesn’t need to be a big complicated document. For most firms, even a one-page plan will do. Regardless of how long it is, every business plan should include your vision, mission, goals, and actions for reaching those goals.

An important part of any business plan will be your finances – this is where revenue projection, talent plans, overhead expense budgets, and profit plans come into play. Not only will the financial part of the plan help you prioritize and set realistic goals, but potential investors like to see that you know where you are going.

It’s important to realize this plan is not a static document. You will need to update it regularly to reflect changes to your firm and new goals.

Picking the Right Type of Business Plan

Most architects will design their practice around a design-bid-build or a design-build model. The essential difference is a firm who only does the design work versus a firm that wants to have both design and construction under one roof. To make matters more complicated, there are lots of variations within the two models.

Your goals, actions, and overall business plan will depend greatly on what model you use.  Creating a business plan that is specific to the type of model you want to use will make the plan more usable.

As you read through the different components of financial management in the rest of this article, you might start to notice that they are all closely related and intertwined. The decisions made at one stage will influence all the other stages of financial management. You might start to wonder where you should start and if it matters where you start.

The Architecture Student’s Handbook of Professional Practice published by the American Institute of Architects (AIA) recommends two potential paths depending on where you are in the process.

• Path A. Start with the workload that is expected, and determine what staff and other resources will be needed.
• Path B. Start with the staff available, and determine the workload it can support.

According to the AIA, the sequence of events for both paths would look like this:

• Project the firm’s revenues
• Establish staffing needs.
• Determine overhead expenses.
• Develop a profit plan
• Calculate staff expenses.
• Calculate overhead expenses
• Set a profit target
• Develop a revenue goal

It’s important to go through all the steps and fill in all the boxes when doing financial planning. You never know what you might miss. Just as for architectural design work, especially in the planning phase, it’s important to have all the information.

Revenue Projection 

Simply put, the projected revenue is the money your firm expects to make in a specific time period. Typically, you will run these projections for monthly, quarterly, or annual accounting periods. What you use depends mostly on your business.

Why is this important? First, potential investors will want to see it. Also, you will use the projection to develop operational and staffing plans. Your revenue is the lifeblood of your firm and you need to know if you will have enough to keep things alive.

Creating a revenue projection can be a lengthy process, especially if you want to create an accurate forecast that has value.

To create your revenue projection, you will use research and internal knowledge. Some examples include reviewing previous sales, talking to your marketing team, contacting clients about future needs, and reading predictions on design and business trends.

A big part of creating revenue projections (and the other parts of financial management) is using software. There are many different services out there to manage every part of financial management. Take advantage of them – they only make things easier.

For an architect, a revenue projection will cover the following:

• Backlog (Existing projects to be completed)
• Proposals that are outstanding
• Unidentified future work

The project backlog is work that has been approved but still needs to be completed. Think of it as an incoming paycheck from existing fee contracts. You are almost 100% sure that work will be completed in that time and you will be receiving those payments. 

You should shoot for a backlog volume (the dollar amount for that work) that is equal to, or greater than, the annual net operating revenue. If the backlog is decreasing, it’s a sign that you will run short of work and revenue in the coming year. If the backlog is increasing, this might be a sign that you need to look at your staffing plan and increase your staff.

Proposals that are outstanding include all the work that you have submitted proposals for and are waiting to see if you win the project. When looking at revenue forecasting for these projects, you will need to estimate when the work will take place. You will also have to multiply the revenue for each project by a probability factor. This probability factor is based on the chances of you winning that work. 

Say you have four outstanding proposals that would generate $400,000 in total fees. For each proposal, you apply the probability factor and end up with $205,000 in fees for your forecasting. This is a standard industry practice that allows you to account for the fact that you likely won’t win every single project.

Unidentified future work demonstrates the work that must be found to bridge the gap between the revenue you will have from your backlog and outstanding proposals. It represents the work you will need to put in to find additional projects and clients in the coming year.

When you are looking at significant growth based on the revenue predictions, it’s time to develop your talent plan or staffing plan. A talent plan will help you bridge the gaps between your firm’s needs and its resources.

Just like every part of financial management, having a methodical process is important, even if it feels like a waste of time. You never know what little detail will sneak in and derail your whole plan. Here are some basic steps you should go through when developing your talent plan:

• Define your business goals.

Your talent plan should be in line with your business plan. Look in your business plan to find out what your plan for growth is. Are you hoping to open more offices? Do you want to expand the types of services you offer? Knowing the answers to those types of questions will help direct the direction you go with your talent plan.

• What are your talent options? 

Know what the overall job market looks like. Know the unemployment rates, the number of job openings, and labor costs. Knowing all of this will help you form your plan – especially the money you will need to have available for salaries.

• Identify your needs.

What help do you need? What problems is the talent plan attempting to solve? Sometimes you will find that your needs can be served by reorganization internally. You don’t always need to hire externally. The work could also be outsourced to consultants, freelancers, or contractors. If you determine that you can rearrange your current staff to meet the companies needs, what training or help will they need to complete the tasks?

• Gap Analysis. 

Now that you know exactly what you need, compare it with what you have. This is called gap analysis. How can that gap be filled? With more training for employees? With a new hire? Is this a seasonal need that can be contracted out?

• Create a talent plan. 

Use the answers unearthed in the steps before creating your talent plan. Outline the steps you went through to get to the plan, so anyone can follow your thoughts. 

When developing a talent plan as a service-based business, it’s important to consider the billing rates. This should be on your mind throughout all the steps of the process. Will your goals and needs require someone with more experience, or can the gap be covered with a few interns? Interns and experienced professionals will have different billing rates and that difference will influence the financial side of a talent plan.

Your staff’s billing rates are higher than just the rates you charge your clients. Don’t forget to include things like salary increases for your current staff, holiday and vacation time, and a budget for education for your staff when creating your staff plan. 

Your overhead expense budget is a look at your total overhead costs. The main metric that matters here is the overhead rate. The overhead rate is how much overhead is attached to each dollar of direct labor charged to a project. Not knowing this rate means you don’t know if your firm’s profitability, so this is an important metric to get your head around.

You should run these calculations for a twelve-month period, as there are overhead expenses that should be evenly spread over the twelve months. 

The overhead rate is simple to calculate. Take the total overhead costs, also known as indirect expenses, and divide by the direct labor cost. The total overhead costs are a mixture of fixed and variable expenses needed to run a business, like rent, utilities, promo material, office supplies, and travel. The direct labor cost is how much you have charged the client for a project.

Having a lower overhead rate is a good thing, but the nature of architecture means the rate won’t ever be below 100%. An industry norm is 150% to 175%. This means that for every dollar of direct labor charged to a project, $1.50 to $1.75 in overhead expenses are also charged. The 2016 average across the industry was 154%. 

A rate above 175% means that overhead expenses need to be better managed. Having an overhead rate that high should make you concerned and should prompt you to immediately act.

Your profit is what is left over after you pay for all your expenses. Profits are required to provide bonuses to employees, to fund capital expenditures, and to reward the owners of the firm for their risk. Importantly, some profits are reinvested in the firm. 

Most of the time you won’t know what your profit was or if you even had any profit until you complete your tax return – typically in March at the earliest. However, bonuses for employees are nice to have prior to Christmas. This is traditionally when bonuses are given. 

This is where profit planning comes into play. A profit plan is also called an operating budget and it helps inform you of how much profit you will likely have.

Here are important steps to creating your profit plan.

• Develop an estimate for your net expenses . 

Don’t include any expense that the client ends up paying for. Only the ones that ultimately come out of your pocket.

• Develop a profit goal. 

This is how much you would expect to see in return on your expenses and it is listed as a percentage of your expense. Some recommendations are a 20% return, meaning you should see a 20% return on the expenses you calculated in step one.

• Next, develop your net revenue goal.

Add your profit goal to the net expenses developed in step one. Your net revenue goal tells you how much you need to charge your clients to meet your financial goals.

The AIA’s Architecture Student’s Handbook of Professional Practice lists examples , not just for profit planning, but for all the concepts we have gone over. Follow their extensive examples (they are fantastic), if you feel like you need more help with financial management.  

All this planning and calculations might seem like a huge waste of your time. Everyone wants to just focus on the design work – it’s more fun. Plus, you might think that focusing on great design is the key to a successful business.

It’s certainly a key, but there are multiple keys and proper financial management is one of them. Think of your firm as a boat with a hole in the bottom. You hold the bucket. It’s your job to keep the water coming in and going out balanced and the whole thing afloat. 

• The AIA Architecture Student’s Handbook of Professional Practice
• How to Draft A Business Plan
• Architecture Firm Business Plan Example
• 15 Crucial Financial Metrics for Architectural and Engineering Firms
• 10 key financial performance indicators for architecture and engineering firms
• 5 Steps to an Optimal Staffing Plan
•  Profit Planning
• Entrepreneur Architect Academy How To Become The Richest Architect You Know (Part 1 of 3)

Compare your firm’s business performance against thousands of other architecture firms

Architecture Business Benchmarks Report

Keep reading.

Guide to Earned Value Management for Architects

Earned Value Management is a useful financial technique to keep control of your project's budget and schedule.

9 Best Practices for Invoicing

Have you ever hit a roadblock with a client due to invoice issues? Don’t worry. By following these 9 best practices for invoicing, they can be avoided.

Guide to Invoicing for Architects

How to manage your cashflow to run a successful, profitable architecture firm.

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Their job was saving lives. They lost their own in Brazil’s horrifying plane crash

The debris at the site where an airplane crashed with 61 people on board, in Vinhedo, Sao Paulo state, Brazil, early on Saturday, Aug. 10, 2024. Brazilian authorities are working to piece together what exactly caused the plane crash in Sao Paulo state the previous day, killing all 61 people aboard. (AP Photo/Andre Penner)

Brazilian authorities worked Saturday to piece together what exactly caused the plane crash in Sao Paulo state the previous day that killed all 62 people on board. Local airline Voepass’ plane, an ATR 72 twin-engine turboprop, was headed for Sao Paulo’s international airport in Guarulhos with 58 passengers and 4 crew members when it went down in the city of Vinhedo. (AP Video/Andre Penner and Maycron Abade)

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A worker carries an empty coffin into the morgue where the bodies of plane crash victims were brought in Sao Paulo, Brazil, Monday, Aug. 12, 2024. The flight crashed into the backyard of a home in the city of Vinhedo on Aug. 9. (AP Photo/Andre Penner)

People arrive for the burial of Danilo Santos Romano at Penha Cemetery in Sao Paulo, Brazil, Monday, Aug. 12, 2024. Romano was the pilot of the plane that crashed into the backyard of a home in the city of Vinhedo on Aug. 9. (AP Photo/Andre Penner)

The coffin of Danilo Santos Romano, 35, is taken to his burial site at Penha Cemetery in Sao Paulo, Brazil, Monday, Aug. 12, 2024. Romano was the pilot of the plane that crashed into the backyard of a home in the city of Vinhedo on Aug. 9. (AP Photo/Andre Penner)

Firefighters and rescue teams work at the site in a residential area where an airplane with 61 people on board crashed the previous day in Vinhedo, Sao Paulo state, Brazil, Saturday, Aug. 10, 2024. (AP Photo/Andre Penner)

Locator map showing the departure, destination and crash sites of a Brazilian commercial airplane that crashed on Friday Aug. 9, 2024. (AP Digital Embed)

Relatives from victims of the plane crash arrives at the headquarters of the institute of legal medicine for the recognition of victims, in Sao Paulo, Brazil, Saturday, Aug. 10, 2024. (AP Photo/Ettore Chiereguini)

Police guard the gated community where a plane crashed in Vinhedo, Sao Paulo state, Brazil, Friday, Aug. 9, 2024. (AP Photo/Andre Penner)

Brigadier Marcelo Moreno, head of the National Air Accident Investigation Center, gives a press conference about the Vinhedo plane crash, at his headquarters in Brasilia, Brazil, Friday, Aug. 9, 2024. (AP Photo/Eraldo Peres)

Police patrol the street leading to the gated community where a plane crashed in Vinhedo, Sao Paulo state, Brazil, Friday, Aug. 9, 2024. (AP Photo/Andre Penner)

RIO DE JANEIRO (AP) — Arianne Risso worked every day to help her patients battle cancer. That made it all the more heart wrenching when her life — along with that of seven other doctors — ended abruptly after a plane tumbled from the sky in Brazil.

She boarded the ill-fated flight Friday in the city of Cascavel, in Parana state, bound for Sao Paulo’s Guarulhos international airport. It crashed in the city of Vinhedo, and footage of the ATR 72 twin-engine turboprop plunging while in a flat spin horrified people across Brazil.

It smashed into the backyard of a home inside a gated community and transformed into a fiery wreck. All 62 people aboard were killed, among them the eight doctors, according to a statement from Parana’s Medical Council. Risso and at least one colleague were headed for an oncology conference to sharpen their knowledge about a disease that kills tens of thousands of Brazilians every year.

“They were people used to saving lives, and now they lost theirs in such tragic circumstances,” Parana Gov. Ratinho Júnior told journalists in Vinhedo on Friday, adding that he had friends on the doomed plane. “It is a sad day.”

Risso’s cousin, Stephany Albuquerque, recalled in a phone interview that the two often played together when she was young. Even then, Risso wanted to become a doctor and, as she grew older, applied herself so intensively to her studies that she rarely went out on the town. Medicine was her calling.

“Arianne treated people who were terminally ill at a time in their lives when they were struggling. But Arianne was always available and did everything with a lot of love,” Albuquerque told The Associated Press by phone from Florida, where she now lives. “She wasn’t the kind of doctor who would the tell the patient, ‘This is your illness, take this.’ No, Arianne took care of people. ... She would give out her personal phone number to patients.”

Risso, 34, was flying with her colleague Mariana Belim, 31. The two had been in residencies at Cascavel’s cancer hospital, and a statement from the institution praised them for the conscientiousness, care and respect with which they treated their patients.

“It’s no wonder that praise for them both would often reach us. Their love of the profession was very clear,” the hospital said.

Willian Rodrigo Feistler, a general practitioner who grew up in Cascavel, knew six people who died in the crash and was particularly close to Belim, with whom he studied and had maintained a 15-year friendship.

“Mariana was serene with a melancholic temperament, but very intelligent, empathetic and devoted to her profession,” Feistler said by phone from Cascavel. “She dedicated much of her life to studies and medical training. She had already specialized in clinical medicine and was completing her specialization in clinical oncology.”

José Roberto Leonel Ferreira, a recently retired doctor who also died in the fiery wreck, was one of Feistler’s teachers during his undergraduate studies. He had a radiology clinic in Cascavel.

“I went over cases with him on several occasions. He was a receptive person who helped other doctors in the discussion of cases to reach diagnoses,” Feistler said.

Brazil’s Federal Council of Medicine said the loss of the doctors left Brazil’s medical world in mourning, and expressed its solidarity for the victims’ friends and relatives. They were venturing forth from Cascavel in search of knowledge as a means to better treat their patients, its statement said.

For now, there are more questions about the crash than answers. Metsul, one of Brazil’s most respected meteorological companies, said Friday that there were reports of severe icing in Sao Paulo state around the time of the crash. Local media cited experts pointing to that as a potential cause, although others cautioned against jumping to a conclusion.

Both the plane’s “black boxes” — one with flight data and the other with cockpit audio — were recovered. The air force’s center for the investigation and prevention of air accidents began analyzing them at its laboratory in the nation’s capital, Brasilia. Airports Minister Silvio Costa Filho said the center was also opening a criminal probe. The airline Voepass and the French-Italian ATR manufacturer are assisting investigations, they said in statements.

All of Brazil — but in particular victims’ loved ones — are eager to learn why these people were ripped from this world.

“It wasn’t God who took my daughter; it wasn’t God, because he chose her to save lives,” Risso’s mother, Fatima Albuquerque, told reporters Sunday. She said she blamed the crash on profit-hungry capitalists and authorities’ neglect.

Stephany Albuquerque echoed her indignation.

“I only hope that the prosecutors will investigate,” she said. “I hope justice is done, because that’s the least my cousin and the other 61 people deserve.”

Credit Reporting Industry Slams CFPB Plan Targeting Medical Debt

By Evan Weinberger

Consumer credit reporting companies, debt collectors, and banks laid out their legal strategy should they opt for litigation to block a Consumer Financial Protection Bureau proposal barring medical debt from credit reports.

In comment letters to the CFPB due Aug. 12, industry groups challenged the agency’s authority to eliminate an exemption from the Fair Credit Reporting Act that has allowed third-party collectors to get outstanding medical debt added to consumers’ credit reports. They also said the CFPB’s economic justification for the rule, which was based largely on research from 2014, wasn’t sufficient.

The trade group letters outlined the likely legal ...

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