Money: Right-Size Your Architectural Practice
Business is a bottom-line venture. If you’re not making money, you won’t be in business long. So setting a financial goal is practical and necessary. What I’d like to recommend is that you spend some time thinking about what’s behind the number you choose.
Recently I worked with a client whose revenue was at $15 million. When I asked what the firm’s goal was for growth he said, “$20 million by 2020.” When I asked him why, he didn’t have an answer. I was surprised. Was it just growth for the sake of growth? Was it greed? Was it because the marketing line was clever? Why was this leader structuring his firm to grow by 25 percent.
All I can say is that if you’re a leader asking an organization to increase it’s business by 25%, there ought to be a reason. For example, do you need a larger staff in order to pursue larger projects? Will the increase in financial prowess allow you to offer better benefits, bonuses, incentives? Are you looking to expand geographically so you can better support clients with geographic diversity?
When setting financial goals, know why you’re doing it.
How Much Is Enough? Answering the Existential Question
Perhaps the most important thing we can do when putting a strategy in place to manage and direct our firms is to pause for a moment to ask ourselves, “How much is enough.”
In the professional services industry, “the cliff”—the backlog that ebbs and flows—haunts us. Sometimes the cliff seems a long way off, like we would have to hike for days to hit the precipice and plunge into doom. Other times it feels like we could walk out the door of our office and fall directly into the pit of darkness, the same one that gnaws away in our gut, relentlessly hungry, maniacally telling our minds to whisper in our ears, “More, more…more.”
And yet, we all seem to be reaching a point where more is not making life better. More is actually cluttering our lives, destroying our serenity, creating chaos, and depleting our energy. We may be reaching the tipping point where less truly is more.
Simplicity seems to be the call of the day. Not just letting go of what we don’t need, but not constantly striving for more in the first place.
Ask for advice about overcoming the burden of too much—and I mean too much of anything: email, magazines, relationships, stuff—and you’ll likely hear two suggestions:
- First: Get rid of what you don’t need.
- Second: Stop the inflow.
How does this apply to an architectural practice? Take a good hard look at your client list and replace those clients who aren’t helping you manage a sustainable practice. Define your ideal client and stop the inflow of undesirable clients and replace them with those who will support your architectural practice in a healthy way.
How Much Is Enough? Answering the Practical Question
I cut my teeth as a professional at URS Consultants, then URS Corporation (now AECOM). Over the years I moved from marketing to business development to corporate communications and investor relations. In a publicly traded company, the practical answer to how much is enough is an unequivocal, “MORE!” The word enough is not in shareholders’ vocabularies.
At URS, there was never a question about this. The bottom line and shareholders’ interests were what mattered. So every strategic planning session I participated in resulted in someone taking an annual revenue goal and jacking it up by some enormous percentage that seemed completely unrelated to anything in the reality I was experiencing as a “sales person” because that’s what shareholders wanted: more. That’s what the CEO wanted: more. The Board of Directors, the head of the subsidiary, the regional management—the business, the culture and the people demanded more.
Small businesses that aren’t publically traded perhaps then have a luxury that large corporate America is denied: the ability to decide just how much is enough.
The foundational question is this:
What kind of business do you want to have?
What are your goals? What kind of work do you want to do? What kinds of clients do you want to work with? Any particular industry or project type? Area of specialization? What do you love?