The Business of Architecture: Business Development Strategies to run a Successful Architectural Practice

Architects typically complain that architecture school did not teach them enough about the business of architecture. Here are some tips!

The field of architecture is so broad that it has many connections to other professions, such as law, management, graphic design, psychology, environmental science, engineering, etc. Though architecture school grapples with this breadth, it sometimes only glosses over other fundamental aspects of what it means to build a life in architecture. 

So, why do architects choose architecture anyway? The reasons for choosing a design career typically include a deep passion for the art and the desire to leave a lasting legacy. Business is merely the means to follow their inclination toward architecture. Which explains why the industry is filled with capable architects who know little about the mechanics of running a firm.

According to AIA statistics, American Architects are responsible for designing about $600 billion worth of buildings each year, for which they are paid approximately $29 billion in fees, or about 4.8 percent of construction value. Those fees are largely paid as a commodity, mostly as lump sums or versions of a fixed fee. Commodity compensation rarely reflects true value, and that harms the profession's economics. Other professions offer higher value propositions. The U.S. has about 110,000 licensed architects and about 106,000 billable positions. Compared to the 950,000 practicing physicians and 1.33 million lawyers, we’re a pretty rare resource. However, salaries of architects, which are a measure of how effectively we convert our value in the construction marketplace, are low.

You cannot be an effective architect without a basic understanding of the business of architecture.  As architect Mark LePage of EntreArchitect says: “Profit then Art.” A firm’s principal must make innumerable decisions about the practice’s focus and character by determining which markets, delivering services, means, methods and resources are necessary to shape what you do in a way that the customer values your services while also being rewarding to your firm.

What’s in a plan?

The context of architectural practice is changing. Today, the architectural profession is part of an increasingly, fragmented, competitive, and complex practice environment. New project delivery methods, new industry players, and disruptive business models are altering the landscape in which architects deliver design services. It is thus important to establish a strong foundation, that includes brand building, financial goals, workflow management, team building and client relationship management, in order to run a successful architectural practice.

1. Building your Brand & Brand Positioning

Any good business begins with clarity of your goals towards the future. To build a successful business, it is first important to clearly define your goals for the future. The goals for your architecture firm may relate to size, revenue generation, types of work, or where you wish to see the firm in a certain timeframe.

2. Building a financial foundation

It’s only the right time to start a firm once you’ve considered your current employment situation and needs, as well as potential clients and projects. Establishing a financial safety net and identifying the services needed in your area are vital benchmarks. Establish your practice with enough funds to last at least three to six months. 

3. Firm structuring, Workflow Management & Teambuilding

To create a successful practice, you must focus on your people. Managing workflow is one of the key components of any good business. Completion of projects on time puts a good word about the firm in the market.  As the principal architect, assessing the duration of each job, to what stage it`s at, to who all are working on it in your firm is extremely crucial. When it comes to structuring a practice, keeping design solutions front and center is key. 

4. Office Infrastructure

Work environments, among architecture firms that rent office space, the rent paid on that space is often their largest single expense. Before the pandemic, the physical and virtual workspaces often seemed to be at odds. But now, widespread quarantines, lockdowns, and self-imposed isolation have pushed tens of millions around the world to work from home, accelerating a worldwide workplace experiment.

There are benefits and drawbacks to both and the direction you go will depend largely on your firm’s needs. By eliminating an office, a fully remote office will have lower overhead costs. However, you’ll need to work harder to keep the office connected. Modern businesses can run almost entirely online and thrive through the internet business culture. Not only do virtual offices allow for no commute time, low to no technology costs and lower overhead costs (with no lease to pay), having remote workers also cuts down on commute time, increases productivity, and produces a lower turnover rate. Plus, a fully remote office might mean your office is spread all over the globe. While the virtual office doesn't work for every business—many companies need people together in one location to get work accomplished—in those businesses where technology truly allows you to work from anywhere, a virtual office offers a strong alternative to a traditional office environment.

5. Business Development

No matter what size of architecture firm you run, having a business development plan for your architecture firm will help you focus on how to get more clients. It’ll make growing your brand easier, help you improve your standing in the industry, and help you network with peers. Business Development involves identifying your ideal client, building & circulating your portfolio, networking, investing in social media, getting published & other forms of soft marketing.

These are just a handful of business development strategies that can help your architecture firm make its mark, no matter what stage you are at today. Don't worry about doing it all! Start with the ideas that you can most easily adapt and put to use. 

More importantly, remember to have fun! Research has shown that the key to reaching our potential is to maintain a sense of play at work. While not all work is fun, a creative approach to work as well as an openness to work smarter, not just harder, can greatly increase our satisfaction and yield better results.