They are studios that are already working, that can survive, more or less bill enough to continue standing, but they only achieve that: survive.
The general trend is slightly downward with some specific year a little better, and they only manage to move forward with a lot of effort and little peace of mind . It is death in life.
As they do not invoice more than what is essential, they cannot invest in growth. And since they don’t invest in growing, they don’t bill more.
How is this vicious cycle broken ? Let’s look at it along with some examples.
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What does it mean to grow architecture business?
It means billing more, having more profit, having more means . Have more work or a better paying job.
On some occasion I have been asked if the traditional service of an architecture firm is scalable , a very useful concept in any business.
Well, it is, although not in a startup sense . This can be the case if you offer certain services that do not require your presence or availability, but if we are talking about designing and directing works, scalability is more limited.
It occurs, above all, getting larger orders . They have much higher performance per hour of dedicated work. And in some other way.
But going back to the concept of growing up, why would we want to?
Above all to escape from the extreme survival situation that I described in the prologue, but also to access larger projects , have less dependence on a specific client or project and more regular order entry, be able to diversify business lines and services, being able to enter other markets …
The benefits can be many if done right.
And apparently it is what marks the market for the future . Large organizations will have greater survivability, while smaller organizations will only achieve it to the extent that they are very clearly differentiated and very effectively.
How to grow architecture business?
There are different ways to go about it. Among them, the main ones are these three main routes :
- Change the business model to optimize it according to the market or create new lines of business. That is, do different things or do the same things differently.
- Maintain a similar business model, but optimize the performance of the study. To do this, the best way is usually to approach business management and give importance to areas that previously did not have it (such as marketing, productivity or finance).
- Carry out a merger, purchase, alliance , or other mechanism that increases size rapidly by adding with other similar studios or organizations.
We are going to see these three in detail (including real examples ) because they are the ones that usually have a simpler and more common application in the case of growing an architecture firm.
1. Modify the business model
– Differentiation
In architecture there is little innovation in terms of business models. The profession is undifferentiated , and this causes that architects end up competing for price.
However, by identifying real market needs, offering a good value proposition, and establishing a strategy and business model around all this, it is possible to find spaces in the market that are profitable.
If you manage to go from being a study like all those that offer generalist architecture services and you focus on solving some market need for which you have the capacity, you will be able to prosper.
– Re-study of business lines
Be careful to completely turn around models that are already profitable. If they are working, it is risky.
Review the lines of business you have to see which are profitable and which are not, and the latter can be modified or directly eliminated.
For example, it is the case of a study that offers architecture services with a differential proposal based on BIM, and also has another line of business that focuses on BIM consulting for other professionals. Maybe one works and another doesn’t.
In addition, within each business line we can study the portfolio of services to see which ones are more profitable.
Within the hypothetical BIM consulting business line, perhaps project implementations or modeling are profitable, but working with point clouds may not.
We can also see that some market segments are more profitable than others.
In the example, working with promoters in BIM consulting is still more profitable than doing it with architecture studios.
You can even consider accessing other markets (internationalize, go to another sector).
Doing this analysis, the idea is to keep the most profitable lines of business and services and discard the rest or modify it. And you can also create new lines of business , I repeat, always based on real market needs.
In the example, the two lines of business are based on the team’s great BIM knowledge. In addition, the collaboration in BIM consultancies with developers helps to generate orders for complete architecture services for these same developers.
– Grow architecture business step by step
If you create a new business model, either as a main line of business or as an added one, I advise you to test it step by step . Don’t make a huge investment hoping it will pay off. If you have done things well, you will go with less risk, but it is still better to try.
Try to provide the service in a small, with a reduced version , and if you see a good response from the market, you can invest more little by little, for example in marketing or media.
The growth generated in this way will be the one that achieves the commercial results, sometimes slow and sometimes a little faster.
If you start a business model from scratch, unless you’ve hit the bull’s-eye, you won’t grow very fast. But it will be sustainable growth if you have done it right.
– An example
They went from a small studio situation with a limited turnover level and difficult to increase to one in which the turnover is much higher and they are growing even in a difficult time .
To do this, they polished some elements of the business model they already had (especially the marketing and sales section), but above all they added a new line of business based on the turnkey service, detecting a latent need in the market in their area. geographic.
This new line of business is what has given them the great boost, and the results are being very good.
2. Optimize performance
Keeping the business model more or less the same (if it works), it is also possible to achieve growth by optimizing the functional areas of the study . And this means taking a more entrepreneurial approach and managing better.
– Marketing and sales
The first area is that of marketing and sales.
You will need to bill more, so if you have a good strategy you can optimize your marketing plan (or create it, few studies have one) and the commercial process from the moment a potential client is interested in your services.
If you manage to increase the entry of orders or make them more important, you will have fuel to grow . But you should not leave out other areas.
– Finance to grow architecture business
For example, finances. Few studios have a truly professional financial direction.
Growth must be financed.
There are different ways, and knowing what they are and choosing the most convenient one is very important.
On the other hand, a good financial control will give you a lot of information about what is going well and what is going wrong in the study. It is essential to grow, because without data you cannot propose improvements.
– Talent management
If the team grows, which is most likely, you will need to professionalize its management. Make people management policies, plans for the acquisition and development of talent, selection, recruitment, evaluation, compensation …
There is a whole world of talent management that is usually put aside in the studios. However, think that the greatest asset of a studio is the team. Not managing it optimally is a drag on competing and growing.
– Operations
It is also very necessary that you optimize operations. This means producing better , more effectively.
Instead of dying spending hours in the studio, it’s about giving it the right structure and organization .
Define processes and procedures to improve effectiveness and efficiency, digitize and automate , optimize to eliminate bottlenecks and prioritize what is important, define the customer journey so that their perception of the value obtained is the best possible.
There are many aspects to work on in production, and architects tend not to pay much attention to them.
– Innovation
And all this while keeping an eye on innovation, that is, having an attitude that allows you to innovate day by day.
Consider the way to do things in order to improve it, look beyond what has always been done, think how you can maximize your delivery of value according to what the market wants.
– An example
Growth in this way of improving performance will initially be slow, but when the machinery greases if you do it right, it will become exponential .
As a real example, we can put Abramson.
Introducing concepts of business management they have experienced spectacular growth in recent years, and are accessing assignments of great volume and interest.
3. Mergers, purchases, alliances
They are not a common mechanism in architecture sector, but it is possible to take them into account.
They can occur in various ways from the legal point of view, although I think it is not worth going into it because it would be very cumbersome.
The important thing in these cases, whatever the form, is that the result is better than the sum of the parts . What seems so hackneyed must happen in reality.
Each of the parties involved should end the operation in a better situation than the initial one, and also the resulting entity should be able to offer more value than the initials separately.
Joining structures, permanently or not, allows greater possibilities for billing and production. It makes it easier to compete in larger actions, benefit from some economies of scale, access more markets, etc.
You can consider growing your architecture firm
Whatever strategy you follow, to grow your architecture firm you must consider it holistically . It is very rare that adding some small action to what you already do achieve significant growth.
Some time I have been asked for this or that action on Instagram or LinkedIn to multiply the results of the study, but this does not work like that . It is as if you want to grow a child by stretching it with a hydraulic press instead of feeding and caring for it.
There are many things that influence the system.
Think about it globally, being aware of everything that is involved, and do it with the least possible risk .
And remember that you have a very complete guide and various resources to get clients for your study in the MARKETING FOR ARCHITECTS
Are you thinking of growing your architecture firm? What difficulties have you encountered to achieve it? Are you in that vicious circle situation of neither growing nor dying?
Thanks for reading me. You have a good day.