It's like being so busy chopping wood you never stop to sharpen the ax. Hello, architect nation.
Enoch Sears here, and today we're going to be talking about a topic that, on the surface may seem a bit dry, but is very important to your liberation and freedom as a free architect. The topic of today's podcast episode is the importance of tracking objective measurables. This episode is sponsored by Smart practice, the world's leading step by step business training program that's helped more than 103 architecture firm owners structure their existing practice so the complexity of business doesn't get in the way of their architecture. Because you see, it's not your architecture or design skills that's holding you back. It's the complexity of running a business, managing projects and people, dealing with clients, contractors and money. So if you're ready to simplify the running of your practice, go to Business of architecture.com. Forward slash smart to discover the proven simple and easy to implement smart practice method for running a practice that doesn't get in the way of doing exceptional architecture.
We are looking for architect developer stories for the Business of Architecture podcast. So are you an architect developer with valuable insights to share? We're always on the lookout for passionate voices in the industry to join us on the Business of Architecture podcast. If you're ready to share your journey, lessons, strategies with our global audience, we'd love to hear from you reach out to us to explore being a guest on our show and help inspire other architect developers on their path. We'd be interested in hearing your story, whether you're at the very beginning of your development story, or whether you have $100 million portfolio of projects already in the bag, completed. We'd like to hear from you if you're working with the developers, or that you've developed a number of small houses, or you're working at a larger scale. Now,
what exactly does that mean tracking objective measurables? Well, in a recent coaching call for our smart practice program, I shared the story of a friend of mine who, about a year ago, decided that he wanted to get into bodybuilding. And he's a generally fit guy. He's middle aged, 47 going on, 48 years old right now. And like I said, about 18 months ago, he had this wild idea that he wanted to participate in a full on bodybuilding competition. You know the ones where the guys get all lathered up in oil and spray tan, and they wear little tiny Speedos, and they parade around on the stage. Well, this is what he wanted to do. He wanted to do. He wanted to see how far he could push his body and where he could take it. Now, as a guy who's six one and weighing in at approximately 190 pounds, he wasn't a fly weight, and he actually looked reasonably fit. He had, he has a very athletic build and the kind of body that most middle aged guys would really like to have to start off with, but as he began putting on weight under the mentorship and tutelage of his personal trainer, who was a Russian immigrant who used to compete professionally as a bodybuilder, sounds like a perfect mix, he began to discover something very interesting. He said, the bigger I got, the smaller I felt. And he said that this confused him for a while. He didn't understand, how could he be growing his muscles larger? How could he be getting more massive and yet feel smaller? And what he realized, and that I've realized about myself as well, is that when we put something into our awareness, in other words, when we start to notice something, when we start to put our focus on something, then we start to notice things about it that we didn't see before. Psychologists talk about something in our brain called the reticular activating system, and this is a part of our brain that has evolved over time to help us avoid danger and to also save processing time so we're not constantly having to evaluate our surroundings, to be able to make important decisions, and even non conscious decisions. So the reticular activating system in our brain is responsible for helping us prioritize where we should put our focus and our attention. An example of how this plays out in real life is, let's say that you've been wanting a new car, and maybe you're shopping for a car right now, and there's a particular make and model that you're looking at, and all of a sudden you're noticing it everywhere, saying, Wow, I didn't realize there's that many of these cars on the road. Or perhaps you like a particular color of car, maybe red, and you're like, wow, I didn't realize there's so many red cars. Now, it's not that the kinds or makes of model of cars on the road changed, but your awareness of those cars changed. So this is what the reticular activating system does. So ultimately, although my friend was gaining in mass, although he was getting larger physically, he felt like he was smaller because now he was Ultra aware of the inadequacies of. His body compared to what he want his body to look like, which brings up an important distinction when it comes to your journey as a free architect, the distinction between feelings and facts, feelings and facts. So one of the frameworks that we teach in smart practice is comprised of these four individual components, your feelings, your facts, your focus and your fruit. And we call this reverse engineered production. In other words, let's say that you want to get a result in life. You want to increase your income, or perhaps you're not exactly satisfied with the kind of products that you're working on, and you really feel like you could be doing better. Well, we use and teach reverse engineered production to be able to as this, as the particular phrase goes to reverse engineer, how to get that result. And when we look at reverse engineered production, we break it down into these four key areas, feelings, facts, focus and fruit, or we could say facts, feelings, focus and fruit. And ultimately, we look at the fruit being the results, the focus being where you put your attention and focus. The feelings, of course, are the emotions or bodily sensations that we have around these things, including the stories, the interpretations. And then at the very beginning, we have the facts. Now, one of the challenges as business owners that we have is that oftentimes we make decisions and we react based upon how we're feeling, as opposed to using objective measurables. So for instance, a feeling is a very subjective experience. And in a recent coaching call, I talked about this with some of our clients, where we made the distinction that sometimes we can feel like our business is doing really well, and yet, when we look at the objective measurables, we can see that our business actually has a lot of signs of unhealthy metrics or measurables, and then On the flip side, we can also be discouraged feeling overwhelmed about where our business is at, where your architectural practice is at, when, in reality, the financials might be pretty healthy. But then what happens if you're making decisions based upon scarcity of feeling of overwhelm, and yet your financials are actually healthy? What could happen? The danger here is that you're putting your focus on the wrong place. You're acting reactively, which means that you're putting yourself up as a victim of life, as someone to which life happens to, as opposed to someone who life happens for. So that's why one of the foundational pillars of smart practice is making sure that you understand what are your objective measurables? How do you track them? How do you know where you're at today compared to where your business was six months ago? Without having to run a bunch of reports and without having to do a lot of digging, where do you have a handy dashboard where you can just pull it up and within 15 seconds get an overview of where you're at right now, and in another 15 seconds, look at your past data and compare that to where you were six months ago. When you start using an objective measurable in your business and in your architectural practice, what you'll discover is that your feelings start to align with the data, which is great, because when your feelings align with the facts of what's actually happening in your business, you are then empowered to make powerful decisions. So with this podcast episode and that preamble, we're going to do something a little bit different. I recently took a coaching call with that I held with some of our smart practice members. And this coaching call is called our Rainmaker flow call, and it's where we focus on strategies for not only winning better projects and putting those in place, but strategies for getting a more consistent pipeline and making sure that that incoming work part of your business is systematized and working very well in a predictable manner. Now, on this particular coaching call, one of the topics that came up was this idea of feelings or subjective experience versus our objective measurables. Now I can't share the contents of this coaching call because there are architects who are part of this call, and there's private and sensitive information that was discussed. But what I did is I put this coaching call into a program that generated an AI Artificial Intelligence summary of the content of that particular coaching call, which I thought was great, because that way you can get the information of what we discussed without compromising the privacy of the members of that particular call. So what you're going to hear here in a minute is about 13 minutes of two AI generated people, and it's just amazing what AI can do now, and they're going to talk about the contents. With this coach and call the key takeaways. And I hope that you get a lot out of this conversation. Now, before we jump into it, let me state that oftentimes we can look at AI or artificial intelligence and perhaps even feel threatened by this new technology and how fast it's going. Fred said something to me pretty powerfully recently. He said Enoch, in the future, there will be two kinds of people, those who embrace AI and learn how to use it, and those who stick their heads in the sand and hope that it will just go away. So with that, here at Business of Architecture, we're looking at how we can use AI Artificial Intelligence and this podcast episode as part of that to deliver more value to you more effectively and more succinctly. And at the same time, I'd encourage you to think and ponder on the question of how you can utilize AI Artificial Intelligence as your friend in your practice on your journey to being a free architect. So with that, here is the summary of the recent coaching call. Welcome
back, everyone. To the deep dive. Ready to explore something new. Today, we're going behind the scenes of the architecture world. Ooh, behind the scenes, but not in the way you might think,
not blueprints and fancy designs, not exactly.
We're diving deep into the business side of architecture, the numbers and spreadsheets side, exactly. And our source material a fascinating coaching call that a listener sent in.
Oh, I love getting a peek into those. Me too.
It features a group of 10 architects, all working with this business mentor, a Mr. Sears.
Sounds like a dream team. What kind of stuff are they tackling? Well, the
core topic is really about how to measure success in business, but specifically for architects.
Ah, success. It means different things to different people totally. And that's
what's so interesting about this call. Mr. Sears really pushes these architects to move beyond those subjective feelings of, Am I doing well, and really understand the importance of hard data
so less I feel successful and more concrete evidence. Exactly. He talks
about profitability, of course, makes sense. Gotta keep the lights on. But he also dives into benchmarking numbers, which are like performance ratios for your firm. Okay, getting a little more technical now and then, there's this thing called revenue capacity. Revenue capacity. Have you heard of that one? I
had to brush up on it a bit myself, not gonna lie,
sounds intimidating, but the concept is actually
pretty straightforward. Break it down for us. Okay,
so imagine your firm is operating at peak efficiency, like a well oiled machine, hitting on all cylinders. Revenue capacity is all about figuring out the maximum revenue you could generate in that ideal scenario.
So it's like your earning potential if everything aligned perfectly, exactly,
and Mr. Sears actually shares a spreadsheet with these architects on the call to help them visualize it spreadsheets.
Gotta love them.
But here's where things take a really interesting turn. Mr. Sears brings up this story about his friend, a bodybuilder.
Now, what does pumping iron have to do with architecture? That's what I thought,
but it's actually a brilliant analogy. This bodybuilder, despite making amazing gains, still felt small and insecure about his physique.
Ah, I see where this is going. It's about that disconnect between how we feel and the objective reality. Got
it. It's the same for some architects. Their financials might be strong, but they feel overwhelmed or like they're not doing enough. It's
like that saying feelings aren't facts, exactly. So
this really got me thinking about how we all fall into that trap in any profession, really, of letting our feelings cloud our judgment, when sometimes the numbers tell a different story, data over drama, right? And on the call, several architects admit to feeling lost when it comes to tracking their business metrics, lost in a sea of numbers. But Mr. Sears encourages them to simplify things, to focus on just two or three key metrics that really resonate with them personally.
Ah, so it's not about tracking everything under the sun, but choosing the data points that truly matter to
you. I love that. And he also makes this great point about owning your metrics, owning your metrics if you didn't create the tracking system yourself. He says it's not going to be as useful.
You don't value what you don't earn, kind of thing, right? To
illustrate this, he shares a story about his son and a bicycle. The bike his son was given, it just sat there forgotten. But the bike his son worked hard to buy, yeah, that one was meticulously cared for, polished the whole nine yards,
pride of ownership, and I bet that applies to business metrics too. Absolutely,
if you put in the effort to build a system that truly makes sense to you, you're way more likely to stick with it and reap those benefits.
So it's about finding that sweet spot between data and personalization. Exactly that bike story. It really stuck with me too. You know, it's like we value things more when we put effort into them absolutely
but there's so much more to unpack from this coaching call.
Oh yeah, like, smart's Hot Seat moment with Mr. Sears.
Oh yeah, smart, wasn't he dealing with a project from a realtor friend, something about subdividing. Lots
you got. It seems pretty straightforward on the surface, right? The friend needs some basic architectural plans, elevations for this tentative mapping phase of the project,
for standard stuff, right? You'd think,
but Mr. Sears, he really encourages smart to think beyond just churning out those plans. Okay, so what's he suggesting? He's saying approach this engagement with a consultant's mindset. Consultants mindset. How? So instead of just taking the request at face value, dig deeper. Ask these developers about their goals, their budget, their overall understanding of the subdivision process.
So it's like becoming a detective, almost, yeah, uncovering those hidden needs. Exactly.
It's about asking strategic questions that reveal the big picture. Give us an example. Well, like, how much did they invest in the land? What are they hoping to sell these subdivided lots for? And crucially, what's their experience with the planning commission? Have they done this before? Ah,
I see that kind of info could be gold for both smart and the developers.
Exactly. Mr. Sears makes this powerful point, providing a half baked solution wouldn't do anyone any favors, right?
Just handing over the plans without considering the full context exactly,
it could actually set those developers up for failure, and that would reflect back on smart too, in the end, for sure, Mr. Sears, he really challenged smart to shift his perspective, move away from that transactional way of thinking and embrace a more holistic approach. So
les hear your plans, see you later and more, like becoming a trusted
advisor, right, guiding these clients, protecting their investment, that kind of thing. Okay, so did
smart adjust his fee to reflect this bigger picture thinking?
He initially mentioned something around like 3000 or $4,000 seems
low considering what's at stake for the developers, you know, with the whole subdivision process and everything, Mr.
Sears thought so too. He pointed out that successfully navigating this project, getting it through planning and approvals, that could be worth 10s of 1000s of dollars to
these developers. Oh, wow. That puts it into perspective, right? So
what kind of fee did Mr. Sears suggest? Somewhere between 25,050
$1,000 Whoa, okay, that's a significant jump, right? It's
a powerful lesson in understanding your value
and charging what you're worth. Makes you wonder, how many creative professionals undervalue themselves, especially when starting out
Absolutely. Goes back to those key metrics we talked about, revenue, capacity, profitability,
and this whole interaction with smart it highlights another essential point, the power of communication with clients.
Oh, for sure, having those key conversations, asking the right questions, demonstrating your expertise makes me thought
about Catherine's situation too, actually curious to hear more about her. Well,
Katherine, she was feeling overwhelmed, like many of the architects on the call, overwhelmed in what way she was wrestling with those big questions, you know, like, How much money do I need to have in the bank to feel secure? How do I figure out if a project was actually profitable?
The classic anxieties of running a business, and
when can I afford to hire someone that was a big one for her. Tough Questions,
did Mr. Sears have any practical advice for her? He
did. He pointed out that even without detailed historical data, Catherine could start tracking project profitability moving
forward. Okay, so taking those baby steps to gain more clarity and control exactly.
And Mr. Sears also brought up revenue capacity again, remember, it's about understanding your firm's earning potential in an ideal scenario, right?
And knowing that number can help you make all sorts of decisions about hiring, taking on new projects, or knowing when to say no to things. I'm seeing a pattern here. Each architect's challenge ultimately circles back to those core business principles.
It's about moving beyond just reacting to the chaos of running a business and being proactive shaping your own future. Love that.
What else did we glean from Mr. Sears wisdom? Well,
another architect, Micah. He was really grappling with this whole idea of efficiency, efficiency in what sense he wanted to track his time better, especially with those work from home distractions, yeah,
the siren song of the refrigerator, exactly. So Mr. Sears, he
introduces Micah to this concept of utilization rate, which is, it's basically how much of your time is spent on billable project work compared to the total time you put into the business, right?
I think we touched on that earlier, but it's not just about hitting some magic percentage, is it? That's
the thing. Mr. Sears, he cautioned Micah against getting fixated on the number itself. Okay,
so the context matters too big time.
He said that non billable time. You gotta look at what's filling it.
So like a 60% utilization rate could be fantastic if the other 40% is spent networking, building relationships, exactly.
But if it's just eaten up by busy work or, you know, procrastination, that's a different story.
It's not just how much time we're spending, but how we're spending
it, right? Are we focused on the stuff that really moves the needle for our business? Micah's
chat with Mr. Sears, it really highlights that need to not just. Track our time, but evaluate it
for sure, this whole deep dive, it's making me rethink how I approach my own work. Honestly, me
too, and there's still more to explore from this call, right? Mr. Sears, talks about non billable time and owning your pricing and how to avoid those common client pitfalls.
Oh yeah, those pitfalls. We've got to talk about those. Okay,
I'm ready spill the beans. Okay, those client pitfalls. Gotta hear about those. Lay it on me.
Well, you know how we were talking about utilization rate, and how it's not just about the number itself, but what you're actually doing with that non billable time, right?
Right? Like networking, good, endless, logo tweaking, not so good, exactly.
And Mr. Sears, he brought up this point that really resonated with me. He said some architects get so obsessed with keeping that utilization rate high that they actually start neglecting crucial stuff, crucial stuff like, what, like marketing and business development. Oh, no, that's so backwards, right? It's like being so busy chopping wood you never stop to sharpen the ax.
Ooh. Love that analogy. It really highlights that balance. You know, billable hours are important, but you gotta make time for those activities that will generate future billable hours. Absolutely,
it's all about being intentional with your time, strategic, understanding what activities have the highest return on investment for your business.
Okay, it makes sense. But how do you figure that out, especially when you're already feeling overwhelmed, you
know? And that's where this idea of owning your pricing comes in. Owning
your pricing, what does that even mean? Mr.
Sears, he reminded these architects that they're in control. They get to decide how they value their expertise, right? But easier said than done, sometimes it is, especially when you're starting out so many creative professionals under charge. You know, lack of confidence, maybe a fear of losing clients. Oh, I've
been there for sure. You think you need to compete on price, but it can become a race to the bottom, and
that's why understanding your revenue capacity and profitability goals is so crucial. It gives you that foundation to stand on right exactly so you can set rates that are fair to you and sustainable for your business.
Man, this whole conversation is making me think about the value of business education, you know? Oh, yeah, big time, especially for creatives. It's not just about the talent, it's about understanding the business side too.
Couldn't agree more, and that's something Mr. Sears emphasized throughout the call. He wanted these architects to see themselves not just as designers, but as savvy business owners. I feel
like I've gotten a whole mini business course just from listening to this coaching call so many insights. Seriously,
it really drives home the point that success in any field takes talent, hard, work and business smarts.
So as we wrap up today, what's the big takeaway you want our listeners to ponder,
I think it's this. We gotta bridge that gap between how we feel and the reality of our business. It's so easy to get lost in the day to day, lose sight of the bigger picture. It's true, but if we track the right metrics, understand our revenue capacity, truly value our expertise, then
we can make better decisions,
that lead to financial success and that feeling of fulfillment, you know, like we're building something that matters. Couldn't
have said it better myself. So to all our listeners out there, we leave you with this question, what are the two or three key metrics that would give you the most valuable insights into your work, into your business, and how can you make tracking those metric a meaningful part of your own journey towards success, something to ponder as you go about your day. All
right, so there we go. Now, I'd love to know your feedback as a podcast listener about what you thought about this format, if you found it valuable. Because if this indeed is valuable to you, then we can do this with other of our coaching and consulting, kind of behind the scenes, things that we do here at Business of Architecture, and I think this might be a great way for you as a podcast listener to get more actionable, real advice to help you on your journey as a free architect. So you may have hated this, you may have loved it, either way, we'd love to hear from you if you can write us in at support at businessof architecture.com and just give us feedback on this particular episode, we would appreciate that greatly. Now, on this episode, I did talk about, and you heard mention about a number of resources, one of which is our capacity planning worksheet that we offer to our clients. It's a very simple spreadsheet, and I'd love to give this to you, completely free as a listener of the podcast, to help you figure out this crucial question of, What does your firm look like? What's the potential of revenue in your firm if it was operating as a well oiled machine, and maybe if it wasn't quite as efficient, what would be the revenue capacity? Then you can compare how you're actually performing with that projection, to get a feel for how healthy truly is your business. To get access to that for free, go over to Business of architecture.com. Forward slash capacity. Again, that's Business of architecture.com. Forward slash capacity, and that's a wrap. Hey, Enoch Sears here, and I have a request, since you are a listener here of the Business of Architecture podcast. Podcast, Ryan and I, we love putting this podcast together. We love sharing information as much as we can glean from all the other industries that we're a part of. To bring it back to empower you as an architect and a designer, one thing that helps us in our mission is the growth of this podcast simply because it helps other architects stand for more of their value spreads the business information that we're sharing to empower architects together so architects, designers, engineers, can really step into their greatness, whatever that looks like for each individual. And so here my simple ask is for you to join us and be part of our community by doing the following, heading over to iTunes and leaving a review of the podcast. And as an expression of our sincere thanks, we would like to give you a free CEU course that can get you one professional development unit. But more importantly, we'll give you a very solid and firm foundation on your journey to becoming a profitable and thriving architect. So here's the process for that. After you leave us review, send an email to support at Business of architecture.com let us know the username that you use to leave the review, and we will send you that free training. On the training, you'll discover what 99% of architecture firm owners wished they would have known 20 years ago, and the other 1% well, they just didn't even know that. They didn't know. Head over to iTunes and leave us a review now.
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