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517: Why is it Hard to Grow and Architectural Practice with Enoch Sears: Otter Voice Meeting Notes

517: Why is it Hard to Grow and Architectural Practice with Enoch Sears

Enoch Sears26min

Enoch Sears

00:00

Hello architect nation, Enoch Sears here bringing you another update on the status of the architecture industry. And today, the topic is this why it is so hard to grow an architectural practice. So if you're thinking about growing an architectural practice right now, perhaps you've tried to grow it in the past, or you're thinking about wanting to grow in the future, then this is a must listen, episode. So buckle up your seat belt, and tune in, we're going to go over for specific reasons why growing an architectural practice is so hard. And we're going to give you three tips for if you decide to go down this dangerous and oftentimes scary road of growing an architectural practice. If you haven't already checked out the tools and resources that we offer architectural practice owners here at Business of Architecture, be sure to head on over to smart practice method.com. And now with that Here is today's show. So why is growing an architectural practice so hard? Well, in the decade plus of time that I've spent consulting with, and training and coaching architectural practice owners, there's one common fear that comes up and it's the fear of growth. Oftentimes, architects, you know, as architects, we get in this thing where we feel like we want to grow, perhaps we try to go grow, we end up hiring some people, it doesn't work out, we end up firing those people having to lay them off, it can be a very rocky and very painful road. So let's just jump into why growing an architectural practice is so hard. And let this be a bit of a warning for those of you who decide that you would like to grow an architectural practice. So a Reason number one is that architecture is a people heavy business, AI has not yet progressed to the point where AI can do all your drawings for you. There's no such thing as an automated set of drawings, there's no there's no such thing as someone who's going to write out your specifications for you automatically. Although we're getting close on that count. There's certainly not anything that can go out there and do the designs or do the light fire on life safety that is that is necessary in the architect's job description. So because of that, you know that as your practice grows, you're going to have to hire more people. Now, just imagine what it's like to hire one person, if you've hired someone before, you know how difficult it is to actually hire someone, there's a lot of challenges with hiring a person. Number one, just finding the people right now in architecture, there are gaps in terms of experience levels, it seems like there's a lot of people who have less experience, there's a big gap in the mid career level of experienced architects, a lot of people end up leaving the industry, when we have things like recessions, or economic downturns. And then a lot of the older generation who have a lot of experience in architecture, they already have jobs, or perhaps they have their own practices. And if they are looking for work, a lot of times, you know they have some old habits that may not fit with your company culture. So it can be very, very difficult just to find the right person that you need to grow the practice. Now multiply this by a growing practice, let's say that you're at a five person practice, you want to grow to an eight person practice, you're going to have to bring on three additional people, let's say you want to grow to 20, you're going to have to bring on 12 1314 additional people, every single person that you're trying to find, you're going to have to put them through if you're following what we teach our Business of Architecture, a very stringent hiring process to make sure you're getting the right person on the right bus. So each one of these hires can take a lot of time. And there's a lot of cost. As a matter of fact, Harvard Business School estimates that the cost of a faulty hire can be anywhere from 60 to $120,000, for hiring the wrong person, that's your time hiring them, your time searching for them, you know, getting someone on board who's just with us for a short amount of time. So it can be costly finding the wrong people. Now, in some other industries, they're not so people centric. Now, every most every industry is going to have some element of human capital that needs to happen in the business. But if you think about architecture, a thing that distinguishes architecture from some of the other professions out there is that as architecture, people are needed to grow your product, it's not like you can just snap out more widgets. By turning the machine faster, you actually need to have another person in the office to be able to grow your services. And you're going to have to have a wide variety of different skill levels in the practice, product managers, people who are designers, job captains all the way down the line. So getting the fit right of the people is no easy task. And this is why many small practices stay small, they never actually grow. Because it is difficult. It's not easy to number one to hire people. Number two to get the compensation, right, number three to make sure that they're loyal. Number four, to make sure they want to you know they want to stay there long term at the practice, they have the ability to continue to grow. All these things combined to make it a perfect storm of difficulty to try to grow an architectural practice. So that's reason number one reason number one, again, is that architecture is a people focused business to grow your architectural practice, you're going to have to bring on more people. And as you bring on more people, it comes with all sorts of people challenges. If you run an architectural practice now, you know that it's simple possible for people to completely leave all the baggage in their life at home. So if they're having marriage problems if they're having sickness in the family, if they have to cater to one of their kids schedules because they need to pick them up from school, guess what? Your business is going to be impacted because of this. Now you start to multiply this by two by three by four by five. And suddenly, you start to feel like you're running a three ring circus feel like you're running around with your hair on fire, feeling like you're catering to everyone's demands, it gets very, very stressful.

Enoch Sears

05:31

Reason number two, why it's difficult to grow an architectural practice is because you as an architect, let's face it, you have a very, very difficult time letting go. This if I had to identify one reason why small architectural practices don't grow, this would probably be it. As a matter of fact, it's not just small architectural practices, it's any small business. The reason why is because most small businesses, aka architectural practices are started by architects who decided to go out and do their own thing. And one of the reasons why we did our own thing is because we want to do our own thing. We have our own way of doing things we like it done this way. Oftentimes, if you're running a practice, right now, you're very capable, you have a ton of experience, you're very knowledgeable. Not only that, but you have a very particular way that you like to design, you have a very particular way that you like to put your drawings together, you have a very particular way that you do just about everything. This comes along with the artists personality. So what we find is that architects oftentimes have a hard time letting go, I'm sure you've seen this yourself. If you worked at an architectural practice, especially a small one, you've seen that your employer probably had a hard time letting go, you probably saw that the practice was never going to grow beyond that person, because the person can never let go. And if you're running an architectural practice today, then you might see a bit of the truth in this yourself, you might see how you hold the tight the reins very tightly. And for good reason. Perhaps in the past, you've been burned perhaps in the past, you've given team members too much rope, so much rope that ended up hanging themselves. And let's face it, running an architectural practice is difficult, because it's not just like you're producing some sort of product out there, there's liability that goes along with it, you know that you don't want to get sued, you understand that the reputation of your firm depends on the quality of the drawings that your office puts out. And so it's very understandable that as an architectural leader and a practice as someone running a small architecture practice, this can be very, very difficult to make the jump to trusting in your team members. Because what that requires going back to number one, it requires experienced team members. And one of the biggest mistakes that I've seen practice owners make is that they end up hiring inexperienced people. And there's nothing wrong with hiring an inexperienced person. But what they end up doing is their practices become very loaded with people who lack experience. And the reason that practice owners do this is because, well, you guess it's because they want to pay lower salaries, they think you know what I can afford to hire that person at a higher level. So I'm just going to train them up, and we'll pay them low. What ends up happening is that you as the leader, end up having, like a studio environment where you're running around, and you're correcting things and everyone's interrupting all the time with God minutes. This is a surefire way to burnout. So when we look at problem number two about growing an architectural practice, we can see that in addition to it being a people heavy business, you as a practice leader, you as someone running an architectural practice, you have a difficult time, letting go, all the practice owners that I've seen that have grown a practice that's gone past 15 People 20 People, like 15 people, you can kind of still do things your way, once you get to 25 or 30 people, you're already into middle management there. That means you must let go of the reins, you must have a line of leaders below you who are managing the practice for you. That means you need to delegate the marketing, you need to delegate the sales, you need to delegate the finances, you need to delegate the accounting, you need to delegate oftentimes, the HR and the hiring. Right. One of my business mentors once told me that the leader of a business has two responsibilities, number one to cast the vision, hey, where are we headed? Where are we going, and number two, to coach and hire and recruit people. So when you get to that level 2535 people this is your focus, your focus is going to be casting a vision, hiring and training and coaching the right people. Now, these skills are also important even at the five person level, but we'll talk more about that later. Challenge number three, in growing an architectural practice is simply that the economy can set you back. Architecture practices are so tied to the cyclical cycles of the economy, the boom or bust cycle. regardless of what industry you're in, it's going to have some sort of cycle. And so what ends up happening is you may grow your practice, you may be even at a very good place right now. But then the recession hits and then you have to layoff people, and then the people that you lay off, they start their own practices or they leave the industry altogether, which makes it then even more difficult to hire in the future. So if you can imagine someone climbing up a mountain, if you're climbing up a mountain and every time you go 10 feet all sudden, there's a little landslide and you slide back five feet. This is gonna be very difficult to get to the top of the mountain. And obviously, this is what it can feel like oftentimes growing an architectural practice. Now, when we look at the largest practices today in architecture, practices, like Gensler practices like Kpf practices like Ah, okay, these are firms that were started around the 60s. And they their growth corresponded with the growth of corporate America and the building boom that happened post World War Two. And so we can see that a lot of the growth in architectural practice happens because of the fair wins, so to speak, it happens because it is aligned with the growth of the economy and the growth of building. So architecture is hard enough without having to worry about the cyclical nature of the economy, having to hire people having to fire them having to lay them off, having cashflow, crisis's, and cashflow crunches. So that's reason number three, why it is so difficult to grow an architectural practice. Let's look at Reason number four. Reason number four of why it's hard to grow an architectural practice is that the industry is commoditized architectures commoditized architects are willing to give away their services for a song they're willing to give away their services for break even they're willing to run practices for years and years and years without making any profit. So what ends up happening is many practices compete on price alone. So clients out there are very used to architects charging what they charge, which may not be enough to invest in the future, the practice may not be enough to actually pay their people really good wages may not be enough to develop really great incentive compensation plans for their team members. So this idea of commoditization is highly linked with the problem of chronic undercharging in architecture. And it doesn't help that a lot of the businesses out there, a lot of the clients who are giving you architectural Commission's themselves are looking at the bottom line, and they have their own business interests in mind. They're trying to squeeze your fees down as much as they can. Now unfortunately, architects, us as architects, we are not equipped to be able to handle the two oftentimes the tough business conversations that come up when a client wants to negotiate your fees down, when clients are telling you that you're expensive. And so as we talk, I talk about this a lot here on the podcast is no surprise, as an industry, we have gotten so used to our value being a certain level, we've kind of lost sight and even we've lost sight ourselves of what you our true value is as architects. So when you're dealing with other practices who are undercutting you, when you're dealing with the pressure of feeling like if you raise your fees to what you actually need to really run a profitable practice that you'll start losing work, you're just going to stay in the cycle of always not charging enough and always finding that you're never able to grow the practice, you're unable to hire the people that you want. When you do hire them, they leave and they go to the larger practices that are paying them bigger salaries. So these are not the only reasons why it's difficult to grow an architectural practice, but they certainly are some of the most important and impactful reasons. So let's review them again. Number one, it is difficult to run an architectural practice. Because architecture is a people heavy business. It takes a lot of expertise, it takes a lot of training, it takes a lot of knowledge, to be an architect, you have to be licensed, you have a long time, you need to go through education in school, and let's face it, compared to some other careers, the salaries aren't as high. And so this makes it difficult to hire people. Now put these two things together. It's a people based business and it's difficult to hire people, you can start to see why this begins to be a challenging proposition. Number two, you have a difficult time letting go you love things done your way, which is great. But no one ever grew an army by micromanaging every one and demanding that it be done a certain way. If you want it done your way set up systems and processes and train your leaders and your culture to perpetuate the way that you want it done. This is something that aren't Gensler talked to me about in our interview that we did years ago, where he was talking about how Gensler grew organically. He wanted to grow as people and so as they got new commissions in different parts of the country, opportunities opened up for offices to be started. So he would send some from his office to go open up that practice. And they developed a constellation of stars kind of as he described it mentality or culture in the firm, instead of having one or two star designers that are the focal point of the firm. They had they dispersed not only the the recognition, the praise the talent throughout the firm, but they made it more of like, Hey, we're all in this boat together, we're all rowing in the same direction, as opposed to being driven by a couple of very, very strong personalities. So this is a great example of Oregon's who was able to let go, he was able to let go the reins, he cared about people enough that he was able to give them growth opportunities, even though at times, they might do things that he might not necessarily do himself. This is one of the key qualities of a leader who's able to grow an organization. Problem number three, the cyclical economy sets you back just when you start firing on all cylinders. Just when you think times are going really well. Just things when things are starting going really good. That project gets put on hold three products get put on hold, the economy takes a big turn there's a or somewhere, there's a presidential election, something happens that disrupts the economy, and starts to throw you into a tailspin. And last but not least, number four, the industry is commoditized, after years and years and years of being beaten down by clients, that, frankly, want to be able to get your architectural services for the cheapest amount possible, architects are not equipped typically, to be able to have these negotiations to be able to see and represent their value at a very high level. And so because the industry is commoditized, there's downward fee pressure on what you can charge. And oftentimes, you may not charge what you could possibly charge based upon your value, because you're worried about losing the project.

Enoch Sears

15:39

Alright, so let's say after you listening to these four problems, you decide, Hey, Nick, that's fine, but my soul is calling me to grow an architectural practice. I'm up for a challenge, I can do this. Come on, there has to be some hope some people out there are growing architectural practices? And the answer is absolutely yes, they are. It's not impossible. It is difficult. But if you're up for the challenge, it could be one of the most exhilarating experiences of your life is taken on the challenge of growing an architectural practice. Now, if you do this, there's three critical principles that you need to understand. Principle number one, is that your firm will only grow as much as your own personal leadership grows. What do I mean, there's a difference between management and leadership. Leadership is someone who's willing, again, to let go of the reins, to empower their people to coach their people up and to be able to hire people in the right seats, someone who's going to have an investment mindset when it comes to growing the practice, instead of thinking like, I'm going to hire these people, because they're cheap, or because I can afford their salary. I'm going instead think, where is it that I'm headed? What kind of investment can I make in people, and that when I make that investment, although I'm paying a very, very high salary for these to have these people on my team, I know that it's going to give me dividends in spades, because I'm going to have more time, I'm going to be able to offload a lot of the running of the fulfillment of the architecture, and will be able to focus on growth. So number one is learn leadership. Some of you out there listening to this podcast, you may be natural leaders, there's probably a lot of you who think your natural leaders who actually aren't natural leaders are very few and far between. And as a matter of fact, even people to whom leadership comes naturally, will constantly invest in themselves and leadership seminars, understanding things like how to give feedback, how to hold people accountable, how to hold them accountable, while not demoralizing them, how to encourage loyalty, how to help people have a shared vision together, how to create a culture, all these things go into what it means to be a leader. So tip number one, if you'd like to grow an architectural practice is learn leadership double down on your own personal leadership. Number one, lead yourself and number two, lead your team. Tip number two, if you decide to go down this road of growing an architectural practice is learn how to sell. Now, as I was thinking about this podcast episode, there's one thing I left out and it was I was going to put down learn how to market but you know what I thought you know what, I'm not going to put that down because learning how to sell is more important, in my opinion, than learning how to market as an architectural professional what is selling. That means you have the ability to go out to create a contact to do some outreach, we call this business development, and to turn that relationship then into projects. And because you know how to sell you know how to close a contract, you know how to price it right, you know how to sell based on value as opposed to based on price. And then once your firm starts growing, you have money then you can invest in the marketing. See what we teach our Business of Architecture is that the first skill you should learn as an architect is how to become a rainmaker. And there's two parts of becoming a rainmaker number one is becoming a marketer, and number two is becoming a closer. But at the early stages of your firm, depending on how big your firm is right now, and how much revenue it's doing, the marketing is going to be a secondary consideration. Because a lot of your business can be one face to face, belly to belly through personal relationships. And frankly, people don't really care what your website looks like. I mean, let's be honest, you probably care a lot more what your website looks like, than your clients do. Because here's the thing, they're not experts in architecture. Now, this may sound like heresy here on an architectural podcast to talk about the fact that your website isn't that important. But I've come across many, many, many, many, many, six plus and seven figure earning architects that don't even have websites. Now, I'm not saying that that's the course to pursue. I'm not saying hey, go out there, ditch the websites and just go out there and sell it, you certainly could do that. Websites are more and more important now. But websites are sort of like a way to think about about in terms of architecture is their their sort of validation, they kind of it's kind of like a reference check when you hire someone, you know, you're not going to hire someone just based upon a reference check. But when you're hiring them, you're gonna go check out this references and if they check it out here you're like, alright, good to go. So most architectural websites are simply that they're simply reference checks. They're simply the client will go to the website poke around a little bit, say, hey, look, they're going to get a feel for does this feel like it resonates with me? Does it feel like these people are legit, and if so, they're gonna go ahead. Now having said that, it is possible to set up a website that really does the selling for you, but let's face it, most architect for websites are not set up like that they're sort of like portfolio sites, there's very little direct response marketing on it on a typical architects website, they're not really set up to actually sell you as a firm, they're more set up to, as I said, kind of informed the client, give them a little bit of trust, give them some kind of a reference point that, hey, we are legit, and we have done some projects, okay. So don't get in the trap thinking that, you know, you're going to create this great website, you're going to do this great, you're gonna hire a marketing agency, and they're going to help you grow your practice, that's not going to happen. Step number one is for you as an architect, learning how to sell and specifically using a selling technique or method or framework that is specifically for selling architectural services because selling an architecture, although we may use the same word, look, let's face it, people sell cars, people sell airplanes, people sell political offices, in both senses of the word, right? People, people sell houses, like people sell everything, people sell ideas, but the ways in which the principles are the same, but the way in which it's actually applied. And the way it's actually done is very, very different. So a Business of Architecture, we teach something called the compassionate conversation, which is a very carefully laid out process for helping a client understand your value that's particularly suited to the architecture industry. So there's many selling frameworks out there, whatever selling framework, you look, get a sell it, whatever you decide on, make sure you're following a system, a selling system, follow it and just follow it repeatedly. This gives you a selling system in your firm. Last but not least, my third tip for growing an architectural practice is do not create a precious practice. What do I mean by precious practice? Well, when I use the word precious, I mean, it's so precious that no one else can touch it. It's like your little gem. It's like, you know, my, it's my little closely held gem. And it's so precious that it just has to be done my way. There's a certain point, if you want to grow, that you're going to have to get past the preciousness of what you want. And that's why grown up practice isn't for everyone. For you, you may be so important to maintain a precious practice that you want to have three or four team members that you can control that aren't going to do things differently, where you can have clean oversight, you can do everything your way, there's nothing wrong with that. That's a very, it's a model that works, right. But if you want to grow, that model is going to be let's put it it's going to get in the way of you being able to grow the practice. So in quick review are three tips. Should you desire to grow your architectural practices, number one, learn leadership, understand people learn how to get the right people in the right seats on the bus, learn how to hire people learn how to network so that people are coming to you that want to work for you learn how to get your firm out there so that people are attracted to work for you. So you don't have to do so much heavy lifting, when you're trying to hire number to learn how to sell. This is an essential skill. Because whether it's you meeting with a committee, whether it's you meeting one to one with someone, whether it's you meeting with an employee, in a performance review, this skill set of selling is going to be applicable across the board. It's very closely tied to leadership. Because oftentimes, the leaders are also great salespeople, they might not see themselves that way, they might not think of themselves as salespeople. And if they went out there and tried to sell they might, they might not do a great job at it. But ultimately what a leader is doing is they are selling they're selling ideas, they're selling possibility. They're selling their team members and their staff on a vision. And number three, in summary is don't create a precious practice. If you want to have a precious practice, then that will limit your growth. Create a practice where you're willing to take other people's ideas in and bring in people who can grow and build upon what you've created. bring in people who are smarter than you bring people who are better designers than you are bringing people a better business sense than you are. This is what the best leaders do. The best leaders aren't intimidated by smart and successful people. The best leaders bring in those kinds of people, because they know that they want to be the dumbest person in the room. If I'm running an architectural practice, I want to be the worst designer in the room, I want to be the worst product manager, I want to be the worst salesman, I want to be the worst marketer, I want to be surrounded by people that have those skills. So I can be the conductor. And I can help them achieve together as a group what none of us could achieve alone.

Speaker 1

24:08

So I would love to hear your thoughts about this

Enoch Sears

24:12

this particular episode. Are there some things that I've missed that you think Enoch, you left us out in terms of the difficulties of growing an architectural practice? Let me know what you think? Have you tried to grow an architectural practice, I'd love to hear any horror stories that you've had about the difficulties and challenges of growing an architectural practice. And on the life side, if you feel like you've really done something remarkable if you've been able to grow an architecture practice, despite all of these challenges, please reach out to us here at Business of Architecture. I'd love to bring you on as one of our next guests and share with you and share with our audience. The tips, strategies and secrets for growing an architectural practice that gives you freedom that gives you fulfillment, and that gives you exceptional financial reward. And that's a wrap. Oh yeah, and one more thing. Today I want to thank the fall Link amazing individuals for leaving us a review on iTunes, Emma Greenberg, user block zombie Andrew from SD and Josh architects, we hear a better way we appreciate and I appreciate your amazing feedback. reviews help people find the show. So if you haven't already, head over to iTunes, leave us a review. And I'd love to read your name out here.

Unknown Speaker

25:20

Hey, a

Enoch Sears

25:21

quick note this is Enoch here and I have a question for you. Do you know someone who's highly professional, loves speaking with people and is skilled in the area of professional selling? Well, if so, I'm looking for a Director of Enrollment to join our team here at Business of Architecture. This is a sales position. And if you or someone you know, wants to impact an industry and earn an excellent income doing so head on over to business of architecture.com for more information. 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 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. The views expressed on the show by my guests do not represent those of the hosts and I make no representation, promise guarantee, pledge warranty, contract, bond or commitment except to help you conquer the world. Carpe Diem DM

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