The possibility now for small practice is like never before in the history of architecture Hello, and welcome to the Business of Architecture. I am your host, Ryan Willard. And today's episode is actually taken from a recent talk that I did in 2023, at the RBA, for their guerrilla tactics seminar, so they will attack six seminar is an all day conference directed at small architecture practices, mainly rhythm based in the UK, probably a bit London centric, if I'm honest, as well. And it was a very, it was a great opportunity actually, to be involved in the event, there's a really good day's worth of interesting talks. It's curated very well and very thoughtfully. And there's a lot of other guest speakers who are who are talking and discussing about the state of the industry, who we're talking, you know, from their direct experiences, a number of architects are sharing what they've done in their own businesses to actually grow, develop market sell, how what kind of processes and systems they've put in place to be able to become more efficient and more profitable. And it's a really fantastic day of networking, knowledge sharing, and really kind of pulling back behind the scenes of an architecture practice and seeing what other people are doing. So I had the the great privilege and honor of being the keynote speaker and opening up the event. And I talk a little bit about some of the things that we do here at Business of Architecture I talk about very briefly touch on the podcast and how Enoch kind of started the podcast and how that's grown and how we've developed it into a consulting agency today and the smart practice method. So it's a little bit of discussion about that targeted for the, for the English audience. And I'd like to let you guys listen to that talk. And hopefully there's a lot of value in that for because I think a lot of things whilst it is geared towards a UK based audience. It's very relevant for all architects around the world. So sit back, relax and enjoy my recent talk at the Riba guerrilla tactics, it's time to announce this month 200 Club. If you missed our episode on the 200 Club, listen back to POA episode 485 To learn more about this new initiative to benchmarking small firm performance. So a big congratulations to our POA clients. Mark Elster, Drew and Justin Tyndall, David and Kristen were Thomas Norton, Christopher Brandon Rainey Adams, Kimberly Doakes Lena bola spin Levine, Christopher Rawlings Yost, Ben de and Denise Burkett, Ryan Salas, Marina Robina, Judy and Larry APR. And Molly Wheelock, great job to everybody who's made it into our 200 club members this month, keep up the stellar work. This episode is sponsored by Smart practice, business of architectures flagship program to help you structure your firm for freedom, fulfillment, and financial profit. If you want access for our free training on how to do this, please visit smart practice method.com Or if you want to speak directly to one of our advisors about how we might be able to help you please follow the link in the information. So festering problems, okay, there's a lot of problems in the industry. I don't want to depress everybody too much. But we do need to get a little bit depressed because it's, it makes the good stuff even better. So I want everyone just for a moment. Turn to the person next to you and I want you to share with them what is the biggest challenge that you are currently facing in your business? What are the current obstacles? What are the things that frustrate you and just share I'll give you give you give you a minute okay that that certainly got everyone liberal animated. Let's just put just put a hand up and shout things out. Who the sorts of things that you heard or you were talking about? Cash flow, red lady jacket annoying clients. Yes, absolutely. Anything else? Convert converting leads? Yeah, good one, Shawn. affair of recruitment recruitment agents or recruiting as a process or both. Yes, hiring can be massively massively expensive. Fees fee bidding. Yeah, absolutely. Very good. Not knowing if you're making money or not excellent one that's not worse. Not Excellent. But I think it's a good one for us to talk about. Keeping your team happy and motivated and excited. Yeah, absolutely right. There's a whole array of massive problems. I'm going to focus predominantly on this dirty word called money. Okay. Now, for me at the root of most business problems, I'm gonna say 95% of them. I don't have any surveys to back that up. But that's just a number I'm throwing out there. Most problems in a business are related to money. And as architectures profession, we're not talking about it. And it's a problem. It's a massive, massive problem. We can see the results of this problem when we look at the beautifully compiled Rebbe benchmarking figures, but they make for continually depressing and sad reading. Okay, when you've got the average, take home salary of a sole practitioner at 25,000 pounds a year. In London, that's tough. That's very difficult. Okay, don't I tell my American American compared to the Americans complain about how much they get paid. But they get paid quite a bit more than here in the UK, but they have other things they've got, they've got to pay for. But here in the UK, our fees are the architectural fees are very, very low. Okay. And this is a massive, massive problem. So we've got low fees, we have low salaries, were economically underperforming as an industry as a whole. Okay, compared to other professions, and I could go into for a long talk about how this begins at university there is zero culture of business finance, or the the financial context with when with which architecture actually actually exists. We do not talk about it, we actively ignore it. Okay, this negation has a price. And if we're frustrated in our businesses, that is part of the price, okay, because it's not fulfilling, we talk about all these incredible things that we want to be a stand for, from diversity, inclusion, sustainability, solving the housing crisis, we have little agency in these things if we are not supported economically, okay. Money is an index of agency, it gives us the capacity to take action. Okay, the old guard of methods of running practice, they've, they're old, they don't work. Okay? They're the old model of growth grow a massive big practice that's not necessarily relevant for us anymore. Okay. There's this feast or famine cycles up and down cash flow. It's like, great for one month, and all of a sudden, now we're digging the barrel trying to pay for all sorts of stuff. Okay, we've got people who are leaving the profession, overwhelmed stress, burnout, fear of growth, late payments, architects get leveraged for risk all the time by developers. Okay, anyone here got or anyone here or know anyone who's got late payments? Okay, a few of you. Okay, that's very common in the industry. When I've spoken to businesses and done my own surveys on this, it frightens the hell out of me to see that on average, and architects practice has 50% of all of their accounts receivable. So all of the money that's owed to them is late. So late, someone's someone is leveraging you. Okay, developers know, architects are a pushover, they will leverage architects, they will leverage their own risk against the agreeableness of the architect. This is a problem, because you're going to get paid late, the original amount that you negotiated, the developer is going to make a shed ton of profit. Okay, we're not sharing any of that this is a problem. Okay. We have a culture of fear in architecture, the way that education works, the way that part three works. Okay, we've become frightened. We're getting frightened of being sued. I was chatting earlier to somebody about working with lawyer clients, okay. Lawyer clients are very good at intimidating architects because they know the law, you don't want to get sued. I'm not going to mess with them. They won't pay us. Okay. low profit margins is accepted as norm. And we have this thing called the culture of design, which is the sacrifices that we make in our relationships, our health, our businesses, our money in order to fulfill a higher purpose of design. Okay. The possibility, very quickly, 60 seconds, turn to your partner. What do you want? Why are you here today? What do you want to learn? In your practice? Just quickly, 10 to 20 partners.
Find client down. Okay, equally as excited. I like it. So, I want to create a possibility here of what a practice of the future might look like what your practice might look Like a financially abundant practice, a smart and agile practice, whatever that might mean for yourself, and empowered culture around money. Often, this means transparency. This has the ability from the top down, you're sharing what's going on financially in your business, your team members understand that you're making a profit. And that profit isn't a dirty word. I had an experience a little while ago, where some young, maybe a part one or part two. I don't know how they found my phone number, but they were very good and found my phone number and said, they've been listening to the Business of Architecture podcast. And this young person was very upset with their boss. And they said, It's out of order. It's ridiculous. My boss is exploiting all of us. I was like, Okay, well, first of all, how did you get my phone number? Why are you talking to me now? I entertained the conversation. And he said, I just found out how much my boss is charging me out. And I was like, okay, he's charging me three times what I'm getting paid.
Okay, all right. But I, we laugh at that. But that's like, there's a deep misunderstanding there. Okay, that's a lack of transparency. That's a lack of business culture, that's a lack. That's what happens when we when the gate talking about finance and money as being the real driving force of architecture, in our businesses, our team members don't understand. Okay, and it's disempowering for them. It's disempowering for them. Okay. So an empowered culture around money, profit with purpose. When I talk about profit, I'm not necessarily just talking about, you know, senseless greed, but actually creating a mission and a vision for your business of what you want to do with profit. I don't care if you want to use it for your own personal lifestyles and your family, and to look after the people around you. Or you want to use that money for causes that are important to you. At Business of Architecture, we've got a number of clients who are using the profit that they'd been making their businesses for years, to do their own self initiated projects, and developments. And they get to use these projects as prototypes for certain types of technology. Or we've got one client at the moment in, in Princeton, who's an advocate for gentle density and for for housing, and for affordable housing. So she's taken it upon herself, to be actually a builder of that kind of stuff. But you can't do that. Without profit, you can't do that without a business that's successful. And it's working. I want people to be defining growth, don't be afraid of this word growth, but define it for yourself, define what it means for you. Okay, so I'm gonna go into all of this, you can, you can look through the notes. But I'm going to give you a few principles here of how we can actually be agile through the Business of Architecture. And I want everybody for the context for today is even had some amazing conversations and talks, people sharing and being very open about what the sorts of successes and business innovations they've been having in their own company. But the possibility now, for small practice is like never before in the history of architecture, it's phenomenal what you can do with a team of labor three people, versus what would would have taken 20 people maybe 25 years ago. Okay, that's really, really extraordinary. So number one principle, money is an index of agency. It's by itself is inherently useless, but it is a facilitator of action. An economically empowered profession has the capacity to act and make societal change change. Money, as I was saying earlier, is the oxygen of a business. So we've got to learn number one that says sell sell it, track it, grow it, sorry, watch it, grow it and share it. Okay, so we go through a process of learning how to sell negotiate fees, negotiate premium fees, we want to be able to understand how to track it with optics, learn things like Earned Value Management, who has earned value management set up in their business, anybody or a way of tracking profit on every single project. It's a show of hands, who's kind of got that and locked down. Okay, great. Okay, timesheets, who loves timesheets? There's nothing sexy about timesheets, but they are super, super important. Okay, and then developing systems and automations and processes to help your business protect the profit that you've created at the front end through selling it. Number two, profit with a purpose. This means defining a vision framework for your own biz SNESs that's aligned with your values, your purpose and a mission, take some time to explore what these are, what is the bigger goal of your business? Take some time as well to create what we call a summit map. Okay, that's like a five year business plan. Where do you want to go? How do you want to get there? What are the things that you need to learn in order to have to have it happen, who's somebody that you can model after who's already gone and trod on the path that you want to be doing? Have your profit making aligned with a bigger future for yourself, for your lives, for the interests of your team members, and for society. This idea here, the network practice, most small businesses get themselves into this scenario, the bottleneck, anyone experienced that every decision that has to be made in your business has to go through you. This slows things down. It's incredibly stressful and overwhelming. Small practices had the ability to do this, to either network internally, or network of other people collaborate. This is this is super, super powerful. We've got small practices, we've got core teams of four people in one country. And then they've got team members in Bolivia, team members in India, team members that they then collaborate and plug in with other businesses, or they plug into larger practices. The space for innovation around that is enormous. This is what we call it the Business of Architecture are six stages of the free architect. Okay, we're interested in creating architects who are investors who have financial freedom, who have multiple streams of revenue, who have the ability to create a portfolio and share in the wealth creation that is intrinsically linked to the services that we provide. And you can create property and wealth and distribute it in whatever you want to do, however you want to do it. Okay, you can, we've I've interviewed some amazing practices in the past, who have built sustainable, circular economies and communities, who have been really pioneering all sorts of different types of technology, and have made good money at the same time doing it. Okay. But these are the these are the stages that a practice will often go through, we start off here, everyone has a human they're born. At some point, we have the great idea that we're going to become an architect, usually a career advisor and notices that you're good at maths and art and suggest that you've become an architect. So then you commit the next 20 years of your life training this training for this and spending 10s of 1000s of pounds. But we come out of university pretty much as an artist, okay, not in every university, for sure. But in general, we're artists of some description, okay, at some point, we go through this next phase where we become an architect, we get real life experience working in a practice, we understand that as a client, we understand as other people, we understand that it's not all about me and my ideas. Then we have this entrepreneurial seizure for some people, they decide that they're going to start their own business, and this is where it often goes quite wrong. Okay. But the next phase is what we call a rainmaker. That's somebody who's skilled in negotiation, marketing, positioning, and being able to attract, retain and create high paying clients. Once we've done that, then we can move up to what we call the trim tab, then when those Buckminster Fuller, and how we describe trim tabs, a small piece of material at the bottom of a big rudder, and when these big rudders on these big oil tankers move, the trim tab is the small thing that moves first, and then it creates a kind of chain reaction, which creates the big rudder to move that then change the direction of the the old tanker, okay, that's who we want to be in our business, where it's created with automations processes systems, that you can get a lot of result out of a small input, that's when we start, that's when we can start having a lot of fun. And there's more freedom, then we migrate to becoming a leader. And then to becoming an investor. One number or metric that I'd like to kind of share with you. We have a thing called the 200. Club. Now, the 200 Club is based on US dollars, which translates to about 160. But as a benchmarking number, we define a high performance business as being a business that is turning over. This is the net operating revenue, 160,000 pounds per full time equivalent employee. Okay, that's an aggressive target. But there's plenty of small practices, not massive corporate practices, that doing that and beyond. Okay, and I'm talking quite significantly above that. That's a high performance business ratio. Here. We've got some other numbers that kind of move along. But I do think that we want to be having aggressive financial targets that are set with alignment for our own values and where we want to go, and that we're driving it with purpose. And then finally, sorry, anyone who is letters have disappeared. But finally, today, you've got the opportunity, a rare opportunity to be able to listen to other practices and what they have been doing. Okay, this is really, really important in our progress of creating agile businesses is the ability to share the ability to listen, the ability to be
sharing with each other, the insights and the pitfalls, and the challenges that you're you've been experiencing. Inside of this final path. There's these three things, this one was meant to say tools and infrastructure. Okay. So this is the systems that and processes, spreadsheets and things that you need to have in your business for it to work efficiently. This next one is, is routines and disciplines. Okay, so in order to have your infrastructure working, you need to have the routines and disciplines for it to operate. And to have routines and disciplines, we need to have a change in paradigm and mindsets. Okay, that is the one that we ignored the most. And it's the most powerful one. And that is all for me. Thank you very much.
And that's a wrap. And one more thing. If you haven't already, please do head on over to iTunes or Spotify. And leave us a review. We'd love to read your name out here on the show. And we'd love to get your feedback. And we'd love to hear what it is you'd like to see more of and what you love about the show already. This episode is sponsored by Smart practice, business of architectures flagship program to help you structure your firm for freedom, fulfillment, and financial profit. If you want access for our free training on how to do this, please visit smart practice method.com Or if you want to speak directly to one of our advisors about how we might be able to help you please follow the link in the information. The views expressed on this show by my guests do not represent those of the host and I make no representation, promise guarantee, pledge warranty, contract, bond or commitment except to help you the unstoppable
