485 Architects Unveiled Deciphering Firm Performance with Enoch Sears & Rion Willard - Up1 | Otter.ai

485 Architects Unveiled Deciphering Firm Performance with Enoch Sears & Rion Willard - Up1

Enoch Sears42min

Enoch Sears

00:00

It's very interesting how psychologically we start to provide a justification for our own underperformance and we normalize it. Hello and welcome back architect Nation. I'm Enoch Sears. And this is the show where you'll discover tips, strategies and secrets for running an architectural practice that lets you do your best work more often. If you haven't already headed over to smart practice method.com to check out our free 60 minute for moto masterclass What are you waiting for? To get free access to over a decade of experience, research and tons of hard work sweat and energy into discovering what it takes to run a successful small practice that supports your life. So today we're going to have the amazing topic. I'm joined by my co host here Ryan Willard, who's the host of the Business of Architecture podcast and actually the host of this podcast as well. Plus, for those of you don't know, Ryan Willard is the is the right hand man hear at Business of Architecture, practically a co founder came on board the business early in our consultancy have been working together, Ryan has been leading up the programs that we offer here at Business of Architecture, the training, the coaching, he is a high performance mentor in his own right. And so super happy to have him here on the show because of the many very practices that he gets to rub shoulders with in the Business of Architecture programs. And now a message from our sponsor our cat, there's no doubt that building information modeling has changed the industry. And I'd like to tell you about a cool resource for you as you're looking to get the best product information for your projects. This is what our cat delivers. Our cat is an online catalog that offers data rich objects, family systems for free without registration. And to sweeten the deal. You can download these files in the last four editions of Revit and SketchUp format or DWG format. It's all very clean, they're kept up to date, a fantastic resource for you, as you're trying to figure out what you want to specify and making sure you have the best and up to date product information. Go to arquette.com today and check it out. That's Arca T dot c o m. Right. Welcome and good evening.

Unknown Speaker

02:07

Thank you very much for such a generous introduction.

Enoch Sears

02:10

While you're welcome. So Ryan today with that now I got you feeling good. Let's jump into the conversation. So today we're going to talk about we're going to talk about the the 200 club. What we are 200 Club is it is it a secret society in the in the underworld of Manhattan. You have to know somebody to get in is this is Winky, a swanky penthouse in London in the financial district. The 200 Club is shall we hold them? Should we hold them along?

Speaker 1

02:43

With know it's an exclusive club. And it's a very special, it's very special club that we want to see more people joining our 200 club right around and right around the world.

Enoch Sears

02:58

Indeed. So here you are, you may be wondering, what's the 200 Club? Well, let's set the stage first. And we're going to obviously this relates to you running a small architectural practice. And let's first set up some of the problems that we're going to be addressing on today's podcast episode problems that you likely are dealing with as a small firm owner. So problem number one is that when you look at how your practice is doing, you're very much in the dark with or it can feel like you're in the dark with how your firm is performing compared to other practices, other practices of similar size. You may feel, for instance, that your operations are inefficient, you may feel that something may be amiss, you're kind of maybe even confused a little bit wondering, what are the things that you don't know? That you don't know? So this can be perplexing and certainly feel lonely as a firm owner. Ryan, what other problems are from owners up against?

Speaker 1

03:56

I think there's no real comparators for high performance. So a lot of hype, a lot of when we jump on sales calls or we start interacting with clients. Sometimes they'll say, Well, what what is good, what is good, like, how do I know what is performing? So sometimes we have these AIA reports or the Rebbe reports. But I don't think whilst they're good at giving us an idea of what other architects are charging, for example, that these kinds of fee surveys or the fee surveys that we've done here. They no they don't offer any real comparators for high performance. There's no grading there's no like this is this is excellent, because we're often looking at data from an underperforming industry. So we look at a lot of these. We look at these benchmarks. I mean, when I look at the Rebbe ones, for example, and you see the numbers of like the average architecture firm, I mean just even Nothing better than what the average is, is not good. Exactly. Because because it's so low.

Enoch Sears

05:07

Well, indeed, I mean, we just look at like the AI produces, I believe it's every other year, don't quote me on that. But the air produces a very well documented compensation report. That's, that's very useful for practitioners to look to see by area. Well, how much people are paying team members how much people are paying staff members. And it's interesting, if you look at the numbers that that small, firm practitioners earn, so firm owners themselves, whether they're solo, or they have a small team around them, you can look it up. And you can see, based upon their sample size, you can see how much a firm owner of a small practice might be earning. And historically, it's been around, you know, it's gone up a little bit in the past few years. But we're talking 80,000 Year $80,000 or so US dollars. And when you compare that to other professions, other businesses, other things that people could be doing, I mean, a very successful fast food chain, here's called In and Out Burger, you've probably heard of it. They're, they're famous for their, their simply prepared hamburgers, their simple meal. And there, they always have a line through the drive thru. I have a friend who is a manager of that store, and he earns $120,000 a year. So he's a six figure employee, and no, no college education. Whereas architectures, architects are running practices and have team members and have liability and, and are working very, very hard and have so much technical expertise, so much creative expertise, it's not uncommon to see them bringing home, it's very common to have small firm owners earning and taking home less than $100,000 a year, which maybe 10 years ago would have been a decent paycheck. But today with inflation, the cost of everything. $100,000 is solidly middle class income, especially if you're a sole provider. If you have a spouse that earns the same thing. Well, that puts you into according to according to the percentiles here in the US that will put you solidly into the middle class, the middle of the middle class, not upper middle class. And certainly if you're in a city, that would definitely be the lower middle class I was talking to Ramiro, one of our firm owners, and he was remarking that his income has doubled over the past year. But he quipped, he said, Now that puts me into the middle class now, because he's in a, he's in San Jose, which is in the, it's in that so let's talk about what you need to be earn about half a million a year to put yourself in the middle class there, you know. So all these are challenges. And and as you mentioned, Ryan, when we compare ourselves, it's easy to it's easy to look at other people, other other practices that are low performing or across an industry that's low performing, and and at least we'll get a good feeling that we may be doing well. But that good feeling can be misleading.

Speaker 1

07:49

Yeah, absolutely. I think another problem that we have in the architecture industry is simply we don't celebrate money. We don't celebrate financial success. It's kind of considered uncouth, impolite, perhaps it's, you know, it goes against the values of architecture. It's slightly crass, it's grotesque. But I think if I think this is one of the biggest misconceptions about successful business, and there's a there is a gracious and an empowering way for us to be celebrating money, because it is the great fuel for agency, if we're talking that you've heard us talk about this many times on the podcast, if, if we're really committed to the things we say that we're committed to making changes, for and around, then economic empowerment should be the fundamental thing that we are striving for. And looking for so celebration of celebrating success, celebrating practices that are kicking ass financially, and making good profit and paying their teams really well and, you know, able to take the whole office out on a trip around, you know, to Europe or something like that. And how many practices are able to do that or give everyone healthy bonuses and invest into new research and design thinking? So we're not we're not celebrating money is as an industry and this is a this is a gross gross problem.

Enoch Sears

09:28

Indeed and and and not only do we not celebrate it, we actually, it's common to denigrate it. There's a culture of of looking down on commercial practices. There's blog posts and articles have been published, denigrating practices that are characterized as commercial, which is interesting because it's one thing to produce architecture that may not be culturally significant may not be adding to the discourse and dialogue of architecture, but to to pair that up with financial success. Is is a fallacy of judgment and a fallacy of values. And it's detrimental to us as a as an industry. So I was talking with one of our mutual friends. I won't mention his name here on the podcast, but he might even listen to this episode. He said something very funny in a conversation, talking about the difficulty practices have hiring right now. So if you're a practice owner, you probably experienced that you may have a lot of demand for your services right now. And just difficulty finding someone. Right, so short staffed, realizing it's very difficult to find qualified people. And in our internal conversations, this, this gentleman said he made me chuckle. He said, It's not that they it's not that small architectural practices can't hire. It's simply that they can't pay high salaries. That yes, let's face it. This is a demand supply and demand is what rules the market. And if you as a small practice, if you're paying extremely high wages, you won't have a problem hiring someone. That's for sure. Now, you want to pair that up with a nice culture, etc. But if you're trying to get people for pennies on the dollar, or you have constraints on your budget, it goes back to this conversation of money. So Ryan, what is what is the 200? Club? And why does it matter? So we've set up the problem here, the problem of lack of comparisons. Let me let me backtrack a bit here. So I've been doing jujitsu recently, and I've been talking about this on some of my Facebook Lives and brought it into the podcast a little bit. It's a fascinating sport, I'm really enjoying it, especially at kind of midlife at my age, it's fun to get out, use my body. But one thing I've noticed is that when I, when I first started wrestling, I enjoyed, I was intimidated to wrestle the people that had the higher belts, the black belts, the brown belts, the purple belts, because let's face it, they were so much better than me, and I walked away from that experience, just feeling bad about myself generally felt deflated, I felt like, I'm never going to get this, it's not going to work. I'm not any good, all these deflating feelings. And so it's not fun to experience that. So when did this phase where I was, I wanted to run on white belts. And so I've wrestled white belts, but what I noticed about the white belts, is that because they don't let they lack the technique, a lot of times they use, they use really rapid movements. So he moving really fast, they're trying to use a lot of strength. And it's very easy to get hurt wrestling a white belt, because if you imagine their arms are flailing around, it's very easy for them to elbow you in the face or knee you in the chin or the jaw. And it's kind of dangerous. And not only that, but it was, it wasn't as challenging for me, because I'm pretty physically fit guy. So a lot of them I could just overpower them through my sheer strength. And I was finding that it was it was hampering my ability to be a good wrestler, a grappler, because I was relying on my strength as opposed to technique. So this is the problem when we're comparing ourselves with another group or subset of people that are that are beginners or that perhaps aren't high performing. It lowers our own performance. And this is one of the challenges that we have running small architectural practices is that for starters, people generally aren't very open about how they're performing financially. And even when they are when we look at those numbers, because the industry overall is averse to business, generally speaking, uneducated, about business principles, generally speaking, that we have, in a business sense. We have low performing firms, we're comparing ourselves against the benchmarks against those we're thinking we do great. So I hear people say this all the time. It's like, well, we're already charging the highest in our in our in our market. And I look at that I say, well, but you're still not posting much of a profit. But see, from their perspective, and I get it as a firm owner, you think, well, we're actually doing pretty good. We're already hearing clients tell us that we're more expensive. We're already hearing clients tell us that we're a lot. And so we feel pressure, we don't feel we can raise our fees anymore. So this is one of the challenges of you know that you're never an island and you're going to be influenced or impacted by the milieu around you, the other practices that you compete against, and if all those practices are so called White belts, this is going to be an issue. So to take this example a bit further, I was talking with one of our one of our clients right now who's a smart practice member. She's currently in the smart practice program, teaches at a well known architecture University also is running an architecture practice very, very bright woman. Brilliant, studied undergraduate, studied business undergraduate, studied psychology as well has this incredible background eventually ended up pursuing architecture because of the desire to for passion, the desire to be an artist desire to create. And what she said to me was very interesting. She's like, you know, I learned business when I was in college. You and school, but what I'm learning in smart practice has completely blown me away, which is like the business principles that you all are teaching and how you've brought it together so succinctly is absolutely next level, which is I never could have imagined this who's all this blows away any MBA, anything that I could think of. She's like, my, my husband, who also runs a business is in another program for his business. And I was he was commenting that he wishes, there was something like this available for his practice. So when we talk here on the podcast, the reason I bring this up when we talk about business, it's difficult at times to understand what that really means is kind of a blanket statement. What are the Business of Architecture? What is business? Well, one of the challenges that I had at the beginning, when I was starting my architectural practice first time, 15 years ago, was, I didn't really understand I didn't even know enough about business to know what it really was. Meaning that I thought that business was simply getting the money getting paid, getting invoices in collecting, and at a certain level, that's what it is. However, there's so much more than that to actually being a good business person. And so marrying these two together, marrying together the architecture, being a divine architect, and at the same time, marrying together business savvy, of being a lethal business person, these two are an unstoppable and oppressive combination. But how are you going to know that you have that? How are you going to you have that business acumen? What can you use, if you're in the jujitsu realm, sparring? It's not like you have belts, right? In the jujitsu. We do have belts, we have belt colors. And so we can see where someone's at, we know how well we perform. And certainly if we join a tournament, we're going to know very quickly how well we perform because we're on a live mat. So what's the equivalent in the architecture industry? And this is where we come to the 200. Club. Ryan, tell us about 300 Club, what is the 200? Club?

Speaker 1

16:51

So the 200 Club is reserved for the high performing businesses. And what the 200 is referring to, is a performance ratio. Okay, so this is a this is a financial metric that is basically giving you a benchmark or an idea of how well your business is doing. So when we have all of our new clients come in to Business of Architecture in the smart practice program, one of the first things we get them to do is to run an audit of their company. And one of the first numbers that we're all interested in looking at and ascertaining is what is their performance ratio. Okay, and it's quite simply, it is the net operating revenue for an for a year, or in most most cases, we do it, we do it month by month. So we'll take the net rate net operating revenue for a month, and then we'll divide it by the amount of full time equivalent employees, and then we'll multiply it by 12, to give an average for that month, if you had a year based on that month. Okay, but you could do it using a whole year's worth of here's what my net operating revenue was for the whole year. And here was the number of full time equivalent employees. Now, what's interesting here is that we're that is that is that for many people that do this calculation, and it's not just billable staff that we're looking at here, we're looking at all staff, all team members. And this number is very useful, because it gives us it doesn't tell the whole story of a business doesn't it certainly doesn't tell the whole story. But it certainly gives us a first glimpse of how well a business is doing. And for those businesses, we've kind of created a kind of set of tiers of where we've where we see high performance businesses versus the low performance businesses. So I'll give you the I'll give you the tear at the tears. A business that's doing $100,000 per per full time equivalent employee per year. Gets us gets a sad face, put it that way. This is a cause this is a cause for concern. This is means that there are things missing in the business. Usually, there's no pipeline, there's no sales, there's no marketing. And the team are working their asses off. Now, one of the things is busted overwhelmed. So one thing that's interesting here as well is that we asked for full time equivalent employees, which means it's not just bums on seats, it's how many hours so we count one person as being a 40 hour week. So this becomes interesting because If you've got partners who are doing 80 hour weeks, you're not one person, now you're counted as two. Now, this changes people's metrics. When we start when we start getting into looking at how many there's been, there's good timekeeping. And we can pull that data very easily. And we can work out what the full time equivalent employees are, we start to realize that the huge amount of hours that many practices are doing means that actually their full time equivalent employee number suddenly shoots up. And their performance ratio drops. Great, because that means now we're getting a bit more of an accurate reflection. It's not just based on the bums on the seats. So the markers, the 100, below 100k, that's a sad face, it's not very good. There's a lot of space for improvement. Perhaps if you're a one man band, and you've just started up your business, or you're in a startup phase them, we'd expect to see that. Okay, but if you've been going for a while, then there's there's a lot, then I would say there's a, there's quite a bit missing, the next number would be from the next band, if you like would be from 100 to 150k. So that's the kind of tolerable, it's okay. Okay, there's, there's still a lot of growth 152 199, if you like, that is good. Here we're doing we're doing well. But the 200 Club, that's $200,000 per full time equivalent employee. That is what we consider a high performance business, when we see businesses doing that, usually they're doing a lot, right, they've got good pipeline, relatively doesn't necessarily have to be relatively well established in terms of they've been around for years and years and years. But often that's the case, usually, they're able to command higher fees. And it's also demonstrating that their team members are not working crazy hours. And they're working very efficiently. So the 200 Club is businesses who are hitting that benchmark of $200,000 per full time equivalent employee. Now, it doesn't stop there. Okay, because we've got clients who are in the four hundreds, I think the probably the highest we've seen in recent times is about 400 platforms and 50,000 or so dollars per full time. And that's a very, that's a business that is absolutely kicking ass and crushing it. And they're doing fabulous work. And it's, it's quite interesting when you run these sorts of numbers on some of the bigger practices. So sometimes you might look and look at some of the newspaper articles in the Architectural Press, and they publish the size of a firm, and like how much revenue that they're generating, you can start to play around and see which practices are high performing. So I've done this in the UK and a practice like Zaha Hadid tends to be there kicking ass. When I've when I've looked at it and makes sense. And they've got some they've got some good things. But then there are other practices who are weren't mentioned who they're big, why not? Think BDP I'll give it and say BDP was one of the ones I looked at, I have to have to recheck my numbers. But there was a there was a few who were in the, in the sort of top 10 In the UK, and they there who weren't performing as well as you'd expect them to be performing. But you can go and check and go and check those numbers. I've tracked the BDP if I'm incorrect.

Enoch Sears

23:42

So if Yeah, and if you're listening to this, so just to clarify the net operating revenue, one way to think about this number, if you're wondering probably okay, how do I measure up here? And how does this relate? I'm curious now. So your net operating revenue, without going to a lot of details, you can think about it this way. It's the money that you have to run your practice, after you've paid not your expenses. But after you've paid any money that's not yours. So what we typically mean by that is money that you've collected for a consultant as a pass through expense, money that you're that you've been paid for reimbursable. Like this is money that is just sort of passed through income. It's not necessarily yours, right? If you're collecting on behalf of a consultant, like a structural engineer, those funds would then get passed through to the structural engineer. So that number is not included. Because if it were it would throw off the number, right? Let's say that you're a practice and you work with a lot of structural engineers. And the work you do is very structural engineering heavy. And so they your fees are very, very high. But the actual money that you actually have to run your practice is very, very low, that would be a misleading number. So that's why we use net operating revenue. So if you take your it's basically you take your total billings for the year and whether you do accrual or cash it's we're not going to get into that now but they would be a little bit different depending on how you collect, etc. But let's just take your cash on a cash basis, the money you collected for a year, this would be most pertinent for actual performance because it factors in collections. So the money you collected for a year, and then you subtract from that any reimbursable expenses or any consultant passer expenses, and most likely, unless you're buying furniture and stuff like that, that is going to be your net operating revenue. And your net operating revenue, then again, like I said, is the amount of money you have to run the practice to pay yourself, to pay your staff to pay your profit, to pay all your operating expenses to invest in marketing, it's the money that you have to run the practice and make a profit. So that would typically be the money that the business brings in. That's earmarked for the business itself. And then as Ryan mentioned, you just divide that number by the number of full time equivalent employees, which is based on a 4040 hour workweek to get yourself the number.

Speaker 1

25:55

Absolutely, I mean, I think it's interesting as well, you said there about the difference between cash and accrual. I mean, with our clients, we encourage them, well, we encouraged them, we tell them to do cash, because we're we're interested in collections as well. And we see, you know, that accrual can distort things a little bit. And when we see it, we find it quite useful when we do it in cash, because it quickly helps us identify it, there's a problem of AR, and past you invoices. When we start seeing numbers that are that are low.

Enoch Sears

26:29

We don't want to confuse anyone to get into that too much. But ideally, you have, you know, we like to we like to see there's benefits from running a three book system. So this might make your head explode. But actually running a cash basis accounting, running accrual basis accounting, as well as running a specific accounting for taxes is really the proper business way to do it. Because what ends up happening is if you're just pulling all of your performance ratios off of QuickBooks, which is generally the way that your accountant will do things is they'll do it based upon tax advantageous categorization and the way things are structured is all about paying taxes. Now, the challenge with that is that paying taxes and the way that government sees things is very different than the way that you want to see things as a business owner. So for instance, let's say that you have car leases a lot of in kind compensation that you take out for yourself that you pass through the business, like for instance, you take the team out for meals, or maybe your wife, your husband is on the board of the company, and you go out on date night and you have a small meeting, and then you write up that entire meal. Well, you know, typically, we would want to in a performance based situation, we would say, you know that wouldn't, we've just included that expense, really, because I mean, under the law, it's because we have a company meeting. But realistically, we might want to exclude that because we understand that that's in kind compensation that's given to the owner so it can get nitty gritty, but if we just focus out from a high level, keep it simple. That's why we like this performance, the 200 Club is so beautiful, because it doesn't take any of that account, it just takes two numbers now operating revenue, the full time equivalent employees, and then it gives you a good benchmark now where you sit. Now what's interesting, what we find is that when we take firm, firm owners through this process, there's there's pushback and there's resistance, because when they suddenly you see that you're not doing as well as you thought, or you find that the tide has gone out. And suddenly you can see who's not wearing any board shorts, suddenly, that can get very uncomfortable. And so typically, sometimes what we see is for motorists wanting to justify why their numbers low, they'll say, Well, you know, we're in a small rural area, or, and there's probably 10, or a dozen different excuses as to why we might justify a low number in our mind. You know, we like working with clients that have limited budgets, we enjoy doing this kind of nonprofit work. And so we it's very interesting how psychologically, we start to provide a justification for our own underperformance and we normalize it. We normalize our own underperformance through justification. And the ramifications of this are serious because we have low industry wages, which causes us to lose brain power, we have, you know, we have people who are fleeing the industry, meaning that mid career professionals are leaving architecture, because they're finding better opportunities and other industries. So at the end of the day, you know, we have ourselves to blame, as we've said many times on this podcast, but the beautiful part about this is if we have ourselves to blame, we also can be the solution in terms of this problem. But it doesn't help if we don't understand where we're at, and where we stand in terms of the 200 club. Yeah, now the 200

Speaker 1

29:39

wouldn't Absolutely I mean, this is it's, you know, it's a it's a real accomplishment to hit that 200 and sustain it, you know, to kind of constantly year in year out be sustaining that, that that 200 I think it's really, you know, it's very good. And it's such a useful metric to kind of impose on yourself, if you like, because it helps you start to calibrate efficiency inside of the inside of the business. And I think it, I mean, we've seen it a lot with with companies who are hitting that 200. And they're, they're, you know, they're very keen to protect it. And they're keen for it not to drop or they're keen to, to increase it to 300, for example, and this is where we start to see innovation happening. And people getting really interested in how to monitor profit bit profitability inside of their projects. And they start getting more interested and more detailed and more focused, and, you know, refining their tools for tracking how many hours are being done in a project versus how many, you know, how much money is being lost, they can see the burn rate on all of their projects. And they start getting interested in the leadership and interested in implementing new technology and tools and AI and innovation, all this kind of stuff. Because they're kind of focused on this performance metric, and they want to protect it. Whereas if you're not looking at that, then what we'll often see is the old school way of running an architecture practice of just throw loads of bodies problem, and with little innovation with little care for for it and then just be resigned to the fact that oh, well, architecture is a low paid profession, you know, suck it up.

Enoch Sears

31:27

Absolutely. So the 200 Club on this, this is this is groundbreaking because of the architectural industry of practices, particularly small practices, because the small practices make up the vast majority of practices and practices can come if we have all the firm owners focusing on this number and understanding what it needs to get themselves into high performance mode. Who wouldn't want to? Now one of the challenges that we often tell ourselves is Oh, high performance means more work. Ryan, would you say that our firm owners that are earning 300 to $400,000 per employee, would you say they're more overwhelmed and stressed out than the people earning one hour or less?

Speaker 1

32:05

In general, way less? Yes, way less stressed. Way, way, way less stressed. I mean, the I mean, when I think about the the guys who are in the three hundreds, they have the nicest. You know, they've got time to sit and design. They've got time for this team members, the team members aren't working crazy hours in it, because because that number is reflecting that if you're doing it properly.

Enoch Sears

32:33

Yeah, yeah. Yeah. All right. So what we'd like to ask you, if you're listening this episode, we'd love to know, if you have done the numbers. If you're, if you're on the 200 Club, we'd like to know, send us an email, just write into support at business of architecture.com. You can reach out to either of us on any of our social media profiles. You can find me on Instagram, at business of arc. So business of AArch. And then Ryan runs the VOA account and the Instagram handle over there is right? Is that Business of Architecture UK. Yeah, exactly. Or you can hit up Brian will run his personal account. Alright, so that's how you can reach out to us. But we'd love to talk to you a few. If you fit into this category. We'd love to have you here on the show. We'd love you to talk about it. We need more more firm owners who are willing to, you know kind of out themselves for being high performing. Let's take away the stigma of making lots of money in architecture. Let's celebrate it. Let's celebrate you as someone who can manage teams, someone that can manage people hold you up as a light for other practitioners. And the goal here is that other practices, as as practices begin to, as we stopped integrating earning money and we start to enshrine it and ennoble it. Would it be possible to shift the conversation in architecture? Would it be possible to push back some of the forces that are causing the brain drain happening in the industry that are causing us to such difficulty hiring, that are causing the erosion of the responsibility of the architect that are causing, you know, on a very personal level architectural practice owners to sacrifice their health, their wellness, their relationships, their financial well being, because they want to do work that they love, that's the goal. So please reach out to us if you if you are in that in that number. If you're in the 100, or even the 100 140 range, please reach out to us as well. We'd love to talk to you and have a conversation about how the simple strategies that we teach in smart practice can help you and your practice. There's really, there's no excuse for being below that range other than simply ignorance. And ignorance is a great excuse because we were never taught these principles in architecture. It's not something that the architectural schools focus on. It's not something that that we were taught by our mentors. And so that's a beautiful opportunity. Because what it shows us is there's there's some low hanging fruit, and it's it's it's not as hard as you think, to be able to turn these numbers around and then once you do Do, you'll find that you're working less, you're having more time to spend on the things you enjoy, you're being able to do better work with better clients. And we find that people's lives are improved their relationships, they prove they have more time with their friends, their family, they're more present and overall more fulfilled.

Speaker 1

35:17

So I will say a little bit about location, because this, obviously, this is a number that we've kind of, you know, in our experience of working with hundreds of practices, this is the kind of benchmark where we see it's a very well, we've seen high performance, it doesn't work, if you're in an in an emerging economy, I would, I would say that because the numbers are gonna be if you're an emerging economy, South Africa, or India or somebody that the numbers are going to be very different. And if you're listening, and you're kind of and you want to have a benchmark as well, another kind of rule of thumb that you can use, is to take the average salary of say, like a five year experienced architect, and multiply it by three. And that kind of starts to give you a good number as well, because that's kind of riffing off the riffing off the rule of thirds. And I know that there are other the number that we're using here, we're looking at all staff, so not just billable staff, we're looking at all staff, there are other riffs of this kind of performance ratio, where you're just looking at performance, or you're just looking at billable staff. But what we're looking at here is everybody. Yeah, that was to take

Enoch Sears

36:26

into Illustrator.

Unknown Speaker

36:29

If you're outsourcing to take into account, you want

Enoch Sears

36:31

to take that into account. Yep. Yep. That's how that works. Beautiful. All right, Ryan, so we will, we would love to see you at our next live conference, the Business of Architecture conference that we hold yearly. And as part of this, there will be, we'll be giving out awards. And we'll start recognizing the practices that are achieving this level of performance. Because they deserve to be enshrined, they deserve to be highlighted for making a positive impact in their practices. Because when you, when you're earning more money for your services, when you're claiming more of the value that you offer the marketplace, you can pay your team's better. You can pay yourself better, you can start to invest in experiences, you can start to buy back your time, you can get out of the rat race. And the beautiful thing is it is absolutely possible.

Speaker 1

37:23

Fantastic. Yeah, I'm excited to hear from more practices who are hitting the 200, I'd love to hear from a 500 practice for anyone, anyone out there. Instant podcasts on you.

Enoch Sears

37:38

Right, another thing, just going back to this idea of location. So certainly, certainly location will have an impact on this number we find, without a doubt, if you're in a rural location, it's going to be more challenging to hit the 200 Club. Not impossible. But here's the thing, if you're if you're in a very wealthy area, so if you're in a zip code in the US that has a high concentration of wealthy people, if you're focused on residential architecture, it's going to have a big impact. Oftentimes, also, if you're by industry, so if you're in healthcare, some of these other industries can be more lucrative, for instance, restaurants, it'd be tougher. You know, doing grocery stores would be even tougher than that. manufac manufacturing facilities, labs would be easier to hit that number. And so it does vary by particular focus. It does vary by by location. But here's the thing. It's easy. When we think about this, it's easy. This is easy for us to then justify why our number isn't high. So we can say, Oh, well, I'm, I'm at 120, but I'm in Timbuktu. So you know, I guess that's just because I'm where I'm at, well, that's a defeatist attitude, that's resignation. That's like saying, Well, you know, I'm better than the white belts in my dojo. But, you know, they're not very good. But you know, that's c'est la vie. It's just the way it is. Right? That's if you haven't noticed, that's not the way that we, that's not the culture of Business of Architecture. That's not what we aspire to talk about here on the podcast. That's not the way we aspire to be. Because the truth is, you can hit these numbers, no matter where you are. We live in a virtual world. Now you can pick up clients from all around the world. And it's up to you how you want to set the constraints of how you compare yourself to others. But there's power in comparing yourself to a standard that helps you stretch yourself more, that helps you stretch yourself to a bigger version of what you can be a bigger version of what your company can be a bigger version of who your teams can be a bigger version of what your projects can do. And this is part of the beautiful impact that you can have as an architect, but it starts and ends with being a great financial steward of the money and honing your skill as a businessman or businesswoman.

Speaker 1

39:50

Yeah, absolutely doing a create the possibility of being the being part of the 200 Club. And we've seen practices in emerging economies who have have, you know have started to innovate and do exactly what you're saying in IQ and working with, you know, clients in other countries where they can get a much higher kind of rate, you know, sell their services in different places. Again, this is this is why the 200 is so good because it creates innovation. It creates innovation, not resignation.

Enoch Sears

40:25

I love that innovation, not resignation. All right, well, architect nation, thank you for listening. Today. It's been great having you on the show, as Ryan and I talk about the 200 Club. And we would like to add your name to the list. So whether you're a current firm owner, or whether you're a firm, or some someone who's planning on opening their firm in the future, set your target on that, you know, make the 200 list. do yourself the favor yourself, your family, your teams, it is possible, and we'd love to see you on the list. And that's a wrap. Oh, yeah, one more thing. If you haven't already, head on over to iTunes and leave a review, we'd love to read your name out here on the show. And now a message from our sponsor our cat, there's no doubt that building information modelling has changed the industry. And I'd like to tell you about a cool resource for you as you're looking to get the best product information for your projects. This is what our cat delivers. Our cat is an online catalog that offers data rich objects, family systems for free without registration. And to sweeten the deal. You can download these files in the last four editions of Revit and SketchUp format or DWG format, it's all very clean, they're kept up to date, a fantastic resource for you, as you're trying to figure out what you want to specify and making sure you have the best and up to date product information. Go to arcade.com today and check it out. That's Arca T dot c o m. 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. QRP DM

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