590: Recession-Proofing Your Design Business with Joel Tanner of SMPL Design Studio
EEnoch SearsOct 30, 2024 at 5:20 pm54min
SSpeaker 1
00:00We've just been around the block too many times that we know it is realistic, and we know it is unrealistic, and it's our job as professionals to educate the consumer.
RRion Willard
00:09Welcome to the Business of Architecture. I'm your host, Ryan Willard, and today I had the distinct pleasure of speaking with Joel Tanner, who is the owner and founder of SMPL design studio based in Canada, over the past 15 years, his firm has left an indelible mark on the architectural landscape, having meticulously crafted over 1000 projects spanning the expanse of Canada, as well as venturing into select regions of the USA and the Caribbean. At the heart of their ethos lies a commitment to ni design, breathing life into each project with an unparalleled server, their approach is deeply rooted in the synergy between the clients lifestyles and the very fabric of the land that they inhabit, whether it be navigating the confines of urban living or embracing the boundless fissures of rural expanses, they embrace the challenge of pushing the boundaries of comfort to forward something truly exceptional, from snug city lots to sprawling rural retreats spanning acres of untouched beauty, they embark on a journey to create havens that resonate with their clients and their loved ones for generations to come join us as we unravel the intricacies of their craft and explore the stories behind the walls that they build. So on, today's episode, Joel and myself dive in and we talk about their fixed fee approach and how they actually managed to keep their projects on budget and on time, not just to their clients budget, but actually to their own fee budget, and the tools that they use to do that, and the challenges that they face whilst doing that, we also look at what Does $200,000 of marketing spend look like in a 20 person firm, Joel breaks it down to us of the sorts of investments that they make on an annual and monthly basis to ensure that their message is reaching their target market. And we also look at introducing new product lines and revenue streams. So sit back, relax and enjoy. Joel Tanner,
SSpeaker 2
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RRion Willard
04:04Joe, Welcome to the Business of Architecture. How are
SSpeaker 1
04:07you absolutely, very well. Thank you very much for having me
RRion Willard
04:10today. My pleasure. So you are a past Business of Architecture program participant, if you like, you did the AFF program back in the day that must have been a few years ago. You're an architectural technologist, and you're the founder and owner of S, M, P, L, Design Studio. So welcome to the show. You've got a fantastic portfolio of lot of really high end, high caliber residential work. And I think it's quite interesting, because, you know, you're, you're, you're actually an architectural technologist, as opposed to an architect. And I think that sometimes architects, certainly in the UK, the architects and Architectural Technology. Just can always have a little bit of kind of competitive rivalry with each other, but it's a very interesting service offering, and the two can work very well together. And it's also interesting to kind of distinguish the differences and the benefits of of each with your with your clients. So that's we can start with. Actually. How did you come to found your studio?
SSpeaker 1
05:25Absolutely, yeah. So I completed a three year Architectural Technology program back between 2003 and 2006 College in Ottawa. From there, I moved out to beautiful British Columbia. Always wanted to live there. Worked two different jobs, between 06 and 2010 I founded the firm in 2010 had a really unique opportunity. I was design department manager at a pre manufactured home company, and there was a bit of a lowland production, and so I took a sabbatical, and I had an opportunity to design a new home for a client. And that company I was working for, they didn't want to take the project on, because it was a modern home, and our company didn't specialize in that. So actually took a sabbatical, took on that contract. That was what that was, our first client officially, and just never went back to the firm. And here we are, almost 15 years later. This coming January, 2025 it'll be 15 years that we've been in operation. And yeah, so pretty exciting. So
RRion Willard
06:30you would have gone through the kind of challenging period around 2008 which often leaves a lot of emotional business scars for many a business owner, how? How was it during that period for you? Because that's kind of pretty much just about when you when you set up.
SSpeaker 1
06:48So 2008 recession. I was working at a firm, and I was very lucky. So we went overnight with that recession from a team of about 70 individuals down to 25 I wasn't part of the cut, so I stay, stayed on with the firm. But it was a pretty intense lesson learned in terms of how quickly things can go from really, really positive to really, really negative, very quickly. There was, you know, there was a lot of movement in the industry. And at the time I was working for, I mean, the firm's still around super, super specialized, high end timber frame home manufacturer located in BC. And, yeah, we just there was, there was a lot of struggle there. And so that, you know, kind of opened up my eyes. Come 2020 with a pandemic. And it was, I mean, it was a very similar series of events, especially for us in our industry at that time.
RRion Willard
07:50What sorts of things did you find when you were going through COVID that you sort of started to do to prepare for an economic downturn? And also right now, as we, as we begin to talk, because, you know, there's been conversations for the for years now, the next impending recession, and certainly in the in the US anyway, there's, you know, the kind of election has caused kind of hesitancy with with client decision Making. How have you, how do you typically navigate any oncoming economic storms? What are some of the things that you do in the business to make sure that you're that you're able to move your way or be nimble through through any kind of sudden change?
SSpeaker 1
08:35Yeah, so we, actually, we did the Business of Architecture training program in the fall of 2019 with Enoch Sears. And so that was originally going to be a three month program, sorry, no six month program, which they actually extended to 12 months. So we were kind of knee deep in the training with them, as COVID was kicking in. So we started in October, November, 2019 and so within a 24 hour span, we were able to kind of turn the company on its head. That was the first time we had to shrink the firm. So right away, in that 24 hour period, we unfortunately had to let go to individuals, and we reset our expectation in terms of, you know what our high end deliverables need to be, what projects can continue, what projects are going to stall. So there is no doubt, a lot of stress during that period. The nice part about being knee deep in the training process with Enoch and their team is the the ability to be able to kind of financially, we're in a stable spot. From a marketing perspective, we're in a stable spot. From a clientele perspective, we're in a stable spot. And it was a matter of just kind of resetting our expectations, looking into government programs that were kicking in. And so that was, you know, that started tail end of March, 2020. Me, which unfortunately also coincided with moving into a brand new building that we had purchased and completely renovated. So we're in that space for 30 days, and we send the entire team home. So it was a absolute whirlwind. But then, you know, you look 90 days from that period, so you look out to June 2020, and all of a sudden, the market for us was exploding. And so it was, you know, there was a lot of stress involved in that. Obviously, where we are today is, you know, we again, we anticipated with kind of, so to speak, the death of COVID and the modifications to the market, higher interest rates. We're very much anticipating a change in the market. And our real estate market up here in Canada has definitely taken a toll over the last 12 months, 18 months and about, you know, about 18 years or, sorry, 18 months ago, maybe 24 months ago, we started see the writing on the wall that things were changing. So in 2022 we spent about $40,000 on marketing. 2023 we stepped step that up to about 110 $120,000 2024 we're gonna probably hit by the end of this calendar year, 200,000 and marketing. And that was never really a thing that we needed to concentrate on and focus on, but in order for us to kind of maintain and to stabilize, because we're not looking to grow, but we do, we have a team of 20 people. We do architectural design, we do interior design, you know, there's a lot of mouths to feed. There's a lot of kind of business to keep rolling. So for us, it's been a massive investment. It's been a massive learning curve over the last 18 to 24 months to figure out where to spend your money. And we're, you know, we're constantly shifting. We're November we have a marketing meeting tomorrow, but November 1, we're, you know, we're taking our advert dollars from Google and we're shifting it over to YouTube, because we're seeing a massive increase in clientele coming directly to our firm from our YouTube videos. So you know, with any business, it's an ever evolving process. There's constant changes, and we're just trying to stay ahead of all those of all those details.
RRion Willard
12:23So for many a practice, even even thinking about spending 50 grand, let alone 120 $200,000 on Yeah, on marketing is is unfathomable. Yeah, and it delights me to hear that's, you know, that's something that you guys are really putting your energy into, and have developed as a result some pretty amazing, you know, social media channels. Can you walk us through a little bit about how that the sort of, what sorts of things did you begin to invest in, specifically, first, with your marketing, and how you've kind of been ramping that up, and now I'm assuming you've got people who are kind of full time on board with you. Or do you have, like, consultants that you're kind of working with, or a mixture of both, a lot of ad spend? Yeah. So
SSpeaker 1
13:14I mean, going back to 2010, first, starting the company, after that first contract was signed, you know we were. So it was very old school. So it was pre, you know, pre Instagram, very early days of Facebook in terms of business marketing. And so we're in a smaller town, and we relied on newspaper ads and our signage out front of the of the buildings that were getting put up, whether it was a deck, whether it was a sunroom, edition, second floor edition, we always had signage and really wanted to grow, grow that presence in this in the city, with that approach, and we still do that today. You know, being a team of 20, doing 5060, projects a year, we're still pushing our signage pretty hard. We're no longer doing newspaper ads, obviously, you know, 15 years later. But in in when we came, actually brought the business started in British Columbia in 2010 actually relocated back to Ontario where I grew up. In 2012 with my wife, wanted to kind of settle down and have kids. So the revamp in Ontario, we jumped knee deep into home shows. So we did the spring, fall home shows in Hamilton and Toronto, and that was a pretty grueling exercise, you know, mentally draining, physically draining, lots of energy, lots of time, not a massive financial investment, just because of our approach with a 10 by 10 booth, it was a fairly reasonable expense, and we Were quite thankful we still have some of those relationships. Even today, that we formed that, you know, 12 years ago, but we don't again. We don't do the home shows anymore. We're very purely digital, and we're also signage on our properties. Instagram is been pretty significant. So I jumped on board Instagram in january 2016 And through a nudge from my wife, and that has been a massive tool for us. It's been amazing to be able to introduce clients, potential clients, to to the homes, through renderings, through videos, through video walkthroughs. So we we do these videos called our feature Fridays. So we try to, I mean, really, get as many of them out there as possible. We've probably done about 35 over the last three years, and the feature Fridays are anywhere from three to six minutes. So that is done by an external videographer that we work with. He's absolutely fantastic. It's a project by project basis, so I don't have him on full time, and he does work with other builders and other designers in Ontario, but he's been a really, really fantastic asset, and we have a really good time doing them together, where he's trying to push the envelope and get a little bit more creative with all of our videos. And we also work with an external chief marketing officer, so we brought her on board about six months ago, and that's been an adventure, and, like, a really positive adventure, and it's a matter of, you know, at the end of the day, we're, we're not specialists in business, and it's been a constant learning battle for the last 15 years, and will continue to be, but, but she's bringing a lot of knowledge to the table, having worked for multinational corporations, that you can kind of bring down to the scale of our operation and really finesse and enhance what we're bringing from a service offering perspective to our clients and and better sell that out to the open market.
RRion Willard
16:38Is she a full time position? It's
SSpeaker 1
16:40she's part time, yeah, so she's part time, and it's contract basis, so she's actually not in our office. So she works for several different firms in varying, varying kind of sanctions. And so, yeah, so she's not specific to the architectural world, but she's been a fantastic aid for us outside, outside of that. It's, you know, it's, it's me on Instagram daily, you know, making daily posts and so, you know, again, that's a lot of energy. We always talk about bringing somebody on full time for the marketing side of things, but this kind of alternative approach with with exterior individuals, has been working really well for us. So we've kind of stayed on that train for for the last little bit. And it's, it's been, it's been good.
RRion Willard
17:23And do you do you find with your social media platforms that like, how do you get people from being a subscriber to a channel to actually becoming a paying client? If you like,
Unknown Speaker
17:41absolutely fantastic question was, what's
RRion Willard
17:43the supposed to kind of steps in the funnel? Yeah.
SSpeaker 1
17:46So you know, for the last seven and a half years, it was literally just posting on Instagram every single day. And through that, we would get lead generation through our website and lead generation through our Instagram direct messages, having said that we never really had a true sales funnel for Instagram, so working with our now part time, CMO, she's fine us to have a new lead generation magnet on Instagram and a new approach to kind of work them into the sales funnel. And that's been an interesting adventure. And so that's what we're now jumping into as well from a YouTube side of things. Now we're starting to see a lot of leads naturally coming through on YouTube. So we're going to start working kind of the YouTube angle, just like we are the Instagram angle. You know, Google ads. We've been, we've been spending a large sum of money on Google ads for the last 24 months. And, you know, unfortunately, not really that much to show for it. And so, you know, we, we've learned the lesson, you know, so to speak, the hard way, in terms of the dollars, the dollars that we've put out. And it, you know, works for some companies. It's not really working for us right now. Mm, hmm,
RRion Willard
19:01that's, that's interesting, and we've often, you know, I've seen a lot of businesses in the past when they're trying to find their feet with the with the ad spend, and it's not an insignificant amount of money that you need to be spending on it to actually start getting the kind of results that you'd be expecting from it.
SSpeaker 1
19:19Yeah, yeah. And that's why I think, you know, word of mouth, so word of mouth through existing clients, past clients, builders, suppliers, that is a, still a significant part of our marketing campaign, in addition to these ad spends and then signage, signage has always been a significant source of revenue and potential clients for us as well, because nobody but a goodie, it is right and and, you know, pictures worth 1000 words, whether it's on Instagram or whether it's in front of you, you know, live as a home is getting constructed, and because our product is is so unique and so tail. Third, we very much push zero copy paste in the industry and in our in our firm, and so it's we're always reinventing the wheel, and I think that's also what helps us. You know, by putting out unique product and having clients that allow us to put out unique product, it makes the marketing side of things a little bit easier, because we're always marketing something new and different and exciting that people aren't necessarily seeing in the industry all the time.
RRion Willard
20:28Yeah, I find it interesting. I often meet a lot of you know the architectural technologies technologists, and find that they're often way more inventive and innovative with their business and the way that they're actually marketing and bringing the services to to their kind of target demographic. Perhaps we could talk a little bit about that, and perhaps you could set the context of in in Canada, what is the difference between an architect and an architectural technologist. What can you do as an architect that you can't do as a architectural technologist, and what can you do as an architectural technologist that you can't do as an architect and and why did that? Why did the two exist?
SSpeaker 1
21:13Yeah, absolutely. So my training is very technical, and I wouldn't say it's purely technical, but it was 95% technical and 5% design. And the 5% design was not necessarily a taught design class, it was more so, you know, given some freedom to work through a design element while creating technical drawings. And so the design side for me, luckily, isn't, is a natural ability that I was born with. My passion for architecture goes way back to I was 910, 11 and 12 years old. And you know, thankfully, my parents supported me, and I bought a whole bunch of foam core board, and I, you know, built houses for fun out of foam core board. And so, you know, that passion then, then grew to taking classes in high school for drafting, 3d modeling, etc, and that just kind of progressively built that platform to doing what I want to do and what I'm doing now, and so, so very, very much technically driven, whereas the architectural side is, you know, obviously there is a technical component when you're going to university for architecture, but they're very, very heavy design driven education. As a technologist, we can basically per the Ontario building code with BCI and certification, which is your building code identification number. So that allows the firm the ability to stamp plans. We can do up to 600 square meter building footprints. So anything over that, you have to bring an architect on board. And so that's essentially our cut point, and it hasn't really become an issue for very many projects. We maybe have one or two a year that we bring an architect on board and collaborate with them for technical purposes and then stamping purposes for those larger dwellings. But it's very much our expertise and our passion and our specialty is single family homes. When you get into, let's say, multi unit residential tower design, commercial, institutional that is very much a architectural focused product line. And, and we A, we stay out of it. It's not our passion. And, and B, you know, it's very much there for, you know, in my opinion, a big bulk of the architects to really specialize and focus and hone in on their skills, you know, but we do. We do compete against a lot of really good architectural firms in the Toronto area on our projects. And what I've found over the years is the more interesting work we do, the more our brand gets out there, the more we're competing against them and for us, that's very powerful, because I think we both have a place in the industry. And some clients are very okay with paying, you know, larger some architectural fees. You know, our our typical clientele, you know, we're we have a fixed cost that we stick to in order to get from A to Z, with architectural design, with documentation, with permitting, with construction administration on site, you know? But we're, you know, we have to be pretty efficient because of that fixed cost that we present to our clients. And so, yeah, it's a very different platforms, yeah, but I think there's room for both of us.
RRion Willard
24:41How do I mean? I find it interesting as well. You know, in a current architectural education, the biggest complaint that we hear from architecture firms is that architecture new quality, newly qualified architects and architecture students have got no idea about construction science or. How buildings are put together. And, yeah, even if I looked at my own architectural education, I'd be very critical of it in in the in the sense of like, I didn't learn how to design buildings, right? There was a lot of strategic thought and design thinking and design philosophy even, and speculating about what architecture could be, but the very core practical aspects of being an architect and understanding what how buildings put together, that was, you know, kind of scarily missing, and how and do we not see like more architectural technologists working in architecture firms, or even collaborating where they where you're able to bring that kind of technical expertise to make you know a design led architecture firm have that more core competency. Do you see that happening? Or do you have any kind of thoughts yourself about the the sort of two education strands and why they exist the way they do,
SSpeaker 1
26:02yeah, so I would say, I mean, I completely understand where you're coming from in terms of the formal training from an architectural versus a technologist perspective. And I think a lot of our team members that are technologists bring a lot to the table in terms of understanding construction. And they know how to put together detail. They know how to put together a set of plans. They're still learning that's that's kind of the reality is, is, hands on experience is, is really the most powerful. You can only learn so much in three years at school. And I think the programs here in Ontario, from a technologist perspective, do a really, really good job, but there is only so much that could be taught at school. And so we're, you know, even here we are, we've got team members that have been with our firm for 3457, years. And, you know, because we're constantly reinventing the design wheel, we're not copying and pasting details, we're also constantly reinventing the details wheel. And so that's an interesting perspective to where, you know, it really depends on what you know, if you're in the subdivision market versus the custom home market, and then when you're within the custom home market, where are you truly specializing in? And I would say that the you know, from an architectural perspective, it's, it's, I think it's tricky there. You know, more focus needs to be paid on at the end of the day, we are being hired, whether we're technologists, slash designers or architects. We're being hired as professionals to put out a set of documentation that the city can approve and that can make sense with a builder on site to put the home together per the expectation that you've set with the client. And so it's a massive, you know, obligation for us as professionals. And so the more we can do as professionals to learn those details and educate, you know. So a, educate our team members, and then B, also educate builders, right? Because if you're constantly reinventing the wheel, you can't just expect them to understand how to put that detail together. So more energy needs to be put into the drawings, more time needs to be put into the project on site. Better expectations need to be met with clients. And so, you know, we've also talked at times with clients to say, Listen, like this project has never been built in the world ever. These details that we've introduced and the parameters that we've introduced on your property, very specifically, don't exist anywhere. And so there's absolutely going to be problem solving above and beyond our drawings to ensure that we can get to the finish line and have that product on site look as per the drawings and the renderings of the beautiful pictures that we've created. So it's a massive task, right? And so I don't, I don't necessarily think that there's a perfect formula, but I think that the perfect formula is, is the team. So, you know, we have, we have people on our staff. So there's 20 of us in the office. We have technologists, we have people that have been trained with, you know, Bachelor of architecture degree. We have one team member doing her Master's right now, and then she's going to be back with us full time in May next year. And so having that mix and having that collaboration is critical to drive the success of these projects and to drive to the success of the firm. So I think, you know, internally, we lean on each other heavily in order to get to the finish line and keep our clients happy. Because there's also the element that we haven't even talked about, which is beyond constructability and beyond the details. From a technologist perspective, it's all the documentation from a permitting perspective. So, you know, every single year, if I look back 10 years of the documentation that our firm submitted for a building permit, and I compare it to today, I mean astronomical deviation, and that's not it partially has to do with our firm and our projects, but it also is partially to do with liability. So liability from an. Perspective, and they want to have nothing to do with these projects, essentially, right? So they need to cross their T's, dot their i's, and ensure every single component of liability has been removed. And because of that driving factor, you know, it's increased our workload, and therefore it's increased our fee structures. And so it's this kind of tumbling effect of of all avenues coming together, but that, but that's a massive component. Our permit team here at the office, there's six of them, right? Six full time staff members dealing with permit, permit management, conservation management, engineering, HVAC designs, all of those integrated ideas. But
RRion Willard
30:39perhaps we could talk a little bit more about how the internal structure looks inside of the inside of your firm, because, you know, you've got, you've got 20 people working on projects that so basically, no, never know any larger than the 600 square meters, correct? Yeah, and all in the kind of residential sector, predominantly,
SSpeaker 1
31:02correct? Yeah, we do, you know, maybe one commercial project every two years, and it's a very small scale commercial so it's very much custom residential. So we do renovations, we do renovation additions, we do custom homes, and we do cottages. And so the way the company is structured, we have the architectural team, which is about 14 or 15 people, and then we have the interiors team, which is about six or seven, kind of depending on the day, because we have a couple of team members that jump between the departments. So I'm the CEO, but I'm also the Creative Director for the architectural department, and so from a design perspective, I'm working with Julia Brandon, Chris and Hayden, so I team up with one individual on each project, and so that way, if I'm in a meeting, if I'm unavailable, that team members available to either have a meeting with the client, have a meeting on site, ensure that the project's moving forward successfully. Once we get through the design stage and we get the client's approval. Then it gets pushed over to the permit team. So the permit team is managing construction documentation, detailing, engineering, HVAC, etc. So Lindsay manages that side of the business. She's our Director of Operations, hugely critical aspect of getting those those builds approved and in the hands of the builder for execution for the client, and then the other half of the team, the interiors team. Nicole heads up our interior department, and same structure, so we're creative director, and then designers, and then the execution team for drafting and for material selections. So and again, that's an ever evolving process as well. You know, as we've gotten bigger, as the projects have increased, as the values have increased, my role kind of continues to move and maneuver. And you know that, and kind of coinciding with our team members having been here for 356, years, and having more experience to bring to the table, and having that aptitude to be able to answer questions, and me not always having to be involved in those meetings.
RRion Willard
33:06And do you run it then where, in terms of the hierarchy within the architectural team itself, how do you how do you prevent yourself becoming the bottleneck of a lot of questions?
SSpeaker 1
33:18There is no doubt that I am a bottleneck. Still, still, still today. I, you know, I've been a part of the 5am club for 15 years, and my, my sweet spot for for getting work done, is 5am to 8am I'm that's when I'm really concentrating on really detailed email resolutions or markup on details, because, you know, the permit team has a question and I need to provide resolution. That's really my sweet spot, because come at eight o'clock, from eight o'clock AM until five o'clock PM, it's, it's usually, you know, meetings, site visits, you know, internal meetings, external meetings, etc. So there's no doubt I am a bottleneck at times, and, and that is, you know, that changes from week to week. It depends on what are the priorities of the firm. And it's, there's no doubt, Ryan, it's still something that I struggle with. And again, it's a matter of, I would say, you know, two years ago, I, you know, I had to resolve 50% of intense questions that came up. And today I'm now down to, let's say, 15. And so, you know, that's been a big jump with kind of, you know, moving and meandering the business model and meandering the team, but, yeah, there's no doubt that I'm still that bottleneck on 15% of the projects. I think the hardest, the hardest thing to to sell to clients is, you know, this is simple design studio, right? This is SMPL. This isn't Joel Tanner, and we are. Are still struggling with that element of clients wanting to communicate directly with me, and again, I'm happy to you know if you want to drop me a quick text message or a quick email sidebar from other things that are happening on the project, because you had a thought pattern, I'm happy to jump in. I'm so insanely passionate I can't ignore those things. But it's a matter of like, okay, if there's this mini dialect resolution, then clean it up and send it to the team in an email format, so you so that, you know, you bring everybody back into the fold. And that's, you know, that is probably going to continue to be, you know, an issue for this foreseeable future. But again, that's been something that's that's been evolving over the last two or three years as well, because we've, you know, we've noticed that we've talked about it as a leadership team issue on how to kind of finesse those things, because it's no doubt, I don't have all the answers. You know, there's a reason there's 20 of us in the office, you know, and they all play such a critical role in getting that project to the finish line. And so, you know, as much as I can say, oh, that's completely unrealistic for a client to think that I'm doing everything. It's like, well, if we don't train them as a client and set those expectations, how do they know any any any better, right? And so, you know, I'm guilty of that, right? I'm guilty of, you know, probably not spending enough time kind of, on educating those steps and maneuvers and team members. And again, it's that constant evolution, because as soon as we finesse that over the next 12 months, something else is gonna come,
RRion Willard
36:36sure, yeah, so as you've grown to 20 people. Has it been over the last 15 years? Has it been a kind of slow, incremental growth where kind of one person has been added at a time? Or has it been more like surges, where all of a sudden you've taken on five people in a, in a in a go, and the company suddenly doubled its size?
SSpeaker 1
36:57Yeah, so great question. I mean, we were a team of one for from 2012 to 2016 I had a part time student twice in those that six year period, but it was essentially just me for the most part. And then in 2016 we hired our first time employee. She graduated from college, so she was a part time student of ours and turned into a full time role as a drafter. And then about, about three, four months later, we brought Lindsay on, who, who started out as bookkeeping and quickly unraveled into director of operations within, within three years, wow. And, and, yeah. And so she, you know, she was a key interval in kind of, you know, being a part of the Business of Architecture program back in 2019 and and was really the, you know, the catalyst of of something needing to change. Because, yeah, we went from 2016 having, you know, one person to two people to three people to by, you know, 2019 there was 10 of us, and so, so. And then from 2019 to now, we've gone from 10 to 20. So it has been, it was definitely like incremental growth pre COVID, and then incremental growth during COVID, and then, yeah, we've remained steady at this number since 20? Yeah, I mean the last two years. So about 2023, we've been we've been 20, and, you know, we don't have plans for growth. We are at the point where we really just are happy saying No, and that's a really hard thing to do as a business owner, to turn down money and to turn down work and to turn down opportunities, but if they're not the right opportunities, then it makes sense to turn down that money right because we want to specialize in modern, single family homes, rentals, additions, cottages, and we also want to do it with clients that are realistic about their budget. So that doesn't mean I need every client to have $5 million in their bank to build these homes. Sure, if somebody comes to me and they say, okay, Joel, we want to build a four 400 square foot home, you know, tiny little cabin in the woods, if you come to me with a realistic budget of $500,000 for 400 square foot cabin, we'll jump on board Absolutely, because it's exciting. It's different, it's unique. We have that proper mindset of what that success is going to look like. And you know, but if a client comes to you and they want to build a 6000 square foot hole and they have a million dollars, the reality is we just can't do it. And we're also not there to sell something that doesn't exist. Other people, you know, there's people in the industry that will there's no doubt about it, whether it whether it be a builder, whether it be a designer, a drafter, etc. You know, sky's the limit with a million dollars, but we're we've just been around the block too many times that we we know it is realistic, and we know it is unrealistic, and it's our job as professionals to educate the consumer, right? Is like, what can you build? And. So we kind of rephrase that say, Okay, well, you know, you want to build 6000 square feet. What do you what do you actually need? Well, we need three bedrooms and we need three bathrooms and living, dining, kitchen, okay, well, are you open to actually building a 3000 square foot home, and are you open to then having a budget of, let's say, 1.4 million? Because if, if you don't have a comprehension on square footage, and we can introduce you to a comprehension of square footage, and we can introduce you to a concept of value within that. Then maybe we can actually come up with a happy medium, or the question, or the answer from the client is, no, I need four I need 6000 square feet, and I have a million dollars. Then that's when we kind of have to walk away right after doing that, determination, of education, of what we think is realistic.
RRion Willard
40:44Let's talk a little bit about some of the other innovations that the been doing in the business, some of the other kind of streams of potential revenue, such as your product line. And perhaps we could talk a little bit, yeah, about some about that, the sync, and how that's come about and and what the what the intentions are around that kind of service or product? Absolutely,
SSpeaker 1
41:08yeah. And so, you know, we started as an architectural brand, we diverted back in about 2018 to wanting to do architecture and interiors. It was a natural progression, because the product that was getting delivered on site wasn't reaching our expectation or that kind of final vision, and we really had this thought pattern that the project could have just been better had we been involved through to completion. And so that's what drove the architectural team to then encompass an interiors team. From there, there's that natural progression of like, well, we're doing the interiors now. We need to do interior decorating. We need to be involved in key furniture pieces and key areas. We don't need to be involved in every single piece, you know, but, but there are strategic areas in the homes that we really feel we can bring value, value proposition, to the table and introduce clients to new and exciting and fresh products, just like we do with our ideas from an architectural interior perspective. Couple years back, we had this idea of, you know, we have these amazing relationships with vendors, with suppliers, with builders, with makers. You know, why not take that skill set and apply it to a custom product that's that's an slpl branded product. And so, you know, what do we want to do? Do we want to do a late fixture? Do we want to do a plumbing fixture? So the first product line that we started with, that we launched the summer, was a poured concrete vessel sink. So it's a floor mounted poured concrete custom design. It was a really fun project for the team to kind of okay, let's get outside of our wheelhouse and out of our standard understanding. And you know, what can we bring to the table? What? What a value can we bring to the table? So, yeah, so it was, it was a pretty exciting adventure there. The maker that we worked with was local, about half an hour from our office, 20 minutes from our office. He went through three different prototypes with us to get to a point where his mold, you know, had basically reached peak perfection, and was really to then build the, you know, the actual final mock up products. So, yeah, so the final mock up product actually just installed it in my personal home three weeks ago and again, yeah, so now it's, you know, it's exciting to be able to use it, to test it, to touch it, to feel it, to get people's reactions to it inside the space. And yeah, so I'm really hopeful. We've got a couple clients that are super excited about it, that want to use it in their upcoming build that we're in the ground on now. So hopefully we can kind of transition that product into their homes. And Yeah, who knows? Who knows what's next? I think there's, there's so many opportunities to work with these talented individuals that we already have relationships with. But instead of doing that kind of classic approach to product is, let's, let's do something a little bit more exciting, innovative, and have it as a dual branded product. Amazing,
RRion Willard
43:57amazing, very cool. And, yeah, so what have you got planned for the rest of this year and for 2025
SSpeaker 1
44:05Yeah. So every fall we we basically strategize what our goal and intent is for the next calendar year. So busy working on budget, busy working on goals and perspectives, analyzing our fee structure, what we want to do with our fee structure. So because we're a fixed cost approach, you know, there, there's always kind of this give and take of, okay, what are we bringing to the table, truly, and what are clients really buying? And every year that we've progressed, it's like, no. Like we guys, we bring so much value to the table. Like, these projects are incredible. Our clients are happy. You know, potential buyers are excited. We know what sets us apart in the industry, you know. We know what we're bringing to the table, you know. And so, so that incremental cost deviation for us is really important to continue to provide high caliber, you know. And additional time investment. On those projects. So we're analyzing that right now. We you know, I'll be honest with you, the hardest thing for me as a business owner is a 10 year plan. And even a five year plan, I really struggle with it. If you had me, asked me 15 years ago what my goal intent was with the company, I would have no idea. And so, you know, having said that, though, we have seen the value in setting a goal and setting a guideline for how and what we want to change. So our goal for 2025 is to increase our architecture and interior project collaborations. So last year, we had signed contracts 7% of our projects were architecture interiors. This year, we jumped that percentage up to 33% next year, we want to take it closer to 60% so the intent there is that 60% of clients signing a contract with our firm are doing so to have architecture and interiors delivered as a kit package. So that's really our key growth platform over the next five years, with kind of incremental changes every single year over the next five years, to try to hit the target of 100% and to basically have that confidence to walk away from a project and say, Okay, listen, the client doesn't want us on both of those aspects. That's our specialty. It's our passion. It's our forte. We have to turn on the project right? So that's really where we're striving to be in the next five years,
RRion Willard
46:24amazing. And just just, just quickly, before we wrap up, could you just talk us, talk us through your fixed cost approach? And, yeah, what? What are the sorts of systems and structures that you have in place? Because obviously, you know the the fixed the fixed fee approach, it can be the best, I think it can be the best way of making money in an architectural practice, if you get it right. Otherwise it is feel good, different, a lot of challenges. And obviously, there's so many things that can go wrong with your fixed fee approach from additional services that don't get caught. Obviously, if you under charge for what, what it is that you're going to be doing, they're big, big changes that don't get properly accommodated into into a new fee. How do you keep your projects on track with the fixed fee approach? And how does that? How do you communicate that in the team as well?
SSpeaker 1
47:21Yeah, absolutely. So we, we try to approach a project where we land at around 10 to $15 a square foot as a fixed fee. And so that's really a baseline and so, and we know that, you know, other other really good designers in the industry are kind of floating around that fee structure. And actually, you know, we might actually probably be more expensive than most of them now. But what we do know is that when we look at our fixed fee against our competition of who we want to be. So the, you know, the higher ups in the architectural sector, architects specifically, we know what they charge and and so we can kind of go into these projects with the experience that we bring to the table, with that confidence of kind of being able to charge a little bit more. We approach it in our contractual agreement with the client that they get up to six custom rounds of revisions. So there could be three changes. There could be 35 changes within that round. But that's how we kind of platform out our contract agreement and how we set up our projects in monday.com when we're setting everything up. So we have, you know, we're pretty diligent with our project management tool to make sure we set that expectation with the team. We keep track of those items. So let's say six times out of 10. We kind of get through a project free and clear, super successful, no change orders, and we're in for permit the other 40% the way we attack things is either a it's like, okay, well, we didn't do six revisions. We got to 10, and now it's like, Okay, we got to kind of have that discussion with a client of you know, we can do these tweaks and changes. But are they truly what you want to see? Are you just doing it for fun? And so if you set that expectation of like, Oh, I'm happy to now make this 10th revision for you, it's going to cost you $1,000 so we just do fixed cost change orders. I don't do hourly change orders. It's much easier for us to manage. And the client's like, oh, Yep, absolutely. And then, or others might be like, No, you know what? Like, I think. I think we're good. Actually, I think we're good. I think we can sign off here. I think we can move on. So all of our change orders are fixed costs. If we get further down the line and we're prepping for permit submission and a client makes a change, we kind of pull everything back and hit hit square one, like, Okay, we need to revise architecture. We need to go back to the engineer, the mechanical design. Here's what we think it's going to take to get to the finish line. We present that cost structure to the client, we get their approval, we charge them with a change order, and we deliver the work. So we're not set up as a firm to do hourly work. It's just it's just much too tricky when you're set up as a fixed fee firm to. That also keeps track of hours on a change order side of things for sure. So again, you know, you win some and you lose some. Sometimes we say, okay, it's gonna be about eight hours. Maybe it's 20. Well, you know what? That's our fault, not the clients, right? We, we didn't set that expectation clearly enough. But across the board, when I look at, you know, our pattern of growth from the last 15 years, but I think more importantly, from, you know, from 2019, 2020, when we really, truly started to grow as a team. You know, work with the Business of Architecture team, focus on finances, focus on profit first. You know, I think we've, we've made some really good headway. We're quite happy with our profit margin. We're not looking to become instantaneous millionaires. We absolutely love what we do. We design these amazing projects for clients all over North America. And so there's that sweet spot of profit and of excitement within those projects to make things happen. Amazing,
RRion Willard
50:50brilliant. I think that's a perfect place to conclude the conversation there. Joel, awesome, an absolute privilege and a delight to hear a little bit behind the scenes of your firm. So thank you so much for being on the show. Absolutely. Thanks so much, and that's a wrap. Hey,
SSpeaker 2
51:07Enoch Sears here, and I have a request, since you are a listener here, for the Business of Architecture podcast, Ryan and I, we love putting this podcast together. We love sharing information as much as we can glean from all the other industries that we're a part of to bring it back, to empower you as an architect and a designer. One thing that helps us in our mission is the growth of this podcast, simply because it helps other architects stand for more their value spreads the business information that we're sharing to empower architects together. So architects, designers, engineers, can really step into their greatness, whatever that looks like for each individual. And so here my simple ask is for you to join us and be part of our community by doing the following, heading over to iTunes and leaving a review of the podcast. And as an expression of our sincere thanks, we would like to give you a free CEU course that can get you one professional development unit, but more importantly, we'll give you a very solid and firm foundation on your journey to becoming a profitable and thriving architect. So here's the process for that. After you leave us a review, send an email to support at Business of architecture.com let us know the username that you use to leave the review, and we will send you that free training. On the training, you'll discover what 99% of architecture firm owners wished they would have known 20 years ago, and the other 1% well, they just didn't even know that. They didn't know head over to iTunes and leave us a review now and now, a word from today's sponsor. A while ago, I began to hear reports of a company that was helping some of our clients build remote teams. We looked into it more closely and discovered the company world teams that was helping small architectural practitioners build remote teams that were both capable and qualified. I was intrigued by another business that addressing one of the critical pain points for small architectural practices, which is the ability to grow and shrink a team effectively to be able to handle higher workflow without having to staff up significantly and also being very sensitive about labor costs, world teams is built to address these issues. World teams is a small but mighty company that helps architectural practices build high performing remote teams quickly and efficiently, saving you the headache of sorting resumes and interviewing under qualified candidates. World teams operates in your time zone and prioritizes near native English speakers, ensuring clear and efficient communication with your remote team members. They have flexible contracts so you can adjust your team size as your needs evolve. Additionally, you're connected directly with your skilled professionals, which fosters trust and collaboration. And world teams helps you reduce your operating costs without compromising the quality that is so important to a practice. To download a free guide for building a remote team for a small architectural practice, go to Business of architecture.com. Forward slash world teams. That's one word. Business of architecture.com. Forward slash world teams as a reminder, sponsorship is not an endorsement, and you must do your own due diligence before entering into any business relationship. Go to Business of architecture.com, forward slash world teams.
RRion Willard
54:31The 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 be unstoppable. So.
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