The RIBA is running a series of CPD events in 2015, hosted by The Wow Company, designed to help architects grow their practices. The events will provide an opportunity to share ideas, inspiration & insight into what the UK’s top performing practices are doing to grow and increase the profits they make.
Ahead of these events, we thought it would be useful to share the 3 things that the smart practices will be doing in 2015. For the final part in our series, we sought inspiration from interviews recently conducted with some of the UK’s most innovative architect practices. The full results of these conversations will be shared at our first event on 10th March in Winchester. Click here to book your place.
Prediction #3 – Smart practices will plan for growth
One of the questions we asked during these interviews was “if you had to give one piece of advice to a smaller practice, what would it be?” The overwhelming response from these successful practices was “PLAN”. Having a plan might seem like an obvious thing for smart practices to be doing, but we’re still surprised that so few businesses actually have them. Here’s Wow’s guide to creating a plan to inspire your practice to great things in 2015:
This is YOUR document
You are not creating this for fun, or to tick a box on a loan application for the bank….. this is a document that needs to be useful for you. That means it needs to be clear, simple and, most importantly, it must help you identify what you need to do to move your practice forward. Before you start, have a think about why you are in business and what you would like your business to achieve FOR YOU. What projects would you like to work on, which practices would you like to collaborate with, and what would you like to earn at the end of the year?
What are you going to do differently this year?
If you do the same things you did last year, you’ll get roughly the same results. If you’d like 2015 to be a breakthrough year for your practice, you’ll need to do something different. What will propel your business forward in 2015?
Break into a new sector? Are you over-reliant on one sector of the market? If more than 50% of your fees are in a particular niche, then it might be worth diversifying into another sector to reduce your risk.
Implement technology? Is this the year that you implement a time management system to keep track of how profitable your projects are? Or perhaps move your accounting system to the cloud to have financial information at your fingertips?
Hire a key member of the team? Perhaps now is the time to hire a Practice Manager, Marketing Manager or even a Commercial Manager to move your business onto the next stage. In smaller practices, these jobs will be shared amongst the Directors, and then possibly your Associates. Bringing in someone dedicated to these roles can have a really positive effect on the business. Who could you hire to take your practice onto the next level?
Increase fees? If you lowered your prices at the start of the recession but haven’t yet increased them, maybe now is the time to edge them up a little (or a lot). Your overheads are increasing, so if you’re not increasing fees then your profit margin is reducing. It’s good to get into the habit of doing this annually – the smart practices all do this.
Break it down
Set SMART objectives and break these down into short, medium and long term goals.
3 years – what key objectives will you have achieved in 3 years?
12 months – what is going to move your business forward in the next year?
3 months – what do you need to do to build real momentum right away?
Know your numbers
A key trait that all the successful practices interviewed had in common was the level of financial reporting they had available at their fingertips, and the amount of time they spent reviewing it. They were using online accounting systems such as Xero, keeping track of project profitability by using tools such as Harvest or WorkflowMax and producing cash flow forecasts for the coming 12 months to check their plans stacked up. Doing this will help you work out what sales you need to achieve (and how to control your costs) in order to make the profit you need. If you need help creating a cash flow forecast, get in touch.
Once you have created your cash flow forecast, it is really important that you review it regularly against your actual results. If you are not producing monthly management accounts to review your progress, perhaps you should be?
Don’t do it on your own
If you’re serious about making this your best year year, it’ll help if you can work with others to increase your chances of success. Seek out good external advice, speak to your accountant or business adviser to get a different perspective on your plans. Have someone challenge your thinking, sanity-check your numbers, offer further ideas and inspiration to help you grow.
Who can you collaborate with to make this easier? Speak to your partners, suppliers (and even your competitors). All the practices interviewed had excellent relationships with other architects. They shared ideas, best practice and even shared resource. Some had formed alliances to pitch for projects together. Who could you collaborate with to make the journey easier (and more fun)?
Review your progress regularly
Review your original plan regularly to check you are on-track……and don’t forget to check the numbers – they don’t lie! Set yourself a range of targets to measure performance, so that you have your own business dashboard. When creating your dashboard, think about:
Leading indicators – these tell you want is likely to happen in the future, e.g. number of quotes issued, tenders applied for, or competitions entered (combined with a historic conversion rate) is an indicator of the amount of future work you are likely to receive.
Lag indicators – these tell you what has already happened. The amount of money in your bank account tells you what has happened in the past, not what is going to happen in the future.
What are the keys to success in 2015 for architects? Please share your comments below. In the meantime, don’t forget to book your place at the Profit CPD Events.