Architecture firms operate in a range of ways. Some specialize in creating eye-catching design aesthetics while others tackle complex cultural projects that demand specific knowledge to complete successfully.
Ownership characteristics and firm structure are intrinsically intertwined and have an effect on the performance of architectural firms. This study explored these relationships among legal ownership forms, structural dimensions and performance measures of architectural firms.
Experience-Based Practices
Many architecture firms opt for an experience-based business model early on, as this can enable firm leaders to build up a portfolio of successful projects before seeking larger clients. This helps ensure the firm can meet client expectations.
This business model can be particularly effective for solo practitioners or small partnerships with specialized knowledge, enabling them to charge higher fees or hourly rates while remaining very profitable.
Key to the success of architecture firm types is meeting project tasks and deadlines on time, building trust with clients that may lead to new projects for your firm. Furthermore, it’s crucial that staff can live up to their commitments.
GROUPWORK was established in 2003 as an employee-owned practice that designs workplaces, residential and civic buildings. Projects completed by them include an innovative brick residence and public library. Their work has earned several RIBA National Awards as well as being shortlisted for the RIBA Stirling Prize, in addition to being nominated for international awards. Another London practice of this caliber is CDA which was established in 2004; their designs range from restaurants to offices; they appeared at Venice Biennale; they recently completed a two-story cafe and events space in Crystal Palace Park; carefully considering site and context in their designs.
Efficiency-Based Practices
An efficiency-based architecture firm prioritizes cost reduction on projects. Key decisions may include hiring efficiency-minded staff, developing and safeguarding cost-cutting processes and choosing suitable software applications for these processes, and selecting efficient building envelope designs with energy-saving properties like using high performance windows for energy conservation, specifying proper insulation to keep temperatures comfortable, as well as “right sizing” mechanical systems to reduce operating expenses.
Starting their own firm may seem daunting to architects, but this model can bring great success and profits. Firms that take this route tend to work on less complex or similar projects which allow them to utilize design process efficiencies while reusing documents, notes, and details from past ones.
They can produce documents much more rapidly and at lower costs, and may even compete with larger firms when marketing specific project types they specialize in.
Firms utilizing this business model enjoy the added advantage of taking advantage of emerging technologies like BIM to cut time and production costs, as well as testing out new software such as real-time visualization which quickly produces 3D models easily interpreted by clients to see if it improves overall project quality or profitability.
Expertise-Based Practices
Due to technological innovations, architecture firms are hiring specialists in computational design, sustainability and material research – roles which did not exist until 10 or 20 years ago but are essential for the future of architecture. Unfortunately, however, these roles often fall outside the typical scope of typical architectural practice projects; instead they provide research and development activities which inform future design projects.
Firms are also exploring new business models that enable them to operate as specialty consultants instead of full-service architectural firms, reducing management overhead while being more effective for smaller practices. Specialty consultants don’t need to manage their own schedules or office space and can be hired on demand for specific projects.
Some firms are combining the stability and flexibility of traditional firm structures with cooperative networks to offer systems that appeal to architects across a spectrum: from an established middle-aged architect who needs assurances their mortgage and family will be met, to young non-American MArch graduates struggling with whether to “go corporate or go home” post-F1 visa status.
As in any business, state licensing and registration rules can complicate these new models. To remain compliant, a system should be in place that manages qualifying licenses, tracks renewals and records changes in business activity.
Business Models for Architecture Firms
Establishing the ideal business model for an architecture firm is of utmost importance in how its operations unfold. It will influence marketing activities, staffing decisions and profitability decisions while also shaping how a firm designs its processes and engages clients.
As they start their firms, architects have the flexibility of selecting from various business models when setting up shop. Some opt for efficiency-focused practices that focus on quickly and cost effectively delivering projects; other may focus on offering only certain project types or use technology to streamline design processes; yet others may seek ways to compete using experience and reputation alone.
An alternative approach is to focus on services provided by expertise-based practices that specialize in specific services. Examples may include firms specializing in designing challenging performing arts buildings, technically challenging research laboratories or code consulting. Although such firms could potentially charge higher rates due to their specialized knowledge, profits may still be difficult to sustain given lower production volumes.
Customer analysis in an architecture business plan should provide details about the types of customers the firm will serve, including demographic and psychographic profiles that explain ages, genders and locations of customer populations as well as needs, goals and objectives of individual customer segments. This will enable firms to design tailored marketing campaigns and increase customer satisfaction levels.
