making the leap
Gilbride set aside $20,000 of his own cash for the start-up, though he never used it all. He hit the ground running, with an agreement to design a group of homes for a high-end golf-course community. Still, he kept his overhead low, working out of his home and investing only in a computer, software, and plotting equipment. Two years ago he upgraded to a modestly appointed office in Leesburg, Va.
"If I had a marble conference table, it would be wasted, because most clients want me at their home for meetings," he says. "Architects make the mistake of thinking their offices must make some kind of statement. But let your business grow to the point where you can really afford to do that." Gilbride works 50 to 60 hours a week and averages four times his former salary.
O'Neil Manion points out that 10 years ago most architects drew by hand, so they could start on a shoestring. But these days, if you're going to be competitive and do substantive jobs, she recommends having $50,000 in the bank to help cover, among other items, sophisticated computer equipment, insurance, and lags in commissions. Hacin used his financial reserve more in the second and third years, when he was waiting for the next projects. "This is not a lucrative business," he says. "You need to have a financial cushion, whether it be savings or a relationship partner who has a steady job."
When architect David Jameson, AIA, left Hugh Newell Jacobsen in 1996 to set up his own firm, he did rely on his wife's income to even out cash flow. But he was frugal, spending about $5,000 on a computer and drafting software. And he took advantage of Virginia Tech's "incubator program," which rented offices in its building to young firms without a profit. He and 12 other architects shared the suite as well as a secretary, library, and copier. That setup also headed off the isolation many are unprepared for when they leave the camaraderie of a large firm. "There was a synergy in working with a number of different architects," Jameson says.
Neubauer also benefited economically and socially from sharing a building and administrative resources with her husband, who owns a landscape architecture firm. "We have 15 people, which makes it livelier, richer, and more stimulating," she says. "I would be very worried about morale if I just had a few drafting and support staff sitting there working all day."
She recommends renting space in an office building, even if the other businesses are unrelated to yours. "Going into a wing of your house, you become isolated and, in a sense, less professional," she says.
Accustomed to bouncing ideas off his colleagues, the hardest part of Hacin's start-up was operating in a vacuum. To compensate, he hired technical consultants on an as-needed basis. And he frequently turned to his father, an architect, for advice on such issues as structuring a fee. "Find a mentor who's in the profession, or someone you admire in your former firm," Hacin suggests. "That's a tremendous resource."
Jameson also surrounded himself with people who knew what they were doing, such as a structural engineer, an attorney, and an accountant. He asked a lawyer specializing in construction work to rewrite his design contract. "I paid him to teach me all the ins and outs of what the language really means," Jameson says. "Now I have a contract custom-tailored to me." His attorney also advised him to get an S Corp. started and to buy a million-dollar professional liability policy.
assets and liabilities
Daunted by the expense, many architects put off purchasing liability insurance, leaving themselves vulnerable to litigious clients. Very small architecture firms aren't sued often. But they get sued more often per dollar revenue than larger firms do, according to architect Frank Musica, AIA, of Victor O. Schinnerer & Co., an insurance firm in Chevy Chase, Md. "Residential architects often provide services for high-income professionals such as doctors and lawyers," Musica says, "and they tend to be terrible clients. Commercial clients know things go wrong and that there's always something to be worked out. The private client investing in the multimillion-dollar house doesn't understand that."
In fact, most claims against architects don't stem from major technical problems, Musica adds, but from client dissatisfaction caused by construction delays, contractor bankruptcy, or a general feeling of having been misled by the architect. In some ways, then, architects who've been playing a role other than project management within a large firm are particularly susceptible to lawsuits during start-up, before their primary responsibility--educating the client--becomes second nature.
Like many insurance firms, Victor O. Schinnerer & Co. has a preclaims assistance program to head off a lawsuit when an architect senses a relationship is souring. "If the owner isn't paying bills promptly, that's a pretty good sign something's going to happen," Musica says. "If you can get someone to intervene and keep things from blowing up, you don't get a claim." Look for programs similar to the company's Design One package, which rolls other kinds of insurance--business, property, and general liability--into a lump premium. Many companies also offer a starter policy that's based on estimated first-year earnings, which covers you at that presumably lower rate for a three-year period.
casting for clients
It's not hard to find architects who built a rock-steady business in the '90s without ever spending a dime on marketing. However, Valence recommends at least hiring a good public relations person to get a short piece about your new practice published in a local newspaper or magazine. If you do a mailing, put together a simple but elegant announcement, and make sure you have a well-targeted address list.
Rather than mailings, Gilbride invested in job-site signs. He used his golf game to strike up productive relationships. And he made friends with general contractors. "The industry has set up an adversarial relationship between architects and contractors," he says, "but a lot of clients contact the contractor first. When you find a GC you click with, all the better."
Starting out, Jameson did everything he could to become visible in the community and the industry, including manning convention booths for the local AIA and speaking at the annual Washington Home Show. But he has always taken to heart a piece of advice from former boss Jacobsen: It doesn't matter how many great projects you do, the one bad one you accept will be like an albatross around your neck.
No matter how meager or abundant your options, "select your clients carefully," Jameson says. "Take time to figure out why they're doing their project and whether or not they value your services."
putting on the hats
Every architect who's set up shop figures out quickly that drawing skills don't float a business. Most have been surprised by the sheer physical demands of having to do almost everything by themselves at first--the artistic renderings as well as the billing, the construction supervision, and the client hand-holding. Ten years ago, Matt Poe and Charles Moore, of Moore Poe Architects, Alexandria, Va., sat down to tell their boss, Warren Cox, of Hartman Cox Architects, that they were resigning to partner a new firm. "He said, 'You have no idea what you're doing,'" Poe remembers.
"He was right," says Poe, AIA, who works 55 hours a week and oversees a staff of eight. "There's an awful lot of management to staying in business. Charlie and I draw 25 percent of the time; the rest is checking shop drawings, talking to clients, and balancing the account. The hardest part of being an architect is construction--it's difficult and time-consuming, from understanding technical aspects to being in the field and resolving natural conflicts."
Gilbride agrees. And yet, he says, architects are taught to think problems through. The same kinds of exacting rules for putting a building together apply to running your business. "Don't get caught up in trying to project a certain image with your designs," he says. "And don't try to deliver more than the client asks for--or can pay for."
methods vs. madness