When it comes to running a practice, it can become easy to get lost in the day to day. There’s deadlines to meet, meetings to be held and bills to pay. An endless cycle that repeats itself each week.
Naturally, this cycle often causes us to lose track of the big picture. The goals and resolutions we set in January fall by the wayside, becoming overlooked by more pressing issues that must be dealt with immediately.
A mid-year check-in can provide your practice with the reality check it may need. Are you meeting the revenue goals you set in place at the beginning of the year? Have you secured enough work for the next six months? What’s team morale like at the moment?
No matter when you started your financial calendar, June can be a great place to take this necessary pause to reflect on where the business is at and where it needs to go. It’s the halfway point in the calendar year, providing you with just the right amount of time to shape things up if need be.
So whether you feel as if you’re lagging behind on your goals, or simply want to give your business a little jolt, here are our three top recommendations for you to take on before the end of the year. Each practice booster focuses on one key area of the business – finance, operations, and sales and marketing – to ensure well-rounded success before the end of 2021.
1. Get familiar with your numbers.
One of the most important business concepts that we teach our clients at Archibiz is the difference between cash and profit. For many architects, it’s very easy to manage their business from a cash perspective. They’ll get several projects come in, feel comfortable with the cash reserves and thus believe the business is in an overall “good” place. While there may be enough money to pay for the studio lights, the practice could still be leaving a tremendous amount of money on the table. Your efficiency could be deteriorating, your margins could be under pressure or your debtor days could be rising. Your financial reporting should act as an early warning mechanism on all of these risks.
Another place we see practice owners struggle with is charge-out rates. These rates can be a useful tool but are no substitute for good project margin control. Yet so many architects lag in this department, simply because of a lack of business training. Relying too much on charge out rates diminishes the focus on volume and efficiency of work being done in the practice. By all means use charge out rates when calculating your fees but don’t rely on them to manage your practice on a day by day basis.
One way to ensure you are staying on track for the next six months is to get organized around your financial statements, specifically your Profit and Loss Statement (income statement.) By presenting your revenue against your expenses, the P&L Statement is one of the simplest ways you can check the health of the business. Find an accounting software application like Xero or Quickbooks, set a date each month where you create these documents and make it a habit. Knowing how to create, read and interpret these statements will help you meet your goals in no time.
2. Check in on your team.
Having the right people working on the right projects can dramatically impact the efficiency, profitability and sustainability of your practice. Often, we encounter a stressed-out, overwhelmed director who wears far too many hats – taking on everything from liaising with clients to cleaning the office coffee machine. Or, we’ll come across a practice where the owner wants to make all the employees happy, letting project architects take on more design work at the risk of losing efficiency.
At Archibiz, we teach our clients to choose the right staff for the job based on three criteria: lowest cost resource, competency for the job and capability of delivering the required quality. In an ideal situation, a staff member who ticks all three boxes will help ensure you are not wasting resources and thus time and money. In this mid-year check-in, take a moment to observe your staff and your own workflow. Is everyone working on what they should be doing? If not, how can you rectify that next month?
3. Keep a list and check it twice.
Many architects we come across have a rolodex of clients with whom they never interact. This becomes a massive missed opportunity, and one that is so easily fixed.
One of the easiest ways to boost your business can be by keeping a list. Not just any list, but a clean, well-organized list that’s kept in a marketing software platform.
Build an email list and include all of your past and current clients, suppliers, partners and personal friends. You can easily create your list in Excel and then upload it to a CRM (Client Relationship Manager) platform like Mailchimp. If you don’t have a CRM platform or software yet, find a free one that works for you and create an account to get you started. Then, send out one piece of relevant, engaging content to your list once every two months. This will help you stay on your clients’ radar and help position you as an expert in your niche.
Taking the time to focus on the business rather than in the business will help your practice succeed long-term. So, take this opportunity to pause, reflect and strategize.
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