A unique perspective on design and what makes firms successful
In this new “un-normal” normal, we have gained a unique perspective as a medium-sized firm on globalization/forecasting 2015 and sustainability. Having been through the most challenging times in our 33-year history, we have learned a lot about ourselves and the unpredictability of today’s business climate.
The three most significant lessons we have learned are: 1) Forecasting is an art in planning for the worst and hoping for the best, 2) Sustainability is not just “green” design, and 3) Globalization is more than having design commissions overseas.
Forecasting 2015 (in the “Un-normal” Normal)
When forecasting our annual revenue over the past four years, my partners and I at Rubeling & Associates have always been, reluctantly, correct.
Every December, we forecast the upcoming year with contracts in place and known opportunities. Then, in July, we analyze what happened and what to look forward to and reforecast. Every year, we forecast a potential range of billed revenue, and we always end up with the lower forecasted figure, never the higher one. In the past (the mid-1990’s to 2008), we could always count that at least 30 percent of projected known opportunities would be realized. Two years ago, none materialized or became billable that year. Welcome to the new “un-normal” normal.
So, then how do you forecast? As a mid-size firm, the secret we discovered to establish the firm’s expense budget was to anticipate the lower revenue figure and, thereby, increase the chances of a profitable year.
What we learned was to predict that 85 percent of what we have under contract will actually be realized, and only 10 percent of possible known projects may come in.
In this slowly recovering economy, the unexpected always happens. It is a given. “Sure projects” go on hold for unexplained reasons, and unexpected projects can save the day, but don’t try to count on them. The best approach is to be conservative and predict low. Use the imagination you honed in architecture school and apply it to business thinking. You will be amazed what can happen.
Overall, 2015 will be more like 2014 for medium-sized firms that are getting squeezed by the larger firms stepping down the ladder and the recent resurgence of smaller firms climbing up.
Plan on having the same year, but step it up and focus on your entrepreneurial, managerial and technical efforts. Don’t worry about having more staff to look successful. Be successful by getting more out of your current staff. Be flexible and nimble, and also able to change directions in mid-step. Firm size does not matter, but product quality and profitability still do. Every one of your clients assumes you are a profitable success since you are still in business.
Another Definition of “Sustainability”
Sustainability is a favorite word of architects, and, unfortunately for most, it is used to describe everything except their firms. In order to survive/sustain your firm, you must constantly monitor your firm’s dash board for vital signs such as cash flow (how much money came in today?), accounts receivable and accounts payable, current workload, and deadline management. Monitoring and reacting to these gauges helps anticipate challenges and successes.
Profitability is what “sustains” your firm
The small-to-medium firm practice has gotten smaller, more intimate. Clients want more service, and architecture at this level has become more of a commodity. As architects, we are dependable leaders for our firms, our clients, and ourselves. The lack of confidence in the economy has generated unpredictable client behavior, but with our leadership skills we can manage that unpredictability.
Focus on relationships and networking for referrals. Stay in constant contact with your advocates, your clients past and present, contractors, consultants, everyone. Be everywhere. Don’t communicate digitally (everyone does that), but be different. Communicate in person over coffee, lunch, golf, cocktails, or your kid’s soccer game. Differentiate yourself. Be seen. Be innovative.
As Jim Cramer and Scott Simpson write in their book, The Next Architect, it is all about “clientship.” Those that practice it sustain their firms.
A New Globalization
What does Globalization mean to you? For our firm, it is not about practicing overseas. It is about connecting people from overseas with our clients in the U.S.
We have focused on K-12 education for over thirty years. One thing that has changed due to the uncertainty in the economy is the ability of private, independent schools to predict enrollment. To help offset declines in recent applications, many independent, non-secular day and boarding schools have turned to Chinese students whose parents want their children educated in the U.S. to ensure future enrollment in our elite universities.
Being entrepreneurial, we invited several heads of schools to play golf with another head who was participating in such a program. Now, over the past three years, each of these heads has between 24 and 50 Chinese students paying three times the tuition amount to attend their schools. This effort of “thinking outside the box” by helping clients achieve their business goals has ensured several master planning updates and new projects for our firm. The furniture for our current library project with one of the schools is being fully funded by a Chinese family as a “thank you” for their child’s success.
This is “clientship.” We have increased our value to our clients beyond master planning and design. We care for them and want their school to succeed. And they know and appreciate all that we do.
These relationships, rooted in our commitment and their trust, continue to provide new work and referrals because of our new way to “think globally.”
The Final Word
Accept the fact that our current and short term future growth will be minuscule. And stop complaining. It only attracts bad karma.
Be entrepreneurial and practice “clientship.” Stay in touch with clients, consider their challenges, and use your imagination to help address them. It is not always about architecture or design.
Differentiate yourself and your firm even if it’s just through a phone call instead of an email.
Focus on your dashboard of Vital Signs Every day.
Follow what the author Simon Sinek says about business: “People don’t buy what you do, they buy why you do it.
Be clever, nimble, flexible, and innovative and you will, in these “un-normal” times, make it happen!
Al Rubeling, Jr. FAIA is the president of Rubeling & Associates, Inc. a thirty three year old, medium sized architecture/interior design/master planning firm located in Towson, MD. He is currently the vice chancellor of the American Institute of Architects College of Fellows as well as an adjunct professor at the University of Maryland School of Architecture/Planning/Preservation teaching leadership/entrepreneurship and innovation for architectural careers.