• What is the value of a firm?
• How do I increase the value of our firm?
• What financial information do we need to run the firm?
• Why do these need to be separate questions?
They’re not!
Key Facts:
You want a firm with good design, tight drawings, and satisfied clients. Nevertheless, there is also the business-side of the firm.
The salaries and related-expenses of people comprise up to 75% or more of every AE firm’s operating expenses. As such, all performance depends on, and all strategic, business, operating and marketing plans are driven by this fact.
A firm also must produce a profit in order to stay in business. The average design firm has operating profits of 10% of Net Revenues. Take away poorly-run firms and imagine what other firms are reaching.
Performance & profitability are achieved on a project-by-project, phase-by-phase basis.
Key financial & economic principles underlying the architecture & engineering industry are crucial to grasp, but quite straightforward and understandable.
How is your firm doing – and why? Keys to those answers are already inside whatever accounting system you have.
Accounting involves getting revenue & expense transactions into the correct accounts on a timely basis. Financial management involves taking all that data, analyzing it, determining why it is what it is and converting it into timely actionable information.