My husband and I founded our firm 18 years ago; we are now 26 people in three states. My advice to a student wanting to start a firm would be to find a successful firm, for this smaller might be better because you get more exposure much more quickly, then learn what they do well, why they are successful. Learn the things school does not teach you: codes, handicap, technical detailing, permitting processes, client interface, liability issues, insurance requirements, contracts. Decide what you want to do. Most people starting out cannot design and document houses to apartments, museums and hospitals. Decide what your focus will be and get the knowledge and skills you need. My husband and I met at a firm that happened to specialize in multi-family. We primarily learned a very specific product type and made numerous contacts within our area of expertise which has helped us to this day. This is important because we have always found word of mouth and our built projects are our best advertising. Starting a firm without any contacts, whatever one's area of focus would be difficult.
We left the small firm and went to a very successful large national firm to discover what they did differently than a small firm. From them we learned to have more structure in the overall project process but also leaned that most fundamentally what they did differently was having a razor sharp focus on contracts and billing. At that time the firm had more accountants than licensed architects!
While there we decided to start our own firm. We took two years, added to existing savings and in our free time set up an LLC, worked on a logo, marketing material and a website so that when we decided to leave we would be ready to hit the ground running. In our specific case we were going after projects that started with budgets around $15 million so we knew we had to have an office and at least one employee since who would trust a project of that size to two people working out of their home?
Ultimately we had three sources of funding: savings, a loan from parents and an SBA loan. We had a good chunk of saving and hoped that would be enough but paying overhead and a salary burned through our savings quickly. We could not find a bank that would finance our venture though one recommended the SBA to us. We applied for and received a $50k loan from them which was a godsend. My memory is that they required a business plan, which we had not put together for ourselves and fortunately this requirement forced us to take the time to do this. This loan carried us until we landed our first big project; however, in multifamily payments can come slowly and we took a loan out from my parents to bridge the gap from having a great project to work on and actually getting paid for the work.
It takes a certain personality to start a firm and weather the many ups and downs. I remember at one point being nearly unable to sleep, each night calculating if we failed how long on a regular salary it would take to repay our debt. My husband finally sat me down and told me failure was not an option so I needed to focus my mental energy on what we needed to do to succeed rather than exit strategies. He was right but the first few years are scary, especially when both spouses are connected to the same start up.
From my experience I would advise students who are serious about owning a successful firm need to be strategic and understand it is a bit of a long game. Most people cannot leave school and go directly into private practice, all issues of licensing aside (which I realize is a huge aside!) even if they just want to do houses and additions. That being said for all the stress, fear, long hours and work it has been, starting our own firm was the best professional decision I have ever made!
If you polled the architectural community I think you will find that most individuals started their firms with a project in hand.
I suppose evidence of a strong commitment, along with a good list of prospects, might inspire someone with money to invest in a startup, but would be surprised.
Francis Pisani, AIA
4419 Fulton Avenue #9
Sherman Oaks, CA 91423
Donald Hunsicker - Funding Architecture Firm Startup
The question posed by your student provides an opportunity to introduce two resources for emerging professionals: the Small Business Administration (SBA) and AIA Trust.
The SBA guaranteed business loans originated by private lenders and offers considerable assistance under the heading Start and Grow Your Business . You might want to take advantage of the Business Resources and Services offered by the SBA Boston District Office.
Senior Officials at the district office often make themselves available to provide a presentation on the SBA resources and the list of the top rated SBA business lenders, which can be helpful in establishing contact with local business lenders. There are other SBA loan products that emerging practitioners should be familiar: 1) CAPLines: Builders Line, financing for small general contractors or builders to construct or renovate a residential or commercial property; 2) Disaster assistance.
Emerging and Young AIA Professionals will also appreciate being introduced to AIA Trust. AIA Trust offers information and resources forNew Design Professionals-Starting Out and Architects Starting a Firm – New in Practice
You might develop an assignment to encourage your students to conduct their own independent research of the topic of funding an architecture firm startup – the opportunities and risk.