Discussion: View Thread

Funding

  • 1.  Funding

    Posted 08-08-2018 08:41
    What kind of funding have you guys used to start up your practice?

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    David Robertson AIA
    Marietta, GA
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  • 2.  RE: Funding

    Posted 08-09-2018 17:25
    Nothing formal. I was without any real income for about 18 months, and then earned very little for a year or two, until I finally earned a livable wage. It was then a very quick path to needing to hire staff, and now I'm back to earning very little again! Just kidding, but things do get very expensive very quickly once you move out of the home office.

    I have a wife with an income, and we had savings. I couldn't have done it this way otherwise.

    Good luck!


    Michael Mitchell,  AIA
    Principal
    BACK40 Architecture, LLC
    www.backforty.co
    495 Flatbush Avenue
    Brooklyn, NY 11225
    T:  212 655 9914
    C: 212 920 5423






  • 3.  RE: Funding

    Posted 08-10-2018 18:07
    Funding consisted of personal savings, some small items acquired on my own, and a few leads/referrals from my previous employer, who couldn't have possibly been more gracious about my departure. I even stayed on part-time with them while making the transition to my own full-time practice, which helped immensely in both income and self-confidence that I could make it all work out.

    My experience/lessons learned: start small, get your name out there, and don't burn any bridges. And definitely have at least a half-year of living expense savings in the bank to give you cushion against the inevitable salad days you will likely encounter at some point along the way.

    Good luck!

    Original Message------

    What kind of funding have you guys used to start up your practice?

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    David Robertson AIA
    Marietta, GA
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    Michael Mitchell,  08-09-2018 17:25


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    Kevin M. Shertz, AIA
    Chestertown, Maryland
    http://www.shertzarch.com
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  • 4.  RE: Funding

    Posted 08-13-2018 17:36

    I recall a conversation that I had with a friend who was an attorney and practicing on his own when I started my firm in 2002.  I asked him how much money he thought I would need to start the business and he stated that he thought about 6 months wages would be a good idea.  When I told him I had about $2,500 he said "that will probably work!"

    And it did...

     

    Perry G Cox, AIA

    Perry Cox Architect, PA

    Apex, North Carolina

     






  • 5.  RE: Funding

    Posted 08-10-2018 00:07
    Hello All ---

    As a confirmed solo-practitioner, I've always worked from home.  So, "funding" has been a non-issue.  The only capital expense, per se, has been the portion of our (my wife & me; no kids) home used for the office.  In any residence, the "office" is, to others, just another regular room (bedroom, part of the living room, whatever).

    In our next condo, our fourth (& final?) unit together, a 2-level unit with very high floor-to-floor heights, will be 3-stories in its "inner half" (away from the windows).  The middle level, my office, is some future Owners' man-cave / she-shed, library, bedroom, etc., or even an office!

    And, as a solo, I normally go to the Clients' locations for meetings, etc, which works because often, something we're lookin'-at on paper needs a field-visit, 30-ft. away...  And, loving my job, I could care less when I'm doing it (I'm a life-long night-owl).  In residential work, parents w/ young kids like my "after-bedtime" option for meetings, starting at 20:30 / 21:00, (8:30 / 9:00 PM) when it's nice-&-quiet, w/ the kids in bed.

    The rare request to see my office is answered with; "It's a home-office, not set-up for guests."  I've never had anyone object to that.

    Also, as a small-to-tiny-jobs guy, I've also known that I could never hire someone to draw for me, for several reasons:
    1.    The work is anything but steady.
    2.    I love to draw and, in the process, lots of Design is occurring...
    3.    So- why give it away?
    4.    Then there're check-prints w. mark-ups etc., etc., etc...
    5.    And finally, of course, overhead, taxes-&-insurance, un-employment.....
    So, I'd pay a fortune in time-&-money-&-worry, to not do the fun stuff myself?  I don't think so...

    So, as Eve said every morning in the Garden of Eden, "Up-&-Adam!"
    Thanks ---
    Bill





  • 6.  RE: Funding

    Posted 08-13-2018 18:52
    It is great to see sole practitioner working from home and being so successful.  I always felt that the bigger the firm one could develop the more successful one was considered.  But there are people who intend to be sole practitioners working in home environments that are successful not only in the project they build but the life that they make.

    Architecture has never been about money.  Size doesn't matter and architecture is a lifestyle.

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    Mark Robin AIA
    Mark Robin Architecture
    Nashville TN
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  • 7.  RE: Funding

    Posted 08-13-2018 20:55
    Amen. Been doing the same since 1995. Got tired of working on prisons which was about the only work here during the nineties. For awhile though my office was separate from the house. When peers bitched about traffic jams on rainy days I bitched about my slippers getting soggy. Working out of a three bedroom condo now and my bedroom office is the perfect size for a digital based practice. One thing I learned recently is forget about pricey work stations and office furniture. Now I buy gamer gear. Gamers needs lots of graphic speed and memory but don’t have much money. Gamers also sit for long periods and need really comfortable but inexpensive chairs.

    Thad Broom, AIA




  • 8.  RE: Funding

    Posted 08-10-2018 10:22
    Hello All ---

    Yes, this may look familiar; I've since realized I missed some of the basics, especially for some of the "young-uns" out there (in bold).

    As a confirmed solo-practitioner, I've worked from home since c. 1984.  After working-around since '66, including co-op jobs during Architorture School, (which I loved), my employer in '84 was leaving the area.  It was the only "Design office" here, so what-to-do was one of the early big decisions my wife & I needed to make (wed., 24 Sep. '83).  Like many drafters ("draftsmen") then, I did small, occasional "free-lance" jobs on-the-side, while working in an office.

    Does that still happen?

    As it turned out, when we married, we found that we both had substantial savings.  That, and her well-paying job in Insurance, did help with the comfort level of going solo, but we never hit the savings for this.

    So, "funding the Practice" directly, has been a non-issue.  The only capital expense, per se, has been the portion of our (my wife & me; no kids) home used for the office.  In any residence, the "office" is, to others, just another regular room (bedroom, part of the living room, whatever).

    As for furniture & tools, I'd always had a drawing table at home.  And, all drafters had their own tools; it actually reminds me of Medieval itinerants; your office gave you the drafting table and stool, and you brought your own tools.  (You could be really cool if you had a great collection of templates!)

    By the way, ALL the tools (incl. templates) are available to buy now; art stores often have fat catalogs, to hand out, full of these goodies, along w/ "consumables"; paper, pencil leads, etc.

    Our new condo, our fourth (& final?) unit together (now in gut-renovation), is a 2-level unit with very high floor-to-floor heights. It will be 3-stories in its "inner half" (away from the windows).  The middle level, my office, is some future Owners' man-cave / she-shed, library, bedroom, etc., or even an office!

    And, as a solo, I normally go to the Clients' locations for meetings, etc, which works because often, something we're lookin'-at on paper needs a field-visit, 30-ft. away...  And, loving my job, I could care less when I'm doing it (I'm a life-long night-owl).  In residential work, parents w/ young kids like my "after-bedtime" option for meetings, starting at20:30 / 21:00, (8:30 / 9:00 PM) when it's nice-&-quiet, w/ the kids in bed.

    The rare request to see my office is answered with; "It's a home-office, not set-up for visitors."  I've never had anyone object to that.

    Also, as a small-to-tiny-jobs guy, I've also known that I could never hire someone to draw for me, for several reasons:
    1.    Pay!, on a regular basis.
    2.    The work is anything but steady.
    3.    I love to draw and, in that process, lots of Design is occurring...
    4.    So- why give it away?
    5.    Then there're check-prints w. mark-ups etc., etc., etc...
    6.    And finally, of course, overhead, taxes-&-insurance, un-employment.....
    So, I'd pay a fortune in time-&-money-&-worry, to not do the fun stuff myself?  I don't think so...

    So, as Eve said every morning in the Garden of Eden, "Up-&-Adam!"
    Thanks ---
    Bill







  • 9.  RE: Funding

    Posted 08-13-2018 18:18
    Bill,

    I'm not sure I caught the original intent of your post, but in reading this one, I have to say I understand how you work and why you work. It made me feel like I was writing it - especially the difficulty of breaking free from being a "solo." I can't say I want to remain that way forever, but the tacit pressure or assumption that success is measured in growth and growth comes from more staff (as one measure) is not something I give in to or believe. I love my current scenario, I'd love to share some of the tedious work with others, but as you stated, it's hard to break up the "work" from the design. Lastly, it's hard to keep it steady enough to pay and pay on a regular basis.

    Thanks for sharing.

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    Lee Calisti AIA
    Principal
    lee CALISTI architecture+design
    Greensburg PA
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  • 10.  RE: Funding

    Posted 08-10-2018 15:26
    MASTA-CAAD.....

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    Nelson B. Nave AIA
    Owner
    Nelson Breech Nave, AIA Architect
    Kalamazoo MI
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  • 11.  RE: Funding

    Posted 08-10-2018 18:02
    We (my wife and I) made the decision when I started DDA in 2010 that we would not carry any debt and we still don't.  As was noted above, it was rice and beans for a while as money from projects was used for insurance, LLC-setup, licenses, and software.  We were fortunate that we had a client out of the gate that paid a retainer.  I didn't really pull income out of the business for about 18-24 months, and then only after setting up an emergency fund so the company would be funded for approximately 6 months if the income stopped.

    We didn't hire initially and worked with independent contractors.  The market was awful, so there were a lot of eager folks to help.  As the market recovered and the firm grew, we hired two team members and still occasionally outsource work when needed.   Architects aren't the best at the business side (myself included) and there's a steep learning curve.  Be willing to make mistakes and to learn from them.  When possible, learn from the mistakes of others.  There are a lot of resources out there within and outside the AIA for learning.  Soak it all up.

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    Daniel Dixon AIA
    Principal
    Dan Dixon Architects, LLC (DDA)
    Orlando, FL
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  • 12.  RE: Funding

    Posted 08-10-2018 18:08
    To All,

    The first thing to understand is an Architectural Degree and Registration will NOT work as colaterral for a bank loan.

    Therefore you need outside capital, your savings, your family, refinancing your home -or------ .  This needs to cover what equipment and supplies you really need and to cover operating expenses in the beginning.  Plan on how to pay it back and on a schedule.  Fortunately, architectrual practice does not need very much capitaliztion compared to other forms of business.

    Operating expenses----keep to a minimum.  Work at home or the least expensive office space possible.  Yes, you will need to eat and have a place to sleep.  Be modest.  Pay your bills on time.  Do not skip payments as that creates a deep, deep hole that is very difficult to climb out.  This is where a committed and understanding spouse can cover the day to day expenses.

    Understand finances.  There are simple courses in operating a busines.  Do not undersell your fees.  A rule of thumb for a solo practitioner working out of the basement is to pay yourself $1.00 for every $2.00 you earn.  The rest will disappear in income taxes and self employment taxes.  If you hire consultants, pay them first, when you get paid.

    You have a life.  While it may be easy for a while to work endless hours, plan your time, don't kill yourself.  Another rule of thiumb is roughly 2000 working hours available in a year.  You will probably only have 1000 billable hours out of the 2000.  The rest will be burned up in chasing the next jobs and managing your firm.   The less unbillabe time is always a good thing to strie for.

    Collect your bills promptly.  Late payers turn into non-payers.  For every dollar you do not get paid, you have to earn an additional $10.00 to pay exspenses and recoup the profit you lost.

    Good luck.  Solo practice can be a great experience.   Continue to learn and be current on trends, clients, markets and the best ways to practice.

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    Arlan Kay FAIA
    Architecture Network, Inc.
    Oregon WI
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  • 13.  RE: Funding

    Posted 08-10-2018 18:29
    When I started my firm I applied for a $30K business loan from a local bank. That required a thorough Business Plan which was a good idea to have regardless. Worked through several lean years, grew the firm, paid off the loan, grew the firm, and applied for another larger business loan to take the firm to the next level.

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    Andrew Moss
    mossArchitects
    Pittsburgh PA
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  • 14.  RE: Funding

    Posted 08-13-2018 15:22
    What kind of practice do you want to/are you start(ing)? If you are have thoughts about that, I'm sure that would elicit more specific feedback.

    Of the posts so far, only one or two mentioned growing the firm. Others mentioned savings and/or having a spouse with an income that would support them while getting their firms off the ground. I'm in that boat: savings and a spouse with a full-time job that could support us if necessary and that definitely provides health insurance for the whole family. And I should note that I've been on my own for less than a year.

    Initial expenses came out of our savings and included insurance, LLC registration, professional licensure and membership fees, and a new computer and design software. Since I started, the rest of the expenses have been fairly minimal, primarily for business development/networking and include travel and coffee/lunch/drinks/dinner and marketing (business cards, website hosting fees, and misc. office supplies).

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    Damon Sidel AIA
    Mix Design and Development LLC
    Somerville MA
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  • 15.  RE: Funding

    Posted 08-16-2018 09:29
    I waited until it was a good time for my wife and I to take the plunge - when she was making a bit more money, and could provide us health insurance. At that point, I simply worked out of the house - I was the guy with a laptop, an old version of CAD and a nice mouse. I graduated from the kitchen table to a little office in the house after about one year, and did that for another 1 or 2 years. At that point, I decided to try the "employees" thing, and rented a tiny cheap basement studio. I figured that it would fail, and I'd go back home after the summer (hired a summer intern). It went well enough that I stayed in that basement for 2 years and went through several employees. Now, I've bought a building and moved my office in there. Several full time employees. Sometimes it's difficult to keep them all busy, which is a problem I'm trying to solve. But having employees has allowed us to grow exponentially in terms of dollars and size of projects. Turn around is faster too.

    In terms of funding it - I started with a $1000 "loan" from myself to the business checking account. Over the years, I've had to "loan" myself up to $5000 at a time, usually to cover a short term cash flow problem (IE: the insurance bill is due & the business acct doesn't have the money). These "loans" get "paid back" in a month or so, once the checks come in. I did take an SBA loan to buy the building, so I am in debt right now, but the building will be cash flowing this year, so it should be right side up pretty soon.

    One of the things I miss - from my sole practice days - is that I now have to babysit the employees & the time is not completely my own. The stress is much higher. But the dollars are much higher now too, so that's nice.

    I'm hoping to be a 10ish person firm in the next few years - of course, this is only part of the goal. I'll need some people to help me get there. Right now, I'm looking for a mid-career or late-career person to help me with PM and people management.


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    David Sisson AIA
    Architect
    David Sisson
    Providence RI
    ------------------------------