ArchitectsEssentials ofStarting aDesign Firm

Peter Piven, FAIA

Bradford Perkins, FAIA, OAA, AICP

John Wiley & Sons, Inc.

Innodata0471456551.jpg

ArchitectsEssentials ofStarting aDesign Firm

Other Titles in the ArchitectsEssentials of Professional PracticeSeries:

Architects Essentials of Ownership Transition

Peter Piven with William Mandel

Architects Essentials of Cost Management

Michael DellIsola

Architects Essentials of Contract Negotiation

Ava Abramowitz

Architects Essentials of Presentation Skills

David Greusel

Architects Essentials of Winning Proposals

Frank Stasiowski

ArchitectsEssentials ofStarting aDesign Firm

Peter Piven, FAIA

Bradford Perkins, FAIA, OAA, AICP

John Wiley & Sons, Inc.

This book is printed on acid-free paper.Copyright 2003 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New JerseyPublished simultaneously in CanadaNo part of this publication may be reproduced, stored in a retrievalsystem, or transmitted in any form or by any means, electronic,mechanical, photocopying, recording, scanning, or otherwise, except aspermitted under Section 107 or 108 of the 1976 United StatesCopyright Act, without either the prior written permission of thePublisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 RosewoodDrive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470, or onthe web at www.copyright.com. Requests to the Publisher forpermission should be addressed to the Permissions Department, JohnWiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, e-mail: permcoordinator@wiley.com.Limit of Liability/Disclaimer of Warranty: While the publisher andauthor have used their best efforts in preparing this book, they makeno representations or warranties with respect to the accuracy orcompleteness of the contents of this book and specifically disclaim anyimplied warranties of merchantability or fitness for a particularpurpose. No warranty may be created or extended by salesrepresentatives or written sales materials. The advice and strategiescontained herein may not be suitable for your situation. You shouldconsult with a professional where appropriate. Neither the publishernor author shall be liable for any loss of profit or any other commercialdamages, including but not limited to special, incidental,consequential, or other damages.For general information on our other products and services or fortechnical support, please contact our Customer Care Departmentwithin the United States at (800) 762-2974, outside the United Statesat (317) 572-3993 or fax (317) 572-4002.Wiley also publishes its books in a variety of electronic formats. Somecontent that appears in print may not be available in electronic books.For more information about Wiley products, visit our web site at

Library of Congress Cataloging-in-Publication Data:Piven, Peter.

Architects essentials of starting a design firm / by Peter Piven &Bradford Perkins.

p. cm. (Architects essentials of professional practiceseries)Includes index.

ISBN 0-471-23481-8 (Paper)1. Architectural practiceUnited StatesHandbooks, manuals, etc.

I. Perkins, Bradford. II. Title. III. Series.NA1996 .P583 2003720.68dc21

2002155590

PRINTED IN THE UNITED STATES OF AMERICA10 9 8 7 6 5 4 3 2 1

www.wiley.com.

http://www.copyright.comhttp://www.wiley.com

To Alf Werolin and Weld Coxe, who taught each of us tobe effective advisers to others

To Lawrence Perkins, who passed on his wisdom andexperience about starting a firm

and

To our wives, Phyllis Friedman Perkins and Caroline Piven,who supported us with this project even when it got in theway of family obligations

Contents

Introduction 1

1. Deciding to Go onYour Own 5

2. Marketing and Sales 17

3. Financial Management 47

4. Negotiating Feesand Contracts 81

5. Organization and Personnel 99

6. Legal and Ethical Issues 133

7. Resources and Support 151

8. Strategic and Business Plans 165

9. Planning for Excellence 183

10. Potential Causes of Failure 203

11. Launching Your Firm 217

vii

Appendix A. Study Guide 227

Appendix B. ChartingYour Course 229

About the Authors 249

Index 251

viii Contents

Introduction

So youre thinking about starting your own designfirm. You are not the first to have this desire, nor willyou be the last. It is a common dream for manyifnot mostdesign professionals. In fact, hundreds ofdesign professionals start new firms each year forvarious reasons, and many others plan for the daywhen they can take the same initiative. Some starttheir own firms because they want to pursue theirown ideas and interests, others because they see it asan opportunity to make a better living, and stillothers because they do not want to work for some-one else. For each individual, there are different fac-tors that lead to this common dream.

This book was written to help those who havethis dream decide whether, and when, to start theirfirm, as well as to guide them through the steps nec-essary to achieve a successful launch and get themthrough the challenging first years of operation. Asin any field, a significant number of new design firmsnever get off the ground or achieve the foundersmajor goals. But for many professionals, having theirown firm is a satisfying, challenging, and rewardingexperience.

1

There is no one formula to follow to guaranteesuccess, but most founders of new firms whoachieve their goals observe the basics of creating asuccessful practice. One of the most importantbasics is to have a plan. This book was written fordesign professionals (including architects, engineers,graphic designers, interior designers, landscapearchitects, and others involved in planning anddesigning the built environment) who are consider-ing starting, or have already started, a new firm. Mostof the material is also relevant to smaller design firmswhose founders are interested in growing and/orchanging their current practice. It focuses on thebasic financial, marketing, and other necessary toolsand puts them all within the framework of a plan foroperating the new firm.

Most of the examples used in the book aredrawn from firsthand experience and are relevant tothe issues facing any design professional building anew or working in a small firm. Some of this mate-rial was first developed to support a course on thesame topic given by the two of us each summer atthe Harvard Graduate School of Design, but thebulk of the book is based on our personal experienceas principals of architectural firms and as advisors toothers in the field.

This book is organized into 11 chapters and 2appendices: Chapter 1 discusses the motivations and analy-

sis that often precede the startup of a new firm.Most design professionals have some, but notall, of the skills, capabilities, and resourcesneeded to start and build a successful practice.For some this means they should consider acareer in an existing firm. For others, this initial

2 Introduction

analysis helps clarify why having their own firmis important and identifies what stepssuch asfinding partners with complementary capabili-tiesthey must take to have a realistic chanceof success.

Chapter 2 addresses the essential task of obtain-ing clients. Without a steady flow of new work,any design firm will fail. All successful firms finda way to achieve this essential goal, and most ofthe techniques they use can be learned. To thatend, the first part of the chapter discusses thestrategic techniques involved in establishing amarketing plan; the second part outlines some ofthe most important tactical aspects of a success-ful sales program.

Chapter 3 explains the financial managementof a design practice. It does not try to teachdesign professionals how to be accountants, butit does describe the basic tools and techniquesused to plan, build, and guide the financialhealth of a young design firm.

Chapter 4 investigates two of the most chal-lenging tasks faced by even the most experi-enced heads of successful firms: setting fees andnegotiating contracts.

Chapter 5 introduces some of the central orga-nizational and personnel management toolsand options that a young firm should consider.

Chapter 6 outlines some of the legal and ethicalbasics that should be considered.

Chapter 7 lists a number of the availableresources that will help a new firm both in itsearly years and once it has become established.

Introduction 3

Chapter 8 coordinates the material presented inthe first seven chapters and describes how thesetechniques can be used to create a comprehen-sive plan for your firms future. Chapter 9 confronts one aspect that should

bebut rarely isincluded in the firms plan: astructured approach to achieving design excel-lence. Chapter 10 provides some cautionary advice for

avoiding pitfalls of starting a new firm. Chapter 11 outlines the major first steps in

launching your firm. Appendices include a Study Guide that con-

tains a number of supplemental projectsintended for use by both readers and schools,the latter of which may choose to incorporatethis material in their practice courses. Appen-dix B, Charting Your Course, provides awidely recognized guide to understanding howfirms can be organized and managed.

Even for someone with a great deal of self-confi-dence, starting a new design firm is a daunting task.This book and the techniques and examples it con-tains are intended to make the task seem less over-whelming. As you read, keep in mind that the firmsthat you admire and consider successful today wereonce fragile start-ups. They launched, survived, andthen prospered, and so can you.

4 Introduction

Deciding to Go onYour Own

As stated in the Introduction, having their own prac-tice is the goal of many design professionals. A newfirm that is successful and achieves its foundersbasic goals can be a very satisfying way to pursue acareer in the field. But while the rewards (in self-expression, if not income) can be significant, so toocan the risks. Most new businesseswhether archi-tectural, engineering, and interior design firms orrestaurantsnever get off the ground. Some manageto launch and survive, but never really achieve muchmore than a modest success. A few, however,manage to surmount the inherent problems andachieve success as a business, as well as become whatmost professionals hope for: a respected firm that isboth professionally and financially successful.

Have a Good Reason for StartingYour Own Firm

Assuming you are considering going on your own(otherwise why would you be reading this book), thefirst question to ask yourself is: Why do you thinkthat having your own firm is the right thing for you?

5

1