Nov 17, 2024
46-year-old Australian architecture firm runs on 10% profit margin
Tyler Suomala
Creator of Growthitect
Welcome to Money Memos! Money has always been taboo in our industry. But that's shifting…
Despite the growing need for financial transparency, many architects have kept firm finances close to the vest, even with partners and close colleagues.
But now, more architecture firm owners are sharing financial insights to grow stronger, more resilient firms.
In an effort to provide real, candid insights into the financial side of running a practice (and to shake up the silence around money), I've created Money Memos. This series brings you anonymous and rare looks into how your peers are navigating the numbers.
Want to participate? Submit your Money Memo here
Here's a look from one of 2 directors at a 46-year-old firm with 10 employees located in Queensland, Australia.
Projects:
High-end residential, developer stock, medical, retail, fit outs, industrial, and hospitality.
Office Situation:
We rent our office for $6,500/month.
Salary:
My base salary is $115k/year plus phone, internet, car allowance, insurances, registration, and profit share.
Work/life balance:
Good…now. I've pulled back over the past 2 years.
Debt:
We have a small $50k loan from COVID times that we're still paying down. We also have a credit card that we use to pay software subscriptions and other minor expenses, but we pay it off each month.
Revenue:
We do about $1M in annual revenue with a ~10% profit margin. This has dropped off in recent years. From 2016-2018, our revenue was $4M. We don't currently put any revenue into savings or investments. Our #1 goal in the near future is to stay afloat.
Best & Worst Expenses:
Our worst expense is wages, which is 60% of turn over. But my best is travel insurance because I'm covered when I take personal leave :)
Biggest Mistake:
Buying out previous senior partners, which came with lots of great life lessons. The down sides are our new turn over (60%).
Book Recommendations:
The E-Myth Architect by Michael E. Gerber.
Firm owners: Want to participate? Submit your Money Memo here