Nov 24, 2024
Husband-and-wife-earns $400k+ annually from architecture firm
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 at an owner of a 6-year old firm with 7 employees (2 payroll, and 5 contract between 20-40 hrs/wk) located in Florida with a fully remote team. The firm is co-owned by a husband and wife.
Projects:
We do education, retail, and restaurant projects.
Office Situation:
We don't pay for an office because our team is 100% remote. We just pay for a virtual address which is $150/mo.
Salary:
My spouse and I own the firm. One of us earns $250k/yr and the other is $100k/yr. We also pay out annual bonuses that range from $50k - $70k depending on cash flow. On top of that, we have three kids who do work for the business in marketing and other roles - each one earns $15k/yr.
Our salaries have continued to double each year with growth. Our ongoing goals are to continuing increasing our annual salaries and increase tax savings with creative spending and utilization of tax code.
Work/life balance:
Balance is great. I teach part time and operate the firm part time, as well. Normally, I don’t work on Friday’s. We take a good amount of vacation yearly.
Debt:
No debt. We use an Amex Platinum credit card with no limit and nice perks. Typically $20k per month in credit card balance for operating expenses but we don't carry a balance. We also have a $100k line of credit on hand but we've never used it.
Revenue:
Over the last 12 months, we've generated $1.3M in revenue. Each year, we see about 20% revenue growth with a 15-20% profit margin.
Best & Worst Expenses:
Favorite expense is business IRA contributions tax free ($50k per year combined). Health insurance is the worst expense at $2500/month for terrible coverage.
Savings & Investments:
No firm investments, but firm contribution to personal SEP IRAs for both owners.
Biggest Mistake:
Assuming a client was good for contract fees and not implementing progress billing during the CD phase of a large project. Going forward I am doing 25% / 50% / 75% progress billing on larger projects because it's better for cash flow.
Book Recommendations:
My favorites are Unreasonable Hospitality by Will Guidara and Never Split The Difference by Chris Voss.
Firm owners: Want to participate? Submit your Money Memo here