Inside a 4-Year-Old NYC Architecture Firm Pulling in $2M a Year

Here's a behind-the-scenes look at a 4-year-old architecture firm in NYC, as told by the owner. The firm has 7 employees and focuses on high-end residential.

Office Situation:

We currently rent a small space (our first) for ~$3500/month. It's a 900 SF open studio space with our own kitchenette we built out and a closet (but pretty bare bones otherwise, just the desks and storage).

But now we're moving to a new space nearby, which will be about 2100 SF and $11k/month. It will allow us to have a separate conference room, a separate kitchen, and my own small office space. Normal utilities and such like internet and a cleaner - the rent is the big cost to us.

Salary:

I pay myself $150k/yr as a base salary through payroll. Last year we profited about $575k, which I pulled from at my discretion for lifestyle items, and otherwise reinvested into the firm. The end of year bonus I pay myself is determined by our accountant who basically tells me the most tax-friendly way to balance things out.

I've paid myself the same salary since the beginning (I promised the move out of being employed had to be worth it, and $150k was my salary when I left my last firm 4 years ago).

We became quickly profitable through keeping costs low and output pretty high and tight. I was able to fund buying a property and building a house through our profitability, as we pulled in far more than I needed for day to day costs.

Work/life balance:

Currently I work too much, and I know it. At least a few hours per weekend and all early mornings. I have the bad habit of always checking my work email.

That said, I offer (rather strictly to my employees) a good work/life balance because I know I don't want to be like my previous firms. While I'm currently paying the price myself, I also know that while I'm young I have the time to figure it out and learn how to adapt.

I have confidence that, in a couple years, I'll know how to unplug more often and level the playing field.

Debt:

We have 0 debts, other than rolling monthly credit card debts (Amex Platinum, just because), which get paid out monthly.

Revenue & Profit:

Over the last 12 months, we've generated somewhere in the low $2 millions in revenue with a 30% profit margin.

We have slowly increased each year, consistent with the growth of the firm. The majority of our jobs have been hourly, so bringing on a new hire simply meant more revenue, which justified the growth.

I think that realistically we won't grow too much more due to my personal preferences. We'll cap out around the $2.5-4M/year mark in a couple years, which I'm really satisfied with.

Best & Worst Expense:

The only expense I could say I might "like" is Monograph, which has saved me hours and hours of my life. It gives me real time data about project and firm financial performance, as well as helps my team keep better track of time and expenses.

I can't say I have a "worst" expense - the costs to run the firm are all justifiable and I take no issue with what it takes to operate.

Savings & Investments:

I've been splitting profit between myself (for personal use) and reinvestment in the firm's growth. We currently have no investments or savings, specifically - just cash.

#1 Financial Goal:

Frankly, just to stay profitable, which we've already figured out.

I would say the financial goal I really have is tied to the clients I want to have - we already work for the 1%, but we're slowly pushing our way into the top 0.1%, where I anticipate more reliable and generous financials.

Biggest Mistake:

The biggest financial mistake I made had to do with a poorly performing employee. Through his actions (and inactions) we ended up losing/eating about $50k. He's since been terminated, so problem solved.

Book Recommendations:

I've never been one to read about business tactics. Our role is a very personable one, on top of all the technical. What I've found to be the case with our success is that people like working with us personally, as well as technically.

For lack of a clearer phrase, kill people with kindness. Be good at your job too, of course... but no one wants a negative no-man.

Final Nugget:

Just that it's good to have Growthitect for sharing this kind of info! I agree people don't discuss it openly enough, which is part of why I think architects are so miserable and tortured. Here's to a brighter future!