Apr 20, 2025
Inside a 44-Year-Old Architecture Firm Doing $3.29M a Year
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 architecture firm owner that has been running their practice for 44 years. The firm focuses on healthcare, senior living, higher education, and religious work with a team of 14 employees located in Southeast US.
Ownership:
I'm currently the sole owner. We have a transition/succession plan in place with the COO acquiring interest in the firm.
Office Situation:
We rent from LLC owned by myself and my wife. The firm pays $12,000/month, which is significantly below market rate.
Salary:
My salary and distributions total $260,000. We have performance-based bonuses for all employees, which are paid at year end. The amount per employee varies with profitability.
Compensation for all employees is adjusted annually (mid-year) based upon CPI, individual performance and a little 'voodoo intuition'. Over the life of the firm, we have only frozen salaries for the period between 2008 and 2010.
Work/life balance:
We work hard and play hard. Average hours per employee per week is approximately 45, but varies.
Debt:
The firm has no debt. We maintain a $500,000 line of credit that is rarely used and have money market accounts totaling almost $600,000.
VISA is our business credit card. Don't know why we selected it. At one time we also used AMEX, but discontinued it about ten years ago.
Revenue & Profit:
Over the last 12 months, we've generated $3.29 million in revenue.
Revenue has been flat for about three years primarily because of staffing difficulties as a result of attrition (young professionals are always looking for the next best opportunity) and recruitment of new hires who are 'similarly yoked'.
Our profitability varies based upon project mix, but is typically 20%-ish.
The #1 financial goal is to increase gross revenue to $5 million with profitability of 25%+.
Best & Worst Expenses:
Best: Bonuses and firm activities (celebrations, ball games, etc.) outside the office.
Worst: Professional liability insurance which is +/- $50,000.00 per year.
Savings & Investments:
Our goal is to maintain six months of operating expenses which we still are working to achieve. It seems there are always unanticipated wants/needs that erode our ability to stockpile too much cash. Typically, we maintain 3-4 months of expenses on hand.
Biggest Mistake:
Retaining staff who are low performers (or toxic to the firm culture). Our leadership team monitors closely to ensure changes are made swiftly when necessary.
Book Recommendations:
I read every day. Not all of our team are so inclined. As a result, we spend our 'book money' by engaging our accountant, bankers, and attorney to perform the duties required to maintain achieve our goal to be a better firm.
Final nugget:
The only 'secrets' we have found are to negotiate the best possible fee for each commission, learn to walk away from 'bad deals', and monitor KPIs monthly to ensure financial goals are met. Transparency with project teams is critically important, too.
Firm owners: Want to participate? Submit your Money Memo here