With each new year, we start fresh with big dreams, renewed vision and updated plans. January is a month for us to reestablish our focus on the many goals (or ONE Goal) for our business and life. It’s a time for us to expel the unnecessary, organize and prepare our success for the next 11 months before us.
Here at EntreArchitect, all throughout the month of January we are focusing our content on the business category theme of Finance. For the next few weeks, the articles here at the blog, the strategies shared in the newsletter and the interviews published on the podcast will all be about the money matters of our businesses. This past week, at EntreArchitect Academy, we launched the new Academy format with a live expert training session presented by Rena Klein, FAIA of RM Klein Consulting titled Financial Management: Key Concepts.
Our Expert Training sessions at the Academy are designed to go deep and provide as much information as possible. Rena’s presentation provided members with everything they need to know to organize their finances and understand the flow of money in and out of their firms. Exercises offered to members following the training session allowed us to absorb the strategies and helped prepare systems for our own firms.
Rena’s presentation is recorded and her training documents are available to members of EntreArchitect Academy. If you are interested in learning more about EntreArchitect Academy, click here.
Keeping It Simple
Inspired by the experiment with My ONE Goal for 2016, much of what I plan to write about this year is how can we keep things as simple as possible. I think many of us disregard the fundamentals of business simply because we haven’t been taught or don’t understand them. We often expect them to be too difficult or time consuming to execute.
With the expansion of the EntreArchitect platform and our desire to provide the most relevant business information for small firm architects, many of the articles presented this year here at the EntreArchitect Blog will be written by others. These expert guest writers will have special knowledge or skills on a specific topic of business.
When I am the author here, my intent will be to break down the complicated or mundane into the essential basics, with processes and systems that are quick and simple to apply at our firms.
Let’s start this new year with the most basic of financial documents; our new annual budget.
Our budget will allow us to estimate our revenue and expenses for the year. We’ll use this document to allocate our resources each month. It will help us understand our finances, plan for the year and manage our money.
Step By Step
Here are the basic steps for preparing an annual budget:
Review your previous budget if you have one. If not, print a Profit/Loss Statement using your financial software. You can use the information from last year to develop your budget for this year.
List all your sources of revenue including architectural fees, commissions and any other sources of income. Prepare a total expected income for the year. Our Profit Plan for Small Firm Architects digital course will be helpful in understanding how much you need to earn to be profitable this year. When you subscribe to The EntreArchitect Report, our free weekly newsletter, we’ll send you the three-module course for free.
List all your expenses including payroll, facilities costs, equipment, materials, insurance and any other expenses that are required to run your firm. Don’t get too specific with this list, but do break it down enough so as to easily understand where your money is spent.
Cut unnecessary expenses. You may find, once you understand where all your money is being spent, that many expenses are higher than expected or unnecessary. Now is the time to trim fat.
Confirm your totals and make certain that your expenses do not exceed your expected revenue.
Break down your budget by month, being aware of the revenue and expense cycles experienced in the past.
Record your actual revenue and expenses in a new column adjacent to your expenses. This will keep you on track and allow you to adjust your spending during the following months.
Use your budget as a guide for business development and monthly spending.
It’s that simple.
Of course, there many other documents, processes and systems required for a successful business. There are spreadsheets and formulas (such as the resources presented by Rena Klein in the Academy) that will help you predict and prepare for business success as a small firm architect.
To get you started though, with this new year, keep it simple. Start the year with a new habit that may lead you to discover the benefits of business planning and financial tools. Start by keeping it simple and prepare a new annual budget for your firm.
Question: Do you prepare an annual budget for your small firm?
Photo Credit: Shutterstock / BillionPhotos.com
The #ArchiTalks Blog Series
This post is my contribution to an international blog series called #ArchiTalks. Each month, dozens of architect bloggers publish a post on a specific topic simultaneously on the same date. Scroll down for links to posts written by all of my #ArchiTalks friends.
This month participants of this #ArchiTalks blog series are asking you to help a friend of ours who is dealing with a family health crisis. Rusty Long is an Architect based in Portsmouth, Virginia, whose son Matthew is fighting for his life. Here is Matthew’s story, as told by his Dad, Rusty:
Matthew Long was born May 29th, 2013, happy, and seemingly healthy. Less than two days later his mother and I found ourselves in an neonatal intensive care unit waiting room, listening to a rushed intensive care doctor explain how our son needed immediate dialysis to save his life. The disease, he briefly explained, was one of a group of disorders called Urea Cycle Disorders, which impact the way the body breaks down protein. We later discovered that Matthew’s particular variant is called OTC Deficiency, a particularly severe form of it in fact, which results in a rapid rise of ammonia in the blood, called hyperammonemia, resulting in devastating neurological damage. This form of OTC is so severe, Matthew has virtually no peers who have survived it. Once the immediate crisis was arrested, we came to find out more about the disease and the impact of this initial event.
The disease is inherited, and the damage is permanent. Treatment consists of a combination of medications, low protein medical diet, and ultimately a liver transplant. Matthew was fortunate to experience no additional hyperammonemic events in the following fifteen months of life, and had a liver transplant on August 24th, 2014. The cure for the disease, a transplant, isn’t so much a cure as trading one condition for another. While we will never risk the chance of another ammonia spike, Matthew is on a half a dozen or more medications at any given time to avoid rejection. Despite these challenges, intensive daily therapy for cerebral palsy (a result of the initial damage), limited motor function, and various other challenges along the way, our son is remarkably happy and has changed all our lives for the better. He’s taught us to be stronger than we ever thought possible, to have faith beyond human understanding, and the immeasurable value of life.
The #ArchiTalks community is hoping to raise $5,500 to help Architect Rusty Long and his family reach their financial goal on HelpHopeLive.org. If each reader of this post contributes a small amount, our impact will be massive and we can make a difference for Matthew’s family.
Thanks! – Mark
Visit All My #ArchiTalks Friends
Bob Borson – Life of An Architect (@bobborson)
New Year. New Adventures That Might Kill Me./
Lee Calisti, AIA – Think Architect (@LeeCalisti)
new race new year new start
Lora Teagarden – L² Design, LLC (@L2DesignLLC)
New Year, New Goals
Nicholas Renard – dig Architecture (@dig-arch)
New Year, A New Hope
Jes Stafford – Modus Operandi Design (@modarchitect)
New Year. New Gear.
Cindy Black – Rick & Cindy Black Architects (*)
New Year, New Casita
Eric T. Faulkner – Rock Talk (@wishingrockhome)
New Year, New Underwear
Rosa Sheng – Equity by Design (@EquityxDesign)
New Year, New Era
Michele Grace Hottel – Michele Grace Hottel, Architect (@mghottel)
“new year, new _____”
Amy Kalar – ArchiMom (@AmyKalar)
New Year, New Adventures
Michael Riscica – Young Architect (@YoungArchitxPDX)
New Year, New Life!
Stephen Ramos – BUILDINGS ARE COOL (@sramos_BAC)
New Year, New Home
brady ernst – Soapbox Architect (@bradyernstAIA)
New Year, New Adult Architect
Brian Paletz – The Emerging Architect (@bpaletz)
A Little Premature
Sharon George – Architecture By George (@sharonraigeorge)
New Year, New Business
Brinn Miracle – Architangent (@simplybrinn)
New Year, New Perspective
Emily Grandstaff-Rice – Emily Grandstaff-Rice AIA (@egraia)
The New New
Jarod Hall – di’velept (@divelept)
New Year New Reality
Anthony Richardson – That Architecture Student (@anth_rich)
New Year New Desk
Greg Croft – Sage Leaf Group (@croft_gregory)
New Year, New Goals
Jeffrey A Pelletier – Board & Vellum (@boardandvellum)
New Year New Office
Aaron Bowman – Product & Process (@PP_Podcast)
New Year, More Change
Kyu Young Kim – Palo Alto Design Studio (@sokokyu)
New Year, New Office Space
Jared W. Smith – Architect OWL (@ArchitectOWL)
New Year, New Reflection
Rusty Long – Rusty Long, Architect (@rustylong)
New Year, New Direction