PRODUCTION MODEL - BUSINESS OF ARCHITECTURE 02

There are 4 aspects to BUSINESS LIFE-CYCLE – at least in theory la…..

Getting the Business – Business Development. We need a FLESHY PORTFOLIOS. Works that can sell itself without much deliberating. We need to create more SEXY-Buildings. The wow factors that will excite the potential client. If it is not the building we need SEXY-People. Good looking people and charming orators that can sell ice to the Eskimo. We need SEXY-Coverage from the Medias, although the Board is very cautious about it! We need to be creative to work around it. We need to “buy” our way through the intriguing networks of brokers, managers and lobbyists. That is reality – the $ speaks loudest. Over-promise is NEVER a Sin. Under deliver – YES! We also need SEXY-Address. Imagine one lobbying for jobs amounting to Billions with an office somewhere in the slum?

Doing the Business – revenue. Revenue is your BLOOD line, without it everything will “close shop”. Revenue comes in the form of your collections, invoices, bills and so forth. You have to find ways to increase revenue and none other by Getting the Business! Newbies mistake is to provide FREEBIES in the form of Free Proposals that brokers will salvage to sell them to their potential clients in your expanse, not theirs. That is a FAIL Business Model. Recruit debt collectors if necessary because in this line of business, payment is always on credit terms. Overall it is unhealthy. The paradigm has to change. Perhaps bridging loan is a short term solution. Remember, REVENUE = PRODUCTION COST + PROFIT. Either way both production cost and profit have to increase!

Managing the Business – Effective Delegation. One reason business fail is because the Principal abdicated its role to someone else. Abdication is not Effective Delegation. Effective Delegation comes with the reward, abdication – no. Effective Delegation comes with a precise objectives and discretionary limits, abdication – no. Effective Delegation comes with proper reporting, abdication – no, and the list can go on. If one fails to delegate, the organization will not grow. The real assets of the firm is Human Capital, not the owner. The owner is credited for its foresight and vision. In other words, if you find someone asking the screw driver to do a hammer’s job, you know it is going to be trouble!

Financing the Business. This is the very one aspect that makes Architectural Practice a FAIL business model. Firstly, Architectural Practice is heavily dependable on human capital and production technology plus all the fixed expenditure and that incurred REAL Cost. Second, services payment are on credit terms and may not be prompt. Such Financial Charges will add up into our REAL Cost and if you are not careful you will end up with LOAN SHARKS. Thirdly, recouping Bad Debts are a risky business due to high Legal Cost and Prolonged Legal Battle. Holding ransom with the Letter of Release will not offer much help. It fails on the first principle and it really doesn't make money sense to run a firm. Yet, people does it! Why?

These 4 aspects will continue to haunt you. Once in a while you will rudely wake up from your sleep with chilling sweats that you need to make up for the 100K pot holes to keep your firm up and running before the bank foreclose your personal property. If you care to look at the profitable firms, you will understand that they had broken away from this paradigm. The question now is… what is this new paradigm?

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