Planned Resources recruit across the niche markets of planning, engineering, architecture and design, property, and government support. We operate across private and public sectors in Melbourne, Victoria, and Australia.
Navigating the ebb and flow of the economic tide is an integral part of running a successful architectural practice. While periods of prosperity bring opportunities for growth, downturns can pose significant challenges. However, by understanding common pitfalls and adopting proactive strategies, architectural firms can weather these storms and emerge stronger.
Common Mistakes to Avoid in a Bad Market
1. “During hard times, don’t abandon your core strengths. Focus on what you do best and maintain the quality of your work.” – Le Corbusier
Diversifying into unfamiliar market areas can be tempting during a slowing market, but it’s often a recipe for disaster. Spreading resources too thinly can diminish focus on core strengths, leading to a decline in the quality of work and client dissatisfaction. Not to mention that it is likely that many other practices are doing the same thing, meaning the market is potentially saturated with new competitors.
2. “Architects should not compete on fees. Instead, they should compete on the quality of their work and the value they bring to their clients.” – Frank Gehry
In an effort to secure projects, some practices resort to cutting fees, particularly when expanding into new areas. The thought process being that you take a loss to establish yourself and that you’ll be able to charge normal fees next time. The reality sadly is often that when you try to put fees up next time, someone else who is trying to break into that market will take that same loss-leader approach, meaning the price becomes a new floor for the market, rather than a once off event Instead, emphasize the value you bring to clients, justifying fair and reasonable fees.
3. “Don’t waste your time and resources bidding on projects that you have no chance of winning. Focus your energy on projects that are a good fit for your firm and where you have a competitive advantage.” – Richard Meier
Responding to every tender opportunity costs staff time, and therefore money. There is no point tendering on a project if there is a high probability of not winning. Strong practices have developed a stringent selection process, focusing on projects that align with your expertise and offer a higher likelihood of success rather than losing money on a bid they had no chance of winning in the first place.
4. “Communicate openly and transparently with your staff. Address concerns proactively and foster a sense of unity and collaboration during challenging times.” – Frank Gehry
Open and transparent communication with staff is crucial during challenging times. Address any concerns proactively, dispelling rumours and fostering a sense of trust. Staff are incredibly perceptive and will notice immediately any cost saving measures, like disappearing perks (think office fruit) or cheaper brands being purchased for supplies. Engage employees in discussions so you have a chance to shape the narrative, rather than letting rumours fly.
5. “Invest in your team’s growth and empower them to adapt to changing market conditions.” – Sir Norman Foster
If you trust your staff when the market is busy, then trust them when the market slows. Micromanaging can stifle creativity, motivation, and morale. Empower your team with clear goals and provide support to help them achieve objectives. Trust your staff’s abilities and avoid excessive oversight.
Strategies for Resilience and Growth in a Down Market
1. “Networking is not about collecting business cards. It’s about building genuine relationships and creating a network of people who you can trust and rely on.” – Zaha Hadid
Use your time wisely. A significant number of Architects use their networking energy going to events that are basically just for architects. You will never win a project standing in a room full of other architects. You need to attend events frequented by your potential clients. Use these events to establish genuine connections and build relationships. Save your sales pitch for later; just focus on being a good person build trust.
2. “Maintain a consistent marketing presence, even in a recession. Keep your brand visible and showcase your expertise to attract potential clients.” – Frank Lloyd Wright
Maintain a visible presence in the market, even during downturns. Keep your brand top-of-mind through targeted marketing campaigns, showcasing your expertise and successful projects. It is truly amazing how many times people are prompted to call you, after they’ve seen or heard your name recently.
3. “Talent is the lifeblood of any successful architectural practice. It is essential to value and recognize the contributions of your team members to foster a culture of creativity, innovation, and excellence.” – Tadao Ando
Recognise and communicate with your key personnel. Tell them that you value them and let them know what plans you might have for them in future. There is nothing more disappointing than losing a staff member you don’t want to lose or even worse, can’t afford to lose. Invest in their development and provide opportunities for growth, fostering a loyal and engaged workforce.
4. “A successful architectural team is like an orchestra, where each member plays a distinct role but contributes to the harmony of the whole. A balanced team with a mix of skills and abilities is essential for achieving great architecture.” – Norman Foster
Strive for a balanced mix of staff. A client once told me that there are 3 types of employees – Finders, Minders, and Grinders. Finders attract new projects, Minders manage them effectively, and Grinders execute the work. A balance of these 3 types is needed for a business to work efficiently.
5. “In a down market, don’t let desperation drive your decisions. Stay true to your values and maintain a client-centric approach.” – Frank Gehry
Cultivate strong client relationships, going beyond transactional interactions. Always look to build your brand by demonstrating the value that you bring to projects. Never make your value proposition with a client about how much you charge, it needs to be about how you will make their project better.
6. “Implement sound financial management practices. Monitor expenses closely, reduce overhead costs whenever possible, and establish clear budgeting and forecasting processes.” – Philip Johnson
Focus should be given to financial management of the practice in any market, but if times are tougher, then it is especially important. Financial management is not just about monitoring and managing costs, it is also about the revenue side of the equation. For example, sometimes just being more flexible in how and when fees are charged can make you more attractive to price sensitive clients.
Remember, navigating economic downturns is not about panic reactions or drastic measures. It’s about making informed decisions, staying true to your core strengths, and maintaining a client-centric approach. By implementing these strategies, architectural practices can weather the storms and emerge stronger, poised for future growth and success.
If you think I’ve missed anything, please feel free to let me know. I’d love to hear what you or your practice is doing.
Leigh Monro, Associate Director
Leigh is our Design Recruitment Consultant and Associate Director. He is a specialist in Architecture, Interiors, Urban Design and Landscape Architecture. He is a true expert in the field and has been recruiting in this space since 1997.
Connect with Leigh on LinkedIn
Contact: 0451 674 977, leigh.monro@plannedresources.com.au