5 Effective Ways Architects Can Increase Profitability
Running a successful architecture business is not easy. You have to manage employees, project prospecting, and costs—just to name a few.
But far too often, keeping an eye on profits and expenses is not as high on the priority list, which often means that these issues don’t get the attention they deserve. As a result, your business may not be making as much profit as it could.
Here, we’ll share five ways your architecture business can increase its profitability.
1. Raise your rates
One of the fastest and simplest ways to increase your business’ profitability is to increase the cost of your services. A percentage increase of your services’ costs can be implemented relatively quickly and will naturally result in higher cash flow over time.
Of course, the real trick is to determine how to break this sort of news to your clients. After all, most people don’t want to pay more for something they were already paying less for.
There are many ways to approach raising your rates. One is to market your services in such a way that it demonstrates why you are charging more for your services. Advertise the difference between your firm and the firm down the street that might do it for less. Sell your potential clients on why they need to go to you instead and what that extra dollar amount is going towards.
Another strategy is to keep your most loyal clients at your original rate (at least for a certain time frame), while charging new clients your higher rate.
When notifying your clients, emphasize how much you value their loyalty by explaining that their rate will remain the same until a certain period of time has passed. This way, your current clients will know it's coming down the road. You can continue to demonstrate your business’ value until that day arrives, making the change more digestible overall.
2. Expand your services
Another way to increase your profits is to expand the array of services your business offers.
For example, if you’re in residential construction, consider adding services that those customers would seek, such as interior design or landscaping. With more services to offer, you can incentivize clients to stick with your firm for their additional needs, generating more projects and profits for your business.
If your firm isn’t currently equipped to offer additional services, reach out to some of your professional connections. Find out if there are any ways to arrange some joint effort where the two teams are working together to bring an idea to life. Then you both can provide more to a client than you could individually, and you both can benefit financially from the efforts.
If you continue to create more partnerships, your network of connections will continue to expand, potentially leading to expansions of your business with new employees and new departments of your own to facilitate these new ventures.
3. Target higher-value clients
You can bring in more revenue from projects if you take on clients who have a larger budget to work with. More specifically, taking on clients whose projects will ultimately require more money on their part to execute.
While this approach can certainly help increase your profitability, there are some factors to consider first.
If your business already has a reputation of taking on a certain caliber of clients, you’ll need to reposition yourself as one who can take on higher spending clients. In other words, you’d likely have to change the way you market your business. In the most extreme case, you may have to completely rebrand your business (which may not be feasible, depending on your market).
If you’re determined to target higher-value clients, your best bet would be to reach out to a marketing firm that can help you rework your marketing efforts and get your name in front of these higher-paying clients. You might also need to speak with an agency that specializes in branding to determine how best to restructure your business to accommodate these new types of clients.
Another thing to consider is that offering online payments can help encourage big-spending clients to contract your services. Online payment solutions can prevent slowdowns in the process of bringing an idea to life by getting payments rolling much faster.
If you can eliminate barriers between paying you and getting their project started, higher-paying clients will be more inclined to work with you.
4. Eliminate debt + expenses
Debt is an issue every business faces. And while it's practically impossible to keep your business debt-free, you can still take steps to reduce how much comes in. Working to bring your debt down will help your profits go farther each quarter and allow you to expand your business more easily.
Bringing in more revenue in general can help reduce your debt, so the methods we’ve already covered can already help you in this area. Naturally, with more revenue, you’ll have more money to use to pay off your debts. But, of course, there is always more you can do.
Take some time to analyze your business’ monthly expenses. If you’re not confident in your finance skills, sit down with a professional who specializes in financial planning. They can help you evaluate your business finances and answer important questions to determine the best steps for improving your firm’s profitability.
Here are some things to think about:
- What exactly is your business investing in each month to perform its services?
- Are they necessary or could they be cut?
By identifying resources on which you could spend less, you make room for your firm to be in the green at the end of the year. Or perhaps there’s something crucial to your business that you could purchase elsewhere for a cheaper price? These are the sorts of things to take into account to eliminate unnecessary expenses from your business.
5. Streamline your processes
Another way to save money is to work toward making your business more efficient. And the best way to accomplish this is with modern technologies.
Far too many businesses still rely on traditional methods to keep track of time and expenses. While this can work in some cases, the simple truth is that software can do it faster—and more accurately.
If you’re starting from scratch when it comes to software solutions, we strongly recommend implementing project management, timekeeping, and accounting tools into your business as soon as you can. These tools can make a world of difference when it comes to productivity and efficiency in your firm.
Another way to increase efficiency on both the business side and the client side is by implementing an online payment solution. Along with speeding up how fast you can process payments, it will help expand your payment options, letting your clients pay how they want (and make them more likely to do so).
Plus, like the other solutions we’ve mentioned, online payments make it a lot easier to keep track of your transactions so you always know the status of your revenue and where it’s coming from.
Want to see firsthand what online payments can do for your business? Schedule a demo of ClientPay today!