Everyone in business has heard the popular phrase: cash flow is the lifeblood of any business.
Let’s think about that for a second. As humans, we’re born with a healthy amount of blood flowing through our body. It’s not necessarily something we have to work hard for. It’s innate.
Yet in a business, the situation is quite different. In order to secure cash flow in a business, you have to provide a product or service that works. You’ll have to find clients or customers willing to pay.
With architects, it often starts with a fee proposal.
“The fee proposal is the tool that is going to win you work,” says Ian Motley, founder of Blue Turtle Consulting. “Fee proposals are the keystone of a business. It’s the critical ingredient that’s going to make a company a success or a failure.”
Ian, alongside his co-founder and partner Alexandra Howieson, created Blue Turtle Consulting to educate architects on fee proposals. Through private consultations, workshops, e-guides and blog posts and other training, Blue Turtle helps architects find the best fee proposals for their unique situation and then advises them on how to present it.
A former project manager at renowned firm Foster & Partners, Ian argues that every fee structure – whether it is lump sum, percentage or hourly rate – has its pros and cons. The problem lies in how they are presented. And while design has radically changed over the past few decades, fee proposals have not.
One of the top mistakes that architects make when drafting fee proposals is they make the documents too legally onerous. This can be daunting for any client, and may lead to them searching for another option with a lower commitment and cost.
“We recommend breaking the proposal up into a series of shorter documents and then feeding the information to the client in bite-sized chunks,” Ian advises.
Instead of a four-page document, consider providing a fee letter first that provides an executive summary, and then providing a standard contract at a later date. While it’s crucial to not remove any of the legal terms from the proposal, it would help to present them differently.
Another mistake that architects often make when presenting a proposal is they only present one option to a client. Rather than presenting one fee or service, it would benefit architects to present a proposal that offers different pricing options, giving the client an opportunity to choose.
Blue Turtle discusses these mistakes, plus others, in one of its comprehensive free online courses, “The Five Biggest Fee Proposal Mistakes.”
In addition to completing his courses, Ian also suggests all architects become familiar with behavioural finance, which is the study of how psychology and biases influence our investment decisions. In architecture, that would drastically change the way you approach proposals and negotiations with clients. Those who don’t educate themselves on the topic, Ian says, will be “leaving money on table.”
So what should a fee proposal look like?
While it is clear there is not a one-size-fits-all solution, there is substantial room for growth and change in this aspect of the business.
In five years, Ian expects to see more web-based proposals. A web-based proposal would allow clients to see information in an easier, more appealing format. It would also provide architects insights on what the clients are looking for – such as what they click on in the site or how long they spend on a certain section.
“It would save a lot of time and money,” Ian said.
Blue Turtle Consulting is based in San Francisco, and operates in Australia, U.K., Canada and New Zealand. For more information, check out the Blue Turtle consulting website.
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