The design life 01.06.17 - Claire Watkins Share this item: Twitter LinkedIn Email Claire Watkins, Head of Buzzacott’s Professional Practices Group, discusses the lifecycle of an architecture practice, from birth to maturity and passing the legacy on to a new generation. At the Royal Institute of British Architects, improving business skills in practices is on the 2017 agenda. RIBA’s objective is music to the ears of our team, who have spent many years supporting architects with the financial side of their business. And while no two practices are the same, most adhere to a three-stage cycle. Birth – learning to stand on your own two feet We have witnessed many new businesses emerge from bigger, older practices. Typically a group of architects or junior partners, enthusiastic to drive the organisation in a fresh direction but hampered by an inflexible Board, make the brave decision to set up their own practice. One of our longest-standing clients started with just such a breakaway. From the start, their focus was on attracting a pipeline of projects and creating a team. To do so successfully they first needed to refine and strengthen their business plan so it could be presented to their bank to secure much needed finance. Since then we have helped the firm choose the most appropriate corporate structure, implement the right accounting software and produce reliable management information. We see our role as creating the financial cement which binds the bricks of the business together. Growth – understanding that clarity leads to prosperity No business should underestimate the importance of maintaining up-to-date, clear accounts. Having a strong pipeline of clients and a clear vision of the future of the business can only take you so far. You’d be surprised how much unintelligible management accounts can hinder your ambitions. It might not be the most exciting of tasks but unpicking complicated accounts will serve to support the strengthening of a firm’s financial strategy. Many of the business managers we work with are beginning to understand the importance of challenging the financial data produced by their in-house finance team, as well as how tax planning can help their business. This clarity means they can appreciate where they need to tighten up their spending and where they need to invest for growth. As a side note: HMRC are now attempting to make it even easier for architects to benefit from the Research & Development tax credit. It’s a mystery why the profession hasn’t made the most of the credit up until this point. However, given the numerous innovative ways in which architects are impacting on our lives we hope to help more of them submit successful claims in the future. Maturity – securing the long term future of your business Having toiled blood, sweat and tears to create a strong business, no-one wants to see it fade and die. And quite apart from anything else, financial rewards are available from passing a successful practice on to the next generation. Mid-tier practices often find fast growth renders their current structure impractical. In these cases, a share option scheme can achieve a gradual transfer of ownership, a route which encourages potential shareholders to have a vested interest in the business’s success. We are seeing more and more architects opting for Employee Ownership Trusts, where shares are held collectively on behalf of staff. And with LLPs, where share-based models aren’t appropriate, we continue to talk to architects about buying and selling the goodwill in their business. This could mean passing it on to the next tier of partners or merging the firm into another practice at an agreed value. Great architecture looks to the future. With proper financial planning and consideration, architect firms can practice what they preach. Buzzacott’s Professional Practices Group works with architects and other professional businesses on all aspects of financial management.