Today is the second part of my interview with Karen Compton. Karen Compton is the principal of A3K Consulting, a firm focused on business consulting for small and medium sized AEC firms.
Go here to watch the first half of our interview on Small Firm Profit Secrets: Why Firms Don’t Earn More Money (And How To Fix It)
In today's incredible interview you'll discover fundamental business tips and strategies for building your dream architecture firm.
You'll also discover:
- The #1 marketing strategy for small architecture firms
- The #1 networking killer (never do this at a networking event)
- The 3 steps to effective networking
- The key to being a master networker (even if you are an introvert)
- How to market your architecture firm (even if you are an introvert)
- One business building strategy you should ALWAYS be doing
- How to hire the best team even if you can't match the salaries of larger firms
- The 2 essential weekly meetings you must have (even if you work alone)
- How to avoid burnout and overwhelm in your architecture firm
- The #1 key to building the architecture firm (and life) of your dreams
- The 3 critical parts of a mission-based architecture firm
Resources for today’s show:
Interview Transcript and Members Only Resources:
Karen Compton: If you have a clear understanding of what your mission is, then any road can't just take you there.
Enoch Sears: Business of Architecture, Episode 182. Hello. I'm Enoch Sears, and this is the podcast for architects, where you'll discover tips, strategies, and secrets for running a profitable and impactful architecture practice. I'd like to invite you to discover how to double your architecture firm income and create your dream practice of freedom and impact by downloading my free 4-Part Architecture Firm Profit Map. As a podcast listener you can get instant access by going to freearchitectgift.com. Today's show is the second half of my conversation with Karen Compton, the principal of A3K Consulting, a business consulting firm that focuses on helping small architecture firm and medium architecture firm, the principals, get back their time, freedom, and increase the efficiency of their firms. So let's get on with it. Hello, Karen, and welcome back to the Business of Architecture.
Karen Compton: Thank you for having me. I'm always happy to be here. Always happy to be here.
Enoch Sears: Karen, last week we ended our segment talking about the amount of time that you recommend that you've seen that small firm architects, principals and owners, should be spending on marketing and business development. You said it varies all over the board, so of course we can't generalize too much, but you said something good to shoot for is 20%, which would basically be one day out of a week focused on those activities.
Karen Compton: Yes.
Enoch Sears: Now, how would you suggest they spend that time? What have you seen as working out there right now for these types of firms?
Karen Compton: If you're a small business or a micro business, my best recommendation is at least networking. If you shoot for attending one or two solid networking events in a month, whether that is an industry-specific event, whether that is an agency-specific event such as a small business conference for example with a major client type or major client group, that's where you're going to get work. If you're doing residential work for example, or you're doing smaller individual work, you may want to go to a Chamber of Commerce meeting. You need to pick and choose what events are appropriate for both the market sectors that you service, and the types of clients that you have, but at a minimum shoot for the networking events. Those are the easiest thing to be able to do. You want to be able to distribute your business card, not necessarily pitch people on what you do. That's not the whole purpose of networking. The purpose of networking is to get out and make connections so that you have a jumping off point for which to follow up. That's my best advice.
Enoch Sears: Let's talk about that. When people, when architects and firm owners, men and women, when they go to these networking events I know what's on their mind. They're thinking, “This is a little bit overwhelming. I'm out of my comfort zone. How is this going to help me get closer to my goal? How do I approach these conversations?” What do you say to your clients to coach them when they go to these networking events to get the most use out of them, but then at the same time not to be annoying and not to be uncomfortable?
Karen Compton: Okay, so first of all, leave your brochure at home. Do not take your brochure, your marketing material, to a networking event because the people that are at a networking event are there to just do that, network. They want to meet, they want to greet, and then at some later point in time have an opportunity to follow back up. The whole point here is really to not make a sale, and I think that's the biggest pressure that can be taken off of any small firm owner. Your goal is to not make a sale. Your goal is to make a connection. It's to find out about someone else's business, find out about potential opportunities, find out where needs are, where work is actually trending, whether that's up or down. Really the intent is to gather information, gather intelligence, and based upon that, at some later point in time formulate a correct followup, whether that's an email, a coffee, a lunch, a breakfast, whatever it happens to be. But that's not the purpose of actually going to a networking event.
Enoch Sears: Strategically, how do you recommend people follow up?
Karen Compton: First and foremost I am a huge emailer. If something gives me a business card, I always say to them, “I'll follow up with you maybe in a week or so.” I'll shoot them an email and just say simply, “Hey, we connected at the Southern California Development Forum. Thought you'd like to get together for coffee. Maybe I can talk about what your interest is, learn a little bit more about your firm.” The focus should always be on the other person. People want to talk about themselves, so provide that platform and the door will open for you to talk about yourself as well.
Enoch Sears: That is amazing. I usually don't interject stories here, but I do want to in this instance. You might find this interesting, Karen, that Jay Abraham, the great business consultant who's grown dozens of firms, he tells this wonderful story about how he was running a seminar down in Australia. He'd been on the flight all day long, was very tired, went to the bar in the penthouse. He sat down and he was talking with a gentleman who was involved in international trade. Jay was just fascinated by this, so even though he'd been on the plane all day, he was just grilling him with information asking about what he did, how he did it, how he made his money, the way the world was changing. Jay says, “After that conversation, the guy, he shook my hand and he looked at me and he said, ‘You are an amazing conversationalist.'” Jay said later, he said, “You know what? I hadn't said more than three or four sentences the entire time.”
Karen Compton: That's the whole thing. You want to just open the door and let them spew. Based upon that, you'll find the commonality. You'll find the jumping off point to be able to come back and say, “Hey, let's connect. You said some things that really jogged my memory,” or, “I might have a colleague or a friend that I might be able to introduce you to,” or, “Yes, I might be able to work with you,” or, “No, I really can't, but let me give you an appropriate referral.” The whole idea is listen more and talk less. God gave you two ears and one mouth, and there's a reason for that. That's my biggest pitch.
Enoch Sears: What strategies do you have for being able to get out there more? Do you have any kind of mindset strategies or things you coach your clients on, because the easiest route of course is to sit at home or sit in our office and take care of the tasks that we need to do on a day-to-day basis?
Karen Compton: I have to admit that this has become even difficult for me, and I have to do it all the time. It is so much easier and so much more comfortable for me to sit in my office and do the work than it is to actually go out and meet people because there's a certain amount of stress that goes along with it. But if you really, truly come from the perspective of, “My goal here is really just to network and make connections,” as fast as the world is evolving, I think that part is really critical. You're not here to try and find your next best friend. You're not here to close a deal. As long as you keep those two things in mind, it does make it easier. My strategy going in really is to just try and get to meet as many people in the evening or in the morning as possible, and make connections with them at some later point in time. Just stop thinking that the idea is, “I have to close a deal. I have to find work.” You have to find connections, and that's really what the most important thing is.
Enoch Sears: Well, you are definitely a master at this, so let our audience know that Karen, she practice what she preaches and she's excellent at doing that. If we don't have the talent, how much of this is based on … Are you just a natural networker? What if I don't like being a back slapper, I'm introverted?
Karen Compton: You know what? That's perfectly fine. Let me give some advice for my introverted friends, because not everybody is a conversationalist. I find that introverts do well in two very clear platforms. Introverts do very well at blogging, and they use social media in a way that allows them to connect in a written platform that is not as comfortable for them as connecting in a verbal platform. If you happen to be someone who is not very conversational, then what you may want to be able to do is look towards social media and towards the development of an online community that actually sees, understands, and appreciates what your area of expertise is. That might open the window for you and be a little bit more comfortable for you to walk in and then go from there into more of the face-to-face networking kinds of situations.
This is also particularly effective for my clients who do not have English as their first language. Oftentimes, particularly in architecture and engineering, English is not necessarily the first language of the design community, but so much of our business is transacted in English. Having said that, blogging, white papers, and conference presentations are probably the better platforms because then people are very focused in what their topic is and they're much more comfortable. It's not like we're just trying to make the rounds in a cocktail party. I understand how stressful that is.
Enoch Sears: Excellent. Karen, so far within these two episodes we've discussed why small architecture firms aren't making as much money as they deserve and how to do better. You brought up the fact of taking out your personal expenses, making sure that you're separating those things out, understanding truly how much time you're spending on general admin, and then doing more marketing and business development. What are the reasons do you see why small firm architecture is so difficult from a profit standpoint sometimes?
Karen Compton: Okay, so I am on a crusade right now, and so you just happened to catch me at the height of the crusade here.
Enoch Sears: Love it.
Karen Compton: Here it [inaudible 00:10:09]. I think small firms do a fairly decent job at trying to understand what they design, how they design it, what their client experience is, and trying really and truly, sincerely to deliver on that promise. What I don't think we do a very good job of is looking for people. We wait until the point where we have an absolute crisis, and then it's, “Oh my God, I have to hire someone, and I don't know how to hire someone,” or, “I've never had to. What do I do?” Here's my other piece of advice. I think that for as much time as we spend doing marketing and business development we need to spend an equal amount of time looking for, and I'm not saying making offers to, but we need to look in and around ourselves and see who is talent that at some point in time if an opportunity presents itself within our firms that we would like to have that person or people as part of our growth, as part of our firm. If we did that, it would be so much more effective.
Right now what typically tends to happen is my typical small firm has maybe one or two people, and then they're slammed. They're overutilized. They're somewhere up around 70, 80%, and they could clearly hire someone, but they've never looked around to be able to say, “Okay, who should we even approach?” Then they do all the standard things. They try and put an ad in Monster or on Craigslist or whatever it happens to be, and then they're very disenfranchised with not only the talent pool that they're actually identifying, but the salaries and everything else. I think we really have to do a much better job of identifying talent, potential talent, for our own capacity and our own needs as they evolve.
Enoch Sears: We're picking a lot on the small firms here, but is it any different for the medium firms and the large firms in terms of what they struggle with?
Karen Compton: No. It really is pretty much the same. The only difference is the degree to which the problem is exacerbated. In a small firm, the talent management issue actually I think is far more challenging than it is in a large firm. A large firm can do what I call throw spaghetti at the wall. They could throw enough money at a person to be able to attract them over. Small firms, we don't generally have the same amount of money to throw at someone to attract them to us so we have to come at it a different way. If we're not going to be able to pay more in salary then what's the trade-off? Are we offering different kinds of benefits, or flexible schedules? There are other ways to look at it. I think the problems are the same, the solutions are just slightly different depending upon the scale.
Enoch Sears: One of your points here that you sent over ahead of time was or the last one we haven't covered is insufficient lines of communication, even within small organizations. Tell me about that.
Karen Compton: I have a client who I absolutely adore. They're a five person practice, engineering. I got a telephone call one morning and she said to me, “I think I have a communication problem.” I said, “What made you conclude that?” She said, “Well, I just talked to Tim, and he told me something I didn't even know about this project.” I said, “Well, when was the last time you talked to him?” She said, “Eh, we pass each other in the hallway.” I said, “Well, but when are you actually talking about the projects and the work?” She said, “You know, come to think of it, we don't really.” She had this kind of aha moment that even in her small firm, she's so busy doing everything, he's so busy doing project work, each person is working as hard as they possibly can with their head down, there isn't necessarily this open dialogue that naturally happens around work.
I think what has to happen is even within a small practice, you have to create spaces and places in which to communicate. It's particularly difficult in large firms, but the problem holds true in small firms as well. Don't just assume just because you're one or two people that you communicate any better. You don't necessarily. Communication is not just about articulating, you and I kind of chatting back and forth. It's about the identification of the issue, what are your ideas, what are mine, what are possible solutions, what are possible encumbrances, and really, truly having a dialogue around those. There needs to be a platform for that to happen, whether that's a project meeting, a pinup, a charette, whatever it happens to be, that's the platform in which communication can happen. But just as you pass people on the hallway or connect in a virtual environment, don't assume that that exchange is sufficient enough to have real, true communication.
Enoch Sears: What are the best practices for communication that you recommend?
Karen Compton: Best practice for communication. If you can't do anything except have two meetings a week, which I'm the queen of the two … The one hour meeting is my rule. Number one, no meeting should go over an hour. People don't pay attention. The other thing is I try not to have any more than two a week relative to two things, one is administration and the other is projects. I think you have to sit down at least once a week and go through all of your projects, either from a design perspective or from an operations perspective, meaning how are they billing? Are they late? What's outstanding? What is the utilization? What is the overhead? Those are all what we call finance meetings, but if you have a finance meeting relative to each one of your projects even if you only have two or three, you have a clear understanding of how you are working as a business on a project-by-project basis, which becomes cumulative in terms of the business. The second is what are the design issues? What are the best solutions? To me there needs to be a design meeting, some kind of charette, whatever it happens to be so that there is a point of discussion on projects, issues, and solutions. Neither meeting needs to be longer than an hour, but those two types of communication I think are critical, critical for small firm success.
Enoch Sears: Great. Karen, is there anything that we're leaving out here, any other questions that you'd like to add for the conversation before we wrap up this episode?
Karen Compton: I think the most important thing to kind of add, Enoch, would probably be that at this point, you really have to look at the totality of your business no matter how small you are. Don't just assume that because you're a single person practice, or a sole proprietorship, that you don't have human resources issues, or IT issues, or finance issues. You need to look a the totality of your practice and figure out where you want and need to invest time in order to develop it. For most firms, the most common areas tend to be in the areas of marketing and business development, finance, and human resources. But let's not forget we are a business of ideas, and those ideas flow back and forth on platforms of technology. How we deliver projects, whether they are lean, whether they are through P3 or design-build or any other kind of alternative delivery, we need to be looking at those areas as well on a constant basis. Look at the totality of your business regardless of how small you are. That would be my best advice.
Enoch Sears: Okay, dive into that a little bit more. When you say “the totality of your business,” give me some more idea about what that exactly means. What do you mean by that? How does someone implement that?
Karen Compton: Okay. A business isn't just the one person doing the design. You still have a series of issues that are associated with that. Every business has six or seven key business areas. There's finance, which we talked about before. There's human resources, which is the people that create the ideas and produce the work. There's the information technology, whether it's this device or any other device or devices, software investment that you may need. What else am I missing? I know I'm having a blank moment. There's operations. How are we actually staffing work? You need to look at each and every single one of those areas and not just assume, “Well, I'm just a one person or a sole practitioner. Therefore I don't need to look at these things.” Yes you do, because at some point in time, even your own personal utilization reaches its cap. You're basically working 60, 70 hours a week doing both design and administration, and production, and, and, and. You eventually get to the point of burnout. Unfortunately, burnout is where I see a number of people, and then that's when they no longer love the profession, love the work, and just say, “I'm going to go back and go work for someone else.” They end up kind of going in a circular pattern, not really, truly realizing that the burnout is the result of not clearly understanding the business of architecture.
Enoch Sears: That's a great point, Karen, and one thing that I'm worried about our listeners, they probably listen to this and they think, “Okay, running a business, I get focusing on these different areas.” How is this really going to help them at the end of the day, right? We can talk about earning more money. We can talk about earning the money for your creative profits, but do you have any case studies or stories of how you've seen clients implement this? How does it really affect their life? At the end of the day, how is their life better by doing what we're talking about right here?
Karen Compton: I think it's Henry David Thoreau wrote a book. I think it's Thoreau that wrote a book called “The Path Not Taken.” It talks about two roads converge in a wood one day, and I wish that I could take both but I can't. In architecture, any road will take you to where you want to go. I think it's really critically important that an owner understand what's their objective. As we were talking about during the break, you need to first start with, “What is your objective as a business owner?” There is nothing wrong with being small and staying small. There is nothing wrong with growth. But have a clear understanding of what are your business goals and objectives. Otherwise any path will take you there. Any client can take you there, and you can be miserable the entire time because you're working for people that you don't like working for and doing work that you absolutely hate.
I think it's critically important that the conversation not just be reduced to metrics, and not just be reduced to profit or loss or revenue or KPIs, but what is the objective that you really are trying to live out as an architect? Is it truly to create livable spaces, and walkable places, and livable communities? Is it truly metrics-driven and financially driven, because there are business models for every single one of those scenarios? The metrics that you live, and the clients that you pursue, and the type of work that you look for should be supportive of what those objectives are. But if you don't have a clear understanding of what your goals and objectives are to begin with, any path will take you there.
I've seen several clients who come to me 10, 15, 20 years into their practice and they've said to me, “I hate my business.” I ask them, “Well, why do you hate your business?” “Well, we make a lot of money, but I do prisons and I don't ever want to do another prison again.” “Well, did you wake up one morning and decide that you wanted to do prisons?” “No, I just woke up one morning and decided I wanted to be profitable.” “Well, any road took you there.” I think it's really critically important to understand, particularly as a small business, you control your destiny, and you should be real conscious about what your goals and objectives are so that any path just doesn't take you there.
Enoch Sears: Do you have any suggestions or strategies for how to crystallize that, because that is so powerful, Karen, to be able to discover that? Any suggestions for that?
Karen Compton: Yes. My biggest suggestion is truly understanding what is your mission. A mission really has three parts to it. It's what is the business objective that you are trying to serve? What are the opportunities that you see or the business condition that you're trying to respond to in the workplace? Then what are your values? If you have a clear understanding of what your mission is, then any road can't just take you there. For example, and I'll use myself as a very prime target. My mission is really to truly work with small firms. Under 50 is preferable for us, for our demographic. My values are to really transform the way people work within their practice. So I am truly committed to this whole idea about the business of architecture, how we work in our practice in order to achieve our business objectives. I don't go out and consciously or unconsciously look for large clients, people who have more than 50 people, because that's really not my passion, it's not my mission, nor is it really, truly my value. My clients are very clear. They're under 50 people.
Now, that does not mean that my phone doesn't ring for large clients. It does. As a matter of fact, right now we have a large national construction management client, but they came to us. We didn't go seeking them out. I think it's really clear that everybody be very clear on what is the purpose that you provide into the marketplace, because clients have a lot of choices. They have a number of architects that they can choose from, but what they really want is what you value and what your focus is. That to me is step number one, before we ever talk about metrics and numbers and profit and loss and marketing, what is your mission? What is your goal?
Enoch Sears: That's a great place to end up, Karen. Thank you so much for bringing your enthusiasm and your energy here to the show.
Karen Compton: Oh, I loved coming. I hope I can come back again soon.
Enoch Sears: We'll see if we can fit you in.
Karen Compton: Thanks a lot. Have a great summer.
Enoch Sears: Okay, thanks, Karen. Bye bye. And that is a wrap. Thank you for listening today. If you're looking for more time, freedom, impact, and income as an architect, get instant access to my free 4-Part Architect Profit Map by visiting freearchitectgift.com. The sponsor for today's show is ArchReach, the client relationship management tool built specifically for architects. If you want to systematize your marketing and business development, ArchReach will help you do it. Visit archreach.com to learn more. The views expressed on this show by my guest do not represent those of the host, and I make no representation, promise, guarantee, pledge, warranty, contract, bond, or commitment except to help you conquer the world.