Architecture Firm Business Plan

NW Architecture will be an architectural firm specializing in residential, commercial and industrial architecture in domestic and international markets based out of the Bay Area near San Francisco, California. The firm will provide architectural services using technologically superior processes, providing greater value for clients and enhanced design and construction.

The target client is segmented into four categories; home owners, developers, government, and contractors. NW Architecture’s competitive edge will be the knowledge of digital-based design resources. Superior customer service will also be a point of firm differentiation.

First year sales are expected to reach $102,000 and increase to $500,000 by the third year of operation. We will be profitable within three years of starting.

The most significant challenges ahead include securing a suitable location, establishing the initial client base, and ultimately positioning the firm to be able to have a presence in a larger, global market.

This business plan outlines the objective, focus, and implementation of this start-up firm.

1.1 Mission

NW Architecture offers a new type of digital interactive media for both the client and the builder. This media will clearly show the client and the builder exactly what the design will look like and the method of construction.

With this new form of media the client doesn’t have to know anything about architectural graphics or terminology (floor plans, sections, elevations & construction documents) to have a clear understanding of what the end result will look like. This is possible through the use of computer-rendered images and interactive video.

This media will be taken one step further by using it in the construction documents as well. The builder will be provided with an interactive video rendering of the entire building containing both visual photographic quality images and construction specs. Every last detail will be worked out in three dimensions in such a way that anyone who knows how to use a computer will be able to access and understand this new means of architectural presentation.

1.2 Keys to Success

1. Provide a service that is technologically superior to the competition’s.
2. Utilizing a diverse staff of architects to provide a wide variety of product styles.
3. A large array of global connections.

1.3 Objectives

1. Sales of $500,000 in Year 3 and $700,000 by Year 4.
2. Market expansion of 20% per year via the Internet.
3. Creating new niche in market by Year 4 of three dimensional construction documents and interactive digital presentation to clients.

NW Architecture will provide a service of architectural design via digital media to the limits of technology. This approach will offer optimal efficiency to the firm and superior value, design processes, and construction methods to the client.

2.1 Company Ownership

NW Architecture will be created as a California corporation based in the Bay Area near San Francisco. It will be owned by its principal investor and operator, Nathan Sawyer.

2.2 Start-up Summary

NW Architecture’s start-up costs total $36,540. The most significant purchases needed are a blueprint machine, plotter, and drafting supplies. Nineteen thousand dollars is needed in cash to sustain the business for the first year to cover rent and wages until a profit is made.

2.3 Company Locations and Facilities

The interim office of NW Architecture will be located in Walnut Creek, California until dedicated office space is secured.

NW Architecture will provide many levels of service to cater to large and small corporations, along with making it affordable for middle and upper socioeconomic classes.

3.1 Service Description

In order for NW Architecture to provide this new innovative service of digital media, the company will use high speed computers running programs such as AutoCad and Form-Z. To keep up with changes in technology, NW Architecture will investigate all up and coming software related to digital 3-D design to stay at the forefront of the market.  Again, this is a key strategic component to differentiate the firm and to optimize productivity and efficiency.

NW Architecture will provide it’s service to home owners who are looking to remodel, as well as developers, contractors and government agencies in the domestic and international markets. Although we are going to cater to a relatively broad scope of customers, the company will decide what the target market is based on sales and trends experienced in the initial months of operation.

4.1 Market Segmentation

Potential clients for NW Architecture’s market is broken down into four categories: home owners, developers, government, and contractors. Home owners are the largest group based on shear population and this will be emphasized in all of the firm’s marketing and promotional efforts. Targeting the remaining three groups will be dependant upon establishing meaningful relationships, and responding and qualifying for request for proposals.

4.2 Service Business Analysis

The architecture business across the country is primarily made up of small- to mid-sized firms specializing in a particular architectural type. But there are also a few large firms that have almost dominated the design of large commercial and industrial facilities.  NW Architecture’s main competitors will be the larger firms.  The reason for this is that the larger firms have more capital to work with, which enables them to keep up with technological changes much quicker than a small firm.

In the first year of business, NW Architecture will focus on the bay area in California. As the firm grows, sales will expand throughout California and across the country, eventually spreading worldwide.

5.1 Sales Strategy

“Sales” in this business is a direct result of exceptional client service. It is based on the firm’s image and the referrals that result. The more clients this company pleases, the more referrals are given. We will work to provide a positive experience in all cases so our clients will refer and return to us for future work as well.

5.1.1 Sales Forecast

Sales are broken down into three categories: design, production, and construction. These three categories put together make up one architecture project. The totals for each project are based on a 10% cut from the total construction costs of each job. The following table and chart provides an overview of our forecast sales.  Actual sales could vary depending on the project size and budget.

Sales Forecast
	Year 1	Year 2	Year 3
Sales
Design	$42,000	$90,000	$250,000
Production	$26,000	$50,000	$85,000
Construction Documents	$34,000	$70,000	$165,000
Total Sales	$102,000	$210,000	$500,000
Direct Cost of Sales	Year 1	Year 2	Year 3
Design	$500	$500	$1,000
Production	$250	$250	$500
Construction Documents	$500	$500	$1,000
Subtotal Direct Cost of Sales	$1,250	$1,250	$2,500

5.2 Competitive Edge

This company will have a competitive edge over both the larger and smaller firms because it will be composed of the new generation of architects which are fluent in the digital world. Many firms today employ an older generation of architects which find the computer a mystery, and those that do use the computer only have the ability to design in 2-D.

This company will start with one AutoCAD/Form-Z architect and the founder. In August of 2007, a clerical position will be added. By 2010, Other CAD/Form-Z architects will be hired to compensate the increased work load.

6.1 Personnel Plan

The following table summarizes our personnel expenditures for the first three years of operation.

NW Architecture will increase growth and technology with cash flow as it increases through the years. Further money will be set aside to pay for further consulting as needed.

7.1 Important Assumptions

The annual assumptions made in the following table are based on a stable economy. We will adjust these assumptions as changes occur in the now tumultuous ecomony the Bay Area is experiencing.

7.2 Key Financial Indicators

The following benchmark chart indicates our key financial indicators for the first three years.

7.3 Break-even Analysis

The following chart and table summarize our break-even analysis.

7.4 Projected Profit and Loss

Net profit is virtually nonexistent for the first two years of operation, with respectable increases after that time. Our projected profit and loss is shown on the following table, with sales starting at $102,000 for the first year and climbing to $500,000 the third year.

7.5 Projected Cash Flow

Cash flow is vital to the well being of this company because of the duration of payment. The following chart and table below show cash flow projections.

7.6 Projected Balance Sheet

The following table shows our projected Balance Sheet and net worth over the next three years.

7.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7383, Independent Artists (including Architects), are shown for comparison.