How to Start an Architecture Firm

Is there anything more appealing than a brilliantly designed home or museum? Architecture is a fascinating field, and a $60 billion industry riding high after years of steady growth. If you’re a licensed architect, now is a great time to take your passion to the next level. 

But beyond design talent, you’ll need to know how to launch and run a business. Fortunately, this step-by-step guide provides all the insight you need to build a major architecture firm. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Architecture industry trends

Industry size and growth

• Industry size and past growth – The U.S. architects industry is worth $59.9 billion in 2023 after expanding 2.7% annually the last five years.((https://www.ibisworld.com/united-states/market-research-reports/architects-industry/))
• Growth forecast – The U.S. architects industry is expected to remain steady in 2023. 
• Number of businesses – In 2023, 76,080 architecture businesses are operating in the U.S. 
• Number of people employed – In 2023, the U.S. architects industry employs 249,262 people. 

Trends and challenges

Trends 

• Digital twins, which are digital representations of a physical object, have enabled architects to show clients much greater design detail 
• Sustainability in architecture and engineering has emerged as a key issue for architects and clients

Challenges

• Demand for architects is unpredictable, which makes revenue hard to project
• Architecture has seen a shortage of talent in recent years, making it difficult for architecture firms to add associates 

Demand hotspots

• Most popular states – The most popular states for architects are Virginia, Massachusetts, and Nevada.((https://www.zippia.com/architect-jobs/best-states/)) 
• Least popular states – The least popular states for architects are Iowa, Kentucky, and Mississippi.

What kind of people work in architecture?

• Gender – 23% of architects are female, while 77% are male.((https://www.zippia.com/architect-jobs/demographics/))
• Average level of education – The average architect has a bachelor’s degree.
• Average age – The average owner architect in the US is 45.4 years old.

How much does it cost to start an architecture business?

Startup costs for an architecture firm range from $2,700 to $6,000 if you run your business from home. Costs include a computer and design software. 

You’ll also need to get an architect’s license from your state. You should also explore getting a certification from the National Council of Architectural Registration Boards (NCARB). 

You’ll need a handful of items to successfully launch your architecture business, including: 

• Computer
• Design software
• Printer
• Drafting table

How much can you earn from an architecture business?

Architects typically charge 10-15 percent of the construction cost. That price assumes the architect will oversee the project, along with the contractor. Architects that only do design, which is mainly for residential projects, charge about $150 per hour. 

These calculations assume full service and an average fee of $20,000. Your profit margin, assuming you’ll work alone, should be about 90%. In your first year or two, you could work from home and do four projects a year, bringing in $80,000 in revenue. 

This would mean $72,000 in profit, assuming that 90% margin. As you gain traction, you might land 20 projects a year and get into higher priced projects that bring in $30,000 each. 

At this stage, you’ll have an office and staff, including junior architects, reducing your margin to around 30%. With annual revenue of $600,000, you’d make a tidy profit of $180,000.

What barriers to entry are there?

There are a few barriers to entry for an architecture firm. Your biggest challenges will be:

• Marketing your education and experience to attract customers
• Competing with large, established architecture firms

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.

How to Start an Interior Design Business

Read Now

How to Start a Home Staging Business

Read Now

How to Start a Home Decor Business

Read Now

Step 2: Hone Your Idea

Now that you know what’s involved in starting an architecture firm, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Why? Identify an opportunity

Research architecture firms in your area to examine their services, price points, and customer reviews.

• Make a list of architecture businesses that offer similar services. 
• Review your competitors’ services  – How extensive are their services? Do they specialize in specific types of architecture? Examine their prices, design styles, and target market to see how you can differentiate your firm. 
• Check their reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers have to say about their services.
• Identify competitors’ strengths and weaknesses and seek to leverage them to your advantage. 

This should identify areas where you can gain a competitive edge to drive better business decisions.

You’re looking for a market gap to fill. For instance, maybe the local market is missing an architectural firm that specializes in new homes or focuses on remodeling, renovations, and interior design. 

You might consider targeting a niche, such as landscape architecture.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services

Once you determine what type of architecture you want to do, you’ll need to decide the extent of the services you want to offer. You can offer design only, or you can oversee full construction projects. You could also expand your services by offering interior design. 

How much should you charge for architecture services?

Architects typically charge 10% to 15% of the total construction cost of the project. If you offer design services only, you can charge about $150 per hour. Check market prices in your area to make sure you’re competitive. Once you hire staff, you’ll want to consider your costs when pricing projects.

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on your specialty. If you decide to focus on residential design, your target market will be homeowners you might find on Facebook and Instagram. If you aim for commercial projects, your best bet to find business owners will be LinkedIn and Google Maps. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm an Architecture Firm Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “architecture” or “architectural design”, boosts SEO
• Name should allow for expansion, for ex: “Infinite Blueprint Architecture” and “VisionScape Architects” over “EcoStructure Architects” and “UrbanHive Designs”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create an Architecture Firm Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A concise overview of your architecture firm, emphasizing its design philosophy, target market, and business objectives.
• Business Overview: Description of your firm, focusing on architectural design services for residential, commercial, or specialized projects.
• Product and Services: Details about your services, including conceptual design, project management, construction documentation, and consultation.
• Market Analysis: Insight into the architecture industry, client demand trends, and regional construction activity.
• Competitive Analysis: Examination of competing architecture firms, their market position, service offerings, and pricing strategies.
• Sales and Marketing: Strategy for client acquisition and retention, highlighting networking, digital presence, and showcasing past projects.
• Management Team: Information about the firm’s founders and key staff, emphasizing their architectural expertise and business management skills.
• Operations Plan: Outline of the firm’s operational workflow, from client consultation to project completion and follow-up.
• Financial Plan: Financial projections including revenue streams, cost structure, pricing strategy, and profitability forecast.
• Appendix: Supplementary materials such as portfolio of previous projects, client testimonials, and detailed service descriptions.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to architecture firms. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your architecture firm will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Form Your LLC

Choose Your State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

Search

We recommend ZenBusiness as the Best LLC Service for 2024

starts at $0, plus state fees

4.7/5

starts at $0, plus state fees

Visit ZenBusiness

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding an architecture business. You might also try crowdfunding if you have an innovative concept.  

If you’re successful, at some point you may be able to attract angel investors or venture capital to grow your firm to the next level. 

Step 8: Apply for Architecture Firm Business Licenses and Permits

Starting an architecture business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

Licensing requirements for an architecture firm vary by state. Your firm may need several types of licenses depending on what services you offer. Check with your state’s professional licensing board for requirements. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your architecture business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked, yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Unanet, bqe, or Scoro, to manage your projects, workflows, costs, and reporting. 

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Schedule Consultation Now”. This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

1. Be a Thought Leader: Make your company known as an expert in the industry by writing blog posts, whitepapers, or articles for architecture and design magazines.
2. Use Social Media Smartly: Show your work and design process on Instagram, Pinterest, and LinkedIn. Connect with your audience by sharing behind-the-scenes content, customer reviews, and architecture trends.
3. Run Workshops and Webinars: Organize events on architecture and design topics to show your knowledge and interact with potential clients.
4. Join Design Competitions: Participate in well-known design contests to get noticed and respected in the industry, which can attract clients looking for innovative and quality designs.
5. Work with Influencers: Partner with popular figures in the architecture and design field. Their support can make your company more visible and trusted.
6. Give Free Consultations or Seminars: Offer these to potential clients to show your dedication and skill, and to introduce your work style.
7. Invest in Quality Photography: Use professional photos of your projects for effective marketing. Hire a good photographer to create a striking portfolio.
8. Create a Unique Brand: Build a memorable and distinct brand that represents your company’s values and design approach. Make sure your branding is consistent everywhere.
9. Network with Related Professionals: Build connections with real estate agents, builders, and interior designers. Their referrals can bring new business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your architecture firm meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your architecture business could be: 

• Modern concepts and inspired designs
• Functional home design to fit your lifestyle
• Architecture that makes dreams real 

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an architecture business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in architecture for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in architecture. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an architecture business include:

• Receptionist – take calls, greet customers, make appointments
• Architects – assist with designs for clients
• Project Managers – oversee construction projects
• General Manager – accounting, scheduling
• Marketing Lead – create and implement marketing strategies

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run an Architecture Firm – Start Making Money!

Architecture is bold work, aiming to create functional, pleasing spaces for families, businesses, consumers and more. With your own architecture firm you’ll be following your passion and helping build your community while also making a nice living. 

You’ve gained some business savvy, so now it’s time to hit the drafting table and start designing your entrepreneurial future.