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Title: The resources and procedures needed to initially establish a business
Introduction
Before an architect can embark on professional practice, one of the things have to be accorded a careful consideration relates to the resources and procedures required to initially establish a business. There is abundance of literature on ways of designing a firm. In one of these studies, Demkin focuses on firm planning, with the core elements under analysis being firm identity and expertise (71). Demkin observes that the rewards of the profession accrue to those experts who produce value (71). Yet value is a relative concept, such that it is wrong to define this concept merely in terms of low cost. The ideal business, according to Demkin, is one that is founded on sustainable value as opposed to intermittent lucky breaks. In a nutshell, Demkin argues that one should design a firm with the guiding principles of leadership and innovation in mind.
Grant, on the other hand, argues that the best way to design a firm is to adopt a knowledge-based perspective (451). Such a perspective tends to have far-reaching implications on the practice of professional in this field of expertise. According to Grant, the most relevant considerations when establishing a firm include organizational capability, the rationale for designing the firm, the way the authority to make decisions is hierarchically distributed, and the way strategic alliances are managed. The present paper explores the various approaches that have been used in describing the process of firm design. In this paper, a unique approach is adopted, whereby a comparison is made on various international formats so as to provide an alternative view of how best these formats can be organized.
Planning a practice
It is natural for architects to be guided by a mental picture of what they are intent on achieving when they decide to open an office. This mental image encompasses things such as the target clients, size of the firm, and the organizational structure. A carefully thought-out firm design undertaking is normally essential since it facilitates the transformation of the image to a reality. In many formats of firm design, a full-fledged strategy is one that addresses issues of structure, nature of the market, nature of projects being handled, ways of getting clients, pricing for professional services offered to ensure profitability and sustainability, ways of ensuring timeliness in project undertaking, how the business is to be managed, and staff development.
One of the most widely recognized formats of firm design is the one proposed by Demkin (73). Demkin proposes a format that is founded on the goal of making a commitment to create a unique identity for a firm (73). This approach is known as the Sparks Framework. This framework contains six fundamental options for use by design professionals. In each option or archetype, there is an identity or personality that is used to set the firm apart from competing establishments. The Einstein archetype, for instance, has the identity and personality of innovation and originality of ideas. On the other hand, the niche expert model focuses on specialty, whereby experts specialize in a specific aspect of service in the market. In this option, full services are provided either nationally or internationally, and this may necessitate the formation of networks among firms.
The third option in the Sparks Framework is the market-partner personality of the firm. This firm personality is modeled in such a way as to focus on one major market, for example airports or higher education. Some firms may be dedicated specifically to research and development. Market partners focus greatly on the role of being their clients’ advocates, particularly with regard to the industries that are of interest to their clients. They endeavor to share the goals that are engendered in their clients’ activities. This creates room for close relationships. Since clients are a major determining factor for firms’ focus, the architectural practitioners often have to offer a wide range of services, sometimes spanning across several industries.
The market partner model differs sharply from the community leaders’ model, which focuses on the leadership role in the profession within a specified area. Emphasis is on building close relations in the form of socio-political connections. For a firm adopting this kind of approach, the range of projects handled is as wide as the size, especially considering that focus is on premier projects. The projects may relate to public buildings, recreation facilities, facilities of the municipal authorities, and police stations. Although this approach requires a heavy initial capital outlay, competition is not as cut-throat as in other approaches. Just like in the case of market partnerships, community leaders have to form close relationships within their communities.
Alternatively, one may consider the Orchestrator archetype. Firms of this variety dwell mainly on the management issues that are of the most outstanding variety. They have to have the capability of handling complex projects. They have to be versatile in such a way as to be able to handle complex projects, take minimum time to complete them, and to have high-level coordination strategies. Many large, established firms, such as Ernst & Young have been seen to be moving towards the goal of playing the role of an orchestrator, which tends to be in very high demand, mainly because of the value that it is attached to it.
The last option in the Sparks Framework is the efficiency expert firm. The main highlight of firms of this nature is a real cost advantage. They easily adapt to new sites and they are mainly adapted for handling maintenance and efficiency-enhancing roles. The areas of operation typically include retail stores, financial institutions, communications towers, and projects entailing the construction of large government office buildings. Total quality management is also another area of focus for efficiency experts. Before embarking on a firm belonging to this archetype, one has to be sure the ability to ensure top-notch quality throughout the practice.
Firm Identity
Firm identity is largely determined by the practitioner, since he is the one who understands the specific image that he wants to portray. The aspects of focus here may range from uniqueness of aesthetics to value-added services. The architect may want to employ unique technological innovations, to determine the main areas of focus for the firm, determine the types of buildings to focus on, and be specific on the range of services to be provided. To avoid the mistake of over-extending the scope of the firm in the quest for identity, reference to the Sparks framework as described by Demkin may be important (73).
In the Sparks framework, the underpinning requirement for one to set his firm in the right direction is an identity. This is particularly the case in organizations dealing with architecture, where operations are mainly in the knowledge industry. In each of these models, though, there is need for a corresponding profit model for ensuring that financial finance is maintained at the optimum level. Demkin points out that in the knowledge industry, one has to consider the most critical values of the firm, its level of distinctiveness, its most significant driving force, the extent to which it is expert, the greatest value that it gives to customers, and the things that the firms hopes to have achieved in the long-term consideration (74).
Nevertheless, Demkin admits that one of the hardest parts in managing a firm is uncovering and articulating all the idiosyncratic components that constitute its essence (74). Indeed, this is hard for architects, who lack training in a restricted form of thinking. If anything, one of the greatest virtues of an architect is his ability to come up with a design for any project. One may expect the architect to adopt a similar approach when designing a firm for professional practice.
Business plan
It is an internationally recognized practice for business plans to be relied on for financing. Nevertheless, with or without the financial importance of a business plan, a firm is best designed with this kind of plan acting as the foundation upon which everything else is laid. If the business plan is not required for purposes of financing, it may not have to be a formal document. Even if it is meant planning purposes only, it has to be properly organized. One of the most commonly used formats encompasses: the preliminaries, that business vision, goals, ways of achieving them, how to verify success, description of the target market, competitive forces, potential problems, ways of solving them, and key personnel. The business is also defined in terms of concept, relevant building industry focus, client base, and firm positioning.
Financial operations
Regarding financial operations, tracking the finances of the firm is one of core duties of an architect who operates his own firm. This necessitates the existence of a financial management system. A clearly defined system for determining the financial performance of the firm needs to be conceptualized at the outset. The main goals of financial monitoring include determination of whether the financial goals are being met, ensuring that the cash flow is in such a way that current expenses are always being properly met, capital is being planned for, and ensuring that professional services are priced in such a way that the practitioner will continue staying in business.
The accounting systems put in place during firm design are mainly categorized into two: general and project accounting. General accounting is for the entire firm in totality while project accounting is for ensuring financial accountability in specific projects. For these tasks, the services of a professional accountant are definitely required. However, the architect has to play a satisfactory role, for instance, that the expenses that are assigned to specific projects are in tandem with a sustainable operation of the firm. For instance, the practitioner should design mechanisms for ensuring that the expenses never surpass rates being charged for his professional services.
The flexible manner in which international formats of firm design are presented in literature underlies the very nature, knowledge-based firms. As Curado points out, the main resources for such firms are intangible and keep changing. This allows for idiosyncrasies in the way developments take place, mainly in the form of causal ambiguity. When the firm is viewed from the knowledge-based conception, it becomes impossible to come up with a standard format of firm design. For this reason, the best thing, no doubt, is normally to highlight the most plausible components from different formats and to rearrange them to suit particular contexts. In terms of rearrangement of financial needs, the most plausible format, it seems, is one that prioritizes on the following issues: capital needs, cash flow projections, and duration of operations until profitability starts being achieved.
Start-up tasks: reorganizing international formats on firm organization
One of the greatest challenges faced by a practitioner in a start-up business is finding the best staff members. Settling on the best people may be difficult, through a necessity, considering that the new firm has to compete with larger, well established companies. These people need to not only be talented but also to have personalities that mesh with that of the practitioner. Much as an individual may be qualified for the position, he may fail to share in the identity of the firm if his personality type does not mesh with that of the founder. The question of identity is of great relevance since it determines the image that the outside world will have of the new company. It is the practitioner’s best bet on how he wants the mental image of his practice to shape up in front of the world. Therefore, the element of preparedness has to get into the firm planning efforts. This grants the founder the confidence that he needs to pursue his ambitious goals.
Attracting ownership potential is a great way of attracting the best people, particularly if the pay is low. A viable alternative is to rely on consultants instead of hiring right away. In this regard, the idea of relationships with other firms should be among the list of priority tasks, with the aim being forging future collaborations.
According to Demkin, the best approach to use to achieve success at the start-up level is to focus on delivery of professional services by giving each individual project all the attention it deserves (255). This is especially the case if one has decided to take the identity of a niche expert, one of the models described in the Sparks Framework (Demkin 73). These tasks should be undertaken with the absolute care that they deserve, considering that start-up tasks are normally associated with high levels of financial risk. In this case, the more properly one is prepared in terms of financing, management, identity-building, and staff sourcing, the greater the chances of success.
Conclusion
In summary, there is no fixed approach regarding the resources and procedures required in the establishment of new firms. This is especially the case for architects, whose professional excellence consists in the ability to come up with new designs as opposed to fixed procedures of doing things. Nevertheless, management scholars have been endeavoring to come up with internationally accepted formats of firm design. Evidently, one of the most elaborate firm planning approaches is described by Demkin, mainly in his Sparks Framework. In this framework, identity forms the underlying tenet on which all other aspects of firm establishment are founded. After an analysis of alternative approaches, it is clear that a major shortcoming of Demkin’s approach is failure to prioritize on ways of finding the best staff members, mainly by attracting ownership potential.
In a nutshell, the architect needs to understand in this typical knowledge-based establishment, there is first a need to define an identity. This is followed by the establishment of a network for sourcing the best people, securing a source of financing, and then spreading the word round by handling professional tasks for clients in a way that enables them understand what the firm’s identity is. All this time, the professional needs to be looking up for networks with related businesses in efforts to explore potential opportunities for collaboration.
Works Cited
Curado, Carla. The Knowledge Based-View of the Firm: From Theoretical Origins to Future Implications, New York: Free Press, 2006.
Demkin, Joseph. The architect’s handbook of professional practice (Thirteenth Edition), Toronto: John Wiley & Sons, 2001.
Grant, Robert. “The knowledge-based view of the firm: Implications for management practice”, Long Range Planning, 30.3 (1997): 450-454.
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