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Ten years ago, I ran an SME subcontracting business. I had set it up as an offshoot of a development business I had started with some old friends, and a few years later, things were going well. We won High Growth Business of the Year and Employer of the Year at the Inaugural Camden Business Awards. Business was booming; we were winning some big contracts and consulted with Camden Council on restructuring their procurement strategy so that smaller businesses could be part of their framework. We had come a long way, but despite this success, less than 12 months later, the doors closed on our Camden office and on several roles within it, as they did on that chapter of my life.
This was a challenging period of my life and it has come back to me recently in conversations with architect practices and other consultants in the sector. One of the first questions I ask practice owners I meet is: ‘What are the big challenges facing architectural practices at the moment.’ Usually, that question engenders a few responses around staff retention, growth, winning new and the right kind of business. In recent weeks however, one response seems to be at the top of most people’s lists, regardless of their size. Almost all people I talk to voiced concerns over survival.
Of course, survival in an uncertain post-pandemic landscape is critical for all businesses, no matter what sector. However, amid the rising costs of, well, literally everything, many in architecture speak of ongoing projects being put on hold as clients pause work to wait for more favourable market conditions.
Not only have the prices of build materials soared, but it’s difficult to get cost certainty past 30 days on anything, so how on earth are you supposed to run long-term projects? The answer is that you can’t unless the project is so long-term that you can ride out this economic uncertainty. Even in those cases, the immediate problem of getting the project built is an uphill struggle. No wonder so many projects are stalling.
Others I’ve spoken to point to project pipelines showing signs of drying up and of projects not progressing past the design stage; these issues present a massive problem for practices. Whatever size practice you are, a drastic and immediate reduction in income is disastrous, especially if you can’t predict when your fortunes will turn around. The sudden loss of this income can place practices on a path to failure. That said, failure is not inevitable if tough decisions are made and made quickly.
Making staff redundant is the hardest thing you will have to do as a business owner
I know from bitter experience that making hard decisions is easier to say than do. When you run a business, a heady mix of ego, entrepreneurial optimism, and a sense of responsibility for your employees can cloud your judgement. As I sat in a bar in the Croissette at MIPIM back in March, one business owner told me they planned to scale back their business quickly. I agreed with the strategy and said I wish I had made a similar decision years earlier, which may have saved my business and, ultimately, kept at least some jobs going. He replied: ‘Well, I’ve been through this before and last time, I didn’t scale down; it almost cost me the business. I’m not making that mistake again.’
Hindsight makes prophets of us all, but perhaps that’s not a bad thing and presents a good learning opportunity. I tell every architect that mentions these problems to me to get advice and get it quickly. Preferably from someone who has been through this before, who can look at your numbers and be honest about what those numbers mean, and how you can avoid disaster.
Making staff redundant is hard. It is the hardest thing you will have to do as a business owner. But almost 10 years ago, as I loaded computers and monitors into the back of my car, I wished I had had the guts to make some of my staff redundant. I wished someone had given me that advice, because, if they had, I might have been able to save my business and the remaining jobs within it.
Kunle Barker is a property expert, journalist and broadcaster
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