Design Practice: Start-up Costs for Architects and Designers

Too often we let simple obstacles become excuses that stop our progress. In my experience, I’ve found that the biggest perceived barrier to progress is cost. I say perceived because I’ve often found that many people think starting their own business is far too expensive to manage, so their dream never gets off the ground. I’ve also found that many people have no idea what it actually costs to get a business going.


I’m a big believer in the lean start-up methodology, which seeks to create a minimum viable product (MVP). Think of the MVP as a rough sketch or approximation of your business. You’ll want to start by investing a small amount of money to get it close and refine it along the way as you get more and more projects and experience.


Here are some start-up costs to consider.



Structure. Your first step is to decide who you’ll be serving by choosing a niche and establishing your business structure. Most choose sole proprietorship, for which there is no fee. If you choose to create a limited liability company (LLC), you can file for it yourself (here in Maine it’s about $200), or you can use a service like LegalZoom for $99 plus your state filing fee (as low as $45 in Arkansas to as high as $612 in Illinois).


Cost:

Sole proprietorship: $0

LLC: about $150



Licenses and permits. If you require a professional certification or license to practice, you’ll need to count this among your start-up expenses. Licensing fees vary by state and locale, but this is usually a minimal cash outlay. My architecture license costs $75 per year (some states charge significantly more), and I maintain my council record with the National Council of Architectural Registration Board for $225 per year. I was also required to file an initial Doing Business As (DBA) form with my town for $10 when I opened my business. Check your local regulations for specifics.


Cost: About $300 to $700, depending on state and local requirements


Professional liability (PL) insurance. Insurance will sit at the top of your expense list, should you choose to pursue it, and the cost will vary depending on the deductible, the coverage and your exposure to risk. In some parts of the world, PL insurance is compulsory, so be sure to understand your local regulations. The design profession is fraught with risk, but the high cost of PL insurance deters many design professionals, especially early on. It’s a serious decision with definite consequences. If you choose not to carry it and you’re a sole proprietor, be aware that you’re exposing all of your personal assets to any lawsuit a client may file, because there’s no wall between your business and personal assets; they’re viewed as one and the same.


Cost: $0 (you’ll assume a higher risk) or $5,000 and up per year, depending on deductible and coverage



Branding. This has been a theme throughout this series, because that’s the primary asset that you’re building. Your brand is your business, and everything you do contributes to your brand image. Branding costs can be substantial for established companies, from letterhead and logo design to everything else. To keep your costs down, rely on your creativity for your early branding. Print your own business cards, design your logo and develop your marketing materials in-studio. You’ll have the time early on while you’re pursuing and qualifying leads and laying the groundwork for your firm. Fine-tune your strategy as you take on projects and build your brand, pivoting as needed and always making it better.


Cost: $0 plus your own sweat equity


Marketing. Your business development falls squarely on your shoulders, and you’ll quickly find that generating project leads and turning them into clients is constant, hard work. But announcing your presence to the world is easier than ever today and doesn’t have to be expensive. A great first step is to complete your Houzz profile, upload high-quality photos of your work, create projects and solicit reviews from former clients and colleagues.


Cost: $0 plus your time


Website. This is an area where you’ll benefit greatly by spending a little. Purchase your business’ name in domain form (.com, .net etc.) along with a theme and build your website — your virtual storefront. It’s important to lay claim to your business’ slice of online real estate for many reasons; chief among them is that it’s an integral part of your brand’s identity and a powerful tool you can leverage to develop and qualify leads. Houzz also offers a no-cost website creator that is an alternative to paid website hosting.


Cost: About $150 for hosting, theme, and domain; $0 if you use the Houzz service, called Site Designer.


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Design Practice: Start-up Costs for Architects and Designers

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