From Metrics to Markets
Your financial plan and your business development plan are the same plan.
Architecture firms spend a lot of time planning for the year ahead. Revenue goals get set, budgets get built, market leaders talk about where they want to grow, and marketing and business development teams start filling the pipeline. Too often, those conversations happen separately.
At AIA New York, AVEC’s Erin Murphy, AIA, tackled that disconnect in From Metrics to Markets: Aligning Financial Goals with Business Development. Her premise was pretty simple: if you know what your firm needs to produce financially, you can work backward to understand the kind of work you need, where it needs to come from, and how much opportunity you actually need to pursue. That gives firm leaders a much more useful starting point than simply deciding, “we need more work next year.”
Start with the numbers. Then make them useful.
Instead of setting next year’s revenue goal by adding a percentage to this year’s, Erin starts with the capacity the firm actually has: people, available hours, utilization and billing rates. From there, you can establish a realistic revenue target, determine the profit you need that revenue to produce, and begin looking at which markets and project types can get you there.
That last part matters because the same amount of revenue can produce very different results depending on the mix of work. Understanding profitability by market gives firm leaders another way to make decisions about where to focus, what to pursue, where fees may need attention, and where operational changes could have an impact.
From there, the financial plan starts to become a business development plan. If you need $2.8 million in revenue from a particular market, your historic capture rate can help determine how much opportunity value you need in the pursuit pipeline, while your win rate can help determine how many proposals that may require. A broad growth goal becomes something your team can actually plan—and staff—for.
Take the session back to your firm.
We turned Erin’s AIA session into From Metrics to Markets: A Field Guide for Connecting Financial Goals to Business Development, with the formulas, worksheets and planning prompts you need to begin applying the approach to your own firm.
The guide walks through staff capacity and realistic revenue, setting a profit target, breaking revenue goals down by market, testing whether your planned mix of work supports those goals, and using your actual win and capture rates to understand what your pursuit pipeline needs to look like. A final planning map brings the process together so you can use it as you build your annual plan.
You don’t need perfect data to start. Use what you have, identify what you don’t know yet, and begin tracking the information that will make next year’s planning stronger. The point isn’t to build a perfect spreadsheet; it’s to make better decisions about the work your firm needs to pursue and why.
Download the Field Guide
*Created by AVEC Senior Management Consultant and Director of Operational Strategy Erin Murphy, AIA
