No Employees? No Problem - The Virtual Firm Has Arrived

PSMJ Resources, Inc.
Posted on: 04/17/20
Written by: PSMJ Resources, Inc.

 

Until six years ago, the career path for Peter S. Macrae, AIA, was traditional. That all changed in 2011 when he parted ways with the recession-ravaged firm where he was managing principal and started his own firm.

Macrae ARCHitecture, Inc., based in a suburb of Columbus, OH, has a website, 25 or 30 clients, and an annual portfolio averaging 150 projects. It has everything that a typical architecture firm has, with one notable exception—employees. THE VIRTUAL FIRM Macrae’s firm is a thriving, high-production design firm that delivers architecture, interior and graphic design, project management, and 3D modeling services to clients in the commercial, residential, and civic markets. And he is its only full-time staff. “My goal was to start a firm without any cash,” Macrae says. “I thought that it must be possible to have a full-service, national architecture practice with zero fixed overhead. No rent. No equipment. No payroll. Just a laptop, with everything in the Cloud. And it worked like a charm. I put money into an account on day one just in case, but I’ve never touched it.”

5 KEYS TO RUNNING A ‘VIRTUAL’ FIRM

Here are five key factors that allow Macrae ARCHitecture to complete an average of 150 projects a year with only owner Peter Macrae as a full-time employee:

1. Financial discipline. Despite almost no overhead, Macrae ARCHitecture, Inc. charges the market rate for its services. Macrae also requires clients to pay half the fixedfee up front and the remainder before receiving the final contract documents.

2. Focus on results, not hours. All projects are fixed-fee. “I’ve actually convinced all the people doing this with me to never again think about how many hours it takes to do something,” he says. “All that matters are the deadline and collectively realizing the profits.”

3. Successful independent contractors. “Every one of the people who works with me is an independent firm owner with their own clients and projects,” says Macrae. “I insisted on it and now we are just one of each other’s clients.”

4. The right clients. The vast majority of Macrae’s clients are in the private sector, largely because public-sector clients won’t agree to his contract terms and can sometimes limit a firm’s profit. 5. Appropriate technology. Macrae and his contractors hold meetings using apps like GoToMeeting and Skype, while exchanging files with Dropbox and similar tools.

INSPIRED BY CIRCUMSTANCES

Macrae says the idea came to him in his prior position when he noticed that, although they were in a room together, his staff was working, more or less “virtually.” “The CEO is in the corner office and there’s a big bullpen with all the staff in their ten-by-ten spaces. It’s the same work environment as when I started forty years ago, but instead of having a set of drawings rolled out on a drafting desk, they have ear buds in and they’re throwing electronic files to each other.”

In building his firm of independent consultants, Macrae had a ready-made talent pool from the good employees that his firm laid off as it dwindled from approximately 20 people to six. Even more doors opened with the passing of the Affordable Care Act, easing the considerable worry of high healthcare premiums among his contractors.

PRESENT COMPANY INCLUDED

Macrae’s total stable of talent consists of about 16 contractors, but he works regularly with up to eight. The firm works throughout the U.S., as well as in Canada and Mexico, having grown to six teams. Five are led by midcareer professionals and the sixth by Macrae himself. “We have team leaders located in four different states and five different cities. Four teams serve national accounts, one team does high-end corporate interiors, and I head up the group that does the one-of-a-kind stuff.”

The “virtual” state of the firm remains out of its clients’ view; there’s nothing on the website or in any communications indicating that the firm isn’t like any brick-and-mortar establishment. Macrae’s few overhead costs include regular license renewals, periodic software upgrades, and the necessary liability insurance. “I don’t pretend that this virtual practice model is the great disruptor or that it’s going to be the only way architects are going to deliver services in the future,” Macrae says. “It’s just an alternative. The Internet and all its connectivity have made this type of practice viable.”

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