How Do You Plan for a Bad Economy?
Brooks Walker
Co-owner and founder
Walker-Warner Architects Inc. AIA
Brooks Walker didn't intend to start his own residential architecture firm. One day the business just came to him.
When Walker graduated from college in 1983, unemployment and interest rates were skyrocketing. There was hardly any building taking place, so Walker considered himself lucky when his uncle's San Francisco based architecture firm hired him on to help with some of its recession-proof clients. Walker stayed in the family business until 1987, when he decided to learn the construction business firsthand. To do so, he built two houses on speculation.
Suddenly, due to the influx of money into the Bay area from Asia, he had two more spec houses to build. Working out of the dining room of his apartment, he did construction by day and architecture by night. Almost overnight, he had too much work — and a small business of his own.
"I thought I wanted to get into real estate development," says Walker. "But the residential architecture business found me."
Because Walker's foray into residential architecture was unplanned, he never took the time to sit down and write a formal business plan for his business, San Francisco-based Walker-Warner Architects, which he and a friend, Greg Warner, officially opened in February 1989.
Because of the up-and-down nature of the residential architecture market, Walker and his partner have never bothered to write a business plan during the 18 years that they've been in business. "There's not much we can plan to do to generate demand," says Walker. "Our business is at the whim of the economy."
Walker-Warner Architect's story is proof of that assertion. Shortly after the firm was founded and began to gain momentum building spec houses, the October 1989 Loma Prieta earthquake shook Northern California and delayed all construction. California's economy slowed; home prices plummeted in the early '90s, and residential design and building halted. "A business plan wouldn't have helped us in those recessionary times," says Walker.
Things changed in 1993 when the company was given a shot at designing a 10-acre estate in Carmel. "It was a very lucky commission," says Walker. "We had only been hired originally to do the assessments on the water and the lot."
What the firm learned: Let the client and their friends be your advertising. For Walker-Warner Architects, word of their good work in Carmel led to many more upscale projects, which put them in a strong position when the booming Internet economy of the late '90s hit Northern California.
To cope with the ups and downs of their industry, Walker and Warner sit down once a week to plan potential projects. Then they work with their project managers to distribute the workload among their staff. They've also hired a consultant to help them structure their operations so that they have a continuous cash flow. "We didn't want to wake up one morning during a downturn in the economy and not be able to meet payroll," says Walker.
One piece of advice from the consultant: Hire an office manager who can keep track of expenses and incoming work and fees and quickly give a snapshot of where the firm is.
"We're not in control of the larger forces, so we are working to run our office as efficiently as possible given any type of economy we face," says Walker. "We believe that if we are practicing our profession and are truly engaged in what we are doing, then our best business plan is a sound philosophy."
— Susan Smith Hendrickson
