Key Highlights
Adapted from my conversation with Branson Bowen on episode one of Beyond the Blueprint.
We brought on our first additional licensed architect at the beginning of the year, and I want to lay out the math on that decision, because I think people underestimate what a hire like this does to a small firm's finances.
Start with the raw number. A second license is a substantial expense, comparable to the rent line and well above what a non-licensed employee costs, and it's payroll every other week whether or not the next project signs.
The part that gets missed is the second-order effect. Adding capacity because your current workload demands it also means you now need roughly double the current workload to keep that person productive, which means more time spent finding work, which raises your acquisition cost, which usually means more space and more of everything else that comes with more people. It's entirely possible to end up with more revenue and a worse margin than you had before, doing more work under more pressure and feeling less profitable, because you are.
That isn't an argument against hiring so much as an argument for going in with both eyes open about what you're signing up for, and doing the mitigation work in advance rather than discovering it in month four.
The counterweight, and the reason we did it anyway, is the other piece of arithmetic. If someone can do a task more efficiently and more accurately than I can, then me doing it is waste, cheaper in the moment and more expensive in aggregate. The real question isn't whether I can afford to hire, it's whether I can figure out how to pay for the person who's better at it than I am, and that framing has been more useful to me than any spreadsheet. Everything is a risk, and the trick is being calculated about which ones while knowing what you'll do if the thing you're worried about actually happens.
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This post came out of episode one of Beyond the Blueprint with host Branson Bowen, where we got into leaving a firm where I held the license and none of the decisions, hiring for weaknesses, and why I don't compete on dollars per square foot.
Watch the full episode