Take all your hours spent working on billable projects...
Multiply by the billing rate that you charge for those hours...
That sum is equal to your total expenses from all sources, plus...
Your profit, or loss as required by this equation.
Are your numbers balanced for
profitability or liability?
I learned the 'secret' of the financial model for architects three years after starting my firm by attending a workshop given by a fellow architect. I discovered that when I used hourly rates I was losing $15 per hour.
I was flying blind, and it wasn't going to end well.
Throughout my career I have used this method and it has never let me down. The Financial Model Workbook is the result of working to make the model easy to use because every architect needs to know how this works.
A Simple Tool For The Small-Firm Architect
The Financial Model Workbook is simple. Enter a name and 4 pieces of data about each employee (contract workers supported). Three more numbers and your model is complete.