How to set up financial management in the design business and turn it into a basis for management decisions: the case of an architectural design firm, Bogdanova Bureau

Bogdanova Bureau — architectural and interior solutions for private and commercial facilities

Site: https://bogdanovabureau.com/
Instagram: @bogdanovabureau

Olga Bogdanova — founder Bogdanova Bureau
Lives his own business
Loves finance and is always learning new things about it
Courageously tests hypotheses and tracks their results on Finmap
Instagram: @bogdanova.personal

Is it possible to set up clear and systematic financial management in the project business?

  1. No, there are so many nuances that it’s not even worth trying to calculate everything. It won’t work.
  2. Probably, but it’s very complicated. You can’t do it without a team of financiers.
  3. You can, even if you don’t have a specialized finance department within your business.

We don’t know what answer you chose, but Olga Bogdanova decided she could, especially after she connected with Finmap and enlisted the support of our financial experts.

This is a case study of what she did and, more importantly, how she did it*

* The case will be useful not only to those who have a project business, but also for everyone who:

  • doesn’t understand how to set up a financial management;
  • is looking for ways to stop losing money;
  • wants to understand what’s going on with the finances of their business.

Given

Olga had been familiar with Finmap since the service’s launch, when, together with her partner, she developed a large architectural firm of over 40 employees. However, at that time the company’s finances were handled by a financial manager and an accountant, so she had no opportunity to personally evaluate the service.

In 2018, the firm split and Olga began building her own company, Bogdanova Bureau, which now has eight employees. «After managing a huge company, it’s a great pleasure to build a smaller, more personal business», she says.

When the question of financial accounting came up, Olga decided to turn to Finmap. She especially liked that she could try the service free of charge for a month.*

* Finmap has a free 14-day trial period

She also took advantage of Finmap’s financial manager for record keeping. Although she was now managing a smaller team, Olga had a great deal of business experience and understood the importance of financial management for the success of a new company.

Task

It was thanks to this considerable business experience that Olga had long since passed the stage of manage chaos that new entrepreneurs often find themselves in, where «no one really understood where the money was coming from and where it was going». Frustrating financial experiences in the past had taught her the need for an accurate fiscal management system.

She had specific objectives:

1️⃣ Calculate project costs

«There are times when you think you’re doing well on a project, especially when you develop a good relationship with a client. But in reality, the situation can be more dire than you realize».

It was essential to know how to calculate costs, identify unprofitable projects, and understand why they are unprofitable, in order to take action.

2️⃣ Systematize the company’s expenses
This included understanding where the business was overspending on unneeded products or services, if the firm was incurring too much debt upfront, and how to optimize or redistribute recurring expenses.

3️⃣ Implement professional financial management in the business
Specifically, she wanted to:

  • understand more about Finmap’s capabilities and how to customize the system to meet her firm’s specific needs;
  • test new hypotheses;
  • have her l financial questions addressed through personal consultations on a regular basis.

Solution

Even during the trial period, Olga found the Finmap program intuitive, allowing her to accomplish common tasks using familiar terms. Finmap required no special training for her to systematize her accounts, import data from Excel, understand analytics, and organize her finances. As she got deeper into the analytics,* Olga had some questions for our customer service team, so we offered the assistance of a qualified financial manager.

* This is what Analytics looks like in Finmap. Our users have CashFlow, P&L, accounts receivable, accounts payable, project reports, and others.

«The financial manager took me through some of the finer points of the program and that is when I really began to develop trust in the Finmap financial system and the people who stand behind it».

By fully immersing herself in the capabilities of the service, Olga confidently delegates some tasks to a Finmap financial manager. For example, entering data takes time. When the manager took over this task, Olga was able to pay more attention to other issues. But the manager’s main advantage was the opportunity to ask questions, get advice, and discuss ideas and hypotheses together.

«I really like having someone to consult with about all my questions: how?, what?, where to look?, and if I do this, how do I take it into account?»

In addition, Finmap’s financial managers have experience in different niches. This allows their clients to get an outsider’s perspective and adopt cool solutions from other industries.

After working with several managers,* Olga finally found «her» one, with whom she cooperates even now.

* If you prefer, our users can get help from Finmap’s financial experts and choose an assistant, manager or mentor for themselves. You can book free consultation and find out more about this service.

Book a financial
consultation for your
business

    What solutions are now used in the Bogdanova Architecture Associates

    1. Introduction to the hourly rate

    After the pandemic began the bureau switched to remote work and it was decided to try to break down projects into tasks and hours in order to see which tasks used up how much time. They then recalculate the cost per hour of each project.

    «Immediately, we implemented the hourly system in the cash flow management , made a table, and then transferred it to Finmap. Now we can easily see what the situation is for all our projects».

    This solution allowed us to assess the projects, while tracking income and expenses. Plus, this made it much easier to provide accurate quotes for clients who needed additional services.

    «There are situations where clients ask for customized tasks, tailored to their personal needs. Often this is difficult to evaluate and it is easy to either over or under charge for these personalized services. What saves us here is the hourly rate. We know how many hours are spent on the work and how much it costs. We can also collate the hourly expense of the entire team».

    2. Started Projects in Finmap

    At Bogdanova Bureau, each client is calculated as a separate project in Finmap. This is very convenient for a project business because you can record all expenses and revenues on a particular task all at once. Each project generates individual project reports and analytics data, allowing for a complete picture for each client.

    * Finmap users can have separate lines of business as «Projects» in order to see each project’s income, expenses, profits, profitability and margins in a separate report.

    3. Established foundations

    This idea also came with the transition to remote work, when it was no longer necessary to pay office rent. Olga did not want the money to go idle. So it was decided to pay «rent» to the company. They put aside $1,000, then $1,500, and then $2,000 each month. By the time the team went back to the office, they had the option of how to spend that money, giving them greater freedom in choosing their future workspace.

    «We ended up choosing a larger, more expensive office. We weren’t afraid to take it because we knew we had a safety cushion that saw us through to the end of the contract».

    Once an entrepreneur starts creating funds, there is no stopping him???? This is what happened at Bogdanova Bureau. After the first reserve fund, it was decided to create others:

    • Emergency Fund

    Failures and unforeseen circumstances happen all the time in the business world. Previously, Olga covered these expenses from her personal money or from other accounts in the company. Now there is a separate fund for such cases, where 2% of all incoming money is put aside immediately.

    «There are times when a project can’t pay for itself, for example due to missed deadlines, inflationary costs, late payments from the customer, or other unforeseen expenses. We now account for these situations through our emergency fund».

    • Development Fund

    Money is set aside for training and useful trips. For example, to Expo Dubai 2020.

    • Marketing fund

    This was instituted quite recently. Previously, clients came to Bogdanova Bureau mainly by word of mouth. However, in 2022 there is a plan to start attracting new clients through marketing and targeted advertising. To work actively in this direction, a separate fund was created.

    4. Analyze the results of experiments

    Plan a 1-month or 3-month project. Whether to provide the service or refuse it. Whether to use this or that software. Financial accounting and analysis helps to make these decisions in a balanced way, based on numbers, not just speculation and conjecture.

    For example, Olga says that a year ago they gave up modeling in 3Ds Max, because it used up a lot of resources and team time, so she switched to another program. However, one of her clients requested the renderings be done in 3Ds Max. The project team agreed with the client that this was the better option.

    Therefore, Olga decided to use Finmap in order to create a separate project and calculate how much time and money it took using 3Ds Max compared to the program the company used for their other projects. It turned out that Olga’s instincts were correct and the previous modeling program was much more expensive.

    «We can see right away from the analytics that if we want to move this way, we need to charge the client more. Or subcontract it. The financial data from Finmap allowed us to immediately identify a problem and work toward possible solutions».

    5. Fix even small expenses

    For example, the costs of various applications and online services. Often entrepreneurs don’t take them into account or don’t consider them expenses at all. None of them by themselves will ever break the bank, but combined they can make a real impact on the bottom line.

    «300 UAH a month for the year turns into 3,600 UAH. And this happens not only with 1 app. In Finmap this is cool to track, you understand what you need to budget for».

    The results

    However, now with Finmap,

    ✅ Bogdanova Bureau has an established and systematic accounting of finances.

    ✅ Olga uses tables for financial modeling and forecasting, as well as Finmap for business analysis and decision-making.

    «For me, Finmap is not about forecasts. It is about accurate analysis that allows me to make forecasts. When you see the results in front of your eyes, on easy to understand charts and graphs, then you see that in some cases we saved money and in some cases we spent too much; you see what worked and what did not; where there were setbacks and where there was potential for growth. It is this accurate data, organized in an easy to read fashion that allows me to plan for the future».

    ✅ Thanks to proper accounting, the company was able to distribute money and create funds for different purposes: reserves, training, marketing, and solving unscheduled situations.

    ✅ They were able to build a system for calculating the cost of projects so as not to work in deficit and not to cover unprofitable projects at the expense of profitable ones.

    «Very often we used to work on one project at the expense of other projects, taking those projects into deficit. Competent management helps us see all of this, save money and buy in even where we didn’t expect to».

    ✅ The company correctly calculates profits and Olga is able to accrue her dividends correctly, so that the business does not fall into a cash gap after they are paid.

    ✅ Olga continues to take various courses and programs in finance. All insights, hypotheses and ideas after the training are also discussed with her financial manager.

    «In that time, I’ve seriously grown in terms of financial management, because the financier helped me put things right and somehow systematize things more.

    P.S. Finally, a few cool conclusions from Olga

    • About Finmap Help:

    «Finmap is a money maker, because it is a money saver. You may look at the cost of a financial manager as a needless expense, but when that financial expert identified areas where we were losing money, wasting resources, and allowing small expenses to slip through the cracks, we realized that the financial manager saved us five times as much as we spent for the service».

    • On how easy it is to start a financial account:

    «On short projects, it’s easier to spread out finances. On long projects, it may seem more complicated and unpleasant to keep track of all the hours, reconcile balances, track cash flow and enter expenses, but Finmap actually makes it easy».

    • On the crisis for entrepreneurs:

    «A crisis isn’t always an obstacle to your company’s growth. It can actually be an impetus for improvement. A crisis helps you look at what you’re doing differently in order to reevaluate, revise, and upgrade your business plan. In the busy flow of your business day it is easy to ignore the little problems that pop up, but a crisis forces you to reconsider what is working and what is not».

    • On finance in general:

    «A lot of people don’t like finances, but it’s basic, and it’s super important to keep an eye on the bottom line. You may not love finances, but a smart entrepreneur never ignores them».

    To implement systematic financial accounting in your business, sign up to Finmap. 14 days free.

    To benefit from the experience of Finmap financial experts, leave a request for a free consultation. We will contact you shortly and find the financier who will be most helpful to your business.

    Book a financial
    consultation for your
    business

      Subscribe!

      Regular articles and cases about finance in plain language

        All rights reserved. Copying a text or a part of it is only possible under the holder’s permission.

        Всі права захищені.
        Копіювання тексту або його частини можливо тільки з дозволу правовласника.

        Все права защищены. Копирование текста или его части возможно только с разрешения правообладателя

        Всі права захищені.
        Копіювання тексту або його частини можливо тільки з дозволу правовласника.

        We collect cookies to improve the site's experience. More information - Privacy policy.