After the Turnaround
Dec 02, 1996
I just got back from the annual business planning meeting with the board of directors of a client of ours that underwent a significant turnaround in the last couple of years. They went through everything that you would expect from a firm that had more than four years of losses— staff cutbacks, salary cuts for owners, huge reductions in deferred compensation plans, management changes, carving off small branch offices, changes in organization structure, a new CFO, a new marketing director, and heavy investments in technology. Now, after six really tough months and another year of pushing themselves and their staff really hard, the company is healthier than ever, with pre-tax and pre-bonus profits about twice the industry norm. So you can imagine how great they felt coming together to look forward to the new year, full of pride and optimism about their ability to control their destiny. After a thorough review and discussion of what was accomplished from last year’s plan (most everything), we looked at what the future could hold. The board had already decided to adopt a significant growth goal for 1997 before I even arrived. And, as is often the case at meetings of this type, the subject inevitably turned to what it was going to take to achieve that goal. When geographic expansion possibilities started being discussed, several of the board members clearly became uncomfortable. As I looked around the room, I saw some of them squirming in their chairs, fidgeting, and sighing. Then one of the board members explained his anxiety by saying, “I feel like a guy who didn’t tell his wife and hocked his house, went to Las Vegas, and nearly lost it all. Then, when I got down to my last five dollars, I hit it big, and won it all back. Now you’re telling me to go back in there and plunk down a couple hundred bucks on number 5. I’m having a hard time with that.” But no matter how badly the company had been burned in the past by expansion plans gone awry, they decided unanimously to press on in 1997. They’ll take specific actions this year to actively pursue options to either start another branch office with internal staff or to approach a couple of other firms about the possibility of merger or acquisition. You see, the leaders of this firm are rational people. They’re cautious— not crazy— but rational in that they know what their alternatives are. They will have to continue to grow if they are going to be able to attract and retain key people, fund their ownership transition plan (in other words, be able to sell their stock some day for what it should be worth), do more exciting work, and keep themselves excited. It’s just that simple. The people who say they want to “stay small” are really saying, “I give up” or “I don’t know how to grow.” Now I don’t think anyone could really blame these guys if any one of them decided that they had had enough of this whole thing. Each of them had a lot to lose if they hadn’t been able to pull themselves out of this last crisis. They had a huge hole, and lesser men (and women) probably would have cut and run (one did just that). They could have lost everything— and not just stuff like houses, retirement funds, or tuition money for kids in school. They could have lost their pride— by being losers and failures— and that’s the biggest loss of all. But thankfully, they didn’t. They worked their 60- and 70-hour weeks. They got on planes. They confronted all of the nasties that they avoided dealing with for years. They collected their money. They paid down debt. And now, after “getting it all back,” they’re ready to strap on their six-guns once again, and step out into the street. Bravo, I say. My hat goes off to these modern-day heroes of our profession. I don’t care what the naysayers, doomsdayers, and other negative thinkers want to believe about small firms and mid-sized firms becoming extinct, or all of us having to turn into contractors, or some other nonsense. It’s precisely this can-do spirit of the company that almost lost it all that leads me to believe the best is yet to come for A/E/P and environmental consulting firms. Originally published 12/02/1996
About Zweig Group
Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.