Implement these specific strategies to set the stage for your firm’s long-term growth and success.
What most people call “strategies,” could also be called “philosophies” or “approaches” to how a business deals with a recurring problem, capitalizes on a specific opportunity, or differentiates itself from other firms in the same business.
If I was running an AEC firm right now, there are definitely a few specific strategies that I would be implementing to set the stage for the firm’s long-term growth and success.
Here are a few of them:
- Overspend on marketing so that you drive demand beyond your ability to supply it. Most people in our business don’t really understand this idea. They are preoccupied with what other firms they compete with spend on marketing, along with having a philosophy of spending as little as possible. They don’t realize that their marketing spend and activities drive sales. My experience over the last 45 years is the more you do marketing-wise, the easier it is to sell work, and the more likely you are to not cut prices to get work. That only happens when you have way more opportunities than you can handle. But the only way you will get there is by outspending/outdoing your competitors on marketing.
- Look for small firms to buy where the owner is a baby boomer and has no internal leadership or ownership transition plans. These kinds of acquisitions can get you into new markets, services, and geographies at a low cost. The goal is to give the owner a graceful exit and some liquidity for their years of toil. What you want are their people and their clients. The sellers who meet this description typically don’t have a lot of options and are amenable to financing the sale if they have confidence the buyer is a good operator who will pay them out over time. Buying these kinds of firms is one of my favorite growth strategies.
- Sell small amounts of company stock to key people and finance 100 percent of it through payroll deduction. In general, I think firms in our business make way too big of a deal about who they will sell stock to. I think the reason is because they often think management goes along with ownership, that all owners have to be on the board of directors, and/or that owners are unaccountable to anyone. None of this has to be the case. It’s all self-imposed. Selling small bits of ownership to key people gives them a chance to build wealth outside of their homes or 401(k) plans. It ties them to the company more than not being an owner. And it rewards them if the company is successful. All good things. It also improves the firm’s balance sheet. So I would make this part of my strategy.
- Implement open-book management for all employees. I will be talking about the benefits of OBM until I keel over because it builds trust with management and any firm can do it. It also teaches your people how the business makes money which helps train the next generation of managers. Always a strategy I would implement.
- Pay a certain percentage of cash basis profits out to all employees on a monthly basis. Make everyone feel like an owner. And don’t wait to do this once a year. Get people in the firm used to the idea that if the firm makes money, so do they. And also get them believing that every month could be a good month if the firm generates sufficent revenue to justify sending out the bills that they can then help collect on. Cash basis is crucial here, as is the frequency of payout. Annually is too long to wait.
- Implement an ongoing client satisfaction monitoring and reporting program through a third-party provider. I recently had one of these interviews with someone who was outside the service provider and being paid to conduct them. When she asked if I had any advice for the business owners I suggested they keep doing these interviews every month and provide the results to all employees in the business. That way it’s not a once a year, or once every five years deal, and the frequency of feedback may encourage changing more rapidly based on the feedback they are getting. This is a great strategy to make improving service quality real.
- Provide company cellphones to all employees at no charge, but insist they try to respond to after-hours calls, texts, and emails. Have all timekeeping and expense reporting through an app on everyone’s phone. We all know responsiveness is one of the most important aspects of client service, so do what it takes to help make that real. Plus it is also a great benefit for your people and not that costly to implement. Another great strategy you could use.
There are many more of these strategies you could employ if you wanted to. But regardless, whatever strategies you are using, I would recommend that you write them down, get concurrence amongst all management, and share them with your people. Don’t assume everyone in your firm actually knows what your strategies are.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.