We live in turbulent times, and you can never fully eliminate uncertainty – but there are several approaches you can employ to combat it.
We live in turbulent times. Things are happening that could result in a lot of change. Plus business can be unpredictable. People are involved. That creates uncertainty. And AEC firm business owners hate uncertainty.
Uncertainty will always be there. You can never fully eliminate it. So what can you do to combat it? Here are seven approaches:
- Set up predictive metrics and monitor them! More firms need to do this than actually do it. This includes looking at things such as web hits, inquiries, specific project opportunities, proposals made and won, and backlog in months and dollars so you can develop some sense of what is going to happen in the future. It may help to present these numbers graphically and look at trends over a period of months. But if everything is going up, feel good about your future prospects! And if done, start doing things to turn that around before you feel the real effects of it. Either way you will be better prepared for what’s likely to come.
- Keep all long-term commitments to a minimum. Why sign a 10-year lease if you can get a three- or five-year lease? Why hire “permanent” if you can do it through contract? Apply this logic to every single decision you make and while you may not maximize your opportunity, you will be better prepared if things get ugly.
- Keep overhead as low as possible. Again – same logic as above. Go cheap. Rent or lease versus buy. Pay down debt. Do whatever minimizes cash flowing out to build up as much cash reserve as possible. A strong balance sheet is the best way to deal with uncertainty.
- Develop contingency plans. What would you do if there was some sort of real economic meltdown? Who would you keep and who would you let go? What costs would you cut? Do you know how you would eat? Where you would live? Make out a doomsday, worst case scenario plan now. It could impact every decision you make and reduce uncertainty.
- Diversify. Get into other markets and specialties. Get into other businesses outside of the AEC business. Put your retirement money into different industries and types of companies. Don’t be dependent on any one business or market. Diversification reduces risk.
- Live in denial. You can always just carry on and ignore what’s going on externally. People do it all the time. But truthfully, this approach can come back to bite you in the rear. Or it may not. Why stress if you cannot do anything about it?
- Have faith in yourself that no matter what happens you will overcome it. There will always be ups and downs. Chances are you have already been through those more than once and you are still here. So have a little faith! No one really knows what the future will bring but you are smart and you will figure it out when you get there!
So what are you doing to combat uncertainty right now? Anything? Maybe it’s time!
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.
