Editorial: The 2014 business plan
Four additional suggestions from Mark Zweig because the time is now.
It’s here – the New Year. They keep coming faster and faster. It’s kind of funny to see the past futurists’ ideas about what it would be like to live today. Just about every vision of today from 50 years ago involves flying cars. While we don’t have them and probably never will, we do have “Facetime” (nearly flawless video call capability between iPhone or iPad), microwave ovens, the Internet, cars that park themselves, and more.
But let’s get back to business. I may seem preoccupied with business planning of late. If so, there’s a reason. NOW is when it has to be done! So, if you haven’t finished your 2014 plan yet, get on it. Here are four more thoughts for you to consider as you work on finalizing your plan:
Get the information you need together to make intelligent decisions. Do you really know what your backlog is? Do you really understand the revenue to cost ratio in every business unit? Do you know what your hit rate is? Average project size? Your largest client relationships? Profitability by client? Who, specifically, is selling how much? How much you are spending on rework? What clients are the slowest payers? I find that many firms make many assumptions about things that are just plain wrong. Bad assumptions will lead to potentially bad decisions.
Protect your creditworthiness and maximize your available credit. Pay your bills on time. Keep good books. Share your reports with your bank. Share your business plan with your bank. Don’t take out too much from the business such that you endanger it. Keep enough cash on hand to meet most of your challenges and get the largest line of credit and highest credit card limits your bank will allow.
Keep your long-term vision in mind at all times but pay attention to today. One thing I have learned about this business after 34 years of working in it: While it is good and necessary to think long-term, you cannot get indifferent to monthly or quarterly losses. Most companies in this business do not have the resources to tolerate losses. Even if you don’t make what you should, don’t lose money in any month or quarter! Watch all of your costs but particularly your labor, watch your incoming opportunities and backlog, and if things look bad or scary take action before you dig yourself in a hole. This is one of the hardest lessons for people to learn! We – as a group – are too optimistic
Everyone has to earn their keep. Take a hard look at every employee you have and see if they are generating the income they are supposed to make. This is particularly critical for principal-level folks. “Earning” is not defined as management or performing pure overhead activities. It is doing work clients will pay for or selling work for other people to do. Maybe the person just needs a different job or role assignment in the company. In any case, this alone is probably the biggest single problem for mature companies in our business and it has to be confronted.
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.