Fear Factor
May 22, 2006
After 26 years of immersion in A/E/P and environmental firms, it has come to my attention that one thing probably holds more firms back from achieving their potential more than anything else: the owners’ fear.
This fear has many manifestations. Here are several of them:
Fear that a new marketing investment won’t work. This keeps more professional service firms from spending money on marketing than anything else. When I hear “word of mouth is how we market,” I want to say “word of mouth is not marketing.” Marketing is science— there is a body of knowledge about it. Some things generally work better than others. There are no guarantees any specific marketing expenditure will pay off, but the combined effect of all of these attempts, odds are, will pay for itself.
Fear that adding a new type of talent will be something that won’t pay for itself. My experience is that it will pay for itself if you are smart about what type of talent you’re adding, get the right person to lead the effort, and market this new capability to your existing clients. Is this service something your existing clients are already buying elsewhere? If so, there’s a good chance you will have a shot at doing it for them. And the right person to spearhead it is someone with an 80/20 balance of emotional intelligence vs. technical competence. Successful launching of new service lines takes communication and personality skills, first and foremost. And don’t forget to market. That means plenty of announcements, getting your new talent speaking gigs, and lots of PR, plus internal marketing and communications efforts such that everyone in the firm is pushing for a chance to introduce their clients to the new service you are providing.
Fear that confronting a key employee about a performance problem will make them angry and quit. But the alternative is worse— bottling up your discontent until you explode. Then you really will risk the employee quitting! Most intelligent people can respond appropriately to honest criticism delivered in a sensitive way. Think about what you want to say before you say it. Then sit on that for a while. Then share your thinking with someone you trust to get that person’s counsel. Then think on that for a while. Then, and only then, will you be ready for the tough conversation with the key employee that you know you need to have.
Fear that pegging stock price for internal transactions to external market value will mean no one can afford it. The alternative is to have cheap stock that anyone can afford and the company can easily afford to buy back but that no one wants! Unless you are in a firm with crazy-high profitability, the stock has to appreciate for the owners to earn a return commensurate with the risks inherent in this type of business. Make your stock go up and down based on its real value, not book value. In fact, book value is probably one of the worst indicators of what any A/E or environmental firm’s stock is really worth.
Fear that confronting a client about their slow payment will result in a loss of their work. This really drives me mad. Who needs a client that sucks up all your operating capital just to work for them? Most of these clients— the ones who abuse your good nature— are, in fact, replaceable. Besides the financial ramifications of working for a bad-pay client, there are emotional ones. It’s bad for your self-image as a company to tolerate abuse. Don’t do it.
Fear that committing to a new bonus program will result in a hardship on the company when it can least afford it. Tie the bonus program to collections or cash-basis income and you will never have to worry about this! Too many firms put their best people on the job market because they will not commit to paying them $X if the firm (or their unit) achieves Y results.
Fear that opening a new office will be a financial mistake. Make sure you don’t bring on so much overhead that it’s bound to fail. That means very little space, short-term leases, and a manager who can somehow stay billable while simultaneously chasing after the next project. It also means doing what it takes to feed these remote staff with work until they can get their own. If you keep costs down and staff down, this will be easily accomplished.
All of your fears can be conquered. If you don’t have the confidence to face these or any other issues on your own, get outside help. Intervention from someone who has been there before may be all it takes. And remember, what’s the worst thing that is ever going to happen? You can always get another job.
Originally published 5/22/2006
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