Forgotten fundamentals of the A/E business

Sep 27, 2020

“Sometimes I think it is good to reflect back on all the lessons I have learned over the years. Here are a few that stand out to me.”

I was being interviewed by a student the other day for another class he is in. He had to interview someone who had a business that was at least 15 years old. He asked me about Zweig Group and how I learned all I know about the A/E business. I told him I have spent 40 years working in one industry in a wide variety of roles and that I have interacted with literally thousands of companies over that time – and if you do that, you are bound to pick up a lot of information that not everyone else has.

Sometimes I think it is good to reflect back on all the lessons I have learned over that time. Here are a few that stand out to me as I write this:

  1. This is a people business. You have to constantly upgrade your team. But more on that later. Here I want to talk about the collective morale. If your people feel good about what they are doing, and feel good about the company, you as the owner(s) can do well. If they don’t feel good, you won’t do so well. So do the things that help them feel good, and don’t do the things that make them feel bad. Pretty simple, eh? But way too many people forget this simple idea. They don’t worry about things they say or do that could be demotivating and harmful to morale, and act as if everyone is replaceable. As a result, they never achieve what could have been possible business-wise.
  2. Pricing will make you or break you. You can sell time, or you can sell the real value of what you do. The choice is yours. Of course, if you want to sell the value of what you do, you will have to do a lot more marketing and selling than you will if you just want to sell hours, because you will run into clients who are not willing to pay you for the value of your expertise. I was talking to a friend of mine the other day. She is at the top of a large, international management consulting firm. They never sell time. They sell everything they do in huge fixed-fee contracts. Some of them are $5 million or more. Her mandate, by the way, is to sell at least $12 million a year in fee. They are very successful and at the top of their field because they value themselves and are not willing to give away what they do. They have some people working for them who get paid $10,000 a day. Imagine what they need to charge their clients to make money on a daily cost rate of $10K! All I could think of as she told me about some of their projects and fees was that I knew a lot of A/E firm owners who could benefit from her thinking about how and what they sell, and how they get the prices they charge.
  3. Match your overhead to your workload. There really are few excuses for a lack of profitability. If your firm is well-managed, you are always looking ahead at your backlog and what work you will have in the coming months. And if you have that information you will have to adjust your costs accordingly. Remain slightly understaffed at all times. Keep your overhead as low as possible. Spend money on what makes money and don’t spend it on things that don’t make money. Use some common sense. It just isn’t as difficult as some want to make it out to be. The problem with A/E firms is they aren’t looking ahead and they are often too slow to react to big changes in workload.
  4. Increase marketing investment in tough times, don’t decrease it! If you have ever ridden a motorcycle at very high speeds on a race track like I have, you can learn a lot. If you don’t learn to do certain things – like counter-steering (literally turning the handlebars the opposite direction of how you want to turn so the bike leans over), you could easily have a terrible accident and possibly get killed. It is counter to one’s intuition to turn the opposite direction you want to go – right? Marketing expenditures are like that. When revenue drops, most companies think they need to cut back. But they need to do the opposite of that in their marketing and promotion efforts (and budget). And yes, that could mean spending money you don’t feel you have, but not spending it will kill the business and possibly put you in a death spiral of never-ending revenue declines and cost cutting.
  5. We lose something by not getting everyone together. All this post-COVID working from home is great in a lot of ways. But it has its downside. People get more disconnected from the firm and the other people in it. This is dangerous for management. So make the extra effort it takes to keep individual morale high and the team rallied. Talk to people on the phone. Check in on them, not just to check to see that they are working but rather to check up on where their heads are and how they are feeling. And maybe even though you don’t have everyone inside an office you should still meet with people face-to-face outside at times.
  6. ABR (always be recruiting). Because this business is so dependent on the people you have, managing the composition of your team is one of the most important jobs you have. Act like it! Always be on the lookout for new people who could improve your capabilities. Hire for character and train for technical skills. Never say “never” when it comes to talking with someone about working there, even if you have no official openings to fill. They could be your next superstar.
  7. Business planning is always better if you get the input of clients and lower level employees. It always gets me how companies will assemble their BOD or a group of principals to spend two days in a room developing a business plan but have done no work whatsoever to find out what their employees and clients think they should do to improve their business. That is crazy! The people who use your services and the ones who do the bulk of the heavy lifting required to deliver those services need to be heard. Their opinions on how to improve things may be more valuable than those of top management. A smart management team realizes that and includes their input for the planning process. It doesn’t mean they need to physically sit at the table but they should be consulted before that occurs.
  8. Good people are rarely the least expensive. Why is it so hard for people in this business to understand this idea? Better people earn more – a lot more – than those who just do the least acceptable job. My experience with A/E firms is way too often the BEST people might make a little more than the others, but nowhere near where they should be if their real contribution to the business were recognized and understood.
  9. Bureaucracy kills. One of the top morale killers in this business is bureaucracy. Everyone hates it yet so many A/E firms create it in their efforts to deal with a management issue. Stop having so many meetings. Stop unnecessary steps and forms for people to fill out time sheets, submit expense reports, do performance appraisals, open a new job number, make a business development call, or anything else they have to do that cannot be legitimately charged to a project. Get rid of everything you can that takes people out of production to do it, and focus on making every single internal process and procedure easier. There will be many rewards of doing so.

How do you stack up on these fundamentals? If you need to work on them, get on it. Time is wasting!

Mark Zweig is Zweig Group’s chairman and founder. Contact him at

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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.