Getting Back to Growth

Jul 22, 2002

Though it happens on occasion, rarely do I work with the top management of a design or environmental firm who will come right out and say, “We don’t want to grow.” Most at least pay lip service to the idea that growth is good, or that they want to grow to keep their employees challenged, or that they are committed to growth. But if you want to grow— in a less than stellar economy— it takes more than mouthing the words. And if you want to grow over the long haul, it takes work, cash, and incredible discipline. Here’s some of what it takes: Growth must be a top priority. I would take 20-30% growth and 8%-10% profit any day over zero growth and 17%-20% profit. But not everyone would agree with me. Some would rather have the money now than later. From my perspective, growth is more fun. It also makes your stock more valuable, and— in the long run— makes you more profits. With a certain amount of growth your ownership plan will work, your clients will be impressed, your firm will be in the buzz, and your employees will work hard and remain optimistic. Kill the growth to maximize profit, and you will find big holes in the workload that make it difficult to remain profitable. You’ll also hurt morale. Knowing who you are trying to sell to. It’s really hard to implement a marketing program if you can’t describe the kinds of clients that you want to get work from. Yet this is more typical than you might think. Everyone can say they want to grow, and selling is good, but the growth is stunted before you even get started if you don’t know what organizations and what people in those organizations you are trying to sell to. Ramping up marketing expenditures intelligently. Most firms spend 3%-7% of net service revenues on marketing. But if you want to grow, you may need to spend twice that amount. The barrier to spending typically revolves around the firm’s owners not believing that marketing works. The entire appetite for risk has to be accurately assessed, or marketing efforts that don’t bring immediate results will be squashed. I still truly believe that most companies think marketing is an expense to be minimized. “Do what you have to but no more.” I think most companies need to commit to a budget and then look for ways to spend it. If they minimize marketing expenses but say they will fund it if the marketing effort is successful, what they are saying is “we’re cutting,” period. Having the services/talents/capacity to sell. If you want to grow, you can’t be working at 120% of capacity. There’s just no way to take on more. You’re capped. One of the costs of growth is front end loading the capacity to some extent so the managers who are selling feel that they can responsibly sell a job and keep the promises they make along the way to do so. And you also have to constantly be on the lookout to add new capabilities. This is not the same as just adding more capacity. It’s something different from what you had to offer previously. Getting consensus on direction and what the ideal success formula is for any firm is never easy. Most design and environmental firms have multiple owners, each of whom has his or her own opinions on what’s best. But even in a single-owner firm the leader cannot run roughshod over his second lieutenants without risking a mutiny. It takes a lot of selling, a lot of lobbying, plenty of data, and a personal ability to demonstrate that your strategy works to win over converts to your way of thinking. Originally published 7/22/2002.

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