We create much of our own good luck – and a lot of that comes down to understanding probabilities and doing things that increase our odds for success.
Some people seem to have all the luck – or do they? Sure, there is no doubt bad luck can strike any of us at any time and it can provide a real setback. But much of our good luck is luck we create on our own – and in my opinion a lot of that comes down to understanding probabilities and doing things that increase our odds for success.
When it comes to the AEC business, there are many things you can do that will increase your chances of success. Here are a few examples of what I mean:
- Good luck in hiring. To be able to consistently hire the people you need in a tough labor market, you need to develop lots of potential candidates so you have a choice of good people and have backup candidates should your first picks not accept your job offers. To do that, you need to be constantly on the lookout for good people and when you find them, keep them interested by regularly checking in with them just like a client you are trying to develop. You can find those good people by getting involved in professional and trade associations, reading publications about firms and people in your industry, working with client organizations, teaching, and many other ways. Meet, greet, and maintain those relationships, and you will increase your odds of success!
- Good luck in marketing. Having a large enough client and potential client database, and making a consistent effort to demonstrate your knowledge and competence will lead to more marketing successes for AEC firms every time. For example, if your market focus is airports, and you only have 10 percent of the airports in your marketing database, and then you only have 10 percent of the people in those airports who could hire or influence the decision to hire you, you are ignoring 99 percent of your target market. Combine a small list of client organizations with a limited number of people inside those organizations with weak and infrequent marketing messaging and my guess is you won’t have the luck you need for real marketing success. So kick it all up! More prospects and more info getting out to them – done for a long enough period of time – and my guess is that your luck will improve.
- Good luck in collecting your AR so you don’t need to rely on credit. We all work in an industry where 70-90 day average collection periods are seen as “normal,” and in most cases, part and parcel of being in this business. But it doesn’t have to be that way! The best-managed firms find that their average collection period can be as low as 30-45 days by simply following good billing practices. Those include things such as getting bills out quickly, making sure they are going to the right person, formatted the way the client wants, and always showing a total due that includes previously invoiced but unpaid amounts. I did not say show an aging of AR on your bills, nor did I say send statements. Those things won’t help you collect your money. Five days after your bills go out have someone in accounting either email or call the client to be sure your invoice is being processed for payment. If there is a problem, find it then and there versus 60 days later when you are hoping to actually get paid. Doing these things and more will increase your odds of success!
- Good luck in getting the financing you need to grow your business. Again – there are always things you can do to increase your chances of finding the money you need to support your growth. Are you consistently profitable? If not, do what you need to do so you are. Do you pay your bills promptly so your D&B creditworthiness rating is high? If not, do so. Do you have audited financials? If not, get them. Do you work with local banks where you know the top people personally, or are you working with national banks where you are just a number? Local banks are more likely to help you as you are a member of their community. Do the things that you should do to increase your odds of success.
- Good luck in having a competent successor. This is such a pivotal part of success in this business as all principals and managers need to have their successors ready to go when they need them to be ready. But how can you increase your chances for success in doing that? Run a good business that provides real opportunities for people to do well. You have to start with a competent talent pool Don’t be a control freak – let other people make decisions and let them have some glory when things work out well as a result. Spend lots and lots of time with your successor(s) so they are fully-trained. And start the whole process early so you have enough time to backtrack and pick a new successor in case it turns out you had the wrong horse the first time around. There is little magic or luck involved if you do all of the things that tend to lead to success in having a good successor.
- Good luck in successfully selling your business when you want to exit. I have worked with so many successful (and unsuccessful) owners of AEC firms over the years when it comes to selling their business, either internally or externally, when they decide it is time to move out. And what is clear is those who do the things to make their companies more valuable always have more and better options. Those things include running a business that is consistently growing (not “staying small successfully!”), one that makes a reasonable profit, one that has a clear focus on specific markets and some depth of specialized experience (no buyers want generalists), one that has clean accounting with no personal co-mingling of expenses, one that has an outstanding staff, and much more. Lots of good options for exit exist when you do all of the right things that lead to it!
Increasing your odds for success – creating your own good luck – there is always something you can do. So do it!
Mark Zweig is Zweig Group’s chairman and founder. Contact him at email@example.com.For this week's issue of The Zweig Letter, click here.