Looking ahead is crucial to success
Quantitative and qualitative data provide industry leaders with valuable information for making decisions.
One of the distinctions of companies that do well over the long-haul, versus those who enjoy only a limited period of growth and prosperity, is top management that looks ahead. You have to look into the future, and, even though it is impossible to predict accurately 100 percent of the time, you can use some tools to help you foresee both problems and opportunities.
There are many “tools” at your disposal. Some of the more commonly used quantitative ones include:
- Website hits. How many unique hits you get each month on your website – and whether or not this number is growing or decreasing – is one of the earliest indicators you can monitor to see what’s going to be happening workload-wise in the future. Your website is the first place new clients go to learn about your firm. Better make it good!
- Incoming opportunities, in terms of numbers and dollar value. Getting the number of new opportunities isn’t hard, but getting the dollar value of them is. People in the firm resist putting a number on an opportunity in terms of its dollar value, but it is necessary nevertheless. I always say: “Give us your best guess on what kind of fee this project would earn for us.” And, if it proves wrong, we can always increase or decrease it in the future.
- Proposals made. Easy to track. Valuable only if you look at one month compared to other months or the trend of monthly opportunities. NOT valuable to look at as a total number,
because it is never cleaned out and always shows a bigger number than it should.
- Sales of new work. How else can you track backlog without knowing new work sold. “Sold” has a couple of different definitions. Some consider a job “sold” at selection, whereas more firms consider it “sold” once they have a notice to proceed and can actually work on it. I fall into the second camp. Selection doesn’t mean a lot if you can’t work on it, although some folks consider this “soft backlog.”
- Backlog. Here is your best predictor of future revenues and profits but many firms – particularly smaller ones – don’t even bother to track it. I find that bizarre. You NEED this information.
But as good as these are, there are other sources of information – qualitative ones – that you need to be capturing and distributing, as well. Some of these include:
- Client interviews. What are their plans for the coming months and years? You need to know this, so you can plan for growing or shrinking demand. This info is crucial from your biggest and best clients. And gathering it is a good time to sell more work. But don’t keep what you learn under wraps. Share it inside the company.
- Business planning done by market leaders. These people should be in touch with their markets and whether demand is increasing or decreasing. Talk with them. What are they telling you? Share their prognostications and predictions with the rest of the company.
- Employee polling. Your rank-and-file employees have a good sense of what’s happening. Are things getting better or worse? Is demand increasing or decreasing? Much like how the government tracks consumer confidence, you might want to monitor “employee confidence.” It’s good information that could affect your decision making.
Looking ahead affects everything. Should you be hunkering down or expanding your staff? Getting bigger offices? Buying other firms? Spending money on expensive software or equipment? Adding more shareholders? Paying bigger or smaller bonuses? All of these decisions -- and more -- will be impacted by your collective assessment of the future.
Mark Zweig is president and CEO of Zweig Group. Contact him at firstname.lastname@example.org.
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.