More A/E/P and environmental firms than ever are seeing their businesses slow down and profits eroding away. We find the situation is rarely, if ever, hopeless. Any firm can stop this slide IF they want to and IF they are willing to do what it takes. If this scenario sounds familiar, I urge you to get together with the other top managers of the firm and take some immediate action. The problem will not go away on its own! Here are some things I would do NOW, not later:Cut labor costs. The number one rule of business is that costs MUST be lower than revenue. If your costs are higher than your revenue, labor is one of the few places you can cut. Do it now. Move out the problem people you should have cut years ago. Cut principal pay if it’s gotten out of hand. Cut the CEO’s pay if it’s out of line. Eliminate those jobs in support areas that don’t really contribute to the bottom line or efficiency of the company. Stop rationalizing and get on with what’s necessary. And that is probably cutting your labor costs! This is not a sign of weakness— conversely, it’s a sign of strength. MOST FIRMS WAIT TOO LONG!Make immediate marketing efforts. Do a press release every week to a media list of 200 or more editors. Send out personalized letters to every client and potential client. Call on existing clients with the expressed purpose of finding out what other needs they have for your firm’s services. Get your best people on your most important proposals and presentations because you can’t afford to lose. Make sure every single lead coming into the firm is treated like gold and not blown because you haven’t convinced your employees that these are precious and rare. But make sure you aren’t wasting money on lavish brochures, too many trade shows, and other stuff that doesn’t do anything for you.Get rid of all the stuff you don’t need. Sell off company cars. Get out of your company airplane. Sell off the company ski condo. Get rid of unneeded trucks. Carve off and sublease unneeded office space (even if you get half of your current cost you are better off!). Empty out your warehouse of old office equipment, sell it, and stop paying rent. Be creative in your attempts to find unnecessary but valuable assets. There is always money to be raised by doing these things. Talk to your people. It’s important that they all know that you know things are bad. They need to have some faith that their leaders recognize the problem and are working on it. Step one is admit you have a problem. Many design firms fail to acknowledge to their staffs that things need to change and get in far worse trouble because of it. Someone, too, has to have a clear idea of what the promised land is and how you will get there. Your vision for success in spite of obstacles is a must IF your employees are to be motivated.Shake up the organization chart. Just because someone is a principal and in a particular role doesn’t mean you can’t make a change. Now is the time more than any other. Things aren’t going well; people expect change. It makes it less personal. But figure out what you want to do and do it decisively. Don’t drag out these kinds of changes. And don’t think every management job has to be filled by a principal, either. Look at some of your other staff members below that level for people who are highly intelligent, motivated, and excellent communicators, and put them into some of the jobs you are thinking about making a change in.Tighten up your credit policies. Now, more than ever, is the time to make sure you are not working for clients who are going to go broke and then leave you holding the bag. Be extra careful in who you work for (extend credit to) when it comes to other consultants or private developers. Originally published 5/26/2003
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.
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