Be wary of spreading yourself and your services too thin; your team’s productivity and your firm's profits could begin to suffer.
Time for part three of our story, “Propensity to Consume.” In our last installment, we discussed our many growing pains and lessons learned. If you survive the growing pains, then the next chapter is even more treacherous. Because as your firm really begins to take root, you will face a whole new set of challenges. Indeed, as a business owner, the challenges of accounts receivable/payables, human resources, and utilization never go away. New threats such as ill-advised diversification, overhead bloat, and failure to identify soft spots begin to show up throughout your firm.
It's certainly not all doom and gloom. In fact, this is also a pretty amazing time for your firm. You are established with great clients, staff, locations, and processes. There is a lot of synergy around your firm that is beginning to build on itself; herein lie the threats.
As you have had a measure of success, you are looking for opportunities to grow and expand your business. You will identify complementary services that you will be tempted to begin to offer your clients. In our case, we began to develop environmental software, a stack testing service, and manufacturing remediation equipment. They were undoubtedly all solid products and services, but the time taken away from our core business began to extract a toll. We were spread too thin, and productivity and profits began to suffer. As this happened, other bad habits hidden by profits quickly became visible too. Coupled with a significant economic downturn, our firm and focus were turned upside down. The bottom line was that our desire to consume resources was quickly exposed by fatigue and a recession, and quick decisions had to be made to ensure our firm's survival. It really was the best of times and the worst of times.
Here are a few key lessons we learned:
- Not all that glitters is gold. Just because your client needs a specific service you do not offer, be very pragmatic in considering the risk and opportunities. Just because you excel at your core business, that does not make you the master of all services. If you diversify, you need a solid plan, staff members with the requisite expertise, and a strong commitment from firm leadership to provide the resources to make it successful.
- Learning to cut your losses. There are times when you will find yourself heavily invested and extended in a particular offering. When the facts show that the offering is draining your firm's resources, do not be afraid to walk it back.
- Pruning the vineyard. To ensure your firm performs at a high level, you and your team must constantly be diligent against bad habits and behavior. When these are identified, the swifter you act to correct them, the healthier your firm will perform.
- Enjoying the moment As your firm is well established, take time to celebrate your victories with your team. When you begin to overextend yourself and your team, not taking time to smell the roses along the way will increase the risk of burnout.
- Work smarter, not harder. Invest in efficiencies. Your firm is mature and established. As your firm continues to succeed and grow, you will need more production in the same amount of time. Efficiencies are critical in helping you accomplish more without risking overextending yourself, your team, and your firm.
In our next and final installment, "The Next Chapter," I’ll examine what we are doing to prepare for the firm's next evolution (ownership transition, technology, growth by acquisition, etc.). I’ll also discuss opportunities and obstacles we see in the future. Stay tuned!
Todd Perry, P.G., is a principal and senior geologist at PPM Consultants, Inc. Contact him at email@example.com.