Step Off the Cliff
Feb 24, 1997
My daughter pointed out a great bumper sticker to me last weekend. It said “Stop Global Whining.” It got me thinking. With the state of the economy right now, it’s hard to understand how anyone could whine. Everything is hot, hot, hot. I believe that we are seeing an unprecedented period of prosperity for the A/E/P industry. Nationwide, times are as good as they have ever been, especially if you consider how broad this boom is geographically. It’s not just in Houston or Denver, or in Atlanta or Orlando— it’s darn near everywhere. Of course, it won’t last. The economy always cycles. But I believe we’ll be less susceptible to the boom and bust we had in the past because of the incredible amount of money being invested in the stock market. More than $20 billion went into mutual funds this January alone. That kind of capital creates jobs and that’s good for our industry. And there’s no reason it will stop. More and more companies are creating 401k plans, and the tax laws continue to favor sheltering income in them. But if you are going to cash in on the good times all around us, you can’t be fearful. Fortunes will be made by people willing to seize the opportunity and take a risk. You have to “step off the cliff” and hope you can fly. Those who don’t take a risk, who are overly concerned with preserving what they’ve already accomplished, will be crying when it’s all over. The train will leave the station while they are in the bathroom. Where will the big leaps come from for the firms that are willing to take the risk? Here’s where: Investments in computer systems. If you don’t have a web page yet, why not? It’s a great place to share information with the outside world, for prospective employees to learn about your firm, or for clients who want to track down a specialty service provider (you). Web sites aren’t that expensive to start up, and can be improved as your budget allows. The other thing I’d think about, something we only recently did, is getting a mail server. This allows anyone in your firm with a computer on the network to fax from their desk, to access the Internet, and for all your external e-mail to be right there with your internal e-mail. Combined with remote access for those who work at home or who travel a lot, it’s fantastic. Last week I responded to e-mails from clients while out of town, from the comfort of my hotel room. I didn’t need to mess with America Online, and the best part was that I could “CC” people in our firm with my responses to those outside the company with complete ease. This is one of the greatest technological advancements you can make. So don’t hold off! Mergers and acquisitions. If you aren’t considering merging with or buying a company that provides services you don’t currently provide to the same client base, why not? This is the easiest way to cash in on whatever distribution system you and they have created. You can sell their services to your clients and they can sell your services to their clients. But if you seriously consider a deal, be careful whose advice you seek and who you listen to. There are some really mediocre “experts” who will tell you that the chemistry of the parties is most important (I say it’s the deal structure); that you should keep the other firm’s name forever (I say one name needs to be established for the whole thing ASAP); and that you should only buy firms that are already successful (I like firms with lots of opportunity to improve their performance). Bringing on new shareholders. It only makes sense that when your firm is doing well, people will want to invest in it. Think about your employees. How many would buy stock in the company if they could? Don’t give it away. Sell it. But make sure you do what’s necessary so it’s a good investment. One other point: don’t fear a loss of control if you don’t own the majority of the stock. If you’re doing your job as a leader, making the firm successful, giving a good return to shareholders, carrying your weight, and not sucking more out of the company than you put in, you can own less than 50% and still be the boss. Bringing in new talent. When times are good, you’ve got a chance to add new people who you may not be able to get otherwise. The fact is, you can’t always have the work for these experts prior to hiring them. But when would you rather take a chance? Now, when client demands are strong, or later, when the market is down? It’ll be easier to establish your new person with your clients now, so when the downturn comes, he or she will be well positioned to ride it out. There’s truth to the old adages, “Make hay while the sun shines” and “No guts, no blue chips.” When the sun goes away and things slow down, I would rather be in a company that kept up with technology, that has a broad range of services to sell its clients, that has the commitment of its employees because they have invested in the firm, and one has the kind of experts who have established relationships with their clients. Wouldn’t you? Originally published 2/24/1997.
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