Weekly Consulstant Viewpoint

Nov 04, 2011

Editorial: By Mark C. Zweig It seems to me that many – if not most – companies in our business today have given up on the idea that they can grow in this economy. Instead, they are all focusing on making a profit and maintaining their cash position – even if that means no growth. On one hand, this strategy makes perfect sense. Growth WITHOUT profitability and good cash flow can ruin your business. It is a fundamentally unsustainable position unless you are in a business like Pandora Radio or some other Internet-related entertainment or social media enterprise. For the rest of us, we have to make a profit and we have to maintain a decent cash flow. We don’t want to run out of money or jeopardize our credit facilities. Profits are essential. On the other hand, growth is essential, too. Employees expect – in fact, they DEMAND opportunity (at least the best of ‘em do). Just try providing that opportunity in a stagnant or declining revenue scenario, not to mention management and ownership. We need to keep them motivated and keep them fresh. Growth is the best way I know of to ensure that we are addressing our managers’ needs, too. So let’s get back to now – late 2011. The year was about like 2010 – maybe a little better at the beginning of the year and a little worse now. No one thinks 2012 is going to be a whole lot different. How can you grow and still be profitable? Here are some ideas to consider: 1) Reallocate your marketing dollars. Maybe now is the time to take a fresh look at all of your sectors, marketing activities and budgets. Whenever I recast marketing expenses by market sector in an A/E firm, I usually find that what they sell the most has the lowest marketing costs as a percentage of revenue, and what they sell the least of has the highest. There may be some reasons for this to happen, but by and large, the opposite scenario will make more sense. Throw gas on the fires that are burning and stop wasting it on markets that aren’t buying. And maybe the activities have to be different, too. More e-blasts, more webcasts and webinars, more seminars for clients – along with better sales training – are some of the ways I would be spending my marketing dollars today. 2) Consider mergers with other, similar-sized firms in similar financial condition. BUYING may be hard now. Cash is tight and there’s a dearth of sellers, as many are waiting to recover the “value” they lost over the last three or four years of weak financial performance. Merging with another healthy firm is a different matter. Sure, there can be a loss of control as the “other guys” won’t be subject to your absolute control like they would be in an acquisition. But so what? Maybe merging is a better way to grow. A healthy company probably has competent managers and decent systems. And maybe there will be some combined synergies and cost savings to be had. Consider it. 3) Be more selective than ever about who stays on your team – and be more demanding of them once you’ve decided they’re worth keeping. This is essential. It is an employer’s market. You cannot afford to have anyone who is careless, sloppy, or less than 100 percent committed. Just doesn’t work in this economy. Nor can you afford managers who don’t get the job done, make excuses for poor performance or complain constantly. My experience is that many complaints, while justified, cease being constructive and instead become irritating IF solutions aren’t served up along with them. Do some recruiting of raw talent. You have to infill at the bottom. But be selective and only hire the very best and brightest! When you cut through all the discussion about what it takes to be successful in this economy, it makes me think of the pop culture management book of a few years back, Who Moved my Cheese? That book can be summed up in nine words: “What used to work yesterday probably won’t work today.” I just saved you from buying and reading the book – believe me, that’s the entire point of it. It’s a worthwhile idea, nevertheless!

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.