Preparing for uncertain times

Market cycles are inevitable, and firms that act before revenue drops will outperform those that wait and react.

If you’ve been in this business longer than five minutes, you already know what’s coming. Maybe not when. Maybe not how bad. But you know the cycle always shows up. Work slows. Clients stall. Banks get nervous. Employees start worrying. And suddenly, all those decisions you made when things were booming don’t look quite as brilliant.

The problem isn’t uncertainty. The problem is pretending it isn’t coming.

Too many AEC firm leaders run their companies like the good times are permanent. They staff up too fast. They take on overhead like it’s a birthright. They convince themselves their backlog is some kind of impenetrable shield. It isn’t. It’s a temporary condition.

If you want to survive and maybe even come out stronger on the other side, you’ve got to get serious before things get ugly. Here’s a list of things you can actually do:

1. Get your financials in order. If your numbers aren’t current and accurate, you’re already in trouble. You should know where you stand every single month without guessing. Clean up your WIP. Write off the AR that isn’t collectible. Stop kidding yourself about utilization. Hope is not an accounting method.
2. Build cash like your life depends on it, because it might. Cash buys time. Time buys options. Options keep you alive. If you don’t have at least a few months of operating expenses in the bank, you’re exposed. Cut distributions. Delay nonessential spending. Do what you have to do to stack cash now, not later when it’s too late.
3. Get all the credit you can now while you don’t need it. Just like my point number two above – credit also buys time. If your financials are strong enough, now is the time to expand your AR line of credit as well as perhaps open an operating account at a second bank if you don’t already have one.
4. Take a hard look at your people. Everyone says their people are their greatest asset. Fine – prove it. Figure out who’s actually producing, who’s coasting, and who’s creating problems. You don’t need a bloated payroll heading into uncertainty. You need a lean, accountable team that can deliver without excuses.
5. Tighten up project selection. Not all revenue is good revenue. Some of it will kill you slowly. Bad clients, bad contracts, low fees, unrealistic schedules. You know who they are because you complain about them already. Stop chasing work just to stay busy. Busy doesn’t equal profitable.
6. Revisit your contracts. If you haven’t looked closely at your contract language in a while, now’s the time. Limit your liability where you can. Clarify scope. Make sure you’re not taking on risks you’re not being paid for. When things get tight, disputes go up. You don’t want to be exposed.
7. Get closer to your clients. Don’t wait for the phone to stop ringing before you start paying attention. Call your top clients now. Ask what they’re seeing. Ask what might get delayed or canceled. The earlier you know, the more time you have to react. Plus, the firms that stay visible during uncertainty are the ones that get the work that still moves forward.
8. Diversify where it makes sense. If all your work is tied to one sector, one client type, or one geography, you could be vulnerable. You don’t have to chase everything, but you should be thinking about where else your skills apply. The time to build those relationships is before you need them.
9. Control overhead like a hawk. Office space, software, subscriptions, travel, perks. It all adds up. Nobody’s saying you have to be a penny-pincher. But don’t confuse “nice to have” with “need to have.” Fixed costs will strangle you when revenue dips.
10. Communicate more than you think you need to. Your people know when something’s off. They always do. If you go silent, they’ll fill in the blanks themselves and it won’t be pretty. Be honest about what you’re seeing and what you’re doing about it. You don’t have to panic them, but you do need to lead them.
11. Strengthen your leadership bench. If everything depends on you, that’s a problem. Develop your next layer of leaders now. Give them responsibility. See how they handle it. In tough times, you need more people making good decisions, not fewer.
12. Protect your culture, but don’t hide behind it. Everyone loves to talk about culture when times are good. Ping pong tables and free snacks and flexible schedules. That’s not culture. Culture is how people act when things get hard. Set expectations. Hold people accountable. Reward the ones who step up.
13. Keep selling. This is where most firms make a huge mistake. They pull back on marketing and business development because they’re scared. That’s exactly backward. When work tightens, you need to be out there more, not less. Visibility matters. Relationships matter. Pipeline matters.
14. Be ready to act fast. Hesitation will cost you. If revenue drops, you can’t wait six months to make adjustments. You’ve got to be decisive. That might mean cutting costs. It might mean restructuring. It might mean letting people go. None of it is fun. All of it is necessary if the alternative is failure.

And here’s the part nobody likes to admit. Some firms won’t make it. They’ll hang on too long. They’ll ignore the warning signs. They’ll convince themselves they’re different. They’re not.

But some firms will come out stronger. Leaner. Smarter. More disciplined. Those are the ones that prepared when they still had the chance.

Uncertainty isn’t the enemy. Complacency is. So the question isn’t whether something’s coming. It always is. The question is what are you doing about it now?

Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.