Getting Your A/E Firm into the Virtuous Cycle

April 30, 2007

Natick, MA – In a recent editorial in The Zweig Letter, Mark Zweig outlined what elements are needed in order for an A/E firm to operate in a virtuous cycle of continuous growth, profitability and regeneration.

To recap:

1. Committed leader.
To get into the virtuous cycle of growth and profitability and stay there requires a leader who is really into it. This means he or she is not preoccupied with other business interests or personal interests, but is instead totally committed to making the firm successful.

2. Focus on one or a few market sectors where the firm can lead.
The virtuous cycle demands a firm to be specialized so it can maintain a decent workload at all times, export its services beyond a small geographic area, and make good fees.

3. Higher than normal marketing budget.
This is one of the keys to growing faster than the other firms serving the same market. I.e., spend more on marketing—and if the growth can keep occurring faster than expenses go up, the firm will find itself in a virtuous cycle of growth AND profitability.
   
4. Better than normal cash flow.
If a firm is going to get into and remain in the virtuous cycle, growth will be higher than normal. That sucks up cash. Therefore, every tactic is employed to conserve cash. Retainers are sought out; bills go out fast and are followed up on quickly; and bad-pay clients are confronted quickly.

5. A commitment to invest in newer technologies.
Virtuous-cycle firms are often the first to try new things, whether that means CADD, Blackberries, or BIM. The progressive firm cannot make the mistake of waiting too long to cash in on the IT gap that exists between them and the majority of firms.

6. Highly productive staff at all levels.
This starts with owners who are still doing billable work and runs all the way through the firm. Everyone is more billable than you would expect them to be at their position in a typical firm.

The preceding was excerpted from the full article as it appeared in The Zweig Letter, the voice of reason for architecture, engineering and environmental consulting firms. For a complete version of the article, contact Ed Hannan at [email protected].

ZweigWhite is a leading source of management consulting, information, and education for the design and construction industry. ZweigWhite brings together experts in strategic business planning, organization, operations, business valuation, ownership transition, human resources, recruitment, finance and administration, information technology, mergers and acquisitions, market research, marketing, project management and project delivery methods. The firm is headquartered in Chicago, with additional offices in Natick, MA, San Francisco and Washington, D.C.

For further information, contact Edward Hannan at [email protected] or go to www.zweigwhite.com.

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