Things usually go as expected

zweig-001In work and in life, our past experiences, relationships, and the information we consume contribute to our outcomes.

You know – in life, or in business – things pretty much happen as you expect them to. That may sound crazy to some of you, but I firmly believe it. If you expect to fail, you probably will fail. Conversely, if you expect to be wildly successful, you probably will be that.

  1. The programing we’ve had. Our parents are the ones who program us. If they think we can be successful and tell us so, it affects our thinking. We won’t settle for less than we should. They help us develop an expectation. Hopefully, they ALSO help us understand the work ethic, diligence, and sacrifice that go along with the expectation and help us realize our individual potential as well – because those things also have to be there. By the same token, if our parents tell us the world is evil and we will be beaten down by the man and never get ahead, that, too, will probably happen. Not so say that people cannot ever overcome their programing. Some do.
  2. The people we surround ourselves with. We all pick winners or losers as friends. And then we also pick those who bolster us up and support us or those who knock us down and defeat us. The people we surround ourselves with have a huge impact on our individual ambition level and sense of possibility. Being with the right circle of friends will have a huge impact on any of us. Pick them closely!
  3. What we read and watch. Inputs DO matter. Too much of any negative information is bound to influence our thinking in a negative way. That’s why one has to balance their input of news so as to stay informed but not be tricked into thinking the world is so evil and hostile it makes no sense to try to do anything. Ditto for books and movies that are all about conspiracies, murder, and crime. Too negative. We all desperately need positive messaging – things that inspire us. History, biographies, nature, art, and other sources of inspiration should all be on our reading/viewing list versus just negative information on terrorist attacks or senseless murders or child abuse.
  4. Our life experiences. They either confirm that things will turn out good in the end – or bad. Small successes lead to larger successes. Luck plays a part. Where you live – the quality of your schooling, success (or lack of it) in athletic pursuits, early relationships, student government, small business ventures, early jobs and more all make such a difference in terms of whether or not one “expects” good or bad things to happen to them. Of course, some people use negative events to make them stronger – however, most don’t.

I’m thankful for the great parents, friends, education, and life experiences I have had. What’s important for all of us as leaders in A/E/P and environmental firms is how we deal with the people who work for and with us. Are we painting the picture of how good things could be – and then reinforcing that idea through our own actions as role models? Are we setting the expectations high enough and meeting them ourselves?

MARK ZWEIG is founder and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com.

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What’s your “big idea” in M&A?

Although Zweig Group’s M&A Survey offers a variety of responses to the question “why are you considering an acquisition”, there are, essentially, only two reasons that firms pursue inorganic growth. These reasons are to either boost the acquiring company’s current performance, or to redirect your company from it’s current business model.

1. To boost the acquiring company’s current performance. 

Firms that fall under this general motivation might be interested in pursuing companies that also occupy a niche within the acquiring company’s market. The overall objective is to acquire firms that enhance the firm’s current revenue stream, or, less frequently, firms that influence the cost structure of the acquiring firm.

This model works best when the acquiring company has a solid operating model and is ready to expand that model by bringing its knowledge or expertise to other firms that it “understands.”

A large MEP engineering firm acquires a smaller MEP engineering firm in a nearby market that the acquirer has had difficulty breaking into – this is an example that will boost the acquiring firm’s current performance. The acquiring firm here will actively seek out targets that are motivated for growth, with strong leadership that recognizes the opportunity that a large firm brings to its existing staff.

Strategic planning is a great way to identify the specific complementary attributes that can support inorganic growth as a way to boost the acquiring company’s current performance.

2. To reinvent your business model and redirect your company. 

The second motivation is a less common one. This motivation reflects a fundamental change in a company’s operating model. This model is a great way to protect your firm from commodization.

This type of acquisition occurs, for example, when an architecture firm that specializes in repetitive roll-outs for big box retail stores acquires a small, boutique firm with high design in the retail sector. The new attention to design detail is an investment that the larger firm is making to avoid becoming dependent on one or two large big box stores. The trade-off is that the efficiencies realized through the acquisition might be questionable. How much additional revenue can the two firms generate after the join forces? How do we make “1 + 1 = 3″? The buying firm will likely need the key rainmakers and practice leaders to stay engaged for longer after the closing to help ensure that business stays stable as the model changes.

This is a challenging motivation, because there is inherent risk in taking on a new operating model, but it is one of the more successful “arranged marriages” that we see in this industry. It’s also more difficult to price an acquisition target that is outside of the buyers’ immediate purview.

By the way, the most common reason that firms are considering an acquisition, according to our 2015 M&A Survey? Entering new markets, followed closely by geographic expansion. Are you ready to develop an acquisition strategy? Call us at Zweig Group!

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A little ADD isn’t all bad

HeartsThe work and talents required of an A/E principal means that some traits associated with attention deficit can be useful.

Experts have claimed that as much as 35-40 percent of the adult population has some degree of ADD (attention deficit disorder). While the last 20 years has been the time of treating everything with medication (i.e., drugs), I’m not convinced a little ADD is a bad thing – especially if you work as a principal in an A/E business.

Here’s why:

  1. You have to shift gears quickly. With so many projects, clients, and other people both inside and outside of the firm to deal with – not to mention the continuous barrage of emails, text messages, and phone calls – you better be able to quickly address whatever it is that’s coming at you. And multi-tasking – writing an email, talking on the phone, and holding a meeting with an employee, all at the same time – no problem!
  2. You have to be wary of threats coming from all directions. The ADD brain is a more primitive one and is better geared to survival. Throw in just a pinch of paranoia and you’ll be better equipped to deal with the contractors who are trying to make you look bad, the clients who don’t want to pay what they owe you, and the myriad of other bad things that COULD happen to you if you weren’t looking out for your business continuously.
  3. You have to move fast. The need to stay busy and the accompanying hyperactivity helps you get a lot done some times. Staying billable is easy when you work a 60-hour week. Juggling all the things you have to juggle – selling work, recruiting people, training underlings, solving problems on projects, and firm management stuff requires you to move quickly or you won’t make it.
  4. You are geared for what the famous, ‘80s-era McKinsey management consultant, Tom Peters, called MWBA (management by wandering around). Staying in constant motion throughout the office helps you stay on top of what’s really going on with the projects and the people in your firm.
  5. You also occasionally have to hyper-focus. When it’s down to crunch time on a major proposal or project milestone, sometimes you need to shut out the world and lock in on one single task. The individual with an ADD brain can do this when it has to – to the exclusion of all else, of course. But this trait can help you get things done when absolutely necessary.

Time for me to get back to finishing a proposal, writing up a construction cost estimate, doing a bunch of paperwork for our bank, getting ready for a 9 a.m. meeting, and returning about 1,500 emails and phone calls. Maybe a little ADD isn’t so bad? Or am I just rationalizing?

MARK ZWEIG is the founder and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com.

© Copyright 2015. Zweig Group. All rights reserved.

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Fostering new ideas

Having fun and encouraging creativity can lead to the generation of fresh, new business ideas.

IMG_2699I have long felt one of the problems with the A/E/P and environmental consulting business is that we have so few new ideas – really new ideas – to fuel the success of our businesses. So many firms seem to be plodding along – with owners who are doing the same thing as the other owners of firms in this business – all hoping the economy holds up and they can sock away a few bucks so they can make it through the next recession.

That’s sad. Because I KNOW that most of us could do a whole lot more with the resources we have if we just came up with some new ideas and then actually implemented them!

We have smart people. We have smart clients. We have design and technical abilities. We have offices. We have cash flow. We have cash and borrowing capacity. But we aren’t using all of this very well. If we were, we’d all be a helluva lot more successful.

The process of firm (and life) transformation has to start with some new ideas. Where will they come from? Here are some thoughts:

  1. Start reading Inc. Magazine and other similar publications. Why? Because they are focused on privately-held, growing companies and will get you outside of this industry! Learn from people outside of this business. The most recent issue has so many articles. One on a fellow who took his fashion company from public to private. Another on a restaurant design firm where all owners are equal owners and work together with undefined roles and it actually works. Another article on a guy who decided to pay each of his employees at least $70,000 a year. Another on someone who was considering selling their company for as much as $4 million but then realized they’d be taking a huge pay cut they couldn’t afford and may have other options to work less but keep it. One on someone who outsourced his operations to the Phillipines and pays his workers $4 an hour and he and they feel great about it. I could go on but I strongly recommend getting out our industry and learning about some others!
  2. Force your managers to come up with new ideas. Try having all them do their business plans this year with more than their typical sales, revenue, and labor expense forecasts. How about asking each unit to come up with three new things to sell and three new ways to market? Then make them present their concise plans in an entertaining format. Give out prizes for the best ideas and presentations.
  3. Make your office environment a lot more fun. Maybe you need to have a free lunch for no reason. Let your people teach a class on anything they want to teach it on. Have lots of sugary snacks. Get an office sound system and try out a “DJ for a day”from your employee group. Go on a field trip to an interesting new business or somewhere fun. Mix it up.
  4. Be open to new ideas. Never say “never” when someone makes a suggestion. Let it age. Ask questions. Try small experiments to see if it works. Test it on other people. Don’t be quick to say “no.”
  5. Mix up the roles. Tinker with your organization structure and roles. Just because “Sally” has always been the bill collector doesn’t mean she has that job for life. Just because “Joe” is in charge of I.T. doesn’t mean he’s right for the job today. Inject some young people and new grads. I hate to tell you but youth and naïveté may actually lead to more creative thinking some times.

Hopefully if you do these things you’ll be energized yourself and maybe you’ll be more inclined to come up with some new ideas. Your next challenge will be implementation. Ideas by themselves are worthless without action. But more on that another time!

MARK ZWEIG is Zweig Group’s founder and CEO. Contact him at mzweig@zweiggroup.com.

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Working in an entrepreneurial firm

More so than the everyday small business, organizations that aim to grow must employ specific types of people.

Not every A/E or environmental firm is an entrepreneurial firm. But, if you’re reading this, odds are yours might be.

There are some big differences between ordinary small businesses or privately held companies and entrepreneurial firms. Growth is what it’s all about. Entrepreneurs want to create value in their businesses, not just extract from it to live a particular lifestyle.

These differences affect the types of people who will survive and thrive in an entrepreneurial firm. If you are running an entrepreneurial firm – not just a small business – here are some qualities I would look for in employees:

  • People who don’t fear change. Growth requires change. Most people don’t like change because change creates stress. You need people who thrive on it and get bored if things aren’t changing. Entrepreneurial firms are constantly changing, and their people have to change with it.
  • People who don’t want to be put in tightly defined roles. When you work for a growing company, you have to be flexible and willing to do the job that needs doing. Those who prefer a fixed, crystal-clear set of duties and responsibilities will probably not like working in an entrepreneurial firm where they could be called upon to help capitalize on a new opportunity or to put out a fire at a moment’s notice.
  • People who see work as fun and have their heads in the game, vs. those who believe work-time and fun-time need to be separated. Nothing drives me crazier than to send an email to someone at 5:02 p.m. and not hear back from them until 8:31 a.m. the next day: It tells me they don’t really have their heart in their work and just want to separate work from personal life. That’s great in a government job or a small business, but it won’t work in an entrepreneurial, high-growth environment, where engagement is everything.
  • People who have a desire to constantly learn new stuff. If someone doesn’t want to learn and just wants to do the same thing every day, they probably won’t be happy in an entrepreneurial firm. The constant change requires constant learning. New people, new software, new clients, new projects, new locations, new everything. Entrepreneurial firms require their people to constantly learn and evolve as the organization does.
  • People who can think long-term and who can delay immediate gratification. Entrepreneurial firms probably cannot afford the same pay that a stable company might provide. Growth sucks up cash and requires constant reinvestment. The long-term rewards may be greater, but the short-term rewards could be less. You need people who understand this, but then you also need to “make good” on that implicit promise.
  • People who can handle the idea that not everything they do or try works out, and that’s OK.Entrepreneurs and entrepreneurial firms do a lot of experimenting. Different services, different ways to do things, new people, new offices, new technologies, new marketing tactics, companies acquired, etc. But not everything they do works out. Along with constant experimentation, you’ll pick up a certain number of failures. That’s OK, as long as none of them tank the company. You need employees who aren’t going to be crushed by the occasional failure.
  • People who had their own business. If you have never had your own company – no matter how small – you’ll have a harder time understanding the motivations of owners who want to grow their business. It helps to hire people who have already experienced some of this firsthand. They’ll fit in better.
  • People who crave excitement and identify with the success of the company. Being part of an entrepreneurial company is FUN. You need employees who need to have that fun, want to be a part of that success, and take pride in it. They show where they work on their Facebook pages. They brag about the company to their friends. They wear the company T-shirts on weekends. They never refer to the company as “they” or “them” and instead have pride in the firm’s success and see why that is good for them.

Think about these points. You want an entrepreneurial firm? Hire the right people who are likely to fit in!

MARK ZWEIG Is Zweig Group’s founder and CEO. Contact him at mzweig@zweiggroup.com.

If you want to find out more about recruitment and retention policies that work, check out Zweig Group’s brand new Recruitment & Retention Survey.

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Getting the ball across the goal line

shutterstock_220112881There are probably many reasons why people have trouble completing tasks; here are some ways to solve the problem.

It seems to me, a common problem we all encounter these days – either with ourselves or people who work with us – is the ability to actually FINISH something. It’s a widespread issue, and one that’s rampant in the AEC business.

Why is this? Is everyone too busy to finish the last 2 percent of work? Do people just get bored and move on to the next thing? Or, is it just that it seems like the other guy’s job?

Whatever the cause, here are my thoughts on how to solve this problem:

  1. You need to be sure YOU aren’t the offender. It is one thing when someone else doesn’t finish up like they should. But it’s another when you, as the leader, don’t. It sets a horrible example. And it’s the same story you have heard many times: Lead by example.
  2. Make it the PM’s job. The PM is ultimately the one who HAS to finish. When he or she doesn’t, it could be that the PM hasn’t been functioning like a PM because the PIC is “too strong.” He or she might expect the PIC to wrap up all the details that need taking care of because the PIC has been doing more than they should have all along. Then, when it comes to final details, the PIC might not think that it is his or her job. Check into this.
  3. Lay out clear expectations. While I have never been a big fan of job descriptions, I do think there should be some clearly understood roles for everyone in the firm, particularly when it comes to projects. Who does what should not be a mystery. And what “finished” means must be defined. Not everyone has the same standards. Make yours high and let them be known to all.
  4. Celebrate endings! We’re done! Let’s make a big deal out of it! Let’s be happy! Too often the end of the project comes along and the only reward is another one just like it. The lack of finality and closure is alienating and hampers job satisfaction. Why cheat your people from this satisfaction? Make sure they finish, and then celebrate it!
  5. Counsel offenders. It’s ok to be patient with people, but those who routinely never complete tasks need to know you recognize this behavior pattern and that it is not acceptable. If you never confront it, then how can you blame someone for acting this way?

I don’t know about you, but I have little use for those who never complete what they start. I don’t have the time to pester them too many times. If I have to, I might decide they aren’t worth fooling around with, and go to someone else!

MARK ZWEIG is founder and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com.

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What about us? The Future for Staff of a Selling Firm

M&A really isn’t all about the valuation and the payout terms. For sellers, there is usually a strong emotional attachment to the company that they’ve devoted years, resources, and their career to growing. A concern that we hear often from our sellers is how their employees will be treated after closing.

M&A-Infographics3-1-01The popular media depiction of M&A, much like the media depiction of almost anything else, is highly dramatized. Movies depict ruthless corporate raiders slashing the staff at acquired firms to boost short-term earnings, while the former owners sit in the corner, dumbfounded at the hostile takeover they’ve just experienced.

The truth – at least in the A/E/C industry – is significantly less Hollywood-worthy. Instead, this industry consists primarily of what would be defined as small and mid-sized, privately-held businesses, with very few large, publicly-traded firms. Many small and mid-sized businesses see their staff as family, recognizing the employees who have stayed with the firm through good times and bad. This appreciation is true on both sides of the table – for both buyers and sellers.

Buyers in this industry generally realize that the major asset in the A/E/C business is the people. Buyers are almost never just seeking to buy your receivables and client names. They need people on the ground who can continue to drive business and make their investment valuable. The seller’s staff hold the client relationships. They have the collective firm knowledge that makes the company attractive to the buyer in the first place. The selling firm’s staff understands the culture of the local market and the unique design challenges that the buyer will face. Perceived redundancies, such as accounting or other administrative roles, should be investigated to determine the extent to which the position overlaps with a similar job at the buyer’s firm. Despite the potential consolidation savings, many buyers choose not to capitalize on the opportunity for a variety of motivations.

For all of these reasons, it is important to build time into the transaction schedule to develop an employee retention strategy. Both buyers and sellers need to make time to properly announce the transaction internally to their own staff. The announcement should occur shortly prior to closing, and the message should be crafted and delivered jointly to ensure consistency and openness. Staff on the seller’s side need to hear that this ownership transition will bring them new opportunities for growth and development, as well as future job security. Key employees may need to be enticed with a retention bonus. Any employees that will not need to be retained should be given as much advance notice as possible as well as a severance package, if appropriate.

Sure, buyers care a great deal about the profitability, potential synergies, and expanded lines of business that the acquisition is intended to achieve. But most buyers also realize that their best opportunity to realize the benefits of the transaction is with the full support of the selling firm’s staff from day one.

Click here for a free report with more data on the current M&A climate:

More M&A Data

Jamie Claire Kiser is Director of M&A Services at Zweig Group. Contact her at jkiser@zweiggroup.com

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Things are changing …

From the early responses to Zweig Group’s 2015 Marketing Survey, we can already see differences from last year, but there’s still time to have your data included.

A lot has changed in marketing approaches, budgets, and attitudes in the past couple of years, even in the A/E/P and environmental consulting industry. Zweig Group’s 2015 Marketing Survey is still open for participation, so any recent statistics presented in this article are very much subject to change as more people give us their input. The following is an interesting preview of things to come and a look back at our quickly changing industry.

  • Most firms in the industry will already be thinking about or working on their 2016 marketing plan. Both the 2014 Marketing Survey and the most recent statistics indicate that firms in the A/E/P and environmental industry most often create their plans at least three months in advance of its use.In the previous version of Zweig Group’s Marketing Survey, the vast majority of firms reported creating a formal marketing plan. Though more than 80 percent of respondents to this year’s survey report creating a marketing plan, one respondent stated, “Not having a formal marketing plan or budget is disappointing. I think people want to see concrete evidence of what’s working.”Indeed, staff today are more marketing savvy than ever, and younger staff members in particular want to know what is bringing in results and what marketing investments are being made by the firm they work for.
  • The most common element firms include in their plans is a firm-wide marketing budget, with 44 percent of firms reporting this. In this year’s survey, already more than half of all firms have this element on their marketing budget. In 2014, 43 percent of firms said they planned to increase their marketing budget over the next year, but the overall predicted change in spending was a measly 1 percent increase. In 2015, so far, expected increases were reported by 50 percent of all firms in amounts ranging from 2-25 percent.
  • In 2014, personal selling and relationship building was the most successful marketing strategy. So far in 2015, most firms are reporting a combination of website, social media, and relationship building as their most successful tactics. Firms are reporting spending an average of 7.3 hours a week on social media, most often to stay in touch with clients and get insights into their needs. In the 2014 version of the Marketing Survey, nearly one-quarter of respondents said they were unsure if their clients were even using social media.
  • Marketing, research, and marketing insights are driving the industry. In 2014, just over half of marketing directors participated in the business planning process. So far, 88 percent of firms say their marketing director participates in the business planning process. Last year, close to one-third of firms reported they conducted market research to learn more about the market and clients or potential clients and about an equal amount used research for strategic decisions. This year, so far these numbers have nearly doubled.

Please remember this survey is still open, so many of these numbers may change. If you’re interested in contributing your views to the 2015 Marketing Survey, go to zweiggroup.com/surveys. Survey participants get a 65 percent off coupon code that can be used on the full-price of any Zweig Group survey.

Download a more extensive report on this data here:


Click here to get the report

CHRISTINA ZWEIG is a Zweig Group marketing and management consultant. Contact her at christinaz@zweiggroup.com.

 

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Email

Though it has been around for a while, email isn’t going anywhere anytime soon; make sure you’re using it effectively.

Email is not going away for those of us in the A/E business – even though, I confess, I didn’t really see the need for it when Fred White first told me about it years ago and suggested we both get AOL accounts.

Email is one of those tools that we all use and assume our employees know how to use. The problem is they don’t always know how to use it (properly).

Here are my thoughts about email and how to make it better:

  1. Email isn’t always the best tool. Sometimes you have to pick up a phone and call someone. Or get up, walk down the hall, and go see them. Or leave your building entirely and go see them. Not everything can be done via email. Put a bunch of non-confrontational, introverted design professionals together and they will email the person in the desk next to them before having any other type of interaction. Not good!
  2. Emails can be misinterpreted. This is one reason you need voice and face-to-face conversations. If you are too brief, someone could accuse you of being terse. If you don’t use exclamation points, someone might think you aren’t excited (enough). There are many other signals one sends out when communicating other than what they actually say. Email doesn’t have these other signals.
  3. Signatures should be uniform within a firm. Everyone’s email signature should be the same and include their name, title, company name, logo, main number, direct-dial extension (if you have them), and cellphone number. The idea is to make everyone accessible to those who need them.
  4. Clean out your inbox every day. Show me someone who forgets to do things and I guarantee that they have an inbox that has thousands of emails still in it. It’s a discipline. Process immediately. The fact that we spend more time with our cellphones on email than our regular computers doesn’t help. I delete everything I can as it comes in and then go back and file the rest later (as in soon after!).
  5. Email folders really help. Get organized. Get file folders. Then you can find what you need to later. And name your folders consistently so this doesn’t become a jumbled mess, which is as bad as an over-full inbox.
  6. Respond quickly! Speed is everything today. Twenty-four hours is not nearly soon enough. A few hours might be too long. A few minutes is better. Lack of timely response implies lack of interest.
  7. Out of office assistant is bad. I’ve said it a million times. Do NOT let your people use this. It connotes poor service when you are telling the world you aren’t accessible.
  8. Acknowledge when someone responds to you. If you ask a question of someone and they respond, or if someone tells you something you need to know or gives you instructions, acknowledge it. Say “thanks, “ “got it,” or something similar. Saying nothing means “you didn’t get it” or aren’t thankful or don’t care or, worse, didn’t like the response you got. All of these are bad.
  9. Employees need training! Don’t assume your people know ANY of these things. Who would’ve taught them? You have to teach them, or they won’t know. It might seem hard to believe, as these things seem like common sense, but, as they say: “Common sense is not so common.”

MARK ZWEIG is founder and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com.

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Is Your Firm Giving Project Managers the Right Type of Training?

Training for Project Managers

Zweig Group’s 2015 Project Management Survey found that a little more than half of firms provide either mandatory (23%) or voluntary (33%) training to project managers. That leaves 44% that don’t provide project management training. When respondents were asked, “What is the most important thing your firm can do to improve project management?” the second most common answer was “training/mentoring” (23%). Only “staffing/accountability” scored slightly higher (25%).

5 graph 10.26

Types of Training

The most common types of general skills training are “preparation of project budgets” (51%), “preparation of fee estimates” (47%), and “client relations” (46%). The most common types of firm-specific training are “how to open a job number” (63%), “preparation of project budgets” (61%), “invoicing procedures” (58%), and “policies on charging time to projects” (57%). As for business development, the most common types of training are “client relations” (41%), “communication” (38%), and “none” (38%). (Respondents were asked to select all answers that applied for each of these questions, so percentages totaled more than 100.)

Challenges for Project Managers

Although “client relations” ranked as one of the most common types of training for both general skills and business development, “managing clients’ expectations” was the most common response (29%) when respondents were asked about their biggest challenges as project managers. “Managing my time” was the second most-chosen response at 18%, followed by “staying within budget” at 15%.

The biggest complaint of PMs? “Lack of time/workload” at 23%, followed by clients’ needs at 14%.

Opportunities for Improvement?

While “client relations” was the third most common type of general skills instruction, only 46% of respondents received training on this topic. Firms that don’t provide guidance on client relations may want to consider adding it to their training plans; those that do might consider giving additional education on managing client expectations.

Another area where firms might want to increase training: “Time management”, the second most common challenge for PMs, with only 29% receiving general skills training on the topic. When asked about the types of general skills training they needed most upon becoming a project manager, nearly two-thirds of respondents (64%) chose “time management”, while another 75% picked the related topic of “scheduling.”

“Preparation of budgets” is the most common type of general skills training, and the second most common type of firm-specific training, but “staying within budget” is the third most common challenge for PMs. “Fee/budget preparation” is also the type of training PMs say they need the most, at 76%. While most firms provide some type of training about creating a budget, firm leaders may want to consider whether additional training about sticking to a budget could be helpful.

Zweig Group’s 2015 Project Management Survey contains a complete look at the data used in this article, plus a wealth of information about other project management issues, including PM structures, project management software, business development, and much more. Data is broken down by firm type, firm size, region, and growth rate so readers can easily make comparisons to firms most like their own. Zweig Group’s 2015 Project Management Survey will be released November 2, and is available for pre-order now at https://zweiggroup.com/p-2233-project-management-survey-2015

Download a free two-page summary report on the 2015 Project Management Survey here: http://info.zweiggroup.com/becoming-a-better-project-manager-seminar

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Getting better fees

Implementing these 8 easy changes can help your firm work smarter, not harder, and reap the monetary rewards.

I have always felt that, if A/E and environmental consulting firms spent as much time on getting better fees as they did trying to manage marginal ones to make a profit, they would come out far ahead. We just don’t try HARD enough to get paid decently for what we do.

Here are some ideas you might be able to use to increase your fees (and your profits):

  1. If you are working on hourly jobs or cost plus jobs, charge every single thing you can to the job. Is management working on the job but not billing it to the job? A common problem in A/E and environmental firms is not getting paid for supervision.
  2. If you are working on hourly jobs, try to get more of them on a fixed fee. You might assume that, just because your client has always paid you hourly, they won’t go for a fixed fee, but have you asked? Many clients would be completely comfortable knowing what kind of fee you are committing to do the work for, as long as it wasn’t more than they were planning to spend. Fixed fees give you incentive to use less and cheaper labor, which can make you more money.
  3. Raise your hourly rates. This is the time of year to do it! Inform all clients on November 15 that on January 1 rates are going up. Then raise them. Do it every year. Even a $1 per hour billing-rate increase in a company with 100 employees and a 65 percent firm-wide utilization rate will bring in another $130,000 in profit for the year! Two dollars per hour would make $260,000 over the year. Ponder that.
  4. Use billing-rate classifications. For example, bill all “senior engineers” at a set billing-rate. Then use your lowest paid ones the most on billable work. The result is higher effective labor multipliers.
  5. Mark-up all reimbursable expenses. Start writing into your contracts a 10 or 15 percent markup on all reimbursable expenses. Many firms get away with this. A firm with $500,000 in reimbursables that marks them up by 10 percent will make an additional $50,000 in profit.
  6. Charge for travel time. It’s amazing to me how many firms don’t do this. If you can’t be doing anything else and are going somewhere for a client’s job, it’s billable. If it’s an hourly job, you can get paid for it. Bill it.
  7. Charge travel mileage on local jobs. I have seen this, too. At $0.575 per mile, just driving 20 or 30 miles a day can make another $11-17 per person, per day. It all falls to the bottom line.
  8. ASK for a higher fee. I saved the best for last. Stop being preoccupied with what it will cost you to do a job and instead think about how much someone will pay you to do it. Listen to the cues your client sends off. Be specialized and better than your competitors. Go the extra mile in every way. And then don’t be afraid to ask for a proper fee to do the job – one you know will net you a profit. Nine out of 10 people quoting fees are thinking “what will this cost us?” It’s a good question to know the answer to – but not the most important one.

If demand keeps outpacing supply like it has been doing in so many markets, you’re going to see everyone in the A/E and environmental consulting business raising prices in 2016.

Do you want a free summary report with the latest data from Zweig Group’s 2015 Fee & Billing Survey?

More Fee & Billing Statistics


MARK ZWEIG is founder and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com.

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10 Interesting Marketing Statistics in the A/E Industry

Did you know?

  1. Marketing trends are discussed by only 40% of A/E firms during marketing meetings.
  2. Marketing departments are becoming increasinly responsible for tracking all marketing/sales related data.
  3. From 1997 until last year, the percentage of work done for new & repeat clients has remained relatively consistent at 20% & 80%
  4. CRM use declined from 2007 until last year when it started to rise again.
  5. Firms report doing 60% of their marketing via email
  6. Last year the biggest marketing expense increases were in staff labor and proposals
  7. Only 20% of firms reported entering a design competition last year.
  8. In 2014, a quarter of respondents didn’t know if their clients were on social media
  9. In 2014, 13% of firms said social media use has resulted in actual projects.
  10. 41% of firms say that social media has not resulted in reliance on traditional marketing methods.

This is just a tiny snippit from our large bank of marketing data.  We would love to gather your opinions and experiences to help us be able to present the most reliable data possible. Give us 15-20 min of your time and get 65% off any ZG Survey of their choice.

Click on the below to participate in the 2016 Marketing Survey. https://zweiggroup.qualtrics.com/SE/?SID=SV_2oFEPUiZnGYaFKt

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Preparing for the competition

Bill MurpheyCompetition can be a good thing, especially if it stimulates others to make themselves better; survey data shows that now is the time to think about your competitive edge.

I’ve spent most of my career analyzing strategies and developing new ones to counter the anticipated actions of competitors. Working at the Pentagon, I analyzed other countries’ motives, decisions, and actions, and built plans to ensure we were ready to respond to a wide range of events. In the geopolitical world, being caught off-guard can be disastrous for a nation, as we unfortunately learned in 1941 and 2001.

In the architecture, engineering, and environmental consulting world, being caught off-guard most often leads to lost market share, lost revenue, and sometimes, loss of ownership.

The healthiest firms prepare themselves for what could happen. They understand their local and regional markets and can identify their competitors within those markets. They understand the value of their company and how they compare with their hungry competitors. They have a formal process for assessing the market; one that addresses much more than the uninspiring strengths, weaknesses, opportunities, and threats analysis taught in every business school.

Successfully competitive companies have also built plans to infuse their firms with talented people capable of accelerating the firm’s growth. They’ve built plans for ensuring their people are educated in the latest techniques and industry trends to maximize their value to their clients. They’ve built plans for a potential ownership transition and the eventual succession. It’s interesting to note that more than 83 percent of large AEC firms are looking to buy another firm, but only 39 percent of firms are prepared for such a transition.

Successfully competitive companies understand their weaknesses and are actively working to overcome those deficiencies. In many cases, they’re successful because they’ve assembled a proactive strategy team chartered to look for competitive gaps in their business model.

From this strategist’s position, here’s a sampling of what I see ahead:

  • According to Zweig Group’s 2015 Mergers & Acquisitions Survey, if yours is a civil engineering firm doing commercial development in the South region with fewer than 25 employees and earning less than $5 million in annual revenue, you might want to have an acquisition plan in place, because that’s the most sought after demographic.
  • Alternately, based on the same survey, if yours is an architectural firm, I recommend developing both an expansion plan and a long-term succession plan, because only 21 percent of the companies surveyed are looking to acquire architecture firms. For your architectural firm, acquiring a design/build firm might be just the spark needed to enhance your competiveness.

What if your company isn’t prime to be acquired? According to another Zweig Group survey, more than 82 percent of the companies that attended the 2015 Hot Firm and A/E Industry Awards Conference stated they expect to grow by more than 10 percent next year. Ten percent doesn’t just grow out of thin air: These firms are likely coming after your market share. Are you prepared to compete with them?

Here are some tips for becoming successfully competitive:

  • Know the value of your company. You can start by looking at your books. Make sure your financial statements are in order and that you know the status of all of your accounts. Consider having an outside assessment of the total value of your organization. You’ll quickly discover if you’re a target for an acquisition or healthy enough to expand your business.
  • Build a strategy team. Designate a strategy team with your best and brightest minds. That’s obviously easier to do when you have a larger organization, but a strategy group of three or four people in a firm of 25 employees is very doable. Task them with becoming experts on the industry and the market. Make them your prognosticators of things to come. This should not be just your principals!
  • Leadership is important. Your strategy team must be fully supported by the firm’s senior executives and have constant, direct access to all of your company’s executives. Remind the team its efforts must always be connected to the company’s vision and mission. Most importantly, leaders must be willing to act on the advice of this team of experts.
  • Training is vital. Do you know how to develop a strategy – not a strategic plan, but a true strategy? Very few people have the experience and formal education required to do it effectively. To have an effective team, appoint a leader who’s been formally trained or send that person through a training program. Anything less, and you’re just wasting time. There are a few good programs out there, but the best ones are very pricy. Look at the course overview and if it peddles “SWOT Analysis” as the main selling point, keep looking. There’s more to a solid strategic plan than a SWOT analysis.
  • Commit. Too often, companies spend precious time at some nice off-site location, discussing in which direction the company should head, only to return to the office to place this shiny new strategy on some shelf, where it gathers dust until next year’s off-site at some even nicer location. If you’re going to spend the time, commit to the results, or it’s all for naught.

“Always prepared” is a great mantra for any company in any industry. The ones that prepare for the competition are healthier and will likely fare well. Those that fail to plan will have plenty of time to reminisce about how great things were before the competition took their market share, or worse, their company.

By understanding your company’s position relative to others, actively scouting the horizon, and having actionable plans in place, your company can be successful in the highly competitive and dynamic AEC marketplace.

BILL MURPHEY is Zweig Group’s director of education. Contact him at bmurphey@zweiggroup.com.

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Some things you shouldn’t do

zweig-001Even proponents of ‘never say never’ will likely agree that these gaffes should never be committed.

Though one of my favorite sayings is “never say never,” the fact is, if you work in an A/E or environmental firm, there are just some things you shouldn’t ever do. Here are my thoughts:

  1. Don’t constantly check your phone during the first meeting with an important client. It’s rude and will lead to the client not liking you. I’ve been guilty of this one. Like many of you, I’m a phone addict.
  2. Don’t have your assistant place your outbound calls and then summon you once they get who they’re calling on the line. This is so rude. You are saying: “My time is more valuable than yours.” Whenever anyone does this to me, I hang up on them.
  3. Don’t forget to make sure your subconsultant gets paid after the client pays you. You don’t want to get a reputation for being a thief and using the other guy’s money. You may need the cash, but so do they!
  4. Don’t talk trash about anyone you work with or for. You never know when it is going to come back to bite you. Not to mention the fact that you may not know everything and not understand why someone/something is the way it is.
  5. Don’t tell the founder’s wife she “looks good for her age.” That’s bad manners. Even if you know she is well into her years, never force anyone to face that fact.
  6. Don’t ask a woman “when’s the baby due?” Some tops or blouses make ladies who aren’t pregnant look pregnant. She might not be pregnant. If you ask that, and instead of being pregnant she is just a little plump, you now have someone who wants to see you dead.
  7. Don’t use “out of office assistant.” It looks bad to announce to the world, both inside and out, that you’re disconnecting and won’t care enough about them to return their emails for X days. It just connotes poor service.
  8. Don’t cheat on your expense report. You may get caught. The whole company will think you’re dishonest, and it could ruin your ability to lead or manage.
  9. Don’t say “it’s not in my job description.” There’s nothing a manager – or a peer or an underling – who is doing a tough job wants to hear less from you.
  10. Don’t call in sick every Monday. It looks suspicious, and everyone will think you are either hungover or just wanted to extend your weekend. They’ll resent you for it, too!
  11. Don’t leave early every Friday after changing into golf attire. It looks bad to those who can’t/won’t/aren’t going golfing.
  12. Don’t talk politics or religion if you aren’t 100 percent sure of the other guy’s views. The country is divided. One thing I know is that you can upset about half the population with any political opinion. So why share them?
  13. Don’t post pictures of yourself intoxicated on Facebook. Again, this looks bad. Don’t put anything on Facebook or Instagram or your personal website that you don’t want the whole world to see!
  14. Don’t stand by the front door and smoke. Looks bad. And if you do smoke, try to take the least number of smoke breaks during the work day, as non-smokers will surely notice and resent you.
  15. Don’t look at things on the Internet you don’t want anyone else in the firm to know you’ve looked at.Some firms are really snoopy. And some IT people are talkers. I remember one firm who found out from their IT guy that they had an employee who ran a “swingers” website. It looked pretty bad for him!

Whether you’re the boss or an underling, the owner or an employee, heed my advice!

MARK ZWEIG is founder and CEO Zweig Group. Contact him at mzweig@zweiggroup.com.

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1477789_10152791298915678_4946862984534976341_nTaking the time to get these 8 items in order might make all the difference when seeking a buyer for your business.

A lot of us don’t want to plan for it. We don’t even want to think about it. But the fact is an external sale is probably the best way to get the highest value for your firm AND might be the best way to ensure its survival and provide ongoing opportunities for your people.

So, let’s say you think an external sale may be in your future: What can you do to make your firm more attractive to buyers? Here are my thoughts:

  1. Have a good business plan. It helps build potential buyers’ confidence when they see you have your act together in the form of a solid business plan. What is your mission and vision? What are your strategies and goals? And what specific actions will you take to accomplish them? These questions and more should be answered, and you should be willing to share your plan with potential buyers.
  2. Be a growing firm. When you have a history of growth, your buyers will have projections for continuing growth. That growth will result in higher EBIT (earnings before interest and taxes – and bonuses) projections and have a positive impact on your value.  
  3. Be profitable. Every buyer looks at multiples of EBIT. To a great extent, the more profitable you are, the higher your valuation will be. And the buyers will have a greater confidence that your system works.
  4. Have a strong second tier of management. Anyone who is considering buying your company is more interested in the people who work for you than they are you. Once you sell your company, odds are you will either be less motivated or out. So the people who work for you are extremely critical to a buyer!
  5. Have a named successor. Who specifically will take over your business? Who is ready to run it? It is crucial to you and to any buyer that someone is ready to assume the top job.
  6. Clean up your books. Get all your personal stuff out of the company. If your office is leased from you, are you overcharging for it? Do you have a condo or boat on the books that the company is paying for? Is Mom getting a paycheck but not showing up for work? Get all this stuff off the books; buyers don’t want to see it.
  7. Have good accounting. This is so critical. We work for buyers and find sellers who can’t even give us a balance sheet or any kind of profit and loss statement that wasn’t scratched together in a spreadsheet. Audited financials are best. Reviewed are second-best. Accountant-prepared compilations are third-best.
  8. Clean up your office. Don’t have a dump! Buyers will surely want to see your workplace. Clean the carpet. Empty the spare offices of the old furniture piled up in there. Toss the old magazines in the lobby. Change the light bulbs. Clean the kitchen.

MARK ZWEIG is founder and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com.

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2015 Valuation Survey

Val-15If you’re an owner of an A/E/P or environmental consulting firm, you can’t risk not knowing the value of your business. Whether it’s for external purposes, such as a firm sale or merge, or internal purposes, such as an ownership transition or ESOP purposes, all firm owners should know what their investments are worth.

It’s one of the most confounding decisions faced by privately held A/E/P and environmental consulting firms – how to value their enterprises. This decision can have far-reaching implications, impacting both the firm and its shareholders on a financial, organizational, and cultural level. In an effort to provide information and insight on this important topic, for the past 23 years Zweig Group has researched and published this definitive survey of how privately held firms in the A/E/P and environmental consulting industry value themselves.

The purpose of this survey is not only to provide benchmarking data on industry valuation norms, but also to further the reader’s understanding of how business value is defined, how it is determined, and perhaps most importantly, how it is created.

The survey covers everything from the reasons that you need a valuation to how to maximize your firm’s value.

Do you know how much your business is worth? If you’re an owner or manager in an architecture, engineering, or environmental firm, you can’t escape valuation questions. Click here to get the best information on your biggest investment.

For information about our valuation consulting, click here.

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Maximize Value With Your Business Valuation

The process of business valuation and the analysis of the firm it involves can be a valuable tool for any firm. A properly prepared business valuation should provide firm owners with an independent view of the value of the firm’s shares, an independent assessment of the firm’s performance and financial condition relative to its peers, and an assessment of the current economic and industry conditions and outlook.

There are a number of fundamental factors that contribute to a firm’s value. Some of these factors are within a manager’s control – such as operating efficiency, the rate of growth in revenue and earnings, and the reliability of the company’s earnings. Understanding each of these factors can help managers better understand how their actions impact value.

Operating efficiency includes all the operating aspects of a firm that contribute to its profitability. These include operating metrics such as staff utilization, the firm’s overhead rate, and more. A benchmark analysis of these metrics can reveal where there is room for improvement.

The rate of a firm’s revenue and earnings growth has a huge impact on its value. This is due to the fact that someone investing in a firm is buying a share of its future earnings, and a growing earnings stream is more valuable than a static or declining earnings stream.

The stability of a firm’s earnings reflects a number of characteristics of the firm and its management. These include risk factors unique to the company such as the depth of its management team, geographic diversity of services, and many other factors. Mitigation of these risk factors reduces the uncertainty of future earnings and increases investor confidence.

It is important to understand how your actions impact the value of the firm. By understanding what factors contribute to or detract from value, you can set policies, take actions, and plan a long-term strategy that enhances the value of the firm for the benefit of all stakeholders.

Zweig Group’s valuation experts understand the industry and what drives value in your firm. For more information, click here.

To buy the 2015 Valuation Survey or for more information, click here.

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New office space

12072617_10153307225956859_1530375576295024395_nSome insights for those planning to relocate or revamp their digs, because we just went through the process.

We just moved into a new office space a couple weeks ago. It’s a big step up from our old space – one that was cobbled together in a 1960s medical office building with an add-on hair salon – a virtual rabbit-warren of halls and level changes with doors on automatic closers and horrible HVAC and lighting. We now have 7,000-square-feet of nice open space with large walls of glass, minimal halls, nice bathrooms and kitchen, large conference room, and super efficient lighting and HVAC. Plus, we’re on a major road with great signage – including a special clock with our logo on it made from our old friends at Electric Time Company in Medfield, Massachusetts.

The effect on everyone’s mood was immediate: We all feel better and more energized by our new space and are moving to the beat of our central stereo system, hooked up to Pandora One. It helps productivity, morale, and our image.

If you are thinking about upgrading your office space, let me give you some advice – remember, we just went through the process, ourselves:

  1. Don’t ask everyone for their opinions on everything. I’m talking about who goes where, what colors to use on the walls, and whether your bathrooms need full-length mirrors. The more you do this, the less happy everyone will be. You can’t please everyone. If you ask and don’t follow their wishes, they can justify being upset with you.
  2. Give people plenty of natural light. Natural light keeps you awake. People who are awake get more done than those who are sleeping (or sleepy).
  3. Have plenty of bathrooms. And be sure a couple are in more private locations for those delicate moments when certain noises or smells that one might like to keep from everyone else are possibilities.
  4. Make it fun! Why does everyone make their office so serious? Have some humorous art. Install some toys. Do something that no one expects. Make the space look like a fun place to work, and you’ll attract employees and clients.
  5. Wire it up! Plan for the future and the changing uses and locations of things. Investing in the cabling you’ll need for communications and computing is essential when you have the walls and ceilings blown out.
  6. Consider acoustics. Carpeting is a heckuva lot better sound-wise than polished concrete when it comes to floors. Consider acoustics in all the materials you pick.
  7. Make it easy to find. Good exterior lighting, the biggest sign you can get, and more should all be part of the new office. You want everyone who drives by to know where you are. It’s marketing, people!
  8. Keep the style eclectic. Going overboard on one or another trendy interior design fad (and they aren’t all modern – “craftsman,” for example, has been really overdone) will only make your space look dated in the years to come. Mixing up styles in your furniture and art will keep the place looking fresh and less dated in the long run.

So what is your advice here? Email it to me, so all of our readers can learn from your experience, too!

MARK ZWEIG is founder and CEO of Zweig Group. Contact him at mzweig@zweiggroup.com.

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Marketing Excellence Awards: The Apostrophe

3. O'NealO’Neal (Greenville, SC), an industrial engineering and construction firm, is taking home third place in the External Newsletter category of Zweig Group’s 2015 Marketing Excellence Awards for The Apostrophe.

The O’Neal team’s goal in developing an external newsletter was to establish and position O’Neal as a thought leader and AEC industry expert. They also wanted to provide relevant industry information and knowledge to existing and target clients, and help prospects and customers maintain a pulse on industry trends and activity. Through the distribution of The Apostrophe, they wanted to develop a platform to talk about O’Neal’s projects, project delivery systems, recognition, and advancing technology and processes.

Prior to the development of The Apostrophe, O’Neal evaluated competitor newsletters, researched industry trends, followed industry thought leaders, and solicited feedback from prospects and clients on items and topics that were important to them. The piece would be defined by a mix of industry features, project spotlights, and O’Neal news that would create the feeling of the newsletter being a valid source of valuable engineering, construction, and economic information rather than a marketing piece.

The Apostrophe has definitely had an impact on people who have become O’Neal clients. To gauge the effectiveness of the newsletter, O’Neal used face-to-face meetings with clients. The O’Neal team found that they achieved their goals with The Apostrophe by increasing awareness of O’Neal and positioning themselves with key points of differentiation. O’Neal has even experienced many of its clients calling to ask for more information or a breakdown of article subjects and how they were handled.

For more info on the Marketing Excellence Awards click here.

The 2016 Marketing Excellence Awards are open for registration! Click here to register your firm.

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Marketing Excellence Awards: New Employee Questionnaire

5. AC Martin Partners, Inc.AC Martin Partners, Inc. (Los Angeles, CA), an 85-person architecture firm, is taking home fifth place in the Internal Marketing category of Zweig Group’s 2015 Marketing Excellence Awards for its New Employee Questionnaire.

AC Martin typically sends out a general email to all staff when new employees start. It’s a simple note that includes the employee’s picture, title, department, projects, and their educational background. Unfortunately, the email alone is not enough to prompt the rest of the staff to engage in dialogue with new employees outside of the usual project discussions. The firm wanted to find a way to provide insight into the new employee’s personality through their likes, dislikes, passions, travels, and design interests.

The general purpose of the New Employee Questionnaire is to demonstrate that there is more to an individual than simply their title, department, and project. They hoped that by posting the New Employee Questionnaires on the firm’s Facebook page they would be seen as more informal and casual, and could prompt staff to seek out the new employees if they saw a shared interest. They wanted an eye-catching design in order to grab people’s attention. Even with a quick glance at the unique photo layout, staff can get a better sense of the new employee.

AC Martin’s goal of increased camaraderie and congeniality was met. Current employees have either found things in common with the new employees and have engaged them in “around the water cooler” conversations, or have looked into design inspirations that they were introduced to through these posts. These informal conversations would not have taken place in the past, because shared interests were unknown. An unintended benefit which contributes to the firm’s overall social media goals, is that these posts showcase the firm’s culture in ways that a website is not equipped to do.

For more info on the Marketing Excellence Awards click here.

The 2016 Marketing Excellence Awards are open for registration! Click here to register your firm.

 

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