There are Opportunities Everywhere!
Apr 12, 2004
On the one hand, it would be easy to get negative and discouraged about the current business climate. The war efforts are dragging on with no clear end in sight. The Middle East, in general, is in a state of unrest. That’s bad for oil prices, and low oil prices are a big part of why our economy did well in the ‘90s. Most paper trading experts will tell you that interest rates have to go up at some point and everyone knows it— that will hurt our business— it just has to. The stock market is a yo-yo. And it seems like some clients are dragging their feet and not moving their projects as quickly as they used to, while at the same time being more budget conscious than ever.
But then you have to look at the other hand. And what you see there are some firms still doing incredibly well. You see companies— not small ones— growing by 20% or more annually, and some of them earning 20% bottom lines. You see the firms that serve land development clients continuing to prosper. You see firms investing in new technologies to manage their business and actually getting it done and reaping rewards from it. You see companies with energized staffs, new offices, and wildly successful ownership transition plans.
So where are the opportunities for A/E/P and environmental firms right now? Here are some places I would be looking:
Acquisitions. There is always an opportunity to grow and add value to your balance sheet and profits to your bottom line through acquisitions. And you don’t need to be a huge firm with tons of cash in the bank to do it. We bought our first firm here when we had only three or four people! I see great opportunities for companies that are successful and operating profitably to buy other firms that don’t have the recipe quite so well-defined. There are all kinds of low-cost, low-risk acquisition opportunities for firms that will devote a little bit of their cash and managerial resources to exploring and processing these kinds of opportunities.
Divestitures. There is often an opportunity to sell off a business you don’t want, or one that no longer supports your longer-term vision for your company. We recently had a client sell off its captive drilling subsidiary, which immediately improved its balance sheet and income statement. The buyer was happy, too, because he knew where a good chunk of his future work was coming from— the seller.
I see firms every day with offices, departments, and business lines that they could carve off and sell at a profit, helping them secure the capital they need for their core business and allowing them to get back to the stuff they are interested in and do well at.
Completely new businesses that you aren’t in now. Sometimes you just look around and see opportunities to get into other businesses. Wolfgang Doerschlag, architect and founder of WD Partners (Columbus, OH), got into the plastic business and is making medical devices. EDSA (Ft. Lauderdale, FL), a landscape architecture firm, bought a water feature design and engineering company, Cloward Engineering (Provo, UT). Other owners of A/E firms that I know have started telephone companies, gone into the warehousing business, and opened up contracting businesses. One guy bought used car lots, filled them with cars, and then turned around and sold them.
Based on our own experience with painters here at ZweigWhite in Natick (we are doing a quick rehab of our 10,000-square-foot space to freshen things up a bit), I became convinced that we could build a 30-40 person profitable painting/contracting business in a year if we wanted to! My point is that there are a zillion businesses A/E and environmental firms can get into, and they don’t all take a lot of time or money or require that you give up what you have now.
Real estate investments. Buying your own building has been a classic wealth-builder for owners of architecture, engineering, planning, and related firms for 100 years. But that’s not the only real estate opportunity that’s available to companies in this business. Some trade services for partial interests in development projects. Others do their own projects entirely. And some take existing real estate that they already own and redevelop it. The point is that many firms in our business have a lot of knowledge about real estate and development but only allow their clients to benefit from it.
House cleaning and adding back some new people. Moving out some of the people who have been age-old performance or morale problems and replacing them with some good people who are happy to be there is always a great opportunity for firms that will do it. I have always said that low turnover is not necessarily a good thing— especially if it results in having all your slots filled with “less-than-optimum” talent. And new blood— people from competitive firms or other industries or types of organizations— can bring us a lot of good ideas.
E-marketing. Anti-spam laws aside, there’s a great opportunity in using the Internet to improve your marketing. The great thing about it is that it’s free. You can send out 10,000 e-newsletters at essentially zero cost, whereas 10,000 print newsletters will probably cost you $10,000 or more to get out there. Firms that want to cash in on this opportunity need to invest in quality CRMs that support e-marketing and then spend the time, money, and training budget required to get everyone using and supporting the effort to build the e-mail address database.
Getting cheap about virtually everything. Do you really need the Taurus rental or wouldn’t a Festiva do? Better yet, why go to Hertz at all? Go to one of the rental places that are well off airport property. And do you really need to stay at the Marriott? You are only going to sleep there…how about a Days Inn? Why not buy a $200 desk the next time you need one for a new employee instead of a $900 desk? When looking for a new office, why not go out to the far-flung suburbs? Why do you offer dental insurance? Would anyone leave if the 401(k) match went from $0.50 on the dollar to $0.25 on the dollar? There’s always an opportunity to tighten things up and get cheap. Keep more of what you make.
Open-book management. There’s an opportunity to educate and train a large group of future managers by using open-book management and sharing with everyone in the firm how the place makes (or loses) money. Not only will the firm perform better, but morale will be better. I cannot, for the life of me, understand why more firms don’t get this yet. Almost daily, I get calls, e-mails, or verbal questions from clients about who gets to see how much information. It takes all I can muster sometimes to not be rude in my response… everyone sees everything (other than salaries). But my definition of “everything” is not limitless detail. It’s all the critical information that tells everyone how the company is really performing.
The glass is more than half full, if you ask me!
Originally published 04/12/2004
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.