Rewrite the Rules of Your Business
Jan 14, 2008
One decision I made recently in my redevelopment business was to start running it more like a “real” business. This may seem strange coming from me— we always tried very hard to practice what we preached at ZweigWhite— but my semi-retirement ventures have a different purpose and I’ve run them accordingly.
That said, I do have some pretty strong opinions about how a business should be run, and I have decided to start putting my knowledge to work in this new enterprise. One key change being made for 2008 is to practice open-book management on all of our new projects (though I did it verbally in the past, I didn’t share all the details in writing like I will going forward). I am including my key subcontractors in a share of the profits as well. When I told my lead carpenter, who is 61 years old and an incredible craftsman, what his share of the profits was on our next project, he told me he’d never been treated like that by anyone in the business before. I am sure that the money that flows to him on this next job will more than come back in even better quality work and more care for how the money is spent.
All of this just reinforces to me that by rewriting the rules of how business is typically done one can create something new altogether, something that can transcend any constraints thrown up by a weaker market or softening economy.
Now, not later, is the time ALL of you should be thinking of how you’ll rewrite the rules of your own businesses. It is only by doing things differently from the other people in your business that you’ll be able to overcome any competition or economy-related problems that present themselves. Here are nine areas you should be looking into for rewriting the rules:
How you pay your people. Who says it has to be “business as usual” in the coming year? There should be reasons for people to cooperate. There should be an emphasis on the whole, not just one’s little area. And, there should be a real recognition of the unique contributions specific individuals make. Finally, owners MUST be rewarded for making the investment in the company. There are conflicting demands in some of these things and plenty of inertia to keep it all the same, but perhaps a clean sheet of paper is in order!
How you do your finance and accounting. Have you thought about why you have the profit centers you have? Are they the right ones? Do you really need profit centers? Why do certain people need to approve certain expenditures? Does this make sense today? What about billing— how can it be done faster and better? Collections— have you really thought about how you can change the process to collect the money sooner? Should you be asking for more retainers? Should you be doing something that really recognizes those teams or units in the firm with better cash flow? I find firms are like herd animals when it comes to accounting. They tend to do things the way they always have— it’s as if the spirit of the little guy in the backroom with the green-eye shade cannot be eradicated! Rewrite the rules of accounting this year!
How you handle your marketing. Are you being creative enough? Are you taking advantage of every opportunity you can to get your name out there and build your brand? Are you still using that tired old web site or have you got a new one you really like? Are you satisfied that every inquiry and every lead are properly followed up on? Do you think your proposals and presentations are the best? Every firm I have ever been into needs help with its marketing. The A/E/P and environmental consulting industry is SLOW to change. The firms who led the marketing revolution are doing well today. Those who still think marketing is overhead and followed the pack of other slow-growth design and environmental firms make up the bulk of our industry. Maybe you need to rewrite the rules of marketing this year— for real!
How you handle PR. Is it business as usual, with a few half-hearted, self-serving press releases going out to a too-small press list? This is a fantastic opportunity to rewrite the rules of your business by doing a lot more press releases, having a larger list, and writing about something other than projects you’ve done. You can do it and it will help transform the company.
Who you put on your BoD. Is your Board of Directors made up of all insiders, most (or all) of whom are white males between the ages of 45-65? If so, you may want to rewrite whatever rules have led to this situation. My experience is that firms with more diverse boards, those that include men and women, people from different races and nationalities, and insiders and outsiders, do better. I don’t have any data to support it other than my observations, but I have worked with a lot of companies in this business.
How you are recruiting. Are the same old ads, job boards, and outside recruiters that you have traditionally used going to get the job done in 2008? Maybe you need to rewrite your rules of recruiting, and get your top people much more involved with traveling to colleges to meet students and spending more time talking to experienced job candidates as well. Maybe you should throw out the old recruiters and try some new ones. Maybe you should look at people who have different backgrounds to fill a job you have traditionally filled with one type of background. I’ll bet, if you are like most firms in this business, that there’s a lot you can do to rewrite the rules of recruiting in your firm.
How you are valuing your stock. Have you taken an honest look at your valuation formula lately? Maybe this is another of those areas that needs some new thinking and a clean-sheet approach. The stock valuation formula should reinforce the company doing the right things to maximize its real value. If yours is based on book value, it does not do that. Go ahead and write me all the e-mails and letters you want about “Keeping the stock affordable.” I don’t buy that logic and think it’s merely a cop-out for not doing what it takes to have a continuously growing and profitable company.
How you are organized. Is it the same old departments or offices that drive your business? Do they make sense? If you claim to be client-focused, does your organization structure reflect that? Or does it really say “We are geographically-focused” or “We are discipline-focused?” Let’s take out a clean sheet of paper and rewrite the rules on organization structure this year.
Where you are located. If all of your offices are in big cities, maybe you need to be in some smaller cities as well. If all of your offices are in small towns, perhaps you should be in a larger market. If all your offices are downtown, perhaps a suburban location makes more sense. My point is to rethink what you’ve always done office-wise, because these rules should not be cast in concrete.
Knowing what you can change in your business and knowing what you have to preserve is a big part of the art of management. The faster the outside world changes, the faster we need to change as individual businesses and as a group of companies.
Originally published 1/14/2008
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.