Natick architecture and construction consulting firm ZweigWhite is recommending quick, decisive action by architecture and engineering firms as they wait out expected spending by the federal government on infrastructure as part of the economic stimulus plan.
John Doehring, managing director of ZweigWhite’s strategic and financial advisory services consulting group, recommends firms take the following steps:
Shore up early warning systems. "In times of economic uncertainty, managers need to be able to accurately project workload-related peaks and valleys," says Doehring. At a minimum, Doehring suggests that A/E firm leaders and managers track sales, revenue, backlog, and capacity at least three months out. "This way, managers can shift work around and make the most of the firm’s resources."
Continue to invest in sales & marketing. While it may be tempting to cut back, reducing expenditures on sales and marketing can do more harm than good. "In this environment, firms need to be positioned to take advantage of each and every opportunity," says Doehring. According to ZweigWhite’s 2008 Marketing Survey of Architecture, Engineering, Planning & Environmental Consulting Firms, the median marketing budget at industry firms is 4.9% of net service revenue.
Expand your reach. With projects becoming more scarce, firms may need to broaden their audience in order to meet their goals. Doehring suggests that diversifying in terms of geography, client type, project type, or service offerings may be necessary in order to offset slowdowns in local and individual markets.
Monitor and trim unnecessary expenses. "When business conditions get tough, a number of firms will have to make difficult decisions and reduce costs," says Doehring. "Bonuses, fringe benefits, and perks are often the first to go." According to ZweigWhite’s 2008 Financial Performance Survey of Architecture, Engineering, Planning & Environmental Consulting Firms more than three quarters (79%) of firm leaders said they would consider reducing bonus payouts should the U.S. enter into a recession. Nearly half (42%) say they would cut back on perks and benefits.
