Being retired from the day-to-day business for nearly three years gives you more time to think.
After nearly three years of being retired from the day-to-day business of Zweig Group, I have more time to think. Let me say that has been glorious!
Here are a few things I have been thinking about lately:
- I will finally relent and refer to this industry as the AEC business, even though it is hard for me to do so. I was digging in my heels on this one because I think most people think the “C” in “AEC” stands for “construction.” As someone who has owned a construction contracting business as well as had ownership in multiple architecture and engineering firms, I see the two as wholly different animals. My own experience in construction over the last 16 plus years is that it has completely different people, different ethics, and vastly different economics from a professional services firm, and it’s easy to understand why so many of us coming from the architecture and engineering side struggle to compete successfully when we dip our foot into at-risk construction. That said, the “C” in “AEC” can refer to “consulting,” which IS a big part of the architecture and engineering business, and covers everything from lighting consultants to aerodynamic consultants to energy consultants to roofing consultants and more. At least that is how I choose to see it at this point. My former business partners at Zweig Group want to stick with one moniker for this vast “industry” we are a part of, I’m sure in large part due to how people find information these days online, and because of the fact that our industry and all of the providers to it seem to have adopted this moniker. Plus, there is the issue of vertical integration and the growth of design/build to consider. So henceforth, I will comply and join the throngs calling it the AEC business.
- There are many AEC firms that are successful because demand is so high, not because of how their owners are running the business. This worries me because I have seen it before during other boom cycles over the last 40 years. I want to see everyone in this business do well. It is consistent with Zweig Group’s “Elevate the Industry” thrust. But when you see companies out there doing absolutely no marketing, companies with draconian employment policies, companies that share no financial information with their employees, companies that provide no real business or management training to their people, and companies that are doing a whole bunch of other stuff wrong – yet are doing ridiculously well and making record profits – I am certain that some or all of their owners are convinced it is because they are great business managers. But they aren’t. Don’t forget a rising tide lifts all ships. And the moment supply catches up with demand, they will find themselves and their businesses struggling and wonder why. Mark my words this will happen – I have seen it before! So if I were in the AEC business today, I would make darn sure we were running the business properly to set us up for enduring success versus short-term success.
- We need to be bracing for a whole lot of employee turnover. Employees of firms in this business have more options than ever, thanks to the changes we all had to make to survive and thrive during the COVID pandemic. We figured out how to work remotely, which is a great thing, and something smart firms did successfully before the pandemic hit. But by doing so, we also opened up a whole lot of doors for our people to go to work for another organization and not have to move from wherever they live – something that has been a huge barrier to those who would otherwise consider making a job change. Meanwhile, at the same time we have given our employees a whole bunch of new options, we are simultaneously facing record demands for what AEC firms do. Get ready to deal with a whole lot of new turnover. I would be gearing up my recruitment efforts in a major way if you haven’t already done so! You will have to spend money and devote management time to this one too.
- Leadership and ownership transition is really hard but worth it! IF you want your AEC firm to outlast you as the founder(s), you really need to be working on meaningful transition issues now. That means sharing financial information regularly so your people understand the financial dynamics of your business, making sure ALL of your managers have identified a successor, making sure all of those successors are being trained and mentored by their predecessors, developing a financial model that tracks and predicts whether or not your ownership transition program will work, and continuously re-evaluating your transition efforts over time. These things are crucial to everyone in your firm who depends on the company for their employment and retirement, and they must be started on immediately and be done consistently over a long period of time for the organization to survive. And let me add, even if you have zero interest in an internal transition, doing these things is critical to your ability to sell your firm externally! So get on it now!
Those are my thoughts for now. I am always interested in hearing YOUR thoughts about these or any other topics of interest to AEC firms, so drop me a line to email@example.com any time!
Mark Zweig is Zweig Group’s chairman and founder. Contact him at firstname.lastname@example.org.Click here to read this week's issue of The Zweig Letter.