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10/01/2010

Rise Above This

For A&D firms, the mission is clear: It is time to get back to the business of design.

By Michael Thomas

 

When President Carter spoke about the challenges of an economy in recession in his farewell address to the nation, he was talking about high unemployment, oil prices at record levels, trouble in the Middle East, and the banking industry in financial crisis. And nearly three decades later, it would seem we didn't learn any lessons.

The last 18 months have indeed been rough. No, wait, not just rough ... it's been tough. Every segment of the design profession has been troubled by the recent recession. From designers to architects, contractors to consumers, manufacturers to design centers—all have been in the grip of this upheaval, which has produced some tough lessons.

Big business clients, once a steady source of projects (and revenue) for design firms, have shuttered offices, handed out pink slips to staff in record numbers and canceled contracts to update facilities. Others have painfully (and strategically) downsized operations just to keep afloat. Organi-zations that once filled millions of square feet of commercial spaces have left huge, gaping holes in all categories of the real estate market that will take years to be absorbed.

Small businesses at the heart of Main Street USA have been equally bruised and battered by this financial tsunami. The dream of owning your own business may have suddenly ceased. Highly skilled artisans and craftspeople in service to the design trade just closed up shop and walked away to stand in unemployment lines.

And after all this, the experts and economists cannot seem to agree on any one explanation as to what created or caused the financial crisis. So what is a design professional to think or do?

It is time to polish our business survival skills. Design professionals have spent months in agony—some clinging to outdated business models with hopes that one day business would return to normal; that the phones would once again start ringing and that RFPs would come around. However, economic forecasters indicate that this challenging period may extend well into the last quarter of 2011, perhaps even into 2012. So in service to the profession, here are five techniques to help sustain the practice:

FIRST, ACCEPT THAT THERE WILL NO LONGER BE "BUSINESS AS USUAL."
Much has changed for the design community and their clients. A new approach is not only needed but also required. The business owner and principal can't just sit it out and hope for a return to better times. Those will come. History proves that.

One must stop clinging to outdated business models that no longer serve clients well nor provide the firm with an appropriate return on the investment of staff, time and money. Take the opportunity during this down time to fix what isn't working in this "new normal."

NEXT, ENSURE A SUSTAINABLE CASH FLOW.
Cash flow is the lifeblood of all businesses (even more so in the design profession where complex business models are the norm). The benefits of effective cash management are many: it increases the likelihood that a firm won't totally run out of cash; it minimizes the constant worry about debt; and it strengthens the perception about the stability of the organization.

But perhaps the best benefit is that with a stable cash flow, the principals and managers of the firm are able to focus on finding the next potential client, discovering the next design project and concentrating on what they do best: design.

Start by reevaluating what and how expenses are cut. Be very strategic, and careful, not to cut out services that clients value. Previous clients will be the first to call when the economy begins to bounce back. Next, get aggressive with clients who owe the biggest debts, and negotiate for better terms with the firm's own debt, especially if there's been a long-standing account.
And when new business comes your way, ask for more dollars up front. While new client projects may be few and far between, increase the initial retainer, if possible. Schedule deposits to more closely and accurately reflect the course of the design process and bill accordingly. This protects the firm from clients who might suddenly find themselves unable to continue with the work or even go out of business.

THE THIRD TECHNIQUE IS TO DETERMINE WHICH EXISTING CLIENT RELATIONSHIPS REMAIN VIABLE.
Sometimes these decisions are hard, but "firing" a client may mean the ability to attend to those clients who are just easier to do business with, who pay promptly and who will refer you to new opportunities. It can be tempting to hang onto each and every client, but if there is no clear and identifiable return on the investment of the firm's resources, it may be time to move on.

THE FOURTH IS SIMPLE: WITH ALL THIS DOWNTIME, MAKE TIME TO CONNECT WITH CURRENT AND PREVIOUS CLIENTS.
In these times of uncertainty, now is the time to reinforce clients' loyal trust in the firm. So keep the firm visible, vocal and indispensible.

Create that newsletter or write that blog that has been in the strategic plan for years. Reinvent that elevator speech. Contact your five best clients and offer to do a "secondary" post-occupancy evaluation to help reduce operational costs or identify ways to work more efficiently with a reduced staff. The point is that design firms must continue to appear stable, strong and be able to communicate the value of design.

Also keep in mind that what designers bring to the table is not only the value of design, but also the value of our thought processes.

FINALLY, THE FIFTH TECHNIQUE IS TO ACCEPT RESPONSIBILITY FOR YOUR OWN BUSINESS SURVIVAL.
There is no magic button that will make the last several months go away, nor is there a perfect plan for the future. The business of design, like so many others, is a roller coaster filled with ups and downs. There will always be good following the bad.

In these challenging times, it is important to grow the passion that drives the design work. Remember what design is all about, the impact it can have and its influence on those who pass thru a well-designed built environment. Treasure the positive results when appropriate design solutions are effectively applied to living and working spaces. The quality of all human endeavors and experiences is impacted by design. And is there anything more important in the physical world?

So, it is time to get back to the business of design. Time is passing, and design firms must be in the best position possible to capture the opportunities that will come when the economy swings up again. This is the time to plan, plot and scheme—not to sit by and wait.

And keep in mind, during those most difficult times, when quitting appears to be the only answer, consider the alternative. You could be working in another occupation. (Now repeat after me: "Do you want fries with that?")

ASID president Michael A. Thomas, FASID, is the president of the Design Collective Group, a multi-faceted business located Phoenix, AZ. ASID can be reached at (202) 546-3480 or asid@asid.org, and on the Web at www.asid.org.

 

 
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