WHAT’S NEW
MANAGEMENT FOR DESIGN Autumn 2014
Costly design business mistakes With changing market conditions, maintaining a successful design firm can be challenging. The industry has become more competitive, cost pressures are coming left, right and centre and there are any number of practices that have become more innovative in the way they deliver their services. In difficult times many firms adopt bad habits which in the long run limit their ability to increase their profit margins.
The most common business management mistakes design firms make are: 1. Not embracing change Constant change and improvement is necessary for growth and enables firms to be more competitive. 2. Inappropriate senior appointments This is a big one and can have far reaching and long lasting consequences. If you are nodding and in this situation then ask for help — don’t sit on it!! 3. Inadequate spending on marketing In a difficult climate marketing is often one of the first expenses to be cut. This can have a significant effect on a firm’s ability to recover when opportunities return. The fastest growing firms spend more on marketing during tougher economic conditions. 4. Inadequate accountability This needs to start at the top and flow down through the organization. Responsibilities should be clearly articulated and you need to set people up to succeed (if you want them to!). 5. Poor recruitment decisions This doesn’t only mean recruiting the wrong person but includes recruiting at the wrong time and with the wrong employment conditions. 6. Not investing in the business and its systems This goes out the window when cost pressures arise. Well guess what — you won’t have a successful business if you don’t! 7. Lack of financial management expertise Having an expert in financial management available to assist with business decisions is essential — this is not a book-keeper or office manager! 8. Poor cash flow management Managing cash flow is essential in order to be prepared to deal with any potential highs and lows. Effective invoicing and collection will allow you to impact cash flow and you need to have accurate forecasts so that any potential shortages can be dealt with in advance. 9. Not sharing financial data Many businesses are hesitant about sharing financial data with project managers, however if project managers don’t receive the necessary information they are unable to make informed decisions and this can impact profit margins. 10. Not training project managers Most project managers never receive complete training for all the different facets of their roles. Good training is essential. 11. Antiquated systems Many firms are still using outdated software and are therefore missing out on the competitive advantage newer technology provides. New technology should be viewed as a strategic advantage.
12. Not planning for succession Companies should prepare for ownership transition at least 5 years in advance. Think about it from the moment you set-up your business. It’s not an afterthought.
Integrate your Business Management Systems 1. Increase your productivity What are the keys to productivity? Effective forecasting, planning, implementation and monitoring of projects and resources combined with a timely means of reporting. Get more done with less effort!!!
Utilizing an integrated business management system enables businesses to: •
Centralize revenue, resource and cash flow information and compare this to budget and forecasts and initiate the appropriate corrective action.
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M anage the flow of information from prospect to submission to project and client.
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M aintain critical data in a central location and extend the information flow from the accounting department, through to senior management and project managers.
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G ain immediate enterprise-wide access to accurate, timely information thereby expanding the knowledge base and make it actionable.
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F acilitate remote work stations via the web.
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R eport whenever and wherever on financial and project information and metrics earlier.
2. Reduce non-value adding activity A well-implemented, effective business management system will reduce costs and improve the bottom line right across the business. In our experience we have seen innumerable processes that can be reduced or eliminated by working in an integrated Business Management System. Some of these include: •
A reduction in the time it takes to produce financial management reports.
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Automation of both the accounts payable and invoicing processes.
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Elimination of the time consuming double-entries that most businesses encounter.
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Reduction in the need for spread sheets and cross-checking of accuracy of data.
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Reduce administrative costs by eliminating redundant processes and data entry.
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Increased accuracy in time collection and billing and less checking.
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Increased project profitability by reducing budget overruns.
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Increased resource utilization.
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Reduction in the support required to support disparate systems and to manage the flow of information.
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Decreased time in managing marketing campaigns and email mailouts.
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More informed strategic decision making.
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Decrease in time to integrate numerous desktop tools such as Outlook, Word and PowerPoint.
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Automation of the creation of proposals and project setup.
3. Increase the value of your business The value of your business is built on clients, projects, intellectual property and strong and stable business management systems. What do you have in place and what are you building? Have you created a business that relies on you to generate the work and design and manage the project delivery through your own hard work? If so, you have not created an asset — you have created a job!!
With the next decade posing as the most demographically challenging for firms looking at potential ownership transitions, this becomes even more critical; putting strong financial and business management systems in place now is an important ingredient to ensuring that your firm has a successful foundation for sustained success. Success-minded firms require a laser-like focus on strong project and financial management practices — the kind that can carry their long-term growth goals to fruition.
Strong business management systems used to require deep pockets and be the domain of large practices of 100 people plus. This is no longer the case. Small and medium practices CAN now get the type of functionality that used to be available only to firms with deep pockets. In fact, it’s now quite easy to implement a Business Management System that not only addresses the accounting function, but also facilitates the firm’s core processes and way of doing business.
Managing your client relationships A CRM system is not just an MS Outlook repository for client and prospect contact details. One of the primary goals of a CRM system should be maintaining and increasing revenue. This is accomplished by leveraging many aspects of an effective system, the most important of which are: •
Communication
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Collaboration
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Enabling follow-up
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Reporting
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Predicting
An effective CRM System should: •
Be the corporate Client Database
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Track and measure Business Development efforts
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Remind you to follow-up in a couple of days, weeks, or years
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Become a central repository for notes and information on a given client or lead
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Manage qualified leads and keep them from falling off the radar
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Manage and track outstanding fee proposals, including forecasting revenue
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Manage prospect customer interactions
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Identify Business Development Tasks that need to happen and whether they are actually happening
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Notify Client Managers about interactions everyone else in the company is having with their client
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Provide feedback on projected revenues and actual revenues
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Report projected revenues by group/department/company
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Increase collaboration between groups and departments through information sharing
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Alert Client Managers and management when revenue is declining for a given client
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Provide a historic record of projects and submissions for the client and prospect
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Be a central repository of information on other firms, e.g. architects that are winning hospitality work that we can team with to pursue future work
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Report on Business Development activities: “That which is measured is improved”
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Manage conferences — costs, exhibiting, attending — and relate it back to specific employees
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Answer the question: what happens to someone’s contacts when they leave?
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Provide historic Information on prospects, marketing events, e-mag distributions, lunches, relationships, and more
A Great CRM should do all of the above and more including: •
Integrate with existing project and client data, allowing for cross reporting related to current revenues and past revenues and how these relate to future revenues
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Identify opportunities that aren’t moving/progressing
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Report on the effectiveness of the Business Development staff
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Identify who and what efforts result in new work
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Integrate with a Client Retention Program (e.g.: survey feedback loop to measure success)
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Become a measurable part of the employee review process
The right people on your team Successful businesses — without exception — want team members who will work together not only to achieve the objectives that the business has set, but to make everyone else on the team better than they are individually. In particular, they want team members who will challenge management, who will enable the business to be at its best, and who will work hard to ensure that the principles and mission are shared throughout the team.
What kind of energy do they have? A great team player never thinks or speaks in terms of “can’t,” only in terms of “can,” as in “How can we?” Such team players are filled with energy. They light up a room with their excitement and enthusiasm, their calmness and focus, and their strength and confidence. Their energy will permeate everything we do. It will be the fount of resourcefulness and connectedness with others, and it will enliven your team with positive feelings that increase your speed and expand your possibilities. Do they want to be the best? One of the primary rules for success is that you must have an undying desire to challenge yourself to grow and be the best. Some people just want to do a good job, to be liked, to be comfortable, and to be part of an enjoyable team, and that’s all fine. Are they willing to put in the time and energy that being the best takes? Of course, even with the most talented and most committed people you can find, you won’t necessarily achieve this all of the time. But a key ingredient to success is at least trying — “going for it” 100% of the time. And to do that, all of your team members need to be willing to do whatever it takes to be the best.
Are they willing to let someone else in the team be the best? This might seem like a contradiction of what we just stated, but it’s really not. Having a desire to be the best is outwardly focused. Being willing to let someone else be the best is inwardly focused. Stated simply, being on your team means that you put aside your desire for immediate personal gain and are willing to support others. It means you don’t always get to be the star. You have to be just as enthusiastic about being in the background for a time as you are being the centre of attention. Are they personally responsible? Another essential quality for anyone who wants to be part of your team is being willing to take responsibility for one’s own decisions and actions. We don’t want someone on your team who has trouble accepting responsibility or who points fingers at others. That only breeds distrust and can undermine or even destroy a team. Instead, we want someone who is comfortable enough with himself or herself to say, “I made a mistake, but I learned from it,” or, “Here’s how I would do things differently next time.” Do they have unique talent or ability? Ideally, each person on your team should bring unique talents or abilities to your business. Not everyone needs to be a ‘superstar’ in all facets of the business. What we need are people who are superstars in at least one critical aspect of your business, people who can complement one another and whose talents add value to those of other team members. Are they willing to adhere to your principles? This is the most important point: the principles and rules that govern how your team members interact with one another. Your business will rise or fall on the strength of the behaviours of your people. It’s imperative that each of your team members — willingly and enthusiastically — subscribe to your principles and rules. If they can’t or won’t, that’s OK. It’s their choice. But then they should join another team and not yours. Your team’s success ultimately will depend on the success of your principles and rules, and that success will turn on the commitment and compliance of those who are asked to live by it.
