MANAGEMENT FOR DESIGN FOURTH QUARTER E-MAG 2020
Business Conditions Survey 2020 Results So, what’s happened to confidence in the economy and business conditions compared to the same time 12 months ago?
The first thing to say is we have captured the sentiment of Australian business leaders emerging from the Covid-19 pandemic, cautiously optimistic that the future is improving! How different would our survey results have looked if we had surveyed during the most severe “lockdown” restrictions with complex and uncertain business conditions in June? With that said, 75% of our respondents are optimistic (cautiously to very) that the growth prospects of their businesses will significantly improve and grow over the next 12 months. The other 25% of our respondents expect to face difficult conditions—this is in comparison to 12 months ago, where only a small proportion of respondents (10%) expected to face difficult conditions. 54% of our respondents are cautiously optimistic, compared to almost all our respondents last year (90%). So, a higher proportion expects difficult conditions and a higher proportion expect significant growth.
Key points from our recent business conditions survey are: • There is a noticeable polarisation of expectations for businesses – a greater proportion expected to grow significantly, and a greater proportion expect to face difficult business conditions • More than 40% of our respondents expect the economy to grow over the next 12 months – but we are coming off a low base • Almost 20% of our respondents expect revenue to grow more than 20% • Over two-thirds of our respondents expect their profit margin to stay the same or decrease (21% expect their profit margin to decrease!) • 75% of respondents do not expect to have a skills shortage moving forward – a similar response to last year but significantly down from past years • 60% of our respondents expect to significantly increase their revenues over the next 3 years • “Only” 4% of businesses expect their employee numbers to reduce over the next 12 months! So, certainly not optimistic! But not pessimistic either! A number of our respondents expect to continue to grow into next year and beyond. Not surprisingly, the proportion of firms expecting price increases continues to reduce. And ominously there is now a proportion of respondents that expect to decrease their pricing. One-third of our respondents don’t expect to increase their fees (compared to 10% last year) and salary levels will only increase moderately (if at all). This year, the full results report has only been made available to survey participants. However, if you would like to request a copy of the results, please contact Management for Design Founding Director Robert Peake — rpeake@m4d.com.au.
Management for Design and ACA Business and Practice Management Systems Survey 2020 Results Management for Design and the Association of Consulting Architects Australia (ACA) have recently conducted our annual independent survey of business and practice management systems used by architects, engineers and consultants in the Australian marketplace. This is the only comprehensive survey of this information undertaken in Australia with the actual users. We have collated the results of over 190 businesses across Australia varying in size from 2 people to over 500 people. This is a similar response to the previous year. Thanks to those of you that responded to the survey. Summary Results 100 Very Effec�ve 80
Effec�ve
60
40
Somewhat Effec�ve
20 Not Effec�ve
Contract Administra�on
Document Management
Client Management
Resource Management
Project Accoun�ng
Time and Invoicing
Accoun�ng
As expected, there are numerous systems in use across the industry. Typically, as businesses become more complex — more business units, more departments, more locations, more people — there is a tendency to move to integrate the various functions of finance, project accounting, client, and document management (commonly termed an Enterprise Resource Planning [ERP] System).
The smaller the business, the less integration occurring across the various functions of the business and more application of stand-alone systems such as Xero for accounting, Total Synergy for time entry/project accounting and MS Project for project planning. As per last year, we have summarised the results and categorised the effectiveness into the following for categories, based on a weighted average of respondent feedback. Which accoun�ng system do you use and how effec�ve is it? 35% Very Effec�ve
19%
25%
8%
5% 3% 3%
Effec�ve
1%
Somewhat Effec�ve
1%
Not Effec�ve
BST
Oracle
BQE
Deltek
MYOB
MS Excel
Other
Quickbooks
Xero
Insights from this year’s survey include: • Xero is the only accounting system considered “very effective” • There are myriad systems that manage time and invoicing, and most are considered “effective” or “very effective” • Over 32% of our respondents did not have a resource management system in place • Almost 45% of businesses do not have a system for managing client relationships • Almost 40% of businesses do not have a formal document management system • The most common platforms for managing contract administration are MS Office and Excel
This year, the full results report has only been made available to survey participants. However, if you would like to request a copy of the results, please contact Management for Design Founding Director Robert Peake — rpeake@m4d.com.au.
Business Systems Webinar with Consult Australia
What business systems are you currently using and what systems are you lacking? What are the three critical systems that you need to have in your business? How do you go about implementing new systems and software? On the 8th of December, Callum Bruce, Business Systems Director of Management for Design, presented a webinar with Consult Australia to assist engineers to effectively implement business management systems and to grow, enhance, and maximise their firm’s potential. The webinar covered what a business management system is, why it’s valuable, how to navigate the myriad of software options, and how to set a firm on the path to successful implementation and behavioural change. In addition, Callum was able to preview Management for Designs new Management Reporting resource as well as our System Selector for Architects, Engineers, and Designers. Callum has worked in business systems consulting for over fifteen years and has an exceptional range of experience working within the Architecture, Engineering, and Consulting industries. During his career, Callum has worked with firms of 5–2500 employees to implement new business systems, drive change and increase staff knowledge of fundamental project management practices. If you were unable to attend this webinar and would either like to access a recording, or to speak with Callum about optimising your business systems, contact cbruce@m4d.com.au.
ACA Advisory Service: Frequently Asked Questions As part of our continued partnership with the Australian Association of Consulting Architects (ACA), members are now able to access an in-depth business frequently asked questions resource, which specifically relate to the architecture, engineering and creative businesses. Example questions include: • What does a concise strategic plan look like? • How do I create a culture of leadership among my key people? • How should I invest in business management systems and software?
Management for Design is committed to sustaining long term relationships with our clients that are built on integrity, expertise, commitment, and teamwork. Whether you recently started a business or have operated for years, we will advise you on the right way forward! If you would like to join the ACA Australia please visit their website here to access these services.
Client Choice Awards 2021
Entries for the Built & Natural Environment Consulting category of the Client Choice Awards, supported by Management For Design, are closing soon. There are a variety of award categories available to firms taking part in the small revenue band (less than $30m annual revenue). As well as having the chance to win an award, all entrants in this grouping receive a detailed client feedback report as part of the entry fee. As a special bonus, the first 50 entrants in December into the Awards will receive an exclusive chapter of beaton’s just-released research report (valued at $250) exploring the effects of the pandemic on clients in the built & natural environment consulting profession. All the information about how to enter and key dates can be found on the Client Choice Awards website or by contacting beaton directly.
How to Achieve Sustainable Growth
A typical misunderstanding of business growth is that it only happens through additional work, time, and effort, and for an already busy firm leader, this can seem like the last priority. But, sustainable growth can be very different. Sustainable growth involves planning strategically and ahead of time so that you have the right resources to achieve your business goals, without reacting too quickly that you occur an overhead. The following three elements should assist you in developing the resources required for the sustainable growth of your firm: 1. Increasing profit Firstly, it is necessary to differentiate between profit and revenue. Revenue is the total amount of income generated from your services, whilst profit is what remains after all expenses and debts are deducted. A profit margin between 10 – 20% is acceptable for a healthy architecture firm. We often find that when revenue increases, so do expenses, meaning that profit remains the same. This is often frustrating, as you are working hard with no substantial gain. Increasing profit ultimately comes from widening the gap between expenses and revenue. To lower expenses, firms can seek to eliminate unnecessary expenditures and improve operational efficiency. On the other hand, firms can seek to increase revenue by developing effective marketing and business development strategies that help bring in an increased number of better projects and clients.
2. Expanding team size Increasing team numbers often feels like a daunting task to firm leaders as it means more staff to manage and increased pressure to consistently bring in new work. However, investing in the right people, with the right expertise, at the right time can drastically improve the functionality of your business and facilitate growth. This involves recruiting people that are specifically suitable and well trained in their area of expertise. Additionally, having a slightly larger firm means you are less disrupted by events out of your control, such as a stalled project or an employee’s decision to leave. Generally, firms under five tend to scramble when these events occur, whereas larger firms with more available resources tend to be more stable during challenging times. 3. Improving and enhancing skills Team members and leaders at all levels always have the potential to improve and become better at what they do. Investing in professional development is important as it gives your team a chance to gain skills that can facilitate and improve your business. For example, perhaps invest in leadership or business management, given these skills are not typically taught at design school. Finally, ensure that you as a firm leader, model a culture of growth and development so that your team knows what to expect. Focus on changing unproductive processes, and ensure you have someone to hold you accountable!
It can often feel counter-intuitive to focus on growth when you are struggling with the responsibilities of owning a small design firm, however investing in sustained growth can indeed be what you need to uncover a new life cycle of your firm, where you feel more in control and ready to achieve your business goals.
Reading List A Short History of Nearly Everything Bill Bryson Taking as territory everything from the Big Bang to the rise of civilization, Bryson seeks to understand how we got from there being nothing at all to there being us.
The Making of a Leader: What Elite Sport Can Teach Us About Leadership, Management and Performance Tom Young In The Making of a Leader, Young shares the practical principles of sustained elite performance and shows how any individual can add value to their own business or organisation by applying these insights.
Making Ideas Happen: Overcoming the Obstacles Between Vision and Reality Scott Belsky Scott Belsky has interviewsed hundreds of the most productive creative people and teams in the world, revealing one common trait: a carefully trained capacity for executing ideas. Implementing your ideas is a skill that can be taught, and Belsky distills the core principles in this book. Start With Why Simon Sinek Start with Why analyses leaders like Martin Luther King Jr and Steve Jobs and discovers that they all think in the same waythey all started with why.
Lean In: Women, Work, and the Will to Lead Sheryl Sandberg In Lean In, Sheryl Sandberg- Facebook COO and one of Fortune magazine’s Most Powerful Women in Business- draws on her own experience of working in some of the world’s most successful businesses and looks at what women can do to help themselves, and make the small changes in their life that can effect change on a more universal scale.
