In my hometown, like most of my peers, I began my firm in the early 70's. We're boomers. Many of us in the early AEC community literally grew up together. We experienced Houston's boom-bust cycle every decade for the past 5 decades - Oil Embargo, Banking Crisis, Dot Com Bubble, Wall Street Collapse, and now Oil...again. Around here, it's a way of life. So you work hard when it booming, stuff your profits in the bank and save it for the bust. There are plenty of lessons learned, of course. But the best lesson learned was the simple rule that what goes up must come down. In addition, after the first two cycles, we learned the pattern and could foresee and plan around a potential market fall.
When we are in a boom like the recent "Shale Play" that created unprecedented opportunities for office, building, housing and retail development to satisfy expanding businesses - that rising tide floated everyone's boat. For those who started their practices to ride the wave it seemed like each day was better than the last and tomorrow would be better still. It can be difficult if not impossible to explain the situation to young practitioners. Possibly the two worst actions taken were 1) to spend the new found wealth, and 2) to expand at the peak of the boom. When that rug is yanked out from under your practice those are the two most regretted and often unrecoverable decisions.
It's the beauty of hindsight, isn't it? As we say here in Houston, this is no place for crybabies. The solution is to look the future square in the eye, keeps those lessons learned near the top of your thinking and create a positive plan for 2020. It's never too late to begin anew.
As a veteran "boom-bust" survivor, here are some of my lessons:
- Understand that the cycle will turn. Do not fool yourself. If it doesn't turn right away, just be patient - and prepared.
- Avoid leveraging your firm. Pay cash and pay as you go. This includes not expanding your office and staff at market peak.
- The best time to spend money on marketing is when the market is up. Sell from a position of strength.
- Reserve a portion of your profit. Nothing can shut down your practice with more certainty than failure to meet payroll or rent.
- Talk to everyone you can, especially more seasoned practitioners, and attend all the market forecasts to develop your own feel for the trend of the market. Learn the warning signs.
Each of these points are fairly self explanatory, but there are many fine points as well. Consider a mentor who has survived the cycle and may be very helpful in guiding you in your practice. The decades in Houston or any city are kindest to those who survive because over long periods of time the money you invested in your people and your firm will be well rewarded. Every step along the path of firm building has hazards and pitfalls. The longer your firm survives and thrives, the stronger and more savvy you become. You might find a little more insight for your 2020 plan in my early blog post "Thinking Big in a Small Firm" at http://www.burwell-consulting.com/blog/2015/2/27/thinking-big-in-a-small-firm. If I can help answer questions or help your firm see around the next corner, give me a call.
William M. Burwell is a retired Architect and Interior Designer whose career focused on corporate interior architecture in sole proprietorships, and partnerships from 9 to 120 staff. Bill retired in 2014 and began Burwell Consulting a Firm Marketing and Management Consulting firm, to share the wisdom and experience of those 45 years Bill writes articles sharing his experience in four keystone practice areas: Marketing, Design, Project Management and Practice Management. He graduated from the University of Houston College of Architecture in 1971 and now serves the College on the Dean's Committee on Excellence. Check him out at www.burwell-consulting.com