The AEC industry has experienced seven straight years of prosperity. In the past three years, project volume has been ridiculously high in most markets and industry sectors, thanks to economic growth and pent-up demand following the recession.
All industries go through ebbs and flows when it comes to construction. These industries might be exploding with new projects today, but what happens tomorrow? A market correction could be just around the corner. There are only two phases of an economic cycle where a company can take significant market share: One is going into a recession, and the other is coming out of it.
The last thing AEC companies need is for the bubble to burst without any contingency plans. You can’t properly take advantage of the economic environment if you don’t strategically leverage it to prepare your business for a future decline. What are you doing this year to position and prepare your organization to navigate a slowdown?
Three Challenges Your 2019 Plan Must Tackle
To get ready for the market turn, make sure your company considers these three important strategies for long-term growth:
1. Develop more leaders. AEC companies face a lack of senior leadership. They’ve experienced so much growth that they don’t have enough senior leadership to manage everything. And because they’ve been swamped with day-to-day tasks, these leaders haven’t had time to train anyone to take on more significant responsibilities. This has created a massive bottleneck where only a few people can be managers, yet the average company needs at least 10.
Your company won’t scale up without properly trained leadership, end of story. If you haven’t already, it’s time to embrace leadership and management-training mindset. You’ll also want to re-evaluate your current managers — most of them were likely trained through sheer inertia. Take the time to give formalized training, expectations, and resources. Leaders aren’t born, they’re trained.
2. Become a doomsday prepper. You don’t have to be quite as extreme as the average prepper, but prosperous times are the best opportunities to plan for inevitable setbacks. Make sure your strategic road maps address the following questions:
- Should you buy more big assets in 2019 or 2020 (based on when you think the market might shift)?
- Which poorly performing services, departments, or locations have you have failed to correct?
- Are there subpar performers or people who are not cultural fits on your team that you need to remove or replace?
3. Evaluate markets. You need to decide which markets or sectors you’re not passionate about, aren’t profitable in, or are unqualified to serve. Let those fade away. Fulfill your existing obligations, but stop investing time and resources to grow in those industries or markets.
By stopping this waste of energy, you can instead enter growing industries and markets that you’re passionate about and profitable in, which will allow you to remain steady in throughout a recession. For example, one of our clients has relied on retail stores as its niche for years before realizing that this sector is declining. That client faced a tough choice about pivoting critical services, but the change ultimately was for the best.
The best time to prepare for the worst is when you’re doing well. Take a step back and use these three strategies to keep your company going well beyond this year. Don’t want to do it alone? Use the P10 Evaluation to discover how well you and your team are currently performing.