Times are Good - But are you Making the Money you Deserve?
Herb Cannon
Right now things are good for A/E firms. Everyone I talk to seems to be busy
working long hours to meet those deadlines. Backlogs are increasing and
everyone is looking to hire quality people. Proposals are being sent out as a
steady stream and most of my clients seem to be winning at least their fair
share of work.
 Please repeat this mantra over and over again. 'We deserve to make a 20% + profit on our services.' 
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-- Herb Cannon
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The downside of being so busy is that we sometimes forget to do those basic
things that have made us financially successful in the past. It is increasingly easy to skip the project business review meeting. After all we do have that deadline to meet and another proposal to send out. Isn't it more important to meet our deadlines and bring in new work? So starts the rationalizing that leads to the steady erosion of profits. Instead of making the 20%+ profit on net revenues that we deserve, we wind up settling for 12% or 8% or even worse. Somehow this doesn't feel so bad since our actual dollar profit may not have declined all that much, we are making it up on volume. Don't fall into this trap! We deserve to make a 20%+ profit on our services.
Please repeat this mantra over and over again. "We deserve to make a 20% +
profit on our services." When things start to slip financially it is always a good idea to go back to the basics. These 6 steps are the absolute bare bones minimum: 1. Stop the scope creep. If you don't get paid for all of your work it is tough to make any profit at all. Make sure to get paid for your entire scope of services. 2. Make sure the client agreement is in writing. This helps with the scope
creep and collections. 3. Get paid for all of you work. Make sure all your invoices are sent to the clients no later than 5 days after month end and sooner if possible. 4. Call for payment on the 31st day. 5. Monitor your utilization weekly and make immediate adjustments when needed. 6. Hold project business reviews every 2 weeks to monitor the financial expenses vs. budget and make the necessary adjustments. Use these meetings to identify potential extras and immediately notify the client. The business climate is good but how much longer will it last? Interest rates
are still low, but heading in the wrong direction. Oil is at $50 a barrel and
rising. Inflation is starting to heat up. The time to make money is now. Not
next year, not next month and not next week. Make your money now and save for
the inevitable rainy day.
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