10. Commit to Understanding the Economics of Running an A/E Firm
Every week, I meet design professionals that somehow have managed to stay in business with little or no understanding of what it takes to consistently produce a profit. They have no idea how little effort is required to learn the basics of running a professional service firm. They believe that working longer hours is the only way to produce a profit and stay in business. Worse yet, many of them make the excuse that quality design and making a profit are inconsistent goals. I have worked with some of the top design firms in the country and I can tell you without hesitation that making a healthy profit is not at odds with top quality design.

There is a substantial amount of literature, seminars, videos and workshops on this subject. If you don't know how to calculate your net multiplier, overhead rate or utilization rate and the impact on your bottom line you need to take a few hours to study the subject. Feel free to contact me if you would like to be pointed in the right direction at hcannon@aecmanagementsolutions.com

Raise your expectations for the information produced by your accounting department. -- Herb Cannon

9. Recruit Better Employees
At the end of the day all we have to produce our product is our employees. If we have lousy employees, it only makes sense that we will be unable to produce quality work. If we want to produce quality design and make a healthy profit, we need to commit ourselves to finding and hiring the best possible staff.

The biggest mistake many firms make in hiring is waiting until they need people before they start the recruiting process. One of the keys in recruiting better employees is to always be recruiting and interviewing. Once you identify someone you would like to have on your team, you can either upgrade your current staff or add them on if the workload permits. If you don't have the workload to justify the new hire and you are happy with your current staff, you can often keep them in a holding pattern, until you have something available.

8. Be Willing to Lose a Job on Price
Do you pride yourself on never losing a job on price? If so, you are undoubtedly pricing your services too low. The A/E industry as a whole consistently under prices their services. In fact most firms could easily raise their prices 8 to 10 % without losing any of their current clients.

How do I know? I present my seminars and workshops to hundreds of design professionals every year and I always ask 2 questions. "How many people raised their fees at least 10% in the last year?" Typically about 15 to 20% of the audience raises their hands.

Of that group I ask, "How many of you lost a project or a client?" Everyone then puts their hand down and I ask the group "Who hasn't raised their prices in the last year? Why not?" I have yet to get a good response.

Do yourself a favor and ask yourself the same question - and then raise your prices.

7. Have Your Accounting Department Produce Timely and Useful Information
Raise the expectations for the information produced by your accounting department. Too often we set our sights too low on what is expected from our accounting department. Work with the accounting staff to set achievable goals for producing timely and useful information.

Remember that in order to achieve this goal, everyone in the firm must cooperate by submitting their timecards every Friday and approving draft invoices the day they are received. We can set high expectations for the Accounting department, but they are not miracle workers. If they don't have the required information from the staff, then they can't produce the reports we need to manage our company.

6. Act Upon This Useful Information
You invested in accounting/project management software. You hopefully hired qualified people in the accounting department. They produced the information you need to run your business. Use it! If the project is over budget, brainstorm to figure out why. Maybe we are producing out of scope work? Maybe the schedule has been extended? Maybe we are receiving conflicting design direction from the client? The bottom line is that we need to figure out why we are over budget and develop a plan of action to get it back on track, otherwise don't even bother to produce project reports.

5. Hold People Accountable for Their Results
One of the biggest problems we have in this business when it comes to producing a profit is that we don't hold anyone accountable for the results they produce. We produce the project reports and can easily see that certain project managers always under perform financially. They consistently over run budgets, they have problems meeting the project schedule and often have difficult client relations. Other project managers consistently over achieve. They always produce a profit in excess of expectations, they meet their schedules and their clients love them.

When it comes to raise or bonus time, we tend to overlook the shortcomings of our under achievers and minimize the contributions of our over achievers. Lets do our best to turn this around by explicitly stating our expectations for all employees. Then we can monitor his or her performance, give feedback as needed and provide the necessary training to make everyone a top performer. At the same time we can financially reward our top performers. (See item #1)

4. Fire Your Worst Client
You know who your worst client is, we all have them. The one who negotiates the lowest possible price then mercilessly expands the scope and refuses to increase the fee. They call up on Friday afternoon at 3PM demanding extensive design revisions by 9AM Monday Morning. In short they produce 80% of your aggravation and 0% of your profits (at best).

When it comes to paying they always question every line item 90 days after receiving the invoice. After you revise and resubmit the invoice they claim they lost it, or never received it or the other signatory on the checking account is on vacation for a month, or they are looking for some previously undisclosed 3rd party partner to put in their share, they can't find their lucky pen to sign the check&the list goes on forever.

Let's get rid of these guys. I don't know about you, but I only plan on working for another 20 years or so - and I certainly don't have enough time left in my career to deal with this aggravation.

3. Fire your Worst Employee
You certainly know which employee I am talking about. While driving into work on Monday morning you wistfully daydream about how wonderful your life would be if this employee would only resign. Maybe this is the week. They have been with you forever and years ago they might have been a decent performer, but time has passed them by and now they are nothing but an under performing drag on the entire company. They complain about everything, criticize every new company policy, act as the clubhouse lawyer and no one wants them on their team.

Deal with this person today. Give them a nice severance package, a good reference and send them on their way. It is addition by subtraction.

2. Renew Your Commitment to Satisfying Your Existing Clients
What is the number one reason that clients stray to other A/E firms?