Thursday, July 24, 2014

How to Measure the Effectiveness of Full-Time Salespeople

by David Burstein, P.E.

Account executives, account reps, BD reps. Regardless of what you call them, they are essentially full-time salespeople—and they’re very expensive. 

How expensive? When you add up their salary, fringe benefits, admin support, travel costs and—most costly of all—the time of your technical people to write the proposals for the leads they find, it totals around $300,000 per year or more. If your firm’s average profits are 10 percent of gross revenue, that means each salesperson must find leads that generate $3 million per year—just to pay their additional overhead costs.

But can a full-time salesperson realistically bring in over $3 million per year in additional work? In very large firms, the answer is definitely yes. But in medium-size firms, the projects generally aren’t large enough to accomplish that goal.

Want a better way to measure the effectiveness of full-time salespeople? Base the success of these professionals on their ability to:

1. Identify and hook strategic clients. Each year, have each salesperson develop a list of “strategic clients” to pursue. Strategic clients should have a lifetime value of several million dollars or more. Measure success based on how many of these strategic clients he/she brings in—regardless of the value of the initial assignment.

2. Maintain the relationships. Salespeople should actively work to maintain their relationships with those strategic clients and be on the lookout for additional sales opportunities. Their success can be measured by dollars of sales booked during the year.


This way, each salesperson has two measurable goals—how many new strategic clients they land and how much additional sales are secured from strategic clients secured in previous years.

Tuesday, July 22, 2014

5 Tips to Cut Your BD Costs and Improve Your Program

Does it seem too good to be true? Can you actually cut your BD costs and improve your BD program at the same time? Yes! Consider these five tips:

1. Attend conferences at which you will speak or moderate a session. Often the registration fees are reduced (or waived) for speakers or session moderators.

2. Make decisions about conference attendance and exhibit opportunities early. We have seen registration fees and exhibitor fees almost double after the “early bird” registration period passes.

3. Plan conference dinner opportunities with clients and prospects early. Get the most out of your time away from the office with those important people who are there and also away from their offices. You won’t spend that much more than you will for a dinner with your colleagues, but the return can be tremendous.

4. Standardize so you can customize on proposal write-ups. This may seem a contradiction of terms, but there is always a certain amount of boilerplate. For example, most resumes don’t change in the descriptions of the staff member’s college degrees or professional registrations. What does always change is the exact role in the project being proposed. So standardize the unchanging parts of the resume and leave a block open for focusing on the individual’s role in the proposed project. Then spend important time customizing where it counts.

5. Focus on making quantum improvement in one aspect of the program at a time. Don’t spread yourself too thin. For example, if your general intro to your firm in your standard presentation is getting too long, spend quality time redoing that portion. Then make sure your staff knows that the improvement has been made. By making sizable improvements, you focus more energy and achieve better results with less expenditure of funds.  



Thursday, July 17, 2014

9 Secrets to Holding Ineffective Meetings

Good meetings are organized, well facilitated, and have a clear, preconceived purpose. But if you’re interested in holding ineffective meetings with your internal team or client group, below are nine, easy-to-follow, proven guidelines that should be practiced at every project gathering.
1. Hold frequent meetings, even if unnecessary. Everyone enjoys spending their days sitting in meetings, particularly when there is nothing to discuss. Principals like to know that their staff is being kept from productive work.
2. Don’t prepare an agenda. Agendas outline limited expectations and discourage participants from going off on tangents. Meetings should allow anyone to discuss anything that pops into their head.
3. Don’t have clear objectives. Everyone loves surprises! Be sure not to inform anyone ahead of time what the
purpose or agenda items are. This way, they won’t have an opportunity to think about things ahead of time or come prepared.
4. Start meetings about ten minutes late. By not starting at the scheduled time, you reward those who are late, and you provide break time to those who arrived promptly.
5. Encourage participants to arrive late. You don’t want your team to think that you take these meetings too seriously. Develop a precedent where attendees can arrive when convenient, and can come and go as they please.
6. Allow everyone to talk at once. Nobody likes a control freak, so rather than taking the lead and being the meeting facilitator, sit quietly in your chair while everyone engages in directionless banter.
7. Schedule meetings for late in the day. People are at their most energetic and productive near the end of the work day, right before they start thinking about heading home or having dinner.
8. Don’t take notes or record decisions. No one reads meeting minutes anyway, so why waste your time recording decisions and distributing notes. Instead, just try to memorize everything, and hope that others are doing the same.
9. Assign action items to groups rather than individuals. By tagging action items to a group of people – or not at all – no one can be held personally accountable when tasks aren’t completed on schedule or performed to a high quality.
It might be helpful to print this list and hang it in your company’s conference room. Distribute the list at your next meeting, to get everyone on board.


Tuesday, July 15, 2014

PSMJ Resources, Inc. Announces 2014 Circle of Excellence

PSMJ's exclusive Circle of Excellence highlights firms that demonstrate outstanding
achievement in the A/E industry

July 9, 2014 (Newton, MA) - PSMJ Resources, Inc., the premier management consulting firm for the architecture, engineering, and construction industries, announces members of the 2014 Circle of Excellence. Sixty-three exceptional firms made it onto the exclusive list this year.
PSMJ's Circle of Excellence is designed to highlight firms that are successfully managed, based on 13 key performance metrics that demonstrate outstanding achievements in profitability, staff growth, cash flow, productivity, business development, overhead management and turnover. TheCircle of Excellence represents the top 20% of participants in PSMJ's annual A/E Financial Performance Benchmark Survey .

"Year after year, the diversity of these firms continues to prove that success isn't necessarily defined by the size of a firm, their practice area, geographic location, or even the markets they serve, but instead by a strong commitment to solid business practices," says Kate Allen, P.E., Director of PSMJ's A/E/C Industry Surveys. "Our passion may be our practice, but top-notch business practices are critical for sustainability."
PSMJ Resources, Inc. announces the following firms as members of the 2014 Circle of Excellence :

360 Architecture Inc.
Klohn Crippen Berger Ltd.
ADF Engineering, Inc.
KSS Architects LLP
Aillet, Fenner, Jolly & McClelland, Inc.
Levi + Wong Design Associates
American Engineers Inc.
LMN Architects
Axiom Engineers, Inc.
Looney Ricks Kiss
Belli Architectural Group Inc.
M+H Architects
Bluestone Engineering
MKSK
Brown Engineers, LLC
Moore Engineering, Inc.
BWBR
Niles Bolton Associates, Inc.
Carpenter Marty Transportation
Pape-Dawson Engineers, Inc.
Challenger Geomatics Ltd.
Partners in Design Architects
Commonwealth Associates, Inc.
Penfield & Smith Engineers, Inc.
CTA Architects P.C.
Phillips + Bacon Consulting Engineers
DGR Engineering
Praxis3
Enterprise Engineering, Inc.
Prein&Newhof
Felsburg, Holt, & Ullevig, Inc.
Ready Engineering Corporation
Fleming Engineering, Inc.
Robinson Consultants Inc.
GEC Architecture
Rodgers Consulting Inc.
Graham & Hyde Architects, Inc.
Ryan Group Architects
Great West Engineering, Inc.
S & F Engineers, Inc.
Greeley and Hansen
Schmidt Design Group, Inc.
Hart & Hickman, PC
SPEC Services, Inc.
Hope-Amundson, Inc.
Studio Meng Strazzara
Hoyle, Tanner & Associates, Inc.
Tom Green & Company Engineers, Inc. 
HVJ Associates, Inc.
Vertical Arts Inc.
INSIGHT Structures
WB Engineers+Consultants
Johnson Braund, Inc.
Weber Thompson
Kimley-Horn and Associates, Inc.
WMA Architects/Planners Inc. 
KL&A Inc. Structural Engineers and Builders
Wright-Pierce
KLJ
ZFA STRUCTURAL ENGINEERS

The firms listed above have agreed to have their names published in association with PSMJ's Circle of Excellence. Firm names are listed in alphabetical order.
"The firms recognized in the Circle of Excellence set the bar for outstanding business results confirming that success, in any economy, is possible," says Allen. "Some firms have been in this prestigious group year after year!"
These firms exemplify both the basic and most innovative best practices in the business. PSMJ's A/E/C Industry Summit will bring together some of the industry's top leaders and most successful firms to share their experiences and honor this year's Circle of Excellence members. Located at the Omni ChampionsGate Hotel in Orlando on December 3-5, 2014, this year's cutting-edge conference focuses on Pushing the Limits, covering timely topics from commoditization and international business to client loyalty and brand marketing.

With data from 311 A/E firms across the United States and Canada, the 2014 PSMJ A/E Financial Performance Benchmark Survey Report is the go-to industry resource for firms wanting to increase cash flow, lower overhead, and improve overall financial results. Now in its 34th edition, the comprehensive report provides the most valuable research and insight available for making critical decisions that impact the success of a firm.

About PSMJ: 
For 40 years, PSMJ Resources, Inc. has been recognized as the world's leading authority, publisher, and consultant on the effective management of architecture, engineering, and construction firms. With offices in the United States as well as the United Kingdom and Australia, PSMJ offers over 150 titles in book, audio, and video format. In addition, the company publishes several monthly periodicals and delivers dozens of seminars, roundtables, conferences, webinars, and in-house training sessions every year for A/E professionals around the world. PSMJ's sought-after consulting expertise covers a range of critical business areas such as strategic planning, project management, valuation, succession planning, and mergers & acquisitions.   
For additional information please contact:

Gregory Hart
PSMJ Resources, Inc.
10 Midland Avenue
Newton, MA
02458
617-965-0055


Thursday, July 10, 2014

Identify Your Business Development Champions

The Business Development resource that you depend on the most is:

a) Our firm’s BD Plan, because without it, we don’t have direction
b) Our existing client base, because PSMJ survey data show that 80 percent of our work comes from these valued clients
c) Our BD director, because he helps us win the large multi-year contracts
d) None of the above

The answer?  None of the above. Why? Your best resource is the group of people in your firm who “get it” when it comes to BD.

Who are these people? They include your:

* Staff members who crave meetings and other interaction with clients 
* Receptionist
* Client-friendly project managers
* Most senior principal who maintains the most extensive client “rolodex” in your office

What do they do that makes them stand out? For example, they:

* Plan to attend conferences frequently, but the technical knowledge they will gain is only a part of why they go. 
* Assess which clients (or targets) will be there, who will be presenting papers, who will be chairing a technical session, and who will be exhibiting—all before signing up.
* Plan (and confirm!) dinners with clients and prospects before the conference. 
* Know that your business runs on profit.  (And to make a profit, you have to have a constant stream of work, preferably from high-quality clients who value your services and your people.)
* Maintain a “wish list” of future prospects, while working hard to maintain existing relationships and to take budding ones to the next level.

How do you identify and nurture them? 
There is, unfortunately, no simple answer.  But you should consider these two steps:

1. Watch how staff members conduct business on a day-to-day basis. How they:

* Plan conference attendance. 
* Interact with existing clients. 
* Select strategic targets and nurture the relationships.  
* Solve the problem a client is facing with the firm, and strengthen the relationship

2. Watch for success. Look for people who:
* Consistently have clients who want to work with them. 
* Always seem to have more work than they (or their department) can perform. 
* Will delegate tasks but retain overall responsibility (because they do not want to disappoint a key client with a single deliverable that does not meet expectations!)


Tuesday, July 8, 2014

A Formula for Success…or Failure?


By Greg Hart

PSMJ’s latest A/E Pulse poll shows that more than 1/3 of A/E firms (a full 39%) use a formula to determine their stock price.  A ‘formula’ can defined as some sort of mathematical equation to calculate the value at a given point in time.  Over the years, I’ve seen it all when it comes to valuation formulas…from the real basic and simple ones to the extremely complex ones.  Some yield a value that is quite close to the actual fair market value of the stock and some are just way off. 

If you are using a formula to set your stock price, here are some tips to make sure that it is behaving as it should be:

1.  Keep it simple.  A valuation formula should be easy to calculate and difficult to manipulate.  Don’t start trying to factor in external things like consumer price indices or other economic metrics.  Of course, there are external economic and market factors that can raise and lower valuations across the board over time.  But, I’ve yet to see a formula that can accurately capture this.  Focus on simple metrics like revenue, earnings, and balance sheet strength in your formula.    

2.  Give it a check.  To my point above about external economic and market factors, no valuation formula should go unchecked for more than three or four years.  The A/E industry is heavily exposed to boom and bust cycles.  Benchmarking your valuation formula with an outside professional valuation every few years will confirm whether the formula is still yielding reasonable results or if it needs to be recalibrated.

3.  Know the basis.  The actual value of an A/E firm’s equity is highly dependent on the purpose of a valuation.  Generally speaking, an internal share transfer valuation will almost always be significantly lower than an external sale valuation.  Know exactly which basis of value your formula is designed for and use it only for that purpose.

One parting point of note.  The A/E Pulse data also shows that 19% of the firms surveyed are setting their stock price at book value.  I’m out of space here, but I certainly want to point out some pros and cons of this approach in a future article.  As a quick teaser, I’ll just point out that book value is a metric that is fairly easy to calculate.  But, the downside is that it can grossly undervalue a design firm.  More to come on that topic!




Tuesday, July 1, 2014

Looking to Go Global? Here’s How

How are some firms able to move into foreign markets?  The firms that are successful in pursuing international grants have developed a strategy.  Their strategies include:  Analyzing how funds are broken down for type of project, size of project, and project finance terms; Determining which consultants have been selected in the past and why; Finding out who the developers and other financial partners were, if applicable; and Establishing what preliminary studies have been done, as well as what studies are in the pipeline.

The strategies can be broken down into seven stages:

Stage One:  Access the firm’s capabilities and its purpose for pursuing international opportunities. 
Evaluate the resources and capabilities of the firm as well as the needs and corporate growth strategy to develop an international market entry strategy. 

Stage Two:  Gather market intelligence and project sources. 
United States firms have found that publicly funded or publicly guaranteed international projects provide better assurance of being paid on time in accordance with the signed contract.  Use these resources to track opportunities and gather information on country intelligence.

Stage Three:  Nurture relationships with international public/private officials who are visiting the United States. 
Delegations from foreign countries frequently visit the United States to study U.S. facilities and receive training.  Hosting these delegations is often a cost-effective way for firms to develop key international relationships.

Stage Four:  Identify project opportunities and gauge project viability. 
International project opportunities can be tracked through different trade and multilateral agencies.  Often pre-feasibility and feasibility studies are available that assess the economic, financial, and technical viability of potential projects in the international arena.

Stage Five:  Acquire in-country business guidance. 
The U.S. Commercial Services department and the U.S. Agency for International Development are two excellent sources for overseas contacts and market intelligence.

Stage Six:  Nurture relationships with international public officials overseas. 
As a firm targets a country, it becomes more appropriate to visit the country and develop relationships with overseas public and private sector officials.

Stage Seven:  Influence project outcomes.
U.S. firms face stiff competition from the Japanese and the Europeans when procuring projects overseas. Project follow-up through direct contacts or foreign ambassadors shows a firm’s interest and commitment to the project outcome.

The international market offers a new frontier for U.S. firms, and with planned and developed strategies, the risks can be very rewarding and profitable.
 
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