This year’s list expands to include the top 200 fastest-growing A/E and environmental consulting firms.
For the eighth year in a row, The Zweig Letter has ranked the fastest-growing architecture, engineering, and environmental consulting firms. The Zweig Letter Hot Firm 2007 List was created to identify the fastest-growing architecture, engineering, planning, and environmental firms in the United States and Canada from 2003 to 2006. After much competition for one of the top 100 spots during recent years, the 2007 list was adapted to recognize more firms for their accomplishments. The list doubled in size—from 100 firms last year to 200 this year—and 50 honorable mentions were added. In addition, the top three firms in each of eight common firm types were recognized and the top 10 firms by size were listed within each of three staff-size categories.
The process began last January with a nationwide call for industry firms to complete a short entry form with questions about their firm type, size, and 2003 and 2006 gross revenues. Submissions were received from hundreds of firms exhibiting growth during the last three years, and then the top contenders’ revenue figures were verified using financial statements or income tax returns reviewed by third parties.
Eligibility rules for The Zweig Letter Hot Firm 2007 List state that firms must be based in the United States or Canada and derive the majority of their revenue from the practice of architecture, engineering, planning, environmental consulting, design and construction, or allied disciplines. Eligible firms had to be in business as of Jan. 1, 2003, and had to have 2003 gross revenues of at least $1 million. Since the Hot Firm List was created in 2000, special care has been taken to recognize both small firms and large firms for their success. Firms’ dollar growth and percentage growth are weighted equally to give both small and large firms an opportunity to make the list. Each firm was assigned a dollar ranking and a percentage ranking—combined for a total score. The 200 firms with the best combined scores made The Zweig Letter Hot Firm 2007 List.
The Zweig Letter Hot Firm 2007—Top 10 Firms*
|5||The Lawrence Group||$43,661,610||342%|
|6||Compass Environmental, Inc.||$77,019,344||235%|
|8||Natural Resource Group, LLC||$32,794,250||251%|
|9||Stantec Consulting, Inc.||$194,078,425||168%|
*Click here to view the complete Hot Firm List.
Small firm, big growth
The Zweig Letter Hot Firm 2007 List truly represents the success of firms of all sizes—and the ability of the little guys to compete with the big boys. Clinard Engineering Associates, LLC of Brentwood, Tenn., a 16-person transportation design firm offering roadway and bridge design, civil, site design, and environmental services, placed 187 on The Zweig Letter Hot Firm 2007 List, the smallest firm to make the list.
"It was an exciting surprise," Managing Partner Tom Clinard said. He shouldn’t be so shocked: The firm’s 2003 revenues of $1,048,869 rose to $2,663,633 in 2006, a 154-percent increase due, Clinard said, to the extension of the firm’s service lines, the addition of key hires, and a commitment to a small-firm atmosphere and flexibility that bigger firms in the area just can’t match.
A family business
Clinard was founded nine years ago as a transportation design firm. Founding Partner Phil Clinard had worked for the Tennessee Department of Transportation and retired in 1999 after 37 years. Phil’s son, Tom, had been working for 800-person multi-disciplinary design firm Gresham, Smith and Partners of Nashville, Tenn.
Starting the business together "goes back to when I was 10 or 11 and my dad used to do a surveying business on the side," Clinard said. "I helped with the business, and we thought it would be neat, down the road, to have our own firm." The firm now operates three divisions: transportation, environmental, and land planning, with a partner heading each of those categories. Clinard attributed the firm’s growth from 2003 to 2006 to several key factors:
Strategic planning—"We made a conscious effort to sit down and do a strategic plan for the firm in 2003," Clinard said. The three partners—Clinard, Phil, and Sammie McCoy—"sat down, worked out a plan, and updated it when we needed to. That was probably the best thing we did."
Adding service lines—Clinard expanded from its original roadway and bridge design work to include civil, site design, and environmental services. This led to opening an office in Chattanooga, Tenn. There is also a project office in Huntsville, Ala., that the firm wants to expand.
Recruiting key hires—"One of the biggest hurdles for us was finding qualified folks to fill these positions as quickly as possible," Clinard said. The firm grew from seven people in 2003 to 16 now, including the addition of five people in one year. Clinard considered using a headhunter, "but, primarily, what works best for us is past relationships with employees at other firms." The firm offers competitive salaries, a 401(k) company match of up to 4 percent of an employee’s salary, and a generous profit-sharing program. Clinard brings in new hires by "tapping into the frustration that people may feel that they’re just another number in an 800-person firm." His firm also offers flexible working hours and a very laid-back office and atmosphere.
The firm also cultivates a family atmosphere with out-of-work bonding opportunities a couple of times a year, such as Tennessee Titans football games and Nashville Predators hockey games, to which families are often invited.
Outsourcing administrative responsibilities—Clinard himself had long been responsible for most of the firm’s marketing and HR functions. However, "one thing that may have contributed to our growth is that I started outsourcing some of those duties I used to do, which freed me up to get out of the office to market the firm and develop business," Clinard said.
"It takes money to make money," he said. "We made an effort to set up a marketing budget. We had to keep reminding ourselves, ’It’s going to pay off.’"
In 2004, the Alabama Department of Transportation selected Clinard for an on-call design contract, which entails an indefinite work agreement for spur-of-the-moment engineering projects. The Tennessee Department of Transportation also selected Clinard for a couple of similar environmental services projects. "We also started to pick up a lot of smaller civil, site, and land planning projects in Tennessee that diversified us a bit," Clinard said.
Clinard’s reputation is already spreading. "Being our size, it seems like a yearly occurrence that we get another firm from the outside wanting to come knocking on the door, asking about an acquisition. It’s something we wouldn’t say we’re never going to do. We’re definitely keeping our options open on that."
Asking the experts
In an exclusive survey, The Zweig Letter asked presidents and CEOs of The Zweig Letter Hot Firm 2007 List about their growth strategies, their biggest obstacles to continued growth, and the outlook for the A/E business, among other topics.
Seventy percent of survey respondents said their firm’s primary means for achieving growth during the last three years have been through geographic expansion and expanding marketing activities (68 percent). Other strategies used by more than half of the firms are increasing hiring and recruiting activities (64 percent), entering new markets (58 percent), and introducing new services to existing markets (55 percent).
Sixty-four percent of survey respondents said that expanding market activities has supplanted increasing hiring and recruiting as the most-popular growth strategy when asked, "What are your primary growth strategies for the coming 12 months?" While only 28 percent said they had pursued a merger or acquisition in the past three years, 55 percent say it will be a primary strategy in the next year. Conversely, fewer firms will be expanding geographically than in previous years, and firms aren’t planning to enter into new markets.
A little less than half (49 percent) of Hot Firm leaders cited finding, hiring, and retaining qualified employees as their top challenge in growing their firm.
Hot Firm leaders are cautious about the outlook for the U.S. economy in the next 12 months, but 58 percent of respondents expect the A/E business will outperform the U.S. economy as a whole in 2008. That number is down, however, from the 68 percent of respondents in last year’s survey who felt the A/E business would outperform the economy.
Overall, presidents and CEOs expect that their firms’ growth will continue to be strong in the coming year, and most expect to return to The Zweig Letter Hot Firm List in 2008.
Laura Rothman is a principal with ZweigWhite and has served as the research director for The Zweig Letter Hot Firm List since 2001. She can be reached at firstname.lastname@example.org. Rachel Lebeaux is a writer and editor of The Zweig Letter, The Zweig A/E Marketing Letter, and The Zweig HR Letter. She can be reached at email@example.com. Additional information about The Zweig Letter Hot Firm List may be found at www.hotfirm.com.