To help offset the decrease in land development and other private-sector work, as well as the poor economy in general, firms are rethinking their businesses, researching new markets, and pursuing initiatives to expand their service offerings. This “Survival Guide” offers ideas and insight to help your firm endure, and maybe even thrive, during this journey.
In April, Bob Drake, editor of CE News, hosted a roundtable discussion at the Civil Engineers’ Summit and Expo in Los Angeles to learn how firms are reacting to the decreased demand in services related to land development. Read how firms like yours are reacting and what their future plans include in “Beyond land development” on page 20.
Following up on what we heard during this discussion and others at the Civil Engineers’ Summit and Expo, CE News reached out to civil engineering firm leaders to ask what markets they are pursuing, advice for other firms, and what information they need about emerging markets. The findings here include answers to questions about entering one trendy emerging market, power and energy.
The most common, non-traditional/tangential markets firms entered, or significantly increased their presence in, during the past two years include:
- Sustainable design
- Parks and recreation
- Power and energy
- Construction oversight/management
Other markets firms are pursuing include laser scanning and program management. Some firms are pursuing work in extremely niche or non-traditional markets such as subsurface utility exploration, design and installation of ground source heat pump systems for heating and cooling buildings more efficiently, property management, and real estate. Many respondents mentioned a greater focus on public work, specifically at the federal level.
The impetus to choose a market is as diverse as the list above, but common reasons included current trends, available funding, client requests, and staff with experience. Additionally, new services that are complementary to traditional services civil engineering firms provide are attractive new ventures, as staff training will be minimized and firms can market past success more easily.
Street Smarts, a traffic and transportation firm with offices in Duluth, Ga., and Tallahassee, Fla., chose to pursue sustainable design, transit, and subsurface utility exploration in addition to its standard services. Marsha Anderson Bomar, president, cited reasons such as cost savings to clients for project delivery, great opportunity, and little competition in certain sectors of this work as the factors that influenced her firm’s decision to expand into these markets.
A message from Bomar on Street Smarts’ website exemplifies the firm’s commitment to being progressive. In a statement titled, “Our Own History in the Making,” Bomar writes: “2009 is going to be historic in many ways — and we look forward to the re-energizing of the economy — locally and around the world. Street Smarts has taken the time to identify new and productive ways to utilize the skills and talents of our staff in ways that have not been done before. We are focused on the success of our community, our clients, and our staff as we showcase these new opportunities to provide valuable service.”
How to do it
Once a firm identifies a market to pursue, the next challenge is how to accomplish its goals. Overwhelmingly, organic growth is the most popular tactic the firms queried use; it is about twice as common as the secondary method of making a key hire of an experienced professional. Geographic expansion, merger, and acquisition are other routes for firms to expand but are used far less often. Other methods cited by respondents include teaming with specialists in the area to gain experience, training staff and requiring them to earn new designations (such as the Leadership in Energy and Environmental Design Accredited Professional), and expanding the scope of existing projects.
Gewalt Hamilton Associates, Inc., a civil engineering and land surveying company headquartered in Vernon Hills, Ill., for example, has expanded its services into sustainable design, GIS, laser scanning, and parks and recreation when the firm identified “current and future work opportunities.” Chairman and CEO Robert B. Hamilton said, “[These markets] are all interesting extensions of our traditional service areas.” The firm expanded through organic growth and a targeted marketing program. Hamilton’s advice: “Stay where you are and let us do it all. We are really enjoying it.” Perhaps we should add, “Maintain your sense of humor” to the list of tactics needed!
Based on her experiences, Bomar said it’s important to “have adequate funding to buy the right equipment and hire the right people — make a long-term commitment.”
Here are some other pearls of wisdom from your peers about entering new markets:
- “Simply stated: Understand the need and whether it is marketable and have the expertise to execute.” —Ray Tadgerson, chairman and CEO, C2AE
- “Make sure you have a champion for the effort and the resources to deliver.”—Larry R. Thomas, president and CEO, H.W. Lochner
- “Try to do some of the work for existing clients prior to full-scale announcement. That way you have experience to tout when you go public with the new service offering.”—Larry G. Schmaltz, president and CEO, A2L Technologies, Inc.
- “Be realistic about the length of time it takes to enter a market and the associated costs, and also set a goal to achieve.”—Peter Moore, president, Chen and Associates
Firm leaders were also asked which market they consider their top potential growth opportunity in the next two years; traditional markets were included among their choices. Sustainable design again topped the list. Power and energy, wastewater, and transportation/roads and bridges were all tied for second place.
No respondents considered the following service lines as their top potential growth opportunity:
- Program management
- Laser scanning
- Utility management
- Air pollution
- Residential services
- Parks and recreation
- Land surveying
- Geotechnical engineering
- Structural engineering
While developing new business opportunities is an excellent activity during slow times, don’t loose sight of challenges that can appear for your traditional service lines. We all believe that the recession will end, private-sector business will return, and some say, civil engineers will be in more demand than ever before. But will you be prepared for business as usual?
One reminder voiced by many of the leaders was that your reputation is your best marketing tool, so don’t cut corners while times are tough. Even with smaller staff and tighter budgets, the quality of your work is of paramount importance.
Firm leaders who have lived through previous recessions remember that many of their old clients didn’t come back after business improved. Just like civil engineering firms, private-sector clients are going out of business, redirecting their focus, or discovering alternate ways to accomplish their needs. Your marketing and business development efforts today are setting the stage for your future success. You need to identify and build relationships with potential clients now to secure their future business.
Staff size could be another looming issue. When the work comes back, who will do it? Assuming your staff size is optimized for the amount of work you have today, what will you do if signed contracts for new projects pile up? Laid off civil engineers are starting new careers, going back to school, staying home with their kids, or starting a small business; they may not be available when you are ready to hire. When business improves, you may have a gap in your staff, and you won’t be able to overburden the superstars who stuck with your firm during these difficult times. To combat future trouble, keep communication with active job-seekers ongoing, as well as with your current team (this isn’t a time to forget about the importance of recruiting and retention best practices); streamline processes; capitalize on technology; and find other efficiencies to prepare your firm for the future boon we all hope is coming.
“Reduce costs of all descriptions at the first sign of reduced revenue. Resist the temptation to believe that reduced revenue is a short-term statistical blip.”
“Find the niche market. New needs always present themselves when the economic paradigms shift.”
“Focus on what you do best and don’t compromise your key values.”
“While it might be counterintuitive, continue to invest the same or more in training staff and marketing services to put your firm in a better position than your competitors to win a higher percentage of the fewer projects that are coming out.”
“Don’t bury your head in the sand and lament about the economy. Look for the opportunities that are there, even if it means you need to adapt and learn something new; learning is a part of growing.”
“Be diligent about cost control, and think outside the box for marketing. Be open and transparent with your employees.”
A ‘go’ or ‘no-go’ guide