The economy has not been gentle to the industry, and that makes leading a Hot Firm all the more challenging. Although the growth numbers may look impressive, leaders still faced tough decisions none of us would envy having to make. Sometimes we have the benefit of legacy practices and company history to help guide us through, but the majority of Hot Firms are still in their first generation of ownership, making them a young crowd with an increased reliance on other key managers and more accurate data and forecasts to inform their decisions.
The "2011 Statistics of the Hot Firm Survey," conducted as a supplement to the 2011 Hot Firm List, offers some insight into the common characteristics of Hot Firms in this difficult economy:
- Hot Firms are forward-looking firms. Despite market uncertainty and the temptation to lay low and hope for the best, these firms pursued multiple strategies to grow the business. A stronger push with marketing, diversification of clients and services, extra attention given to employees, and a greater focus on bolstering expertise and innovation are the initiatives and goals they stuck to. And yet, these are efforts available to any firm. The differentiator is that Hot Firms decided to invest in that growth even if it was the toughest decision they'd make all year.
- Hot Firms are vision-oriented and employee-committed firms, and their strategies include investing in, motivating, and caring for their teams above profits. Motivation isn't necessarily synonymous with monetary rewards — which is why Hot Firms acknowledge the power of open-book management and the significance of establishing and sticking to a vision. This is not to say that compensation isn't important or that hard work isn't appreciated; the majority of Hot Firms have an incentive compensation plan in place for managers as well as for the rest of their staffs.
- Hot Firms are mostly organic firms, and they grew their revenue by securing more work out of their existing roster of clients rather than from new ones. Adding new services to their offerings was also a successful activity — ranking well above mergers and acquisition (M&A) activity. Despite a lot of curiosity in M&A and a high proportion of firms admitting they were approached by an eager suitor this year, a very small percentage of Hot Firms actually completed one.
- Hot Firms are marketing-minded firms. As mentioned above, gaining a larger share of a client's work, entering new geographies, and selling to a whole new batch of customers requires more than one's average everyday marketing. Limited opportunities, heightened competition, smaller fees, and proving one's value are still real challenges that even the Hot Firms face. An increase in marketing expenditures — not less — and a wider range of marketing activities — not fewer — are Hot Firm success factors.
- Hot Firms are positive firms and see more growth for 2012. Despite the fears they specifically mention — fears that likely plague all firms in the industry — Hot Firms have multiple plans in place to address these. These kinds of actions require tenacity and a positive outlook, but if they are applied as they were in 2011, they will undoubtedly yield similar success.
Christine Brack, PMP, is a principal with ZweigWhite specializing in business planning and project management best practices. She can be contacted at email@example.com.
Purchase the complete "2011 Hot Firm Report" at https://www.zweigwhite.com/p-1140-the-zweig-letter-2011-hot-firm-report.aspx