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Kindling for growth

Kindling for growth

By Luke Carothers

From the Zweig Letter

Zweig Group experts share their insights on the unique challenges and opportunities faced by small, entrepreneurial AEC firms.

More than five decades of experience in AEC industry leadership and expertise were on display during Zweig Group’s recent Fireside Chat Webinar. Using the format of a classic fireside chat, Mark Zweig, founder and chairman of Zweig Group, and Chad Clinehens, president and CEO of Zweig Group, explored topics and questions centered around the unique challenges and opportunities specific to small firms in the AEC industry. In anticipation of Zweig Group’s 2024 AEC Small Business & Entrepreneurship Forum, coming to Atlanta May 21, the pair discussed resources and opportunities that will help small, entrepreneurial firms navigate the complexities and challenges of the AEC industry.

The event’s moderator, Chad Coldiron, director of development and a principal at Zweig Group, set the stage for the discussion, outlining responses from small business owners within the AEC industry pointing toward the need for more tools and resources. Clinehens opened the discussion by pointing out that, within the wide-ranging AEC industry, there are a massive number of firms that could be considered small businesses. However, according to Clinehens, after discussing some of the challenges and opportunities specific to small businesses in the AEC industry at last year’s ElevateAEC Conference, he came to understand that the challenges associated with defining what it means to be a “small” firm or business stem from a lack of resources, which was part of the inspiration for Zweig Group’s AEC Small Business & Entrepreneurship Forum in May.  Building on these ideas, Zweig also spoke to the importance of firms understanding and being clear about their plan for the future.  By clearly defining goals and strategies, Zweig believes small businesses are able to put themselves in a much better position to take advantage of opportunities – despite their size.

Another headline topic during the conversation centered on the unique challenges small businesses in the AEC industry face – particularly when it comes to today’s hyper-competitive landscape.  Zweig pointed out that, in this landscape, small firms can struggle to compete when it comes to resources such as working capital.  However, facing these unique challenges, he again reiterated the importance of being clear about company goals for the future, including around firm growth.  Clinehens continued this thread, pointing out that this plays out in areas such as recruiting and retention where larger firms with more resources can afford to pay higher rates with a long-term goal in mind.  According to both Zweig and Clinehens, small firms in the AEC industry need to think creatively to overcome these unique challenges, and they underscored the importance of talking with other small business owners to gain insight into potential solutions.

Continuing the discussion about recruitment and retention, Zweig emphasized the importance of selling the benefits of working in a small business to potential employees.  He pointed out that, oftentimes within larger firms, there is a tendency for new employees to get “pigeonholed.” On the other hand, the experience of working at a small firm can often be much more rewarding on a personal and professional level.  By selling the benefits of working in small firms, such as being able to work on a wider variety of projects,  these companies can better compete to recruit and retain future employees. To effectively sell the benefits of working in small firms, both speakers placed an emphasis on building culture. When it comes to building a company culture that effectively promotes growth as well as recruitment and retention, Clinehens emphasized the opportunity to be bold and clear. Particularly within smaller AEC firms, he pointed out that it’s significantly easier to be bold in terms of vision because you are only worried about getting a small group to buy into your vision.

Both speakers shared a common sentiment that the AEC industry is more risk-averse than other industries, which Clinehens said plays out with a number of firms putting an oversized emphasis on being debt-free or low-debt. He pointed out that this line of thinking hampers a firm’s vision of growth. Instead of using excess capital to improve or expand the company, this mindset focuses on paying off significant debts as quickly as possible. Clinehens also said the return on investment per dollar is higher now than it has ever been, which he believes creates the perfect opportunity for capital investments in growth. Zweig extended this further, pointing to the fact that return on equity in the AEC industry is similarly at a historic high. In fact, return on owner’s equity – pre-tax, pre-bonus – for small firms within the AEC industry is currently at 47.3 percent compared to the rest of the industry at 43.2 percent. Under these conditions, both speakers were quick to point out the current opportunities for investment in long-term growth. 

Throughout the hour-long webinar, the pair covered topics ranging from recruitment and retention to the manager-producer dilemma and everything in between.  One thread that binds the challenges and opportunities facing small firms in the AEC industry is the need for more discussion and connection.  As the AEC industry continues to work toward solving the major challenges of the future, it is important that small firms understand that there is strength in numbers.  By engaging other small businesses in conversation, we can work together to Elevate the Industry.

Consider attending Zweig Group’s AEC Small Business & Entrepreneurship Forum to join the conversation about the unique opportunities and challenges associated with being a small firm in the AEC industry. Learn more here!

Luke Carothers is Zweig Group’s senior content manager and editor for Civil+Structural Engineer Magazine. His writing focuses primarily on the projects, people, and processes that influence the past, present, and future of the built environment. He welcomes those interested in collaborating on an article to reach out to him at lcarothers@zweiggroup.com.