Leaner times are coming for the A/E industry. Depending on what markets your firm serves, the business impact of the pandemic may range from tepid to terrible in 2021. If state and local governments constitute a substantial part of your client base, the impact may be particularly severe. Their combined budget shortfalls next year are projected to be between $250 billion to $400 billion, and that on top of massive losses this year. The commercial sector has also been hard hit, among others.
What's the best way to respond to a downturn in business? Get closer to clients. That was the lesson from the Great Recession. I looked at several studies from that time, spanning multiple industries (including our own), to determine what strategies best correlated with growth in a stagnant economy. There was a clear winner—recentering the business around customers to better serve their needs. And those needs became more fluid and unpredictable in those uncertain times, requiring greater focus and attention from service providers.
Are you ready to reconfigure how you serve clients to meet their changing needs? It might not be that easy. As clients' budgets have decreased, their needs have changed as well. They are preparing to get more from less, to stretch limited resources as far as they can to address their pressing needs. Is your firm prepared to help them in that quest? A few suggestions:
Stay engaged with your clients even when they don't have active projects. These times may test your commitment to client relationships. Will you continue to nurture those relationships even if there's no short-term financial payback? Some A/E firms apparently won't, as many stopped calling on cash-short clients during the previous downturn. This presents you with a good opportunity to solidify your relationships (and steal a few from your competitors). The fundamental role hasn't changed: You're there to help your clients, even if that involves some measure of free advice or discounted help.
Help your clients characterize and prioritize their needs for the foreseeable future. Many of them, of course, already have a pretty good handle on this. They likely have a facilities or capital improvement plan; some have gone a step further with asset management planning. But those plans probably didn't account for a substantial shift in revenue and funding. You might be able to provide valuable guidance in rethinking facility or infrastructure needs and how best to address those in the evolving financial climate.
Provide operational assessments and consulting. Many clients will have to make do with current facilities that were planned for replacement or upgrades. That may require some creative thinking with regards to possible operational changes or low-cost modifications. As an outsider with relevant expertise, your firm may be better positioned than the client to objectively assess these situations and offer makeshift solutions. The fact is that all organizations can benefit from retooling their operations to eliminate waste and inefficiency, and tight budgets can provide just the needed jolt to make that happen.
Explore strategic alliances to better serve your clients' changing needs. This is always good advice, of course. But the downturn creates new opportunities to package complementary services and products to help clients. For best results, you may need to step outside the box of convention. Examine your clients' emerging and unmet needs, even if they're not directly related to your current services. Consider what kinds of expertise is needed to meet those needs, then explore how you might merge that with what your firm can do.
Provide more affordable off-the-shelf solutions. I was talking with the administrator of a rural county who questioned the need for custom designs for facilities like a fire station, small branch library, or vehicle maintenance shop. He wondered why he couldn't choose a basic design from a selection of prototypes, similar to how people use house plan books. I remember pitching the same idea to an architectural firm that had designed fire stations for small towns in their state, but was already seeing that market decline. As you might expect, they didn't respond favorably to the suggestion.
But don't the difficult times call for more economical alternatives? And shouldn't we use our specialized expertise to help provide them? The problem, of course, is rethinking the solutions we routinely provide to offer alternatives that don't compensate us as well. But as this administrator observed, sticking with old business models may well mean these projects don't happen at all for the next few years.
The coming year might bring difficulty for both our clients and our firms. But it can also bring opportunity to think afresh about how we uncover and satisfy client needs. It might be a time to make some strategic investments that could pay off well in the future. It starts by going deeper with clients, to better understand their evolving needs and repositioning how we respond to them.