If you are a business owner, steering your firm through 2020’s pandemic, economic shutdown and recession is probably one of the most stressful things you’ve ever faced. But sometimes slow business can spark ideas, force decisions, and open up opportunities. When I started my architecture firm in 1990, it was in part because of a recession — there weren’t many other options for me since no firms were hiring at that point. In 2008, we came through it, stronger, and also wiser. Now, as 2020 brings more uncertainty every day, here are a few things I’ve learned in my 30 years running a business that have helped our firm stay strong and stable no matter what’s happening in the economy.
- Be assertive. Don’t be afraid to ask for the contract or deal. This was probably my very first lesson. Right as I got out of grad school, and was applying for jobs, I was getting a lot of responses that firms just weren’t hiring, didn’t have any openings, etc. This was in 1990, and that was my first clue that the economy was heading south. So, I took an internship with the National Parks Service for the summer. It was a job I had worked the previous two summers. When it was over in the fall, there was still quite a lot of work left to be done. So, even though we were fresh out of school and had only recently formed our company, my business partner and I made the pitch: Hire us to finish the project. We knew the project well, and we were inexpensive thanks to our youth. It worked, and we got the job. Lesson learned: Even when nearly all signs point to no, ask anyway.
- Stay on top of information about trends in your industry. During the first year of owning my firm, I went to a conference and heard a keynote speech about the future of the architecture industry. The speaker predicted there would be major consolidation and that the small firms that survived would be highly specialized. There were other industry news reports saying similar things, and just observing what was happening around me supported it. Back then, a “small” architecture firm by SBA standards was about $1M to $2M in annual revenue. Now, it’s more like $25M. And that change was caused by exactly what that speaker predicted — small firms got bought and folded into big firms. Watching this unfold, we stayed on course in our niche — historic preservation work. It worked, as we developed expertise and relationships that solidified and strengthened our reputation.
- But also diversify. This sounds counterproductive, but what I mean is to find your niche. Find that pocket in your market where there aren’t a lot of competitors and truly differentiate yourself. Then, make sure that you are fully covering the market to get diversified revenue streams. For me, that meant specializing in historic preservation work and developing capabilities in the related field of cultural resources. Our firm had two divisions for quite a long time — an architecture division and a cultural resources division that dealt with historic artifacts and resources, more on the archaeology side for site reviews. So, within our specialized niche, we had diversified into different types of projects. We also do a lot of government work for publicly owned buildings. But we also do private restorations too. So, again, diversification within your niche helps you make pivots when different parts of the economy weaken.
- Commit to high-level service. When firms get really cost-conscious during downturns, service is always part of the equation. Can you do the project right the first time? Will you pay attention to the details and get them right, and take care of your client? Many businesspeople have had the experience of choosing the lowest-priced proposal when trying to save money, or, alternately, selecting the big flashy name because they cut their prices during a downturn. But in both situations, it’s not uncommon to be disappointed in the quality or service. If you have a specialty and can deliver better than anyone else, that market differentiation can pay off when you are suddenly faced with a lot of competitors when work is scarce because of a downturn.
- Develop partnerships. When work is scarce and there isn’t much to bid on or submit proposals for, sometimes the angle is to join forces with a firm that has a different specialization than you, so together you are stronger than other bigger competitors. You’ll have deeper, more extensive expertise and can still compete with the big flashy names on price. Building these relationships with partners you can trust and have experience working with can be an advantage in a downturn.
- Say yes to the volunteer or board opportunity. Many times being asked to volunteer for a trade or community organizations, or to take on a board position in one of those organizations can feel like an obligation you don’t have time to commit to. But say yes anyway, and put your all into it. it strengthens your reputation. In turn, doing great work and showing your capabilities to a new audience is one of the most worthy investments in your company you can make. Relationships and trust pay dividends all the time, but especially in a downturn. But you have to build them when times are good.
As you can see, weathering an economic downturn is about expanding your lens for opportunity and potential. How you handle your business relationships can often be just as important as how you handle your P&L sheet. And that view has served me well for 30 years and counting.