Going or Growing?

Sometime ago I wrote an article on the “New Era of Surveying”, the basis of which is a paper I was requested to submit to the FIG 2010 Conference in Sydney in April. In my view, a small proportion of surveying firms have commenced a change process but to date a vast majority continue with outdated processes, shrinking prices and margins, with an increasing difficulty in attracting & retaining staff. All of this against an ageing, shrinking surveyor population with a current steady, if uncertain, market makes for interesting times ahead.

We see the progressive firms, a maximum of 15 percent, can see the pressure coming. The next 40 percent, the early majority sense something is happening – not sure what it is but starting to feel the winds of change. The next 30 percent, the late majority, read about changes and will still procrastinate until they see the early majority do something. The last 15 percent are the laggards who will never change, will retire and leave the profession in the next 5-10 years and they will walk away or get very little on the sale of their practice.

What we’re seeing in the surveyor market place emerging is exactly these trends – more enquiries for people selling & a number of enquiries for acquisitions.
I also highlighted, in this submission, some key operational drivers for those wanting to accelerate the growth of their business, namely; developing a clear direction for the future, attracting and retaining a talented team, strong financial management, building a sound culture, having a one stop shop of value added services and displaying strong leadership skills.

It is certainly becoming clearer the choices surveying firms have:
1. Grow organically internally with some sound structured strategies to have the foundation of the firm set on a strong platform for growth;
2. After achieving this or in some instances running concurrently, some firms are achieving faster growth with a structured program with acquisitions;
3. With the ageing surveying population some see it as an opportunity to maximise the value for selling their life’s work by selling out even if they are sale ready.
After having work with Surveyors for over 7 years I’ve found these more in depth results:
1. From an internal business development perspective for those owners committed to change:
 A much stronger focus and understanding on the key financial drivers to increase profitability & cash flow
 A significant enhancement of modern operating systems
 A leading edge approach to marketing based on image, brand building & relationships
 Breaking down the communication barriers with the team to produce significantly higher team energy through a more loyal, committed, united approach of communication by the owners themselves as well as with their team.
 A clearer sense of direction
2. Taking a structured approach to fast growth through acquisition. Some firms, in my view less than 5%, are fast tracking through either financial acquisition or strategic acquisition.
Financial acquisitions are about merging an acquired firm into the current company after the purchase & achieving economies of scale (nil or reduced overheads), and gaining leverage and an opportunity to sell a packaged arrange of services to a new client base of A & B, maybe some C, class clients.
If a business is bought well, to also have a strong return on investment. In some cases the revenue acquired can go straight to the bottom line of the purchasers company as most firms have available capacity within their own team as in my experiences firms aren’t as effective, efficient with team utilisation as they think they are.
3. An emerging trend is for some owners to underplay the value they have in their practice after spending years developing the goodwill of their business (i.e. strong client base, loyal team, quality systems) & think that it has little value.

In some cases it is clearly less than what it could be due to poor practices but it still has some value through the core A & B class clients, better team members, & quality system.

So clearly there is an opportunity for a win-win approach for firms selling – gain some value on a sale (albeit at a discount) as opposed to walking away and for firms buying – instant quality growth (i.e. let the C & D clients & team go through acquisition) bought at a discount thus producing instant profit enhancement & stronger value in their own business for eventual sale either internally to the team or to the outside suitors – competitors, clients or strategic alliance partners.
Professionals generally are poor marketers (generally it is reactive referral marketing i.e. when the phone rings).

Which phase are you in – going or growing?

Let me know what you think or if you’d like a free confidential conversation to discuss your own business don’t hesitate to call us on (02) 8883 4699