Author: Steve Quiggle

Thank you for visiting. I consult exclusively with architects, engineers and planners based on my 37 years in the profession. The value for you often begins with a pro bono conversation to discuss what you’d like to accomplish, ideas for ensuring that your practice achieves the desired results, and aligning strategy with your unique vision, core values, and goals. Feel free to review my site, the services I provide, and my professional experience; I then invite you to contact me for an initial discussion, on a pro-bono basis, so I can learn more about your specific needs. I am inspired by working with A/E/P’s that want to continue to

prosper in a challenging economy. E-mail: sdquiggle@gmail.com Phone: 916-715-9855

It is no surprise to anyone that we have been in a deep and long lasting recession which is not recovering as well as some politicians would like us to believe. I recently read two excellent books (Aftershock and The Aftershock Investor by David and Robert Wiedemer) which provide some interesting insight regarding what may well be in store for the A/E/P profession in the next 2-4 years. Even if only part of what they project comes true, we are in for challenging economic times for which there is no historical precedent. In an earlier book, the Wiedemers correctly predicted the housing bubble collapse and the ensuing financial debacle in 2008 and 2009.

Their contention now is that we are creating huge bubbles that are only being masked and delayed, while growing, with Quantitative Easing and the Federal Reserve buying $85 billion in government bonds every month. The big bubbles they discuss are as follows:

1. National debt
2. Stock market- rising far faster than the fundamentals behind share prices
3. Rapidly increasing housing prices (again)
4. Private debt- spending faster than increases in income
5. The dollar bubble
6. Consumer spending bubble

For all the generations that didn’t live through high inflation and interest rates, this may be such new territory that conventional wisdom might create a belief that the normal

business cycles happen and are to be expected. They also point out that one bubble bursting might well trigger a collapse of one or more of the other bubbles.

I chose not to read this in the context of gloom and doom but gaining a better understanding about how we might prepare to make the best of potential challenging times ahead. I believe that we may still be in the denial phase but it is important to develop strategies for A/E/P practices to not only survive another major recession but to prosper by being in the right markets in time to position our firm’s to take advantages of opportunities in a proactive manner. I strongly recommend both books even if one does so with a degree of skepticism.

Many owners evaluate the value in their firm based on what their shares are worth. A far more accurate and meaningful assessment of one’s return on investment includes the total of the following:

1. Stock price and number of shares,
2. Stock appreciation,
3. Base compensation,
4. Incentive compensation including a ROI component,
5. 401K Employer match,
6. Profit sharing contribution (if any plan is in place),
7. Deferred compensation (if that approach has been utilized as part of the ownership transition program),
8. Perquisites for owners,
9. Other programs that have a financial value.

The challenge with too much focus on only share value is that it can be greatly affected by how profitability is allocated. For instance, some firms pay lower base compensation and/or bonus to increase stock appreciation. This approach can also have an adverse effect on the Ownership Transition Program by creating a high stock price that makes the purchase of new shares less affordable to those buying into the practice. Key Factors in Adding Value:

1. Increasing profitability faster than net revenue and focusing on key financial indicators,
2. Building bench strength- a strong professional development program and/or recruiting a solid second and third tier of leaders for more effective management as well as a pathway to future ownership,
3. Breadth and depth of markets, services and client diversification,
4. Brand recognition,
5. Geographic expansion (where appropriate),
6. Quality and technical excellence programs including coaching and mentoring employees at all levels for professional growth,
7. An Ownership Transition Program that is affordable (fundable) for the firm and individuals buying shares and an exit strategy for owners who may be ramping down in the future. The sooner a firm has a good program in place, the more options a practice has regarding what direction they may want to take going forward- too many companies are forced to sell because the owners wait until they have gotten older and it may become too late for an internal transition,
8. A well-defined performance based incentive compensation program that is clearly communicated on a regular basis,
9. A well thought out long-term Vision for the firm with a strategic and action plan that moves the firm toward achieving its
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   Vision,

10. A marketing strategy to move the company that focuses on higher margin clients and projects,
11. Staff development and a strong career path program,
12. A leadership succession plan.

There is a lot more that can be done to grow firm value whether you want to position your practice for an internal transition or an external sale. Interestingly, the steps to building value are almost identical regardless of the path you decide to take. Please contact me to discuss building your firm’s value in greater detail.