TZL 1335 (web)

T R E N D L I N E S M a r c h 9 , 2 0 2 0 , I s s u e 1 3 3 5 W W W . T H E Z W E I G L E T T E R . C O M

Finance leaders

“[These tactics] can help you keep control of your business while creating a culture that leads to continued growth and success.” Bootstrapping to fund growth

“B ootstrapping” in a business context means starting your business using the least amount of your own or others’ capital resources. In other words, you control the ownership of the enterprise because you don’t have any other investors. I love bootstrapping. It has alway annoyed me that so many of those involved in teaching or supporting entrepreneurship or new business start-ups today act as if everyone has to do a “capital raise” as soon as the ink dries on their initial business plan. Not so. The majority of businesses – and certainly the preponderance of architecture and engineering firms – are founded by people who use their own money and/or borrow what they need to get started and fund their initial growth. There are so many benefits to keeping all of your ownership to start – you can always add employee owners later as a motivational tool and to generate additional growth capital. You are your own boss. No one else can tell you what to do or how to do it. And no one can take your business away from you. But one of the best benefits of bootstrapping is it teaches you frugality. That is something that you will never forget, and in my opinion greatly increases your firm’s long-term chances for success. As it turns out, what is good for a start-up is also good for an established business that wants to grow. Preserving every bit of precious capital by employing the tactics of bootstrapping start- ups can help you keep control of your business while creating a culture that leads to continued growth and success. Here are 13 bootstrapping tactics that any established A/E firm can use to help finance their growth: 1) Always ask for a retainer or initial “mobilization” fee. Of course, the first response of people in this business is, “My clients won’t pay that.” But when is the last time you asked them for it? And if you had far more work than you can handle, this is one way to weed out some clients so others can prosper along with you. 2) Use “vendor statements.” These are something you can send out to every single supplier, subconsultant, and subcontractor each year around November 15. It is a form where you ask them to fill out all of their basic information and then also have a line for discount and payment terms. They will assume that they are competing for your business and literally bid against themselves to give you the best deal. Try it – you might be surprised at the results. 3) Increase the speed of billing. Bill everything the moment you can with no lengthy review processes that gum up the works. Most

F I R M I N D E X Mabbett & Associates, Inc.. ....................6 Miyamoto International............................4 three positions for analysis in 2020 and beyond: Financial managers, controllers, and CFOs. MO R E A R T I C L E S xz KRISTINE DORN: Thoughts on A/E gender bias Page 3 xz Balance: Arthur Mabbett Page 6 xz LEO MACLEOD: Building a personal vision Page 9 xz JUNE JEWELL: Change with the times Page 11 Zweig Group’s 2020 Salary Survey of Northeast & South Atlantic Engineering Firms provides median base salaries for technical and administrative roles alike across the East Coast. A concerted effort to break down titles of nontechnical departments was made this year to give firms a better view of their administrative team. For example, while reports of the last few years combined three financial leaders into one group to get an overview of the role, the group has been split into

Mark Zweig

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