TZL 1414 (web)

BUSINESS NEWS VLK RECOGNIZED FOR BUSINESS ACHIEVEMENTS AND CORPORATE CULTURE IN 2021 VLK Architects continues to earn numerous acknowledgments for its success in the AEC industry and the greater business community. VLK’s honors achieved new heights of recognition for its performance, growth, and company culture during an incredibly challenging 2021. Among the accolades for growth and performance, VLK was once again recognized for the strength of its company culture and as a great place to work. This year the firm was among the 2021 AIA Houston Emerging Professionals Friendly Firm Award, Zweig Group’s Best Firms to Work For, and Fort Worth Inc. ’s Best Companies to Work For. While the 2021 rebound brought a considerably more optimistic business climate and an economy in fast recovery, the lingering effects of the global pandemic continue to profoundly impact the AEC industry. “The lessons we learned from the pandemic have made us an even stronger firm,” said Sloan Harris, VLK Architects CEO and partner. “Our clients usually don’t have the luxury of flexibility regarding the completion of their buildings. It’s our mission to develop feasible solutions to keep these projects on schedule and within budget despite the industry-wide challenges.”

The whiplash of supply and demand over the last 18 months has resulted in major disruptions in the supply chain for construction materials, resulting in shortages and severe price spikes of critical materials like steel and wood. The construction industry further suffered from a shortage of skilled workers and high unemployment rates, contributing to the struggle to meet scheduling requirements during construction. Finally, extreme weather events like the frigid artic blast in February and Hurricane Ida in September caused even more interruptions to construction progress. “Tapping an extensive network of engineering, materials, and construction partners, VLK established systems of new protocols to identify materials alternatives and time-saving approaches,” Managing Partner Todd Lien explained. “These issues became opportunities to demonstrate our agility and resilience as a solutions resource for our clients. It also underscored the value of bringing experts together to collaborate for the ultimate good of our industry.” Here is the comprehensive list of VLK’s 2021 awards and recognitions: Firm culture, employee satisfaction, and benefits: ❚ ❚ Fort Worth Inc. Best Companies to Work For in Fort Worth: No. 25 among Small/ Medium Companies

❚ ❚ Zweig Group Best Firms to Work For: No. 25 among AEC Firms and No. 4 among Architecture Firms Growth and performance: ❚ ❚ Architectural Record Top 300 List: No. 56 ❚ ❚ Building Design + Construction Magazine Top 90 Architectural Firms of 2021 No. 29 for Top 160 Architecture Firms of 2021 ❚ ❚ Zweig Group Hot Firm Award: No. 20 among all AEC firms and No. 2 among Architecture Firms ❚ ❚ ENR Magazine Southeast, Southwest, and Texas/Louisiana Region Top 10 Design Firm: No. 7 among Architecture Firms; Top 50 Design Firm Overall: No. 38; and No. 3 among Education Architecture Firms in 2021 ❚ ❚ ENR Magazine National Top 500 Design Firms: No. 281 ❚ ❚ Inc. Magazine’s 5000 2021 List of Nation’s Fastest-Growing Private Companies: No. 3,993 With offices throughout Texas, VLK Architects provides architecture, planning, and interior design services to automotive, K-12, higher education, corporate, and institutional clients throughout Texas.

MARK ZWEIG, from page 11

usually means at least 35 percent to 40 percent of your profits have to go to owners, unless they want to dig into their own pockets to meet their tax obligations from the money they make on their firms. In the above example – for a $20 million revenue company with $18 million in expenses and a $2K profit, they would have to pay out roughly $800K to owners at a minimum just so they can meet their tax obligations. If their clients take 90 days on average to pay their invoices, that means they need $4.5 million in working capital and with $2 million in profit less $800K in owner distributions. That means they would have to make $2 million a year for FOUR years – paying NO bonuses to employees and paying only enough in distributions for owners to meet their tax obligations and nothing more. If clients take longer than 90 days to pay, this number goes up. That’s crazy! AEC firms must stop tolerating these kinds of slow-paying clients. We cannot afford to finance the other guy’s (or gal’s) business. We – as a group of companies or “industry” – are facing unprecedented demand for what we do. If there was ever a time to say that slow-paying clients are not acceptable, it is now. You cannot keep working this hard for so little payout just to fund your working capital needs. Put the spotlight on the problem and get tough NOW ! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

So what are the implications of that? The firm will need to have enough cash to keep paying all of its people and all of its other overhead for the time it takes their clients to pay them for their work. That’s a tremendous amount of money. If you have a $20 million annual revenue firm and your operating expenses are $18 million, you need $1.5 million of liquid cash for each month of your average collection period. So a 90-day average collection period means you need $4.5 million in liquidity just to keep your doors open. If it is a year, you would need $18 million in liquidity to cover that. “The working capital problem is one that a lot of people in this business don’t understand. It’s a huge problem, and one that needs a lot more attention and education if AEC firms are going to deal with it.” If you are an owner in your firm, you don’t want to have to leave that kind of money in the till. If you are organized as an S-Corp, LLC, or other type of legal pass-through entity for tax purposes, you need to be able to allow your owners to extract enough distributions to cover your taxes. That

THE ZWEIG LETTER OCTOBER 25, 2021, ISSUE 1414

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