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O P I N I O N
M ost businesses in this country don’t make it to their fifth birthday. Even fewer make it to 10, 20, or even 30 or more years. “What causes AEC firms to fail? I have been a student of this business for 39 years now. Here’s what I have seen.” What leads to business failure?
What causes AEC firms to fail? I have been a student of this business for 39 years now. Here’s what I have seen (in no particular order of importance): ❚ ❚ Owners who have lost interest in their business. Let’s be honest – it happens. Some people get tired and burnt out. Especially when they have completely poured their hearts and souls into something for a long time. And not everyone is addicted to the game or the money. They may feel they have enough or have accomplished what they set out to do. If these are the people in charge, the business is headed for eventual disaster. ❚ ❚ Owners taking too much money out. I have seen this time and time again. One of the best examples I will never forget was a firm owner who was taking $380K annually out of his less than $3 million an- nual revenue company. When I ran some numbers and told him the most he could afford to pay himself was $180K a year, he told me he needed $380K be-
cause his cattle farm was losing $200K a year. They eventually went out of business. ❚ ❚ Employees are taken for granted. We had some friends over this weekend and the husband and I discovered we both had worked with a particular architecture firm – he was their client and I was their consultant. I remembered back to a time when their managing partner came to see me in our Natick, Massachusetts, headquarters after we had helped them with a financial turnaround some years earlier. He told me that the prior year was a record year for them and that they made a $2.6 million profit. But the bad news was they lost 70 percent of their staff and virtually all their second tier quit. After asking some questions do you know what I learned? They paid the entire $2.6 million in profit out to their owners and gave ZERO to anyone else! This type of selfishness can kill a company.
Mark Zweig
See MARK ZWEIG, page 4
THE ZWEIG LETTER September 30, 2019, ISSUE 1314
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