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ON THE MOVE WALDROP ENGINEERING KEVIN DEARDORFF CHIEF FINANCIAL OFFICER Waldrop Engineering, P.A. has announced the addition of Kevin Deardorff, CPA, MBA as chief financial officer to the team. NAMES Deardorff will be based at Waldrop Engineering headquarters in Bonita Springs, Florida. Deardorff has more than 17 years of professional experience working with developers, contractors, and professional consultants throughout the state of Florida.
Deardorff is very involved in the community, serving on the Collier Building Industry Association Board of Directors and various other organizations and committees. “Kevin’s addition to the group will assist in providing our clients and team members continued comprehensive land development services, and continue to build on our diversity of development services,” said Ryan Binkowski, senior vice president and chief operating officer.
Waldrop Engineering, P.A. is a full-service development consulting firm specializing in civil engineering, landscape architecture, and planning. Headquartered in Bonita Springs with branch offices in Fort Myers, Sarasota, Tampa, and Orlando, the Waldrop Team offers interdisciplinary expertise founded on exceptional customer service, quality design, and a solid commitment to their clients’ success.
MARK ZWEIG, from page 3
❚ ❚ Unwillingness to confront unproductive principals. Dead- weight partners are a cancer. They sit around the office and set a horrible example for everyone else, and consume more than they produce. Get too many of these people and let the problem go on too long, and the business may never be able to recover. I have seen the downside of not dealing with this problem as well as the upside resulting from confronting it in MANY AEC firms. ❚ ❚ Protection of other “pet” employees. Some companies de- velop a “family” culture that makes it very difficult for them to let anyone go, even the worst of employees. Sometimes this person has been with the firm a long time and served one or more of the owners well in the past but is now not doing their job, or worse, has a bad attitude that they are willing to share with anyone who will listen. They have to go because they are a cancer that, allowed to spread, can kill the com- pany. Sometimes the pet employee is a newer hire, too. Man- agement can’t admit they made a hiring mistake, so they wait years to deal with the situation and destroy the morale and productivity of the rest of the people working in the business in the meantime. “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.” ❚ ❚ Unwillingness to cut unnecessary overhead costs. Too much office space. Too many company vehicles. Vacation con- dos running through the firm. Expensive lunches for partners only. Season tickets. Private secretaries or administrative as- sistants (someone please tell me what the difference is?). All of these things, if allowed to get out of hand, are like an anvil around your neck while you are trying to swim away from sharks. ❚ ❚ Not valuing long term client relationships. You see compa- nies that do this regularly. They put their best people on new clients and give their old reliable repeat clients all of their new and inexperienced people to do their projects. It isn’t right, and I have seen it kill companies. I’m sure if I had more room we could come up with more contributors to a firm’s demise. But I don’t! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.
❚ ❚ No attention to, or budget for, marketing. Marketing is what I like to call an “off balance sheet” investment. You have to spend money on it consistently and you have to keep do- ing new (and old) things. So many companies view it as an overhead cost to be minimized. My own textbook for the small business management class I teach at the University of Arkansas recommends setting the marketing budget as a percentage of sales. So if sales go down you spend less. The unfortunate thing is this is exactly what some AEC firms ac- tually do! ❚ ❚ Not monitoring working capital and not collecting AR. This has been the death of more companies than you know. Working capital – cash plus AR, less accrued short term li- abilities, accounts payable, and line of credit balance – is a number management HAS to see on a consistent basis in order to stave off problems and stay alive. And, of course, col- lections for most firms in this business are the biggest factor in what this number is. When you see AEC firms with 90-day average collection periods when others have 45 days or less, you know they are heading for trouble that greatly increases the risk of the business. And yes, companies have been shut down when the credit lines don’t ever get paid down to zero, if that is a covenant. ❚ ❚ Bad accounting. Having bad numbers – not knowing what is profitable and what is losing money – and not having an accurate balance sheet – can sink a firm in this business. This is why having a competent CFO is so crucial to your survival. And many firms in this business don’t have such a person. ❚ ❚ Failed ownership and leadership transition. Many firms never make it through their second generation. Sometimes the cause is that the owners didn’t do a good job of picking and developing their successors. In other cases, the succes- sors were so hell-bent on doing everything differently that they “threw the baby out with the bath water” and got away from the basic strategies that made the firm successful in the first place. On top of that, many firms never even model their ownership buyback programs to see if they can actually afford to pay for them. This problem is exacerbated when the major- ity of owners are the same age and retiring at the same time. ❚ ❚ Ignoring banking relationships. Your bank is your part- ner. And keep in mind banks cannot afford to take a lot of risk. They have very thin operating margins and are heavily regulated. You have to not only know and abide by your LOC covenants, but also keep these people informed about what is happening in your business, both good and bad, so if things do start getting a little dicey they won’t drop you like a hot potato.
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THE ZWEIG LETTER September 30, 2019, ISSUE 1314
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