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Schnier

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policy that is incorporated into our contracts and which is sent with the first invoice. Our accounting department con- tacts our clients on day one with the invoice, on day sev- en to ensure that they received the invoice, and on day 30 to let them know that the invoice is past due. On day 45, our PM gets involved and tells the client that work stops on day 60 if payment has not been made. We stop work on day 60 and send a formal stop work notice. So the project is on hold at this point. On day 90, we send a final demand letter. On day 120, the account is sent to our attorney for collec- tions and we file a lien on the property if that’s an option. A client that is sent to collections becomes a former client. We subscribe to the adage, “String us out once, shame on you, string us out twice, shame on us.” We really would love for clients who cannot pay in a timely manner to become a competitor’s client and string that firm out on payments in- stead of our firm. “We’ve had to consciously monitor the amount of new work coming in so that we’re able to meet our financial goals without burning out our team members or falling short on the delivery of our value proposition.” TZL: Is there a secret to effective ownership transition? WS: Of course there is! The secret to an effective owner- ship transition is to have a plan and strategy for an effec- tive ownership transition. And you’ve got to have that plan in place and executable five to 10 years before the transi- tion is set to be finalized. If that plan is not in place, then you’re looking at an external sale or closing the firm. Nearly every week I speak with a firm owner about an acquisition. We have around $18 million of annual revenue, so our ac- quisition targets generally tend to be half our size or small- er with a single owner or very small ownership group. Al- most without fail, they tell us that they have a plan to sell their firm internally to their next generation of leaders. Of course, when I ask to review that plan, there typically is nothing documented. For owners in that situation, an ex- ternal sale becomes their only option. With no plan, there is no transition. There is only an external sale or a closing. TZL: How do you go about winning work? WS: First, we win new work by fulfilling our value proposi- tion with our current clients. Our number one way of win- ning work is to accept more work from happy clients. Sec- ond, we force prospective clients through our BIG RED fil- ter. The BIG RED filter is the screen that all of our prospec- tive clients will pass through before they have a live visit with a BIG RED DOG team member. We don’t want any- body to cold call us – or BIG RED DOG to cold call him or her for that matter. We want prospects to know BIG RED DOG and why they need to work with our company regardless if

they contact us or we contact them. The BIG RED filter is critical to our marketing effort for the simple fact that since 2011, more than 93 percent of all business-to-business sales in the U.S. have originated with an internet search. Of those searches, more than 70 percent of the buying process is complete before any direct human contact occurs. What goes into the BIG RED filter is proprietary so I’ll stop there. TZL: What’s the greatest problem to overcome in the pro- posal process? WS: For us in the current market, it’s not proposing on ev- erything that comes through our filter. We’ve had to con- sciously monitor the amount of new work coming in so that we’re able to meet our financial goals without burning out our team members or falling short on the delivery of our value proposition. When the market turns, and it will, the challenges will turn, too. Fortunately, we’re able to refer a lot of work to competing firms that we are friendly with. Our traffic engineering practice and structural engineering practice, for example, does work for many other civil engi- neering firms that don’t have those capabilities in-house. When we have leads we can’t handle or can’t manage prop- erly due to workloads, we have the luxury of referring them to a competing firm that is also a client. It’s nice to help our friends in other firms and our clients by giving them work. That’s another great example of our BIG RED filter doing its job – we have no shortage of good opportunities for us and for our friendly competitors. TZL: Once you’ve won a contract, what are the “marching orders” for your PMs? WS: That’s simple – we must fulfill our value proposition. Our PMs play the most important role in fulfilling our val- ue proposition, which has four components. First, we’re ex- perts in the client markets we serve. So as a client, you’re not hiring a generalist, you’re hiring somebody who’s done this hundreds or thousands of times very successfully on substantially similar project types. That expertise has al- lowed us to win work nationwide – because the local firms hold themselves out as local generalists when clients want experts. Second, we communicate exceptionally. This is the primary marching order for our PMs – communicate the heck out of things with your client and the design team. Third, our billing practices are transparent and fair. And fourth, our construction plans are complete and construct- ible. If our PM executes all four of those tenets well, then the client will keep coming back and become a raving fan of BIG RED DOG. Once the client is a raving fan, they become an important screen in our BIG RED filter. TZL: You are a proponent of open-book management. What is the advantage of showing the firm’s financials to everyone on staff? WS: The leadership at our firm strongly believes that if you expect people to execute your business plan, they must See CONFERENCE CALL, page 8

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