Common Struggles in Firms

by: David C. Baker
from: Professional Practices: June 18, 2002

Using a database of 280+ firms in 84 different metropolitan areas across North America, what are the three things that these principals struggle with the most? You might recognize yourself.

The first thing most principals struggle with is their own personal role, especially if the firm is growing. Typically the principal is a generalist at the outset of their entrepreneurial life, touching many roles because the firm is comprised of so few employees. While that is appropriate at this stage, it becomes destructive as the firm grows, yielding a greater need for his/her management input. If they remain a generalist as the firm grows, everybody does everything and nobody is responsible. The decision to grow is a decision about the principal’s role, not a decision about making more money or getting larger profile client relationships.

The second thing that principals struggle with is proper systems to be profitable. We call it being a “profit-based” vs. a “deadline-based” firm, and there is a white paper entitled “Profit-Based Management Environment” that details this more fully. The principles for making this happen include centralized monitoring, no on-site promises, daily timekeeping, written control documents, a sufficiently broad definition of billable time, and no discounting of time at the entry stage. That’s just a sampling.

The third thing that principals struggle with is how to position their firm. The role of marketing is one of the most misunderstood aspects of management. Most firms proudly proclaim that “we don’t need to market” as if marketing is for “little people” without any other option. Smart people market all the time, no matter how busy they are. That’s because marketing has very little to do with keeping busy. It has more to do with what kind of business you have than how much business you have. Stated differently, marketing is about control, not growth. Marketing consistently is the most important thing you can do at your firm. The public reason we don’t do it is because we are too busy. But the real reasons we don’t market are because we aren’t confident. Because we aren’t focused. And because it forces positioning.

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