Business Management

Want To Ride Out The Economic Roller Coaster? Diversify!
By Ed Hannan

Crabtree, Rohrbaugh & Associates, a Pennsylvania-based architectural firm, opened its doors in 1984 when the U.S. economy was in recession and the unemployment rate was in the double digits. Twenty-five years later, amid another recession, the firm has grown from 6 to 94 employees, with a second office in Virginia, and a plan to expand its workforce. The firm’s vice president Doug Rohrbaugh acknowledges that success came through diversification and steady growth. By identifying new markets and expanding regionally, Crabtree, Rohrbaugh & Associates was able to find stability.

Following Crabtree, Rohrbaugh’s example, taking steps now to diversify will prepare your firm for either a downturn or expansion in the future. “If you are only concerned with projects you need today, your firm is not positioned for stability in the future,” Rohrbaugh explains. “By the time the economy crashed in 2008, we were able to weather the storm and grow because we were already diversified.”

Crabtree, rohrbaugh & associates diversified in two ways:

• Discovering new markets. While 80 percent of Crabtree, Rohrbaugh’s work in the 1980s was in retail and public housing, it wasn’t long before the firm began to expand its focus. During the past 25 years, the firm has expanded into government projects, the prison market, education and, more recently, into healthcare and data centers.
  
• Expanding regionally. If capable, expanding your firm’s reach regionally will broaden your scope of opportunities. Crabtree, Rohrbaugh’s expansion was not solely through new markets, but regionally as well, expanding into Maryland, Virginia and West Virginia. Having licenses to practice in 48 states and throughout Canada has also enabled the firm to explore different opportunities and markets.

What you can do:

• Act now. If your main market begins to fail, do not wait for it to recover because it may never do so. Rohrbaugh suggests that “stability is out there and available—firms just need to work for it.”
  
• Look for the next growing market. Have your firm positioned to take advantage of markets that’s boom as the economy recovers. “There are a number of markets that are depressed now, but when the economy returns they will invest and grow,” Rohrbaugh says. Firms should prepare for future markets now, and have secondary markets to use if the initial market fails.
  
• Recognize when it’s time to move on. While you may be able to maintain temporary success by focusing on a single project type, as more firms become involved with the market, profitability drops. Firms begin to significantly lower prices just to win work, and this is the time to explore other project types in new markets.
  
• Hire the right staff. Crabtree, Rohrbaugh understands the importance of developing a staff that will not only be utilized in current projects, but also for future endeavors. The firm has used the current recession as an opportunity to recruit experienced architects who have been laid off by other firms. Before looking for work in a new market, consider hiring staff members that have already become leaders in that market. Not only will they bring knowledge to a leadership role, but they will expand your firm’s credibility.
  
• Offer opportunities for growth. While Crabtree, Rohrbaugh hire staff that are leaders in new markets, they don’t neglect their current employees. Instead, they offer all employees a chance to expand their talents within every market. To keep employees excited and creative over time, it is important to give them a chance to learn Rohrbaugh notes. By rotating team members throughout a project, Crabtree, Rohrbaugh has allowed its employees to grow and gain experience in new markets.
  
• Expand slowly. Do not try to expand your firm too quickly. For Crabtree, Rohrbaugh, “Growth has always been steady and contained—adding a few of the best people we can find each quarter,” explains Rohrbaugh.
  
• Don’t chase competitors’ clients. Instead of focusing marketing efforts on clients who have already chosen their architects, invest this money in going after new project types and new markets. “If an RFP is put out, we will respond,” Rohrbaugh says, “but a lot of architects put their effort into convincing a client to hold interviews for their next project, and this is a waste of time.”

By taking these steps to diversify your markets, experience, and staff, your firm will be better positioned for long-term success in the future.

Ed Hannan is vice president of publishing at PSMJ Resources, Inc. in Newton, Massachusetts. For more information, visit www.psmj.com.