Word on the Street: Issue 213

I Would Have Appreciated a Heads Up About the Scorpions

Last year, my long-suffering business partner, Mark Goodale, traveled to Italy for a family vacation. Being the consummate professional and tireless industry advocate, he took what he learned from his visit to the Pagani factory in Modena and penned the insightful “Five Business Lessons from a Pagani Factory Tour” article for Word on the Street upon his return. It elicited a ton of reactions from our readers. (Was I jealous? Of course not.) Even on vacation, he was thinking about how he could help the industry. This was just one more example of why our clients and the team here at Morrissey Goodale love working with Mark. And one more reason for me to resent him…deeply.

So, when I set off with my family last month for our Italian vacation, I was determined to out-do him and write the seminal “What I learned in Italy” article. I’d planned day trips to hill towns all over Tuscany—Perugia, Montepulciano, Assisi. You name it, every town in that old Etruscan province was fair game for me to examine on a mission for Word on the Street. The Catacombs? The Forum? Trevi Fountain? Every iconic structure was potential fodder for what I envisioned as a classic “Here’s What AE CEOs Can Learn from Roman Builders.” (Very Life of Brian—“What have the Romans ever done for us?”) With the hubris of a returning Roman general, I crossed the Rubicon confident that my months of “learning” Italian with Duolingo had prepared me for deep and meaningful conversations with the locals that would bring an authenticity and grittiness to my article, something I saw as sorely missing in that Pagani factory piece.

But it was not to be. Rather than a robust Byron-esque romp through Italy, my visit more closely resembled the last days of Shelley or Keats as I lay Covid-confined in a darkened room—shutters closed—for over a week. While family and friends gallivanted from one vineyard to another, and took selfies with various semi-clothed statues, I was left in a darkened room alone. Or at least I thought I was alone.

I would have appreciated a heads up about the scorpions. Sure—in Italy they don’t pack a deadly venomous sting. But you only figure that out after gingerly tiptoeing (where did I leave my sandals!?) around a creature that had apparently just stepped out of an Indiana Jones movie and desperately Googling “scorpions Italy.” It would have been nice if Rick Steves or Stanley Tucci had just once said something like, “Oh, by the way, a word on scorpions…”

So, I returned from Italy with no great insights, a new-found phobia, and no article. But I did return to over 500 emails. Because this was my first-ever vacation that I had travelled sans laptop. Part of my “condition” is that I’m a workaholic. (I actually went into the office the morning of my wedding day.) I’ve taken my laptop and worked on every single vacation. Sure, I’ve posted the “Out of Office” message on Outlook, but it was just a cover. If there was a client or prospect email or inquiry, I NEVER wanted to miss it. As any of you who run/own a business know, you can never really step away. But for this Italian trip I was determined to disconnect completely. So, I left the laptop at home. And the emails piled up while me and my Covid Scorpions (excellent band name) got acquainted. (Final score: Mick 3 Scorpions 0.)

And four things jumped out at me from those over 500 emails.

1. First, I was stunned to see the sheer number of inquiries from private equity firms looking to enter the AE industry. Based on the volume of emails from firms (all of which seemed to have a name that included one of “Rock,” “Lake,” “View,” “Stone,” or “Valley”) I doubt we are anywhere close to “peak” industry recapitalization. This level of interest simply didn’t exist prior to 2018, and it shows no sign of slowing down.
2. Second, I was struck by the behavior of different types of clients over the 17 days that I was out. Closely related to the point above, my observation was that the management teams of employee-owned firms make corporate decisions—particularly around M&A—in a far more ponderous manner than firms that have private equity as part of their capital stack. This is something that we’ve observed in general in our advisory work over the years. But this 17-day period provided an amazing snapshot of just how different the cadence of decision-making is between these two types of firms. 
3. Third, there’s a massive amount of capital being directed at further consolidation in the transportation, water, wastewater, T&D, and data center markets. It’s as if every leadership team is working off of the same “investment thesis” and believing it’s unique. It’s not. But it’s happy days for owners of firms in those markets.
4. Fourth, they may not be household names now, but within five years, there’s a handful of European firms that will have established themselves as legitimate ENR Top 100 players in the U.S. market.

These and many other topics will be featured at our annual Texas and the South M&A and Business Symposium at the beautiful five-star Post Oak Hotel at Uptown in Houston next month. We will also be recognizing the recipients of the Best Post-Transaction Performance Awards. So register today to join over 200 AE industry executives and investors at the #1 deal-making event of the year in the #1 city for deals. Ciao!

You can contact Mick Morrissey at [email protected] or 508.380.1868. 

Strategic Business Plans vs. Growth Plans—They Are Different Animals

AE firms often find themselves at a crossroads where the path forward isn’t always so clear. Should you focus on streamlining operations, pivot to new markets, or double down on what’s working? Two powerful tools to chart your course are strategic business plans and growth plans. While these terms are often used interchangeably, they serve distinct purposes, and understanding the differences is key to driving your firm in the right direction.

This article delves into the key differences between strategic business plans and growth plans, explaining when to choose one over the other and how to execute each for maximum impact.

What’s the difference?

A strategic business plan serves as a comprehensive guide for the overall direction of a firm. It’s the “big picture” plan, focused on aligning the company’s mission, vision, and long-term goals with its day-to-day operations. It defines the firm’s identity and values, sets performance metrics, outlines competitive advantages, and provides a roadmap to success over the next 3, 5, or 10 years.

Strategic plans address high-level questions like:

• What does the firm want to achieve long term?
• How can the firm differentiate itself in the market?
• What are the firm’s core competencies, and how should they be leveraged?
• What internal weaknesses need addressing?

This kind of plan typically involves a comprehensive internal audit, including financial health, operational efficiency, employee development, and customer satisfaction. It also examines external factors such as market trends, competitors, and regulatory environments.

On the other hand, growth plans are narrower in scope but laser-focused on expansion. Where strategic plans provide broad, firm-wide direction, growth plans zoom in on increasing revenue, market share, or operational scale within a specific time frame. Growth plans are all about “how fast” and “how much.” They define concrete goals for client acquisition, market penetration, geographic expansion, or even mergers and acquisitions.

Growth plans often involve tactical steps like:

• Entering new markets or industries
• Launching new services or products
• Scaling operations, either organically or through acquisitions
• Maximizing existing client relationships

While a strategic business plan is more about setting up a sturdy foundation, a growth plan is about accelerating once that foundation is secure. It’s the fuel that powers a firm’s next phase of evolution.

When to focus on strategic business plans

A strategic business plan is the go-to when your firm is in need of:

1. Reevaluation: If your firm has hit a plateau or is undergoing significant changes (such as new leadership or a merger), it’s time to rethink the firm’s direction and operational alignment.
2. Repositioning: AE firms face shifting market trends—sustainability, digital transformation, or changing client expectations—that may require a recalibration of core services and positioning.
3. Stabilizing operations: When growth is either unpredictable or unsustainable, a strategic business plan can help get the house in order by improving project management, talent development, and operational efficiencies.
4. Crisis or recovery mode: After a major crisis (such as a leadership shakeup or pandemic), a strategic plan helps recalibrate long-term objectives while re-establishing core operational health.

How to execute a strategic business plan

1. Conduct internal and external audits: Start by gathering data. Survey employees, evaluate client feedback, and analyze competitors. Review your firm’s financials, strengths, and weaknesses.
2. Review mission and vision statements: Revisit and refine your firm’s mission and vision. Are they still relevant? Are they understood and shared by employees and clients alike?
3. Set strategic objectives: Define long-term goals with key performance indicators (KPIs). These might include financial targets, client satisfaction rates, or operational improvements.
4. Create an implementation roadmap: Break down big goals into smaller, achievable milestones. Delegate responsibilities across business units and ensure there’s a clear timeline for execution.
5. Communicate and achieve buy-in: No strategic plan works unless the whole team is on board. Leadership must communicate the plan and secure buy-in from employees at every level.
6. Continuously monitor and adjust: A strategic plan is a living document. Set regular intervals (quarterly, annually) to review performance against KPIs and adjust the course as needed.

When to prioritize growth plans

Growth plans should be front and center when your firm is:

1. Stable but stagnant: If operations are solid but growth has stalled, it’s time to kick-start a focused growth strategy. Often, firms find themselves in a stable market position but need to push beyond the status quo to achieve the next level of success.
2. Seizing market opportunities: Maybe there’s a new market ripe for entry or a client segment that is underserved by competitors. A growth plan helps your firm pounce on these opportunities before they pass.
3. Preparing for M&A: Whether you’re looking to acquire or be acquired, a growth plan details how expansion will unfold and integrates it into your firm’s broader strategy.
4. Geographic expansion: Trying to break into new regions? A growth plan outlines market-entry strategies, from securing key hires to building a local reputation.

How to execute a growth plan

1. Define clear growth metrics: Growth for the sake of growth isn’t enough. Set specific, measurable goals, such as increasing market share by 10%, acquiring three key clients in a new market, or launching a new service line that will contribute 15% of revenue within two years.
2. Conduct client and market research: Understand who your ideal clients are and analyze their needs. Conduct in-depth market research to identify the regions or industries with the highest potential for your firm.
3. Allocate resources: Growth often requires significant investment—whether in new hires, marketing efforts, or infrastructure. Make sure you have the right resources allocated and prepare for cash flow fluctuations during growth spurts.
4. Align leadership: Ensure that your firm’s leadership team and key stakeholders are aligned on the growth goals. A lack of alignment can derail even the most well-thought-out growth plan.
5. Establish a timeline and execute: Growth plans should be highly time-sensitive. Map out the steps, resources, and teams responsible for hitting milestones, and track progress rigorously.
6. Build in flexibility: Growth plans need to be flexible enough to adapt to unforeseen changes in the market or competitive landscape. Create checkpoints to assess what’s working and course correct as needed.

When to use both

The reality is a strategic business plan and a growth plan are not mutually exclusive. They often work in tandem, especially for AE firms. For instance, a firm might implement a strategic business plan to solidify its operational foundation and cultural alignment, then immediately follow it with a growth plan to accelerate revenue and market expansion.

A well-rounded AE firm will have a strategic business plan as the guiding north star, periodically implementing growth plans to capture market opportunities and ensure sustainable expansion.

Key moments to use both

• Post-leadership transition: After a new CEO or leadership team comes in, the firm might launch a strategic business plan to define the new vision, followed by a growth plan to capture the momentum gained from turning the page.
• Post-M&A: Acquisitions require both integration and growth. A strategic plan stabilizes operations post-acquisition, while a growth plan ensures the newly combined firm maximizes revenue opportunities.
• Mid-career leadership transitions: If a firm is grooming new leaders, a strategic plan is crucial for clarifying the firm’s direction, while a growth plan gives the next generation specific goals to pursue.

Why the distinction matters

The difference between a strategic business plan and a growth plan might seem subtle at first, but the distinction is crucial. Strategic business plans are about ensuring the firm’s long-term sustainability by aligning all elements of the business with its mission and vision. Growth plans, on the other hand, are about driving aggressive expansion in the short term, ensuring the firm capitalizes on market opportunities before they pass.

Understanding when to use each is key for AE firms navigating increasingly competitive markets. Strategic planning brings stability and alignment, while growth plans bring the rocket fuel for firms ready to blast off. Together, they form a powerful combination that can secure your firm’s future.

To connect with Mark Goodale about your firm’s future plans, call 508.254.3914 or email [email protected].

Market Snapshot: Planning Activity

For the fifth consecutive month, the Dodge Momentum Index (DMI) increased, reflecting optimism towards nonresidential building markets. Most categories experienced growth in planning activity in August, resulting in a 2.9% increase from the previous month and a 31% increase compared to August of last year. 

On the commercial side, retail, hotels, and warehouses started to move upwards. Data center activity is still strong but may be starting to slow down based on last week’s report from Dodge Construction Network. Health care was the top performer within the institutional sector, which was 5.7% higher than July. Recreational planning also picked up.

To learn more about market intelligence data and research services offered by Morrissey Goodale, schedule an intro call with Rafael Barbosa.

Weekly M&A Round Up

Industry consolidation continued with yet another deal in the fast-consolidating South: Last week we reported 13 new domestic transactions in NC, AR, MD, VA, CO, CA, KS, NY, PA, and VA. Global deals were announced in Germany and the UK. You can check all the week’s M&A news here.