While nobody can predict with certainly what course the economy will take, there are some tactics that will help you navigate the slow periods.

When the economy slows down, most clients become cautious. A skittish market makes developers reluctant to commit to new projects. Institutions usually tighten budgets and defer capital expenditures. Projects already in the pipeline may be delayed or cancelled altogether. Since construction is a leading economic indicator, this obviously has an impact on most design firms. In a deep recession, many firms hunker down by cutting expenditures to the bone, laying off all but the most essential staff, and waiting out the storm. In a mild recession, however, things are much more ambiguous, so it’s a much tougher call. Weakening backlog may suggest layoffs, but those same staff may be needed immediately if a delayed project comes back on line, and hiring new staff can be expensive and time consuming. While nobody can predict with certainly what course the economy will take, there are some tactics that will help you navigate the slow periods.

First, make an honest and objective assessment of your current backlog. If there are projects in the pipeline, how real are they? Has the property been purchased? If so, the carrying costs may precipitate action sooner rather than later. Is the financing in place? If not, the viability of the project will depend upon the client’s credit rating. If a project is delayed, what business factors must be present before it’s reactivated? It pays to know how your clients are assessing their situation so that you can plan accordingly. Analyze your backlog based on facts, not hope, and update the assessment frequently.

Second, take a careful look at your finances. How much revenue must you generate each month to break even? How much can you reduce this figure by cutting or delaying expenses? If backlog is weak and the monthly “nut” is too large, reducing staff may be the only way out, but if this is the case, take care that the cuts are made strategically. It’s too tempting (and too dangerous) to adjust staffing only on the basis of LIFO (“last in, first out”). Instead, take pains to retain (and reward) the real producers in the organization— this is the best way to send a positive message to all staff that you know how to value their contributions.

Third, focus on marketing and public relations. Talk to all your clients about what’s in the pipeline, both short term and long term. Don’t be afraid to take on smaller or less significant projects-they can help get you through the slow times. Look for legitimate additional services on existing contracts. If times are tough for your firm, it’s very likely that they are also tough for your clients, so spend some time brainstorming about how you can help save them money. In a slower economy, people are less busy, and so it’s a good opportunity to get out and about, making client contact whenever and wherever possible. Now’s the time to schedule that often-postponed lunch or dinner. It’s also a good time to write an article or two or address a local group.

Fourth, devote some time to cleaning up the office.Slow times are a great opportunity to organize files, revise CAD standards, conduct employee evaluation and training sessions, and form special-purpose teams to review and update office policies and procedures. When things are busy, there’s never enough time to get to all these details, so take advantage of the downturn to get your act together. Get out of the crisis management mode once and for all. This will give everyone something positive to do and help keep morale high.

Fifth, maintain project discipline. Make sure that every hour is a productive hour, and resist the temptation to charge additional time to projects just because you have time on your hands. Charging excess time to projects will only erode the profit margins you are trying so hard to maintain. Instead, use those spare hours for marketing and office improvements-things that will add long-term value to your firm.

Sixth, consider ways to generate cash if you need it. Accelerate your efforts to collect receivables, or borrow against them. Extend your line of credit, or even raise capital by selling stock. Husband your cash carefully, and invest for current income. Tight times can teach great lessons about money management if you are willing to learn, and those lessons can last for a lifetime. Now more than ever, the wisdom of sound financial management will be clear to everyone.

Most importantly, stay calm.Remember that the economy is always cyclical—sooner or later, busy times will return. When they do, you should be prepared to take advantage of the inevitable upswing with better marketing, better management, and a better firm overall. Your staff will take their cue from you, so stay upbeat. If you meet your problems head on and engage everyone in the firm to help solve them, you can use the recession as a slingshot that will catapult your firm to even greater success.

—Scott Simpson