They can both make us crazy?
No, that title really wasn’t intended as the first line of a joke.
But there are a couple ways that a firm is like a project for me. The first is that we are always striving to build something meaningful and lasting.
It’s the second one I want to talk about, because it can simplify how we think about the firm’s financial management.
Every member of the firm is engaged in work related to his or her role or expertise. Some of them are designing, some are drawing, some researching materials or writing specifications, some putting together presentations, and still others doing things to support everyone else but have little or nothing to do with a project.
Imagine a visitor walking through our office, or offices. This visitor would not be able to tell by casual observation whether or not all of our people are working on a single project, or many. Whether they are large projects, or small ones.
Pretend for a moment that all of these various projects are actually just smaller components of one single, complex project.
We know what the firm is paying all of our people, including the ones not doing project-related work. And we also know, or should know, what the firm’s other ongoing expenses are.
We just have to make sure that the firm is spending less on all that stuff than it is earning in total project fees (revenues).
It’s as simple as that.
Simple-minded, you say? Perhaps, but hear me out.
There are countless business books and consultants out there making it so much more complicated than that. They really do make me crazy.
Sure, there are individual aspects of business management that can be rather complicated, requiring detailed analysis, knowledge, or experience. And accounting itself is not as simple as it may seem. I took some accounting in grad school, and spent many late nights on this challenging subject.
Those more complicated facets of management and finance can be learned. But it is important not to let them become distractions from the one simple idea.
As the television commercial says, everyone knows that. And it applies to any business.
Let’s not make ourselves crazy overthinking it.