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This article continues an inquiry into the economic conditions of the Surveying and Mapping industry (NAICS 541370) using data from the U.S. Census Bureau. This time we will look at customers and services. The data comes from the Economic Census conducted every 5 years on American businesses. The American FactFinder was used to extract the 2012, 2007 and 2002 data. The 1997 and 1992 data was transcribed from archived census publications.
Customers 1992 to 2012
Figure 1 shows categories of customers who purchase surveying and mapping services. For each category of customer, the sales revenue is expressed as a percentage of the total for a given year. The composition of customer sales is remarkably consistent over 20 years except for a few anomalies. Further research might reveal if these discrepancies are coding problems or actual changes in the mix of customers.
There is typically more diversity among a firm’s customer base than these categories reveal. A consistent pattern of customers over a long period of time suggests service providers and their customers have settled in to habitual ways of doing business. One way for surveyors to disrupt these persistent patterns is to come up with a fresh answer to a question posed by Theodore Levitt in 1960–What business are you in? Craft a response without using the term surveying. Focus on customer needs that are being satisfied rather that the surveying services being sold. This approach may lead to new categories of customers who will benefit from the surveyor’s expertise.
Surveyors should also explore the interdependencies that exist within the industry. Most of the surveyor’s customers are directly and indirectly involved in land development. Under this arrangement, a rising economic tide tends to lifts all businesses in the same industry, but what happens when the tide goes out? The surveying and mapping industry is part of the Architectural, Engineering and Related Services industry (5413). It includes architects, landscape architects, engineers, drafters, building inspectors, geophysical surveyors, surveyors & photogrammetrists and testing labs. Figure 2 shows the changes in employment leading up to and following the 2007 Recession. It is worth pondering why some of these industries fared better than others.
The demand for land and its development is influenced by a variety of factors. Some of these factors are specific to a local economy and others are related to state, national and even the global economy. These factors when combined with the immovable nature of land offer insights into the business cycles that characterize the industry. For example, we all know surveyors who have moved across the country because the demand for their services ended abruptly.
Services
Figure 3 shows major categories of services. These major categories include subcategories. For example, geospatial services include photogrammetric mapping, geospatial data conversion and GIS.
Figure 4 shows subcategories of surveying services. These subcategories do not reveal the impact of digital technology on professional services. These services are essentially about the production and transfer of knowledge for use by others. More of this process is being facilitated by digital technology. The physical artifacts that once memorialized the surveyors work are being replaced by digital artifacts. For example, the construction surveyor’s wooden stake is being replaced with digital design models and a complex positioning system. Automated grade systems have altered the demand for construction surveyors and the services they provide. Each of the services listed on Figure 4 is not what it was 10 years ago. Along the way, the surveyor’s job has changed. Knowledge/ skill remain relevant to the tasks surveyors perform; however it seems customers are interested in services located at a different position along the continuum of expertise.
Following the money
These broad categories of customers and services help surveyors identify potential sources of revenue. People seeking opportunities tend to assume that more-is-better is a good rule of thumb to follow. Quantity is not necessarily a good indicator of the quality of opportunities. Much depends on the characteristics and dispositions of buyers and sellers. When service providers and customers crowd into marketplace, it can increase competition and diminish the value exchanged in each business transaction.
Some revenue sources available to surveyors are better than others in terms of reliability and quality. This can be the result of prevailing business practices in an industry, a customer’s risk taking preferences, regulations and situational uncertainty. Many of these financial risks can be mitigated by using sound business practices. It pays to look upstream from your location before committing to partaking from a given revenue stream.
Systematic business and career development
In a market economy it is vital to understand who is buying what and why. This understanding is often expressed in a business development plan. Reality has a way of disrupting plans; so many owners forego the exercise. The value of drafting a plan is to challenge your assumptions about business and systematically learn how to get better at operating a business. A small business tends to be a busy place where one thing follows after another. Periodically every business owner needs to take a break from working in the business and ponder why they started it in the first place. A simple written plan helps an owner stay on track and build expertise.
And what goes for owners and their businesses also applies to professionals and their careers. In an industry driven by innovation, a surveyor’s expertise can acquire a sell by date. The passage of time can cause what was once a valuable skill to become an unmarketable skill. A professional needs a plan for remaining relevant in a changing marketplace. Some consideration ought to be given to the costs of developing and maintaining competence; trends in compensation; and the economic elements of service revenue. The anecdotal evidence suggests the costs of being a surveyor are going up. Investments in technology have expanded a firm’s balance sheet and altered the way in which services are delivered. Again, the objective of a career plan is to challenge cherished assumptions about professional expertise and learn what makes it valuable in the current marketplace.
The value of the surveyor’s services
What is the surveyor’s know-how worth in the market place? The industry uses several customary business practices for pricing services. The practices are a practical art that seeks to assign a monetary amount to the value being offered to the customer. As it turns out, customers have their own notions about value and what they are willing to pay for it. And it is possible that surveyor and the customers both misunderstand the potential value that is available in a business transaction. In which case both parties are likely to get something other than they are bargaining for. The cumulative effect of price-value discrepancies eventual shows up in personal accounts of wealth and economic statistics. Estimating its magnitude is perhaps an impossible task. Signs that this discrepancy may exist involves a bit of speculation about the relationship between payroll (a proxy for expertise applied) and sales receipts (a proxy for value provided). If kindred service providers within the Architectural, Engineering and Related Services industry (5413) appear to be converting payroll into revenue at similar rates, then the respective pricing strategies may be similarly effective. There are lots of ifs at work in this theory, so its purpose is less about conclusions and more about pondering relative performance. Figure 5 shows the ratio of revenue to payroll in the industry. Surveyors have some of the lower ratios among this list of service providers. Perhaps it is time for surveyors to revisit their business models and value propositions.
Carrying this project forward
This brief inquiry only touched the surface of what can be learned about the economics of the surveying and mapping industry. I encourage surveyors in each state to do some research, make some charts and publish it in the state society newsletter. The goal is to support ongoing discussions with some facts about the challenges surveyors are confronting. Going forward, surveyors need some benchmarks in order to evaluate progress. The typical small professional service firm often lacks the resources to keep informed about important developments in the marketplace. Some professions address this issue through the services of trade associations that offer its members economic information, as well as, practice management guidelines. This information aims at helping practitioners better serve their customers and satisfied customers will help the industry grow. I can think of no better time than now for surveyors to form a trade association.
The recent debates about the future of surveying include topics which at their core are related to imbalances in supply and demand. These are reoccurring problems every market economy must resolve. The consequences of the 2007 Recession are a bit different. Surveyors are confronting what could be called a wicked problem– multiple problems that must be addressed at the same time. These problems interact with one another in unexpected ways. Further, the problems and those who will address them are dispersed throughout the country. Surveyors in different parts of the country have different perspectives and as a result they have different opinions about should be done. The challenge is to align our efforts around a few key issues and avoid becoming engaged in a game of whack-a-mole.
Lee Lovell is a registered land surveyor in Colorado and Nebraska and has accumulated 34 years of professional experience. He resides in Parker, Colorado where he was part of Western States Surveying for 20+ years.
A 2.032Mb PDF of this article as it appeared in the magazine—complete with images—is available by clicking HERE