Your competitor is closing down. What will you do over the next 90 days?

The market is shrinking - and yet you’re still receiving enquiries that, a year ago, would have gone to three other firms. Not because you’ve improved. But because the others have gone out of business. Market consolidation isn’t just an abstract economic term. It’s happening right now, on your street, to firms you know personally. The question isn’t whether this is an opportunity. The question is whether your firm is in a position to capitalise on it - or whether enquiries are coming in whilst you lack the capacity to handle them properly.

The market is consolidating faster than expected

Last year, more architectural firms slipped into insolvency than at any time in the past eight years. This is not a short-term blip. Half of the firms surveyed are having to deal with project delays, put-backs or cancellations. Currently, only around 84 per cent of firms are making a profit - last year, the figure was just under 97 per cent. Anyone who believes this is a temporary blip is underestimating the structural change behind it.

Further real declines in turnover in residential construction of 14 per cent and 7 per cent respectively are expected for 2024 and 2025. According to the Federal Statistical Office, a total of 21,812 corporate insolvencies were recorded in 2024 - an increase of 22 per cent compared with the previous year. Companies in the construction sector are particularly hard hit. The shake-out is underway. And it is not over yet.

What consolidation means for the survivors

When firms go out of business, it is not just competitors that disappear. Their contracts, their staff and their client relationships disappear too. All of these are looking for a new home. Because older firm owners are finding it increasingly difficult to find successors internally, they are selling their businesses more frequently to large corporations, some of which are from outside the sector. What is not sold simply dissolves. The projects, the clients, the skilled workers - they move to the firms that are currently visible and receptive.

With an average age of 49, architects can hardly be described as a young professional group. Among the self-employed, the median age has risen from 53 to 55 since 2015. At the same time, the proportion of those over 60 among practice owners has grown to 30 per cent. This means that a third of the competition faces an unresolved succession issue in the coming years. Not all will find a good solution. Those firms currently perceived as stable and capable of delivering will attract their clients - without having to actively seek them out.

Growth in a declining market is not a contradiction. It is simple arithmetic: whoever shrinks more slowly than the market gains market share.

What it really costs - inaction

Most firms that recognise this situation do not react quickly enough. Not out of disinterest, but because their internal systems are not built for growth. The causes of this strained situation lie in disrupted project workflows, regulatory requirements and the struggle for fair contracts. Overall, project durations are increasing, in some cases significantly. Anyone who accepts a new enquiry in this situation without stabilising internal processes is buying themselves extra work - not profit.

The real problem is that capacity and the quality of project delivery do not automatically grow in line with the order book. An office that now wins three new major clients but completes projects six months behind schedule will not retain these clients. The reputation that counts in a declining market is being built right now - in every project that is completed on time and in full.

What others have tried - and why it falls short

The standard reaction to falling order numbers is well known: cut prices, step up acquisition efforts, and tap into new service areas. A dip in orders can also be seen as an opportunity to work through one’s own order pipeline and to systematically reflect on the structure of one’s own firm, the acquisition strategy and innovative business models. That is not wrong. But it falls short.

More business development is of no use if what is secured cannot be completed on schedule. New service areas are of no help if existing projects are bogged down internally. Lengthy approval processes are now regarded as a problem of comparable magnitude to a lack of orders. This is a sign: the problems do not lie solely outside the organisation. They lie in the way work is organised internally - how projects are handed over, where decisions are left pending, where feedback loops consume time that nobody has.

The new framework: delivery capability is a competitive advantage

In a saturated or growing market, the winner is whoever markets themselves the loudest. In a consolidating market, the winner is whoever delivers most reliably. This is not just a motivational slogan. It is a structural shift. Clients who have had an insolvent planning partner in the past are not looking for a cheap firm. They are looking for a reliable one.

Even if a firm has established itself in the market, strategic or economic priorities can be relevant, such as cost-effective project delivery, time and cost management, or sharpening the firm’s profile. This is precisely where the lever lies that most people overlook: not in the firm’s public image, but in its internal ability to steer projects predictably through all phases. Those who can do this are recommended to others. Those who can do this take on the clients of firms that could not.

Rising costs and the shortage of skilled workers are increasingly limiting capacity. This applies to everyone. But there are firms that still manage to get more done - not because they have more staff, but because work doesn’t get bogged down with them. That is the difference between firms that grow through consolidation and those that go under as a result.

What matters now

Before you accept the next enquiry: Do you know where your current projects stand internally? Which service phase is awaiting whose decision? What capacity do you actually have in 60 days’ time - not planned, but realistically?

If the answer to these questions is unclear, every new enquiry will burden the existing system, not relieve it. Market consolidation gives you a window of opportunity - but only those who are capable of delivering internally when enquiries arrive will make use of this window.

If you want to see where work is getting stuck in your office today and which change will generate more completed projects first, that is exactly what we will find out together in 10 working days. Without a new method, without a new tool. Find out more at Scaled Innovation.