2016, consider Starting my own structural engineering firm. 2

[dannyypk]

Hi, all,

Just want to get more opinion about starting my own new structural firms in 2016.

Here is the points that support my decision:

1) Experience = over 10 years in residential , small commercial projects
2) MS / BS in Civil Engineering conc. in structural
3) Have multiple states PE license
4) Wife will support my back during the initial period of the business development.
5) work from home with more flexible hours

I have great amount of experience in structural design in residential and modular house. My strategy will be starting the business with all the real estate agent around the area and get more inspection business first. At the same time, I will contact as much small residential contractor as possible, will do all small or big custom projects.

Would like to hear more opinions / suggestion / recommendation / experience talk about starting a small structural engineering firm. Thanks.

 

[JAE]

Residential = more liability risk as you would be working with a continuous flow of small, sometimes ignorant, and non-repeat clients with limited financial resources.
Make sure you have adequate prof. liability insurance.



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[SlideRuleEra]

On item #4, (business development), what is the estimated elapsed time before the business becomes (significantly) profitable?

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[dannyypk]

I give myself 6 months to a year. If it failed, i will look for a job.

 

[dannyypk]

I understand the payment from small contractor., real estate agent, or home owner might be tough, but they are the easiest customers I can get when my company still young.

 

[zdas04]

Do you have a business plan? Take a look at faq784-1900 to see if you've missed any of the stuff that I feel contributed to my success.

I never worked for the market you are going after (I cancelled my Yellow Pages add after the first year because I didn't want them calling). My feeling for that market is that no one wants to pay a living wage and all feel like you should be happy with $25 for a 3 hour job. Way less than the minimum wage in a lot of places. In that market I would certainly stick to my published rate sheet, but I would plan on a lot of collection issues. Pay is probably a bit faster than corporate work, but it is somewhat more likely to suffer default.

David Simpson, PE
MuleShoe Engineering

In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist

 

[IRstuff]

6 months seems awfully optimistic for what is essentially a retail business. Note that while you are on the job, you are less able to do marketing. If you have no current customers, I would think something like 2 to 3 years would be more in line with reality:

http://boss.blogs.nytimes.com/2009/07/15/failure-is-a-constant-in-entrepreneurship/?_r=0

That was the expectation when my wife started her own medical practice, but we were able to bypass that by buying an existing practice

Percentage of companies survived vs. year since start

TTFN
I can do absolutely anything. I'm an expert!
homework forum: //

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[SlideRuleEra]

dannyypk - Good to established a time frame. Agree that 6 - 12 months sounds optimistic for a new business. If things don't work out, be sure to shut down the business in an orderly manner - don't just "walk away".

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[dannyypk]

zdas04, Which market you are referring to?

 

[dannyypk]

IRstruff, this is why I decided to stick with the real estate / residential inspection market as they generate quicker cash flow.

 

[BUGGAR]

I did similar and scored well with niche work - my best clients were builders who didn't build something right and were told to go get an engineer to fix their mistakes. I was that engineer and contractors threw money at me to make their problem go away. I never competed with anyone for work - you can't beat the cheapies. Find something unique.

 

[dannyypk]

BUGGAR,

Can you tell me more about your experience??

 

[BUGGAR]

The recession struck, I was out of work and there was no work around. I always liked the contractors I worked with when I had a job, so I sent out letters offering engineering services to them. I hit pay dirt with them and I started getting calls. I also picked up a few jobs from architects who fired their previous engineer (some engineers don't have people skills - take advantage of it).
This was the time that laws were being passed mandating minority and women owned firms. I picked up jobs from the minority firms who got the work but didn't really know how to do it. There were always truck and trailers that ran into bridges in Seattle and I picked up work there for repair design.
I never had insurance - I risked it and lucked out. I lost a lot of money working for religious clients. I used my SS number for tax purposes and was never audited or questioned (don't claim any significant expenses). I generally got by with letter format contracts but it's important to state all that you will do and will not do. Have a termination clause but this has to be worded politely so it sounds to the owners advantage.

 

[zdas04]

dannyypk,
I was taking about the consumer market. I only work for industrial clients.

David Simpson, PE
MuleShoe Engineering

In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist

 

[Ron]

danny....I think your "market" is the contractors/developers of single family homes....not the consumer, not the real estate agents. Those are for inspections. Inspections are fine for an opening market to create some cash flow, but keep in mind that you are competing with non-engineers who will work for half of what you should be getting.

If you want to do structural design of single family residences and small commercial projects, look to contractors and developers first. I have several colleagues in this same business and I review many designs when involved in forensic evaluations, and these are the groups the small structural guys work for.

Now I'll get critical.....you will be your only reviewer for anything you do. You must learn to be critical of your own work. I have done this for many years and find that when you do a project, it is helpful when you "finish" it, to let it sit for a day or two at least, then go back and review it as if it were someone else's work. Be critical. Be thorough....you are protecting your livelihood and your family with each time you sign/seal something. Go back and read your posts. Do you find grammar or spelling errors? They might seem small, but they are your presentation to the public. Make each word count....both for presentation and for liability. It is important to create an impression of competence, completeness and professionalism.

Good luck. I don't regret starting my own business. I've done it twice and both times were better than working in a corporate structure. The only reason I've done it twice was that my first business became attractive to a larger engineering firm and I sold out. It took me 16 years of moving through two separate corporate structures to realize I didn't really like doing that, so I started another business. That was over 10 years ago and I thoroughly enjoy what I do.

 

[Brad805]

I would not chase the residential market unless you forsee working with some good designers or well financed clients. When we used to do residential work our receivables were a constant struggle. We never took on sketchy residential clients, but the fact remained 90% of them were in over their heads or it was their first time. They are far risker to work with for that reason and the reasons Ron mentions. We have done some jobs similar to what Buggar mentioned. Contractors that are told "provide an engineered design," for various aspects can be good clients because they usually come to you with an idea at hand and you are helping them out of a problem. They pay their bills and the degree of liability tends to be small compared to some markets. I too like working with contractors. Dealing with endless discussions that go round and round with no purpose annoy me endlessly. Industrial clients are some of the best. We are too small to do their big jobs, but they always have things that need to be fixed. It is surprising what they require to be engineered these days.

Develop a client interview strategy and stick to it. Learn to sniff out the under financed or characters that spend too much time in small claims court. Just because someone wants you to do a job does not mean you want it.

If you enjoy the residential market, and have some developed clients, it surely can work; however, being the business owner will change many realities for you. For a year or more you are going to be the HR department, accountant, tax man, IT department, bill collector, engineer and unless I am mistaken, the technician. Great fun, but be prepared for a bumpy ride at times.

 

[dannyypk]

Brad805,

Can you give me some example about " Industrial Clients"?

I had done some engineering design regarding to warehouse remodeling (relocate a column, adding a mezzanine, or certifying a mezzanine loading.)

How do you get industrial clients? They usually don't have an architect involved.

 

[Brad805]

We are in an oil and gas area. This is only about 15% of our work now, but we expect it to increase to 25% or more next year. We are close to many plants and that makes a difference. This market is quite depressed right now, but they still must maintain what they have. We take on jobs like lifting studies, rigging, access designs, equipment repair, new equipment support, foundations, and general repair work where they need to lift off some heavy piece. Some of the work borders on being mindless, but they need it done. In the 90's the contractor did all of these jobs, but now due to their safety requirements they require engineered designs. This varies between companies, but some have developed some fairly strict internal rules.

No architects ever. Plants that are light on internal engineering tend to delegate the more mundane engineering tasks to the contractor, so the easiest method to start into this type of work could be to research and find the small to medium sized contractors doing repair work. The big contractors have their own internal staff or are aligned with someone, but the small to medium sized contractors tend to be willing to at least listen to the new guy. You will need to work on a sales pitch and show them you can do something different that benefits them. It can take time, but one contractor could be all that it takes to get you rolling if it works out well. You need to learn how to spot a problem they do not know they have, and show them how to fix it.

A few other good options for business are design/build contractors or steel fabricators. Job by job they pay marginally less, but there is great value finding someone that will keep coming back time after time. In effect they are doing part of your business development and unless they are terrible at their job, they pay their bills within 30d. Both of these options will be won based on fees, but the benefit is they have a good idea about fees because of their experience.

I don't know how close you have been to the proposal writing end of things, but architects are far craftier at business than us. They squeeze and squeeze all the time to take home more for themselves. I fear this will get worse with time. The stats on the number of sole practioner's and small to medium firms drops each year as the large firms gobble them up. At our last insurance conference the one presenter showed a slide where the various business's profit margins were compared. Engineers were nearly the same as a grocery store at 1.8%. This is a dog eat dog market for some. The closer you can get to the person that writes the cheque, the better.

 

[BUGGAR]

Ron's third paragraph! Sleeping on a design before turnover to the client is mandatory with no exceptions!

 

[oldestguy]

I did it only because I had many acquaintances as clients for former employer that liked my work. Of the several structural engineers that I know, most of them seem to be busy a lot more hours in a week than 40, probably just to keep above water. If my advice means anything, it appears you are way too optimistic and are not properly prepared. That BS and MS note will not impress anyone these days. They want the best at the least cost.