FEM4Structures
Structural
How would one approach a small engineering consulting business if he don't want to invest too much. Strategies for attracting business?
Thanks,
FEM4Structures
Thanks,
FEM4Structures
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Consulting Engineer 8
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MacGyverS2000
Electrical
From a more "philosophical" standpoint, I'd say a business won't do well if you don't invest in it... and customers can usually see that, too. If you need expensive software packages to do your work beyond a certain level, you have a choice; buy the software and allow yourself to do complicated projects, or don't and stick with simple projects. Guess which type of work will more quickly build your business (and your name)?
Dan - Owner
Dan - Owner
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Engineering on the cheep? The current administration has a term for that: "Non working, not employed" which won't count in the unemployment numbers, but gets just as hungry.
I didn't even consider starting my business until I had:
[ul]
[li]Enough money to purchase everything I needed for startup (from wide carriage printers, to computers, to some really expensive software, to desks and file cabinets)[/li]
[li]6 months living expenses separate from the company[/li]
[li]6 months of company operating expenses[/li]
[/ul]
Ever ask why so many start-up companies fail? Under-capitalization is the most commonly cited reason. If your primary concern is "on the cheep" then save yourself a ton of heartache and keep working for the folks currently paying you.
David Simpson, PE
MuleShoe Engineering
Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat
I didn't even consider starting my business until I had:
[ul]
[li]Enough money to purchase everything I needed for startup (from wide carriage printers, to computers, to some really expensive software, to desks and file cabinets)[/li]
[li]6 months living expenses separate from the company[/li]
[li]6 months of company operating expenses[/li]
[/ul]
Ever ask why so many start-up companies fail? Under-capitalization is the most commonly cited reason. If your primary concern is "on the cheep" then save yourself a ton of heartache and keep working for the folks currently paying you.
David Simpson, PE
MuleShoe Engineering
Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat
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FEM4structures....if you have to ask.....
I agree with both of the above. You must invest and you must have a plan for no income. I've started two businesses and have been a principal in much larger ones. My first business was undercapitalized and it made life difficult! I was able to succeed and ultimately sell the business to a much larger competitor; however, being undercapitalized makes for sleepless nights and the dread of payroll day. I currently have a different corporate structure that allows much more flexibility and low capitalization, so for the past 9 years, it has been much less difficult and much more rewarding, both financially and professionally.
Risk. You need to be willing to take it and survive it. Otherwise, follow David's advice and stay where you are.
I agree with both of the above. You must invest and you must have a plan for no income. I've started two businesses and have been a principal in much larger ones. My first business was undercapitalized and it made life difficult! I was able to succeed and ultimately sell the business to a much larger competitor; however, being undercapitalized makes for sleepless nights and the dread of payroll day. I currently have a different corporate structure that allows much more flexibility and low capitalization, so for the past 9 years, it has been much less difficult and much more rewarding, both financially and professionally.
Risk. You need to be willing to take it and survive it. Otherwise, follow David's advice and stay where you are.
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Well, I somewhat agree with what is discussed above.
I have been doing this for a just under two years now and the firs thing is, you need to know where you are going to get your clients from. Most of my clients came after my last company went out of business. Contacts I had withing the company or contacts I dealt with outside of the company.
-You will need E&O insurance. This is my largest expense for the year (my wife takes care of my health insurance).
-If you are not so lucky, you will need health insurance which will probably be your second largest expense every year (Thank you new government regulations).
-If you live within 1/2 hour of a print shop, you do not need a large format printer (it's just another thing to break down and take care of). All of my prints are done at Staples and an 11x17 printer I bought for $300 which has worked quite well for the past 2 years. Most shop drawings are done on the computer now (I hate that).
-You will need a CAD package.... but you don't necessarily need the "latest" version of CAD.
-Any computer programs you think you might need to do your job. I know a few small engineering companies who don't even own a software package and do everything by hand (of course they mostly work on residential projects but it works for them).
-Finally, a place to put your office. I put mine in a spare bedroom in my house. It's not for everyone (and I'm not sure if I really like it).
If you wanted cheap, you would get the minimal insurances, place the office in your house, buy a cheap computer/CAD package get a good calculator and you are off. I don't know if this would work for you or not. I work a lot with fabricators/contractors and only a little with architects (not by choice but by necessity). Others don't like this but it works.
I have been doing this for a just under two years now and the firs thing is, you need to know where you are going to get your clients from. Most of my clients came after my last company went out of business. Contacts I had withing the company or contacts I dealt with outside of the company.
-You will need E&O insurance. This is my largest expense for the year (my wife takes care of my health insurance).
-If you are not so lucky, you will need health insurance which will probably be your second largest expense every year (Thank you new government regulations).
-If you live within 1/2 hour of a print shop, you do not need a large format printer (it's just another thing to break down and take care of). All of my prints are done at Staples and an 11x17 printer I bought for $300 which has worked quite well for the past 2 years. Most shop drawings are done on the computer now (I hate that).
-You will need a CAD package.... but you don't necessarily need the "latest" version of CAD.
-Any computer programs you think you might need to do your job. I know a few small engineering companies who don't even own a software package and do everything by hand (of course they mostly work on residential projects but it works for them).
-Finally, a place to put your office. I put mine in a spare bedroom in my house. It's not for everyone (and I'm not sure if I really like it).
If you wanted cheap, you would get the minimal insurances, place the office in your house, buy a cheap computer/CAD package get a good calculator and you are off. I don't know if this would work for you or not. I work a lot with fabricators/contractors and only a little with architects (not by choice but by necessity). Others don't like this but it works.
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And, all that is great, but you need to have a plan for setting yourself apart from all the other engineers out there. That doesn't mean just lowballing all your bids, either - it's counterintuitive, but that will get you less respect, and work. I live in a town with lots of one-person firms, so I knew I had to figure out who to go after as clients or I'd stay hungry. And, given that it's a small town, you can get shot down really quickly by trying to steal other engineer's clients. I found an untapped niche and have been going after it aggressively, and really growing each year. This year, I'm already ahead of where I was in May of last year. Feels kind of good.
Best of luck. Find your niche, don't sell yourself as the cheap option, and make sure your office has a door on it.
(Oh - and Google Voice lets you have a work number that rings directly to your regular cell phone, so you can choose to answer a work call or not. For free.)
Best of luck. Find your niche, don't sell yourself as the cheap option, and make sure your office has a door on it.
(Oh - and Google Voice lets you have a work number that rings directly to your regular cell phone, so you can choose to answer a work call or not. For free.)
No Zdas, the number one reason for failing in business is that the new businessman cannot make a sale.
To be successful, you better be one that can close a sale, you can be one hell of an engineer and it is worth crap if you cannot bring work in.
Ask yourself: Are you fit to do the small talk, the chit chat, the lunches, the golf outings, the cold calls, the marketing, the presentations, can you convince that you are the best? can you wear a suit and tie everyday? can you switch from a follower to a leader? do you have a portfolio to present?
Can you answer typical questions (what is you turn over ratio? tell us about you change order experience, tell us about your quality control program, tell us about your Health, Safety and Environment program, are you registered? do you have written references? testimonials? has any of your projects won an award? how many registered people do you have? do you hold XYZ license in such and such states? are you certified ICC code reviewer? tell you about your sustainability approach, etc...)
First: Are you capable and ready? that's the question.
To be successful, you better be one that can close a sale, you can be one hell of an engineer and it is worth crap if you cannot bring work in.
Ask yourself: Are you fit to do the small talk, the chit chat, the lunches, the golf outings, the cold calls, the marketing, the presentations, can you convince that you are the best? can you wear a suit and tie everyday? can you switch from a follower to a leader? do you have a portfolio to present?
Can you answer typical questions (what is you turn over ratio? tell us about you change order experience, tell us about your quality control program, tell us about your Health, Safety and Environment program, are you registered? do you have written references? testimonials? has any of your projects won an award? how many registered people do you have? do you hold XYZ license in such and such states? are you certified ICC code reviewer? tell you about your sustainability approach, etc...)
First: Are you capable and ready? that's the question.
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Cry,
Your list is important to success, but not the primary reason for failure. I've known a lot of small businesses that couldn't last until the first check came in (spend 2 months finding the first job, do it in a month, send the invoice, wait 90 days for the 30 day cycle to play out, and you are 6 months with zero income, and too often your doors are shut when the first check arrives).
David Simpson, PE
MuleShoe Engineering
Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat
Your list is important to success, but not the primary reason for failure. I've known a lot of small businesses that couldn't last until the first check came in (spend 2 months finding the first job, do it in a month, send the invoice, wait 90 days for the 30 day cycle to play out, and you are 6 months with zero income, and too often your doors are shut when the first check arrives).
David Simpson, PE
MuleShoe Engineering
Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat
Suit and tie? I tried that at first and no one took me seriously. I started wearing jeans and somehow I looked more professional. My first boss only wore shorts. If you can't buy a plotter or don't have a cheap repro place close by, fedex generally has an Oce at some close location. 5+ years and we are about to finally buy a plotter.
I think it is possible to cheap out on things that no one sees. Such as we use an Ooma for the business lines and that pushes to our cellphones so its generally easy to get ahold of us. Meet at the clients location or project site and a fancy office isn't necessary. My first business partner wanted to pay monthly for things to show off. But no one ever saw that stuff.
The majority of our work is coming from repeat business. Mainly younger Architects or newer small businesses. Keep doing good work and sooner than later it will pay off. The hard part is getting your foot in the door. At some point in the beginning I was sending emails to all the local architects that were written to their company sort of like sending a resume out. Nothing generic or mass sent. I would include a link to a positive story on a project they had and talk a little about it. Craigslist is a free way to post your business up. Haven't had much luck with getting much work out of that. But its something if you are starting out. Most people we work with don't even have a website or their domain email. Architects we are dealing with either have a gmail or some way too fancy website that's hard to navigate.
For E&O insurance I was lucky to have made a USAA account before when you didn't need to be in the military. And by some luck our insurance person asked if I was a USAA member which got us a nice discount on insurance. Shop around on that part.
And like zdas04 says be prepared to wait a while for payments. Don't start without the retainer. It has gotten so bad recently that we might stop giving out the first draft before collecting 90% of the payment.
I used to be able to work 80 hour weeks like nothing while going home and collecting a paycheck. I would say running your own business is easily triple that but stressful. I started getting grey hairs at 29 after 6 months of doing this. Funny thing is the only other friend I know who ran their thing from scratch also went grey shortly after starting.
B+W Engineering and Design
Los Angeles Civil Engineer and Structural Engineer
I think it is possible to cheap out on things that no one sees. Such as we use an Ooma for the business lines and that pushes to our cellphones so its generally easy to get ahold of us. Meet at the clients location or project site and a fancy office isn't necessary. My first business partner wanted to pay monthly for things to show off. But no one ever saw that stuff.
The majority of our work is coming from repeat business. Mainly younger Architects or newer small businesses. Keep doing good work and sooner than later it will pay off. The hard part is getting your foot in the door. At some point in the beginning I was sending emails to all the local architects that were written to their company sort of like sending a resume out. Nothing generic or mass sent. I would include a link to a positive story on a project they had and talk a little about it. Craigslist is a free way to post your business up. Haven't had much luck with getting much work out of that. But its something if you are starting out. Most people we work with don't even have a website or their domain email. Architects we are dealing with either have a gmail or some way too fancy website that's hard to navigate.
For E&O insurance I was lucky to have made a USAA account before when you didn't need to be in the military. And by some luck our insurance person asked if I was a USAA member which got us a nice discount on insurance. Shop around on that part.
And like zdas04 says be prepared to wait a while for payments. Don't start without the retainer. It has gotten so bad recently that we might stop giving out the first draft before collecting 90% of the payment.
I used to be able to work 80 hour weeks like nothing while going home and collecting a paycheck. I would say running your own business is easily triple that but stressful. I started getting grey hairs at 29 after 6 months of doing this. Funny thing is the only other friend I know who ran their thing from scratch also went grey shortly after starting.
B+W Engineering and Design
Los Angeles Civil Engineer and Structural Engineer
Tread very lightly with a retainer, if you get an unhappy client they can have your licensed revoked for not performing the work that you were paid to complete especially if there is a discrepancy. I know many engineers take retainers but that is something I am not comfortable with at the moment. However, shelling out thousands of dollars for subcontractors and supplies to get paid 6 months later is kind of a drag.... but at least when you get the money it is all yours (well except for what you owe the government). I had an architect tell me one time to "bill early and often". The thought behind the process is that small bills are more likely to get paid faster than the larger ones.
Finally, in my business I managed to have some strong relationships with some other engineering companies. When they have too much work and I don't have enough it works out pretty well as they will cycle me some work (it goes both ways). They get their job on time to their client, I get paid and I don't have to deal with the usual BS that goes along with a project (just engineer it and get out).
Finally, in my business I managed to have some strong relationships with some other engineering companies. When they have too much work and I don't have enough it works out pretty well as they will cycle me some work (it goes both ways). They get their job on time to their client, I get paid and I don't have to deal with the usual BS that goes along with a project (just engineer it and get out).
The other thing to remember is that as a very small firm (1-5 people), you don't have the most expensive overhead of all which is lots of senior people doing non-billable administration work. If you can charge big firm rates, you can afford whatever software and office space you want!
@SteelPE: I have never heard of someone losing their license because of retainer, and I can't even imagine how it might play out like that. If you ask for 10% of the total project to be paid at mobilization and applied as a credit against the final invoice, where is the risk? Retainers should be standard!
SteelPE....retainers in my niche of the business are routine. We make it clear that a retainer is a "place holder". It engages our services (i.e. TIME) for a specific limited time without any expectation of results from that enticement. A retainer should not be refundable in general as it "retains" your services to the exclusion of others. Be careful that your exceptance of a retainer is not just for the purpose of "conflicting you out" of a project such that you can do no work for others on that project (others which might prove to be significantly more lucrative for you). This occurs in forensic work but can also occur in other work as well.
Retainers are particularly useful if you have no experience with a particular client or if their payment reputation cannot be researched through reasonable means.
I wouldn't worry too much about them making a claim against your license. Not likely.
Retainers are particularly useful if you have no experience with a particular client or if their payment reputation cannot be researched through reasonable means.
I wouldn't worry too much about them making a claim against your license. Not likely.
If you don't want to invest too much, meaning you really don't envision getting major projects (especially at first), it is very common for SE's to provide structural engineering for residential projects. There are a lot of home designers out there that need to have a licensed engineer to provide engineered designs on custom homes that by local law cannot be designed by IRC prescriptive methods. I personally also provide engineering for three home builders that range from tract to high-end custom homes.
Overhead can be very low - working out of your home, you should be a registered LLC (don't make the mistake of being a sole proprietor), the cost of becoming an LLC is very low, and you don't need to invest very much on software if your clients do the drafting based on your redlines, which is very common. You need also to register your business with your State Board of Registration for Engineers and Architects (here in AZ it is only $20/yr).
If you don't provide good, economical, practical designs, you won't get much business, so I recommend getting some experience working for a consulting firm specializing in residential structures. I had worked for consulting firms for years and did an occasional custom home but really didn't have a clue until I worked for a residential-only firm. Some custom homes I get can be very challenging, and there are a lot "tips and tricks" that home builders are aware of, and expect their SE to aware of.
Overhead can be very low - working out of your home, you should be a registered LLC (don't make the mistake of being a sole proprietor), the cost of becoming an LLC is very low, and you don't need to invest very much on software if your clients do the drafting based on your redlines, which is very common. You need also to register your business with your State Board of Registration for Engineers and Architects (here in AZ it is only $20/yr).
If you don't provide good, economical, practical designs, you won't get much business, so I recommend getting some experience working for a consulting firm specializing in residential structures. I had worked for consulting firms for years and did an occasional custom home but really didn't have a clue until I worked for a residential-only firm. Some custom homes I get can be very challenging, and there are a lot "tips and tricks" that home builders are aware of, and expect their SE to aware of.
It's possible. Maker Faire is a good place to start... Make.com. Tons of DIY stuff, aka "Engineering done on the cheap."
Open Source is another great thing to look into. When you start talking about wanting to do consulting work without the capital to do it the more "traditional" way, it really puts you in this kind of worldwide, open collaboration arena. Don't be afraid of it... in fact, it may get you the exposure and endorsements you need to keep growing, without costing you more than possibly travel time and whatever a web page runs for these days.
As far as residential structures, there's a phenomenal movement springing out of the Open Source / DIY fields called "WikiHouse." If you want to get involved in learning, consulting, etc. for the residential structures industry specifically, maybe you could start there?
Experience: accumulated knowledge over time.
Talent: the ability to use experience.
Which is more valuable?
Open Source is another great thing to look into. When you start talking about wanting to do consulting work without the capital to do it the more "traditional" way, it really puts you in this kind of worldwide, open collaboration arena. Don't be afraid of it... in fact, it may get you the exposure and endorsements you need to keep growing, without costing you more than possibly travel time and whatever a web page runs for these days.
As far as residential structures, there's a phenomenal movement springing out of the Open Source / DIY fields called "WikiHouse." If you want to get involved in learning, consulting, etc. for the residential structures industry specifically, maybe you could start there?
Experience: accumulated knowledge over time.
Talent: the ability to use experience.
Which is more valuable?
Nice.
Well, don't judge before you've checked it out. I'm pretty such there's also plenty of articles you can find on Google about "Creative Commons licensing" and "patents vs. Open Source."
All of these searches can be educational and informative for those who are willing to absorb and evaluate the information.
Experience: accumulated knowledge over time.
Talent: the ability to use experience.
Which is more valuable?
Well, don't judge before you've checked it out. I'm pretty such there's also plenty of articles you can find on Google about "Creative Commons licensing" and "patents vs. Open Source."
All of these searches can be educational and informative for those who are willing to absorb and evaluate the information.
Experience: accumulated knowledge over time.
Talent: the ability to use experience.
Which is more valuable?
Also, Open Source does not imply a lack of qualified input. Collaboration does not imply an inferior output because some of the contributors may lack a degree or some piece of paper.
I'm just saying, read about it. Learn more about it. You may gain some insight, and ideas.
Experience: accumulated knowledge over time.
Talent: the ability to use experience.
Which is more valuable?
I'm just saying, read about it. Learn more about it. You may gain some insight, and ideas.
Experience: accumulated knowledge over time.
Talent: the ability to use experience.
Which is more valuable?
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