Experience with business needed

[elevenoceans]

I started one year ago my engineer business working alone as a project manager in the construction industry. Now I am feeling I need to take another step, thus needing to grow my business. There are several options but I am a little confused about what option to take, since each one as their advantages and disadvantages.

The options are:
1) Subcontracting more work
2) Hiring workers
3) Establish a company with a new partner (or partners)

I am open for other options.

 

[4qualityce]

A few questions..

1) Why do you "need" to expand?
2) What option is most appealing to you?

 

[DonPhillips]

Pros:
1) spreads risk, increases flexibility
2) profits go in your pocket
3) spreads risk, increase resources

Cons:
1) less control
2) payroll, workman's comp, more management
3) less control



Don Phillips

http://worthingtonengineering.com

 

[elevenoceans]

A few questions..

1) Why do you "need" to expand?
2) What option is most appealing to you?



1) It is natural to expect a business to expand, at least, I hope so.
2) Since I only have 1 year of business experience (and 9 years working for a salary), I feel that having a parter could kill the business since I do not have much business experience. If I subcontract most of the work my clients could perceive that I am not doing the actual work and going elsewhere. In the option of hiring workers, I feel I haven't secured enough work to hire people, and could get on the red tape very fast.

 

[4qualityce]

Not saying you shouldn't expand - just seems that you are a little uncertain as to what to do. I am looking at starting on my own when the time comes. I plan to bootstrap my startup similar to what it sounds like you are doing. One of the big resources I have been using is advice from a guy named Dan Miller (google him for a great website) that has a book called 48 days to the work you love. He advises against partnerships in general (his preference). One of the things he recommends is subcontracting. I know of a civil engineer that worked 5 years + being a subcontractor specializing in drainage studies and design as a sole proprietor - as far as I know he didn't have negative feedback from clients as he subcontracted a lot of his work. He just recently partnered with somebody. I am sure he waited until the time and person was right.

 

[4qualityce]

Also note that hiring interns is cheap!!! $10-15/hour and usually very bright.

 

[JaredS]

yes that is just what we college age people are here for...

 

[DonPhillips]

I think you may be placing too much stock in what your clients may be thinking. Hopefully, the contract is between a company and the client and clients expect service. A good, strong principal can keep a client happy with mediocre employees but meeting costs and schedule and delivering a decent product is why they are hiring your firm.

I am turning away business or pricing myself rather high because I do not want to grow since I may go back to being an employee next year. Otherwise, I need a part-time drafter and I would hire one so those projects would not go to friends of mine. If I pay an intern $15/hr and charge out at $45, that makes better financial sense since I charge myself out from $75 to $100/hr, depending on the project. That is my reason for not growing - hiring someone for only 18 months would not be fair to that person and my clients would have to find someone else.

Then again, growth is natural if people are demanding your services. It means you are doing something right.


Don Phillips

http://worthingtonengineering.com

 

[AZengineer]

Don, what part of the country are you in? If you're turning people away by charging $75 to $100/hr, I'll try to steer clear!

 

[JaredS]

A former employer hired me out at 70$ an hour as an intern

 

[DonPhillips]

I am in central Ohio and the clients knocking my door that I turn away the most are homeowners thinking $300 for a $1500 job is reasonable. I sometimes refer them to a couple of friends that may charge $500 to $750.

I recently did a small mechanical/electrical job I quoted at $2700 that I thought was high but a competing architect wanted $6000. I guess I'll have to raise my rates again - perhaps $75/hr for drafting.

Don Phillips

http://worthingtonengineering.com

 

[RVSWA]

With regards to a business partner, I have one and wouldn't try it any other way. Of course we went to college together years ago and have been friends every since...

I've always been advised against having a partner because of the complications. I appreciate having someone to share thoughts with, oh yeah, and being able to take a week off once in awhile. We share many opinions with regards to personal and business finances so that has helped with one of the biggest partner pitfalls. Just sharing...