starting a Structural Engineering Firm...

[reddahaydn]

thread784-235812

Just reading through this old thread and just wondering if you ever started your own company?

I'm thinking of starting a company with my old boss. He's worked for himself, then at the company I am at, then he left about 12 months ago and is back working for himself.

He has quite a few clients yet to tap into, and his niche is doing a proper job, to the point where his clients generally don't even ask for a fee proposal, some jobs are run at an hourly rate, some over $1,000,000 in fees (in a niche industry). He also does high end houses, up to $80,000 in fees, and again, the clients don't usually even get another quote.

He wants to share the risk and get me in so we have the capacity to do the bigger jobs when they do crop up, as they generally have tight timelines.

I've worked with him before and we get along great and work well together. He has potential clients and existing clients. Only thing is it is pretty quiet over here at the moment (Australia) and were not sure when it will pick up.
I don't want to steal clients from my current employer, however if they want to come do I need to turn them away?

Any other advice? I've got 5 years experience and a lot of site experience, I tend to work with builders a lot doing d&c's. I've just applied for my registration as well.

Cheers guys

 

[rowingengineer]

sounds to good to be true, this statement is the one that has me concerned:
"He has quite a few clients yet to tap into, and his niche is doing a proper job, to the point where his clients generally don't even ask for a fee proposal, some jobs are run at an hourly rate, some over $1,000,000 in fees (in a niche industry)"

http://www.nceng.com.au/

"Programming today is a race between software engineers striving to build bigger and better idiot-proof programs, and the Universe trying to produce bigger and better idiots. So far, the Universe is winning."

 

[cvg]

just a few thoughts

put together a business plan
you need a banker, accountant and an insurance agent
he needs an employee, not a partner with just 5-years experience site design experience.
will he be able to hang in there for another 10 years while you come up to speed in "niche engineering" experience, marketing, client management?
will you have the money at that time to buy him out?
do you have the cash flow ability to weather the storm until "things pick up?"

 

[SteelPE]

I would hate to see the project that has $1,000,000 in fees. It does seem like he needs an employee (possibly a few) and not a business partner. What risk is he trying to spread out and are you ready to assume that risk? I would be interested in the proposal but as they say, the devil is in the details.

 

[OHIOMatt]

$1,000,000 in fees seems quite extensive. If you average all the tasks that it takes to do a project (drafting, design, project management) you will come up with about $100.00 an hour. That means a typical firm would need 10,000 hours to complete the job. That is 5 years of work for a single person.

I go through the above as I think you may want to do some homework. This does not seem like a realistic scenario to me.

 

[ztengguy]

Just in case, here is my red lights, sirens, whistles, flashy signs, etc. for you.

What job has 1,000,000 in fees, can get done in time (6 months to a year) by one person and still have other clients?

Somethings not right.

 

[kipfoot]

Aside from the $1MM fees:

There are three categories I can imagine that your situation might fall under:
1) You are going into business together. In this case, you assume some risk of reduced pay when things are slow, but share the money equitably when things are booming. If your financial situation can weather the down times, then this could be a good way to start. It seems like the business is already started and I wonder if the other engineer feels like he's getting a partner or an employee.

2) You're an employee working for someone compatible on interesting projects. This could also be good because you'll have more responsibility in design, time with clients, and gain a better understanding of the overall business. As an employee, you get paid when things are slow because the owner takes the risk.

3) He needs to hire someone to cover the peak work loads, but wants you to cut your pay when business gets slow. Is this the 'risk' he talks about? When you knock out a big house at an $80k fee, you don't share in the profits beyond your salary. This scenario may not be too different from #2, because many engineers have hours cut in down times, but it may be something you wish to avoid.

It's important to make clear with both parties what the expectations are for your role. If there's a notion that you'll get ownership sometime in the future, then you may want to establish measurable milestones to get there. An owner may think that's a good idea now, but may feel differently when it comes time to actually share the money you've helped earn.

 

[berkshire]

Whatever you do, Go to a [highlight #EF2929]lawyer[/highlight] ( solicitor) and get an agreement that you are both happy with, before, you start working with this guy.
B.E.