Starting my own consulting firm - advice appreciated 2

[hemiv]

I'm interested in starting my own firm someday. It would be only me, and I would do everything except possibly some drafting on occasion. I would focus on structural work - light structural and architectural design, home inspections, and feasibility studies. I would also do site work like drainage improvements, hardscape and softscape design, and small scale agriculture site design and improvements. The tools required would be surveying equipment, CAD, and maybe some structural design software down the road. I also have the skills to do a lot of structural work myself if the job permits, so I could eventually invest in some of those tools, as well. I have a few opportunities in front of me to do some pro-bono work, so by the end of the year I could have two or three jobs on my portfolio. So if I can keep that up via word of mouth, I could grow my clientele.

I don't want to pursue this in order to grow a larger business. I want to stay small, work on my own terms, and just make ends meet without selling 40 hours a week to a company. It's starting to wear on me. Even if working solo is more hours, at least I'll be in charge. Our family is fairly self-sufficient and in a low cost of living area, so we don't really need to be pushing six figures to make it.

Who else has gone down this road? Do you have any advice?

 

[moltenmetal]

Wonderful and good luck to you!

You're never your own boss until you're independently wealthy. My dad taught me that. He also taught me that the only way to avoid being ripped off is to get as close to the money as you can, and no mere "employee" is close enough to the money. Cutting out the middleman will allow you to work less for more reward. Congrats- you've earned it!

The more modest your expectations of income and especially the steadiness of that minimum income, the easier it will be on you. The hard part is drumming up work consistently, on the right timeline and not more than you can manage without subbing or screwing it up.

Others will provide you more meaningful advice.

 

[IRstuff]

I think there are tradeoffs to be made
> every new customer is essentially a brand-new boss, who may think that their money buys way more than in reality
> you do get to fire the "bosses" that are PITAs
> you are, more often than not, in marketing mode -- some people find marketing to be a bigger challenge than their actual discipline


TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

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[JAE]

a) Be sure to get legal advice on separating your personal assets from your company assets and knowing ways to protect those personal assets from lawsuits.
b) Professional liability insurance issues.
c) If your spouse helps out with bookkeeping, etc. I had a self-employed friend who once described how he and his wife were always out-of-sync with each other. At a particular time he might have all sorts of projects waiting to begin and he would feel good about his business. But his wife only saw the current cash flow status and was panicking. Conversely, if he had just finished a bunch of projects, and his wife was giddy with his then current cash-flow, he was panicking because he didn't have any future work lined up. So lots of communication with the spouse was highly recommended.



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[tygerdawg]

In my experience, some things I wished I had been told:
[ul]
[li]When writing proposals, be very explicit on what you will do and what you deliver. Be equally explicit on what you WILL NOT do or deliver. Leave nothing open to debate.[/li]
[li]NOTHING happens unless it was put into writing and agreed to by all stakeholders. Learning that has saved me much heartache when things went sideways.[/li]
[li]Learn to say "NO, thanks" very well.[/li]
[li]Deliver, on time, what you promised. Move Heaven and Earth in order to do it.[/li]
[li]Provide not only excellent, but superlative, quality work. This is your advertisement for the next job because your referrals will mostly come from word of mouth.[/li]
[li]Quoting and proposing takes time and effort. It costs money. Factor it into your quotes. When someone requests a "budget quote", give them 37 seconds of your time and offer to provide a "more refined" quote at the cost of X Dollars. That has a wonderful filtering effect for eliminating worthless hacks.[/li]
[li]Similar to Dave Ramsey's exhortation: business requires offense (marketing & doing the work) and defense (insurance).[/li]
[li]Don't be afraid to charge what you are worth. But be sure you are worthy of it and that you actually earn it.[/li]
[/ul]

TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering

http://www.bluetechnik.com

 

[Jboggs]

I had my own engineering business for 10 years.
1. Your clients aren't really hiring an "engineer". They're hiring someone to solve as many of their problems as possible. Remember that. Become involved in tackling problems (whether they are directly related to your engineering work or not).
2. Learn to say "yes!", but never over-promise.
3. With every minute of every day, you are either looking for work, or you are making money, but never both.
4. You can balance multiple clients simultaneously by using the "monkey" method. You can delay work on one client's project while you wait for them to answer a question. Once you ask them a question, and let them know you need an answer, the "monkey" is on their back, not yours. Go work on another client's project until they get back to you. I learned to come up with some very good and critical questions that might take a few days to answer.
5. Try to schedule invoices to arrive immediately after the client receives a work package. Never send an invoice before the client receives any work product at all.
6. Most clients will understand that a one or two man operation is operating on a relative shoestring and sometimes can't really wait 30, 60, or 90 days for payment. Push for early payment. Get to know their accounts payable people.

 

[msquared48]

Be honest.

Mike McCann, PE, SE (WA)

 

[IRstuff]

Honesty is often highly under-rated. My customers trust me because I won't lie about my knowledge and won't oversell anything. Likewise, I bought my last A/C from a guy who explained why I didn't need the tonnage most estimators were going to try to sell me.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

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[271828]

tygerdawg mentioned Dave Ramsey.

Ramsey's book EntreLeadership is, by far, the most useful and practical book on business that I've read. Highly recommended for any business owner.

 

[CWB1]

I won't lie about my knowledge and won't oversell anything.

I cannot like this statement enough. A common sickness among consultants is what I call "expert-itis." The bottom line is that we owe clients quality work. Unless you have spent years under someone experienced in that particular niche you cannot guarantee the quality of your work, you are not an expert, nor an ethical professional if you take on that work independently. A consultant that outsources or otherwise admits their limitations will get more work from me. OTOH, I will do my damnedest to ensure that a consultant producing amateur results because they are working outside their experience never gets another client.

 

[BrianPetersen]

Say what you are going to do and when you will do it, then do what you said you would do when you said you would do it. If anything - underpromise and overdeliver. Consequences ...

Don't take on jobs in which you don't see a path through to successful and timely completion. If someone else has created a mess, and you can see how to fix it in a reasonable manner, by all means. If someone has boxed themselves into an inescapable corner, and is asking for the impossible, you don't want that job. If you accept it, it will still be just as impossible, but now they can blame someone else (you) for it.

If you want something done your way, and someone else wants it done their way, and their way doesn't reasonably coincide with your way, don't be afraid to say no ... but do that up front, before you are stuck with the situation.

Be efficient. And charge for it.

 

[oldestguy]

The insurance aspect cannot be ignored. I see that only once above. You may not be able to get liability insurance due to your "inexperience". Going bare may be OK in your line of work, and maybe not. Be aware it can totally destroy you, even if the problem is not your fault.

 

[SAITAETGrad]

Decide if you are going to consult or contract. Stick to one or the other.

Starting fresh is an option. Another option is to buy an existing one. Here's a book that gives a template on how to go about it.

 

[NewbieForever]

Here's a potentially useful resource from ASCE:
Engineer to Entrepreneur: Success Strategies to Manage Your Career and Start Your Own Firm

The Small Business Administration office in your state is likely to be another useful resource.

SCORE presentation materials for the How to Start a Business Workshop provide a good overview of issues worth considering.

Conventional legal wisdom would advise you to incorporate as an LLC. I agree with that. Where I live in the U.S., the state agency that oversees small businesses provided a simple downloadable form for me to incorporate as sole proprietor, and there was a small free to register.

Conventional financial wisdom recognizes that many startups fail for lack of financial resources and realistic financial planning. You are in starting a relatively good position if you can identify specific potential clients who will do business with you. In any case, simple tools for projecting cash flow are available, and being prepared for less-than-expected revenue early on is of course well-advised.

If you are sole proprietor, federal taxes can be reported using supplemental forms submitted with your annual 1040. You will need to pay your estimated taxes quarterly.

Hope this helps!