When to hang up my shingle 2

[EngrPaper]

Hey folks. This forum has been my favorite for a long time. Ever since I began reading here about 6 years ago, it has inspired me to hang up my own shingle. I really value your opinions on the business of engineering, so I wanted to lay my cards out in the open and get your thoughts on whether you think I am ready to start my own solo engineering firm or if I have more to do before I can make the leap.

I’ll try not to dox myself too hard on here, but any of y’all who may know my background will probably pick this up. For general reference, I am in Alabama.

Education - Summa Cum Laude from a local state university with a Bachelors of Mechanical Engineering.

My Experience
My work background is quite varied. I began writing it out in detail and then realized I was being too wordy. Here is the summary.

Job 1 – Textile manufacturing company – Mechanical project engineer with projects including chain drives and servos and process piping and system design for chill water, thermal oil, and natural gas. Really discovered my love of piping and process design here. 2 years there.

Job 2 – Big EPC Company – Piping engineer with short hops into the process group. Learned pipe stress around power turbines, reliefs, heavy rotating equipment, etc. Got to also learn how EPCs do heat and mass balances, equipment specs, etc. 1.5 years there and they closed the office when Covid hit.

Job 3 – Big Rocket Company – Launch Engineer, Fluid Systems at big rocket company in FL. Moved the family down there for work and absolutely loved it. Deep dived in intense process design work, piping design and fabrication, and construction. I was able to develop process and piping experience in cryogenics (LN2, LNG), high pressure (6000+ psig) gas systems, regulatory approval processes, and more. Another 1.5 years there before the location really started to take a toll on the family due to being away from our hometown and extended family. I got my initial PE while I was here.

Job 4 (Current) – Medium EPC Company – Came on as a mechanical engineer doing pipe stress and EOR-ing design detail piping jobs. I was able to leverage my cryogenics experience for some specialty work there but also branch into non-metallic piping systems (mostly FRP). After a year and a half or so, I made a lateral move into our process group so I can get back more into the system design work. I’ve been doing a variety of chemical process work in specialty chemical industries with some projects in mineral processing. This includes mass balances, PFD/P&ID development, equipment specifications, and hydraulic calcs. I am active in proposal development, getting in front of clients, and site field work. I have been here for about 3 years.

All-in-all, I am licensed in several states and have a wide background of experience in the process industries. I am also in a subgroup for an ASME standard that I enjoy working on and lets me meet a lot of folks.

As for my family situation and starting a business, I’ve been married a little over 10 years, I am about to turn 30, and I’ve got a gaggle of kids under 8 years old. We have enough saved that we could change nothing about our lifestyle and could live 6-8 months comfortably without any income. Beans and ricing could get us a year or so before I would need to find work. This includes my projected business costs (insurance, software, and all that) and replacing health insurance through a purchased plan from healthcare.gov.

I want to go out on my own so that I can take full responsibility of my own work and also get the reward of it. I don’t mind working smaller jobs so that it is possible for only me to do it. In fact, I probably prefer that. My target projects would be thermal and utility fluid systems in medium sized manufacturing and process plants in my area. New system construction, retrofits, operational analyses. I can also leverage some more specialized work with FRP pipe stress and cryogenics as those are becoming more needed for cost savings or bulk gas systems. I want to come alongside these companies to handle their small to medium projects myself and also act as an owner’s engineer on larger ones. I am in Alabama, which is heavy in pulp and paper, auto, steel, and also has easy access to adjacent markets in GA, MS, and elsewhere.

I have a few industry contacts (former coworkers and otherwise) that I plan to contact first about potential work but my only restriction from my present work is a non-solicitation agreement, which is totally fair. I am not trying to take any processes or clients with me.

So please, let me know your thoughts. From an experience background, is there anything lacking? From a client acquisition perspective, am I shooting myself in the foot to not have a client signed before I make this jump? Am I nuts to do this while I have young kids and a stay-at-home wife?

 

[Smoulder]

Don't know your industry so can't help there. Not even in same country. But 30 years old, had a few different jobs, finding time for ASME with young family sounds like you've got capability for this. Business plan sounds like it needs some work. Any chance first client is current employer? Quite common IME. For overall work potential it's better to look at actions rather than words. Are there competitors out there in same boat getting work? Because people will tell you they're interested in you if you ask but mostly they'll keep doing what they're already doing. If one man bands aren't a thing in your line then you're pushing uphill.

 

[EngrPaper]

So I am friends/acquaintences with a couple mostly retired one-man-bands in my area. There seems to be a market overall, just with some frequent travel which I would expect.

As for my business plan, I have a somewhat two pronged approach. There is the main avenue which I mentioned above - operating companies that need project work, and secondarily there are a LOT of general and engineering contractors in the area. Subing for them for specialty work would be avenue two. Things like specialty pipe stress, spec writing, and more complicated flow analyses. Generally taking the difficult thing off their plate so they can make money on their bread and butter work.

There may be an avenue to contract back with my current employer, but perhaps I was being modest on the sizing. My current employer is a 2000+ employee firm, so we have a lot of folks we can share around.

 

[CWB1]

Frankly, your posted background looks pretty weak, doesnt show the necessary experience to hold a PE, and you're proposing a wide variety of work outside your competence that would need several decades of experience. I prob wouldnt hire you as an employee, nvm sign a design contract. I highly recommend remaining in one niche for at least three years. Pipe stress analysis is rather ubiquitous but like most aspects of engineering, it doesnt carryover well between industries and is often mistaken as "easy" by the root-cause of the next major disaster/warranty.

 

[EngrPaper]

Fair enough - I appreciate the assessment. Thats the kind of clarity I am looking for.

 

[SWComposites]

I left a big company at age 40 to go do consulting in the aerospace industry. Worked with some other colleagues who were also consulting. The first few years were kind of lean, and then fortunately lucked into a bunch of work for a number of years. Your reputation is critical - both technically and meeting commitments. You need to do a lot of marketing of your skills, do lots of networking, etc. Join and attend industry professional organizations (ASME, etc), volunteer for leadership positions in those organizations, attend trade shows and conferences. All this take a fair amount of time, but is needed. In the jobs you have worked, have you been in sort of consulting type roles? It helps to be able to show you have already performed in similar consulting type work. Assess very carefully the market for your services and how much it will pay. Companies often need help but aren't willing to pay for it, or their internal systems are not set up to deal with independent contractors.

Frequent travel when you have young kids is not great and will lead to lots of family stress 9 (been there). And you want to be really sure your wife is 110% supportive of your plans.

 

[EngrPaper]

So I am very fortunate on the family front. My wife wants me to quit and go all-in yesterday. I am the planner of the two of us.

As for reputation, I have never left a job without them trying to keep me or hire me elsewhere, so I think I am good there. I also keep up with a mix of them every year or so.

As I mentioned above, I am active in the writing of an ASME piping standard (think a subsidiary of 31.3) and attend as many conference as I can. All of my work has been in a project design and execution style role. And I'd say of that, the last 6 years has been entirely in the design of fluid systems (piping, equipment specs, flow calcs, pipe stress, etc.). 5 of those years has been with an EPC doing consulting work.

Do you think it is worth targetting attendence in some of the more niche industry organizations like the Chlorine Institute or NACE? I work with their standards regularly but havent attended.

 

[SWComposites]

Yes, the more networking the better. You ideally want to be a known person in the industry. So keep active on the standards committees relative to your experience; and they always need committee leaders.

Sounds like you are in a relatively good position. Just sort out what sort of jobs you will target first. And if you can "pick the brains" of other consultants in your industry the better.

And sort out what rate you will charge, and don't set it too low. There are lots of expenses - computers, conferences and trade shows, etc and you get to pay both halves of the Social Security tax, so ~ 15% off the top. You want separate checking accounts and credit cards for the business - do not mix up business and personal finances.

 

[Enhineyero]

Hi OP,

Have a battleplan.

Q1. What are your expectations in terms of money? Most business dont make money in the first two years (if you are lucky, some take five years). Plan for that.
Q2. Do you know when to pull the plug? not enough revenue or new clients in 12months? 24months? Put a line in the sand.
Q3. Who are your target clients? How will you reach them/market to them? How many clients do you need? Is there a high demand on your services? Again put a plan in place.
Q4. How do you differentiate yourself from other similar businesses? in other words if I'm a potential client why would go to you rather than someone else who are already established. Will you compete on quality? expertise? cost? Think about this when trying to compose a "pitch".
Q5. How are your people skills? Can strike a conversation with a stranger? if its good then thats great otherwise work on this....confidence makes a lot of difference in creating connections and trust.
Q6. Write goals to guide you, and be specific as possible (i.e. earn a $1M per year, 10 projects per year, be the next fluor daniels). Revisit them after a year then refine.
Q7. What are your avenues for networking and acquiring new client? Will you cold call them? stalk them in linkedin? Get an introduction from uncle frank? List and plan.

This is all for now, I probably have more but these come top of mind, hope it helps. Not sure how much you know about economics, business, and entrepreneurship - but having knowledge about these subjects does help guide aspring business owners in the right direction. To be honest I do way less engineering now than when I was working for someone else.

 

[XR250]

Q1. What are your expectations in terms of money? Most business dont make money in the first two years (if you are lucky, some take five years). Plan for that.
Q2. Do you know when to pull the plug? not enough revenue or new clients in 12months? 24months? Put a line in the sand.
Q3. Who are your target clients? How will you reach them/market to them? How many clients do you need? Is there a high demand on your services? Again put a plan in place.
Q4. How do you differentiate yourself from other similar businesses? in other words if I'm a potential client why would go to you rather than someone else who are already established. Will you compete on quality? expertise? cost? Think about this when trying to compose a "pitch".
Q5. How are your people skills? Can strike a conversation with a stranger? if its good then thats great otherwise work on this....confidence makes a lot of difference in creating connections and trust.
Q6. Write goals to guide you, and be specific as possible (i.e. earn a $1M per year, 10 projects per year, be the next fluor daniels). Revisit them after a year then refine.
Q7. What are your avenues for networking and acquiring new client? Will you cold call them? stalk them in linkedin? Get an introduction from uncle frank? List and plan.

Honestly, I did none of that when I went out in 1997. Have been balls-to-the-walls ever since.

 

[LittleInch]

Every industry and situation is different though.

This is the key bit for me in all this good thought provoking stuff.

"My target projects would be thermal and utility fluid systems in medium sized manufacturing and process plants in my area. New system construction, retrofits, operational analyses."

Ok, great idea, but have you actually seen if anyone and I mean anyone, would actually write you a PO for the several tens of thousands of dollars I assume you're talking about.

My best guess would be first to see if any of a companies existing suppliers for these services need some support for their work at a lower rate than going to their usual supplier. Then it gives you a track record to move on after a while to bigger things.

Personally I think a one man band in this sort of work will either struggle to get any work to hang your shingle on or be instantly overwhelmed and fail to supply the required design work. Some engineering specialities are much more suited to doing this than others where companies are looking for a greater level of background experience and also depth of cover. so even before you start, try and see if there are any other similar minded people out there already who either need some assistance or could do the same if you get lucky with a piece of work. Luck has a bit part to play in this for sure. you could tender for 50 bits of work (which often takes as long as the work does) and get none and then a lucky break or not.

But if its something you really want to do, your other half is invested in this decision and there is always an escape route, then it's best to do it and perhaps fail than not do it al all.

Be sure to keep us up to speed with what you decide. Posts stay open for 6 months before they close so there's always a chance of an update later on.




Remember - More details = better answers
Also: If you get a response it's polite to respond to it.

 

[EngrPaper]

Q1. What are your expectations in terms of money? Most business dont make money in the first two years (if you are lucky, some take five years). Plan for that.
I expect to be self-supporting out of savings most or all of the first year. Hopefully covering bills by year 2. Profit year 3.

Q2. Do you know when to pull the plug? not enough revenue or new clients in 12months? 24months? Put a line in the sand.
If I am not getting ANY work in y1, that would be a plug puller. If its small and we can squeak by, then we will.

Q3. Who are your target clients? How will you reach them/market to them? How many clients do you need? Is there a high demand on your services? Again put a plan in place.
Target clients are a mix like I mentioned above. I am positioning myself well in my current company for contract work if its open, but that's unknown. In the general industry, I have good working relations with several large process companies. As for reaching out, I am active in a code committee that gets me exposure to other engineers and operating companies. I also have built a decent LinkedIn following that at least gets me some contact info to start reaching out. I also maintain relationships with past coworkers who are now all over the southeast and I think would at least let me pitch them, if not have work they needed on the front end. I'll cover demand in a second.

Q4. How do you differentiate yourself from other similar businesses? in other words if I'm a potential client why would go to you rather than someone else who are already established. Will you compete on quality? expertise? cost? Think about this when trying to compose a "pitch".
Main avenues are speed and quality. I see a lot of drawn out, medium to low quality deliverables from places I have worked and other contractors whose work we have done 3rd party reviews for. There seems to be a lot of room for improvement. I also don't like the bait and switch that often happens in "big" engineering - where the salesman promises the moon and experts at every level and then the staff mixture turns into juniors and "high value" engineering. I am who I am, you get who you are talking to.

Q5. How are your people skills? Can strike a conversation with a stranger? if its good then thats great otherwise work on this....confidence makes a lot of difference in creating connections and trust.
No issues there. I am introverted, but no problem with the elevator pitch to fresh conversations. I am in front of clients on a weekly basis.

Q6. Write goals to guide you, and be specific as possible (i.e. earn a $1M per year, 10 projects per year, be the next fluor daniels). Revisit them after a year then refine.
A good practice that I have been trying to get better on.

Q7. What are your avenues for networking and acquiring new client? Will you cold call them? stalk them in linkedin? Get an introduction from uncle frank? List and plan.
Initial clients as above. I expect referrals to be a primary source after the initial round of projects. From the other sole practitioners I know, they lived off referrals for 30+ years. Just a matter of consistently good work, which I suppose is always the crux of things.

To LittleInch's question regarding who would pay for this service: One of the recent happenstances that led to me thinking this might be a good time was I had a couple fabrication shops recently reach out to me because of a lack of experienced piping and process PEs in the area. They were trying to hire me to take on this work and start up their company certificate of authorization and all that. My thought was simply - if they reviewed my resume and want me to do this work for them, why can't I just do it myself? The liability would be the same, it would just be my company instead of someone else's.

 

[LittleInch]

That's good and also brings another point which you need to consider is how much, at least initially, do you just "follow the money" by taking anything that someone offers you even its diverging from where you want to go. It's hard to turn down $5,000 of PO when the savings are dwindling and the car needs fixing.

"...want me to do this work for them, why can't I just do it myself?"

The answer is liability and the back up and comfort people get from dealing with a larger entity that they think is going to be on the hook for mistakes, can back fill you if you get sick or just bugger off / ghost them and most of them are just not willing to take a risk to save themselves a few $$ or get unknown level of quality and acceptance of what can be very onerous terms.

The whole liability / insurance angle is something that needs very careful thought and to distance your business from your personal assets incase someone comes looking to sue everyone into the ground.

Oh and you need to do some due diligence on your clients and make sure they don't not pay invoices for months or find minute errors and delay payment. Or go bankrupt themselves.

Remember - More details = better answers
Also: If you get a response it's polite to respond to it.

 

[Eng16080]

Honestly, I did none of that when I went out in 1997. Have been balls-to-the-walls ever since.

Same here. Also structural. Been at it about 6 months now. I’m sure things are different between mechanical and structural, different geographic locations, etc. etc. but I’ve had no issue getting work with almost no marketing.

In my area, there have been a lot of recent acquisitions of smaller engineering companies by larger ones whose sole focus seems to be billing every second while being minimally responsive. This doesn’t go unnoticed by clients. If you can produce better than average quality work and respond reasonably quickly to client’s needs, getting work in this type of environment is not hard.

Maybe I don’t understand what “make money” means in Q1 above, but as a single person engineering company working out of your house, if you’re unable to be profitable in a few months I think you’re probably doing something wrong. Perhaps “make money” means profit after you’ve already paid yourself a reasonable salary, idk. And perhaps mechanical is different here. For structural at least I can’t imagine many other business types could have much lower startup costs.

 

[EngrPaper]

I think a main difference between structural and mechanical here would be the client base. I will be limited to entirely industrial clients, whereas structural can hit inudstrial, commercial, and residential. I know you likely have a subset you serve more directly, but at least there is more open to you. I dont do HVAC, so that keeps me industrial.

 

[SWComposites]

EngrPaper - it sounds like you have thought this through pretty well, and have a good plan, and reasonable expectations. (unlike others who have posted on here). I say just go for it. Just be willing to branch out into adjacent areas as you grow your business and clients. And keep networking and learning.

 

[Eng16080]

I think a main difference between structural and mechanical here would be the client base.

I think that's generally accurate. For a one-person show, I'm somewhat limited to smaller projects, mainly residential and small to medium commercial/industrial, but still, there's a lot of residential work out there. (There's also plenty of crap residential inspection work I try to avoid, but would absolutely do if that was the only option.)

I also agree with the comment above. It seems you've thought this through reasonably well, you're in a decent position financially with ample savings in place, so overall, this seems like a low-ish risk. If you go 6 months and things are clearly not going well, then perhaps re-assess at that point. Probably the first few months will be slow no matter what. Also, I'm not sure I would hold out for 2 or 3 years to be profitable, unless it's not causing potential long-term financial damage.

Worst case, if all fails, I'm sure plenty of companies would be more than willing to hire somebody who recently tried and failed to start their own company. That alone shows you're more motivated than average.

 

[Enhineyero]

Honestly, I did none of that when I went out in 1997. Have been balls-to-the-walls ever since.

Thats great! I know some engineers who started their business and got burned. Mainly because their only selling point is they can price lower than the other guy.

Maybe I don’t understand what “make money” means in Q1 above, but as a single person engineering company working out of your house, if you’re unable to be profitable in a few months I think you’re probably doing something wrong.

I understand that a small firm is very low cost - that side of the equation we control. The other factor in the equation is your income stream (i.e. clients and projects on the books). It may come as a surprise but creating demand out of thin air for your newly created business is quite hard especially if your network is quite small.

in the general industry, I have good working relations with several large process companies

Sounds like you are in a good position and have thought this through. I say go for it, its scary journey but the experience and things you learn are invaluable.

 

[Eng16080]

It may come as a surprise but creating demand out of thin air for your newly created business is quite hard especially if your network is quite small.

Definitely not surprising. My perspective is only based on my own experience. I have a small but decent network which has grown mostly by word of mouth, some of my competitors have been doing a terrible job as of late which makes the bar real low, and I've perhaps had some good luck on my side beyond that. All of this could change, of course. Still, if my early experience flying solo has been better than average, I still think it's useful to share that here with OP.

Perhaps to your point, I did put myself in a financial situation where I would be ok (maybe not great) for a couple years if things were going to be slow. I'm not sure I would hold out that long though.

 

[NorthCivil]

Frankly, your posted background looks pretty weak, doesnt show the necessary experience to hold a PE, and you're proposing a wide variety of work outside your competence that would need several decades of experience. I prob wouldnt hire you as an employee, nvm sign a design contract. I highly recommend remaining in one niche for at least three years. Pipe stress analysis is rather ubiquitous but like most aspects of engineering, it doesnt carryover well between industries and is often mistaken as "easy" by the root-cause of the next major disaster/warranty.

I reckon this is a bit harsh, and unfair. Do you have your own business, CWB1?

I know all sorts of engineers in my business. Guys with 25+ years of experience that are absolute clowns, and young engineers with 5 years experience that have picked up the trade very fast, and totally outclass some of the veterans. Plenty of competent engineers are ready to practice on their own after 4-5 years of practice. After all, that's why you only need 4-5 years of experience to get your P.E. and get out there and practice on your own. if you needed more, PE boards would require more.

Plenty of people get licensed and hang their own shingle the next day. hell, i was one of them. (took about 9 years to get licensed though). been 5 years in business now and loving it, making a killing too.