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Consulting Engineer
7

Consulting Engineer

Consulting Engineer

(OP)
How would one approach a small engineering consulting business if he don't want to invest too much. Strategies for attracting business?

Thanks,

FEM4Structures

RE: Consulting Engineer

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
http://www.Hi-TecDesigns.com

RE: Consulting Engineer

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:
  • 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)
  • 6 months living expenses separate from the company
  • 6 months of company operating expenses
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

RE: Consulting Engineer

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.

RE: Consulting Engineer

2
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.

RE: Consulting Engineer

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.)

RE: Consulting Engineer

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.

RE: Consulting Engineer

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

RE: Consulting Engineer

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
http://bwengr.com

RE: Consulting 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).

RE: Consulting Engineer

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!

RE: Consulting Engineer

@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!

RE: Consulting Engineer

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.

RE: Consulting Engineer

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.

RE: Consulting Engineer

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?

RE: Consulting Engineer

Enginerd9---there's a fortunate impediment to this process...licensing

RE: Consulting Engineer

Enginerd9-- all kinds of "quickie engineering" on the Internet such as design-a-beam is undignified and dangerous.

However I have no problem with educational/informative websites

RE: Consulting Engineer

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?

RE: Consulting Engineer

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?

RE: Consulting Engineer

Sorry, I meant websites like that "design-a-beam" where they advertised a licensed engineer could give you a beam size for a small fee over the Internet. And there is no stamped paper document.t

RE: Consulting Engineer

Oh, well yeah that's kinda silly. Plus, I didn't think you could build something without a permit, which requires review by a PE working for the local government office. Whenever I've produced plans for residential or commercial structures, there's me... then the guy checking my work, then his guy who reviews it and stamps it. Then it gets submitted to the building office. Then it gets rejected because the reviewer doesn't like the line weights and can't read a variable in a calculation. Then it goes through all of that again, to be submitted to a different guy who thinks a 9 is a 3 because the heavier line weights smudged a bit.

Anyway.

Experience: accumulated knowledge over time.

Talent: the ability to use experience.

Which is more valuable?

RE: Consulting Engineer

Here, there are a lot of residential projects that go thru under the IRC guidelines. The unlicensed residential designer selects beams, and no engineer ever sees it, except for at plans check.

Sometimes the plans checker thinks the beam should be engineered, according to his judgment.

This is all dangerous, because projects I have been called in to provide shear wall design only, almost always have at least one grossly under-sized beam or header.

RE: Consulting Engineer

This process of "Open Source" engineering treats engineering as a commodity and not the profession it is and should be. To ascribe to such lowers the status of engineering, reduces the pay of legitimate engineers trying to uphold the ethics and stature of the profession, and can result in a danger to the public. If you haven't figured it out by now, I'm not a fan. I would like to find a way to stop it, but that probably won't happen.

Ranks right up there with internet medical practice.

RE: Consulting Engineer

Ron,
I agree, but the irony to me is the existence of the IRC. It is just as dangerous - I have frequently seen beams overstressed by a factor of 2, but of course they don't fall down because our roof loads are construction = 20psf and not likely to occur, and wood has FoS about 3.5 - 4.

RE: Consulting Engineer

OK I finally actually looked at WikiHouse - it is basically building a small module with CNC-cut plywood ribs. That would never even come close to being permitted here in the US anywhere the IRC or IBC governs. It appears WikiHouse is UK-based.

In the future they would have to get Code approval, but I don't see that happening in the near future because our wind and seismic loads are probably a lot higher than in the UK.

RE: Consulting Engineer

Well, I disagree Ron. Simply put, engineers aren't the only ones capable of developing good ideas. I don't believe a person needs 35 years of experience in engineering before their ideas can be considered feasible, if only a bit conceptual at inception.

What Open Source does is provides a larger pool from which to draw ideas, and collaboration. As an engineer, you have a wonderful opportunity to get involved with that collaboration in a constructive way, ie lending expertise to help good ideas grow.

As a consultant engineer, and really to the OP, you can easily get involved with Open Source projects. This will help facilitate collaboration with skilled and knowledgeable professionals, and done "correctly" it can actually help PROMOTE the profession. It can PROMOTE the prestige the profession deserves.

I used WikiHouse as an example, there are many others. I'm aware of the code issues, etc. but the point is bigger than that... we have an opportunity to engage ourselves a bit more directly with the community. We have nothing to lose by getting involved, gaining exposure, and providing a valuable resource such that ideas can grow / develop safely, efficiently, etc.

As far as reducing the pay... I don't think Open Source has anything to do with that. I would assert it has something to do with the supply of young engineers entering the depressed workforce which has been decimated by outsourcing and financial speculators, along with companies trying to protect their margins by paying less for more output. The money isn't there anymore, universally, so people are looking to do whatever they can. This can also explain the surge of DIY and Open Source resources which seem to have popped up in recent years. That's a completely different topic. So rather than loathe, chastise, or begrudge the young talent, this could be a great opportunity to mentor and encourage that talent... you know, to protect the prestige the practice deserves.

Experience: accumulated knowledge over time.

Talent: the ability to use experience.

Which is more valuable?

RE: Consulting Engineer

I forgot to mention, Open Source does not imply charity work. You can charge for your time and materials / resources you use to facilitate the project. Creative Commons just says, basically, that it is a collaborative endeavor and a patent / IP claim can't be made by any one person. It grants everyone the opportunity to engage, modify, and improve the content / product so long as credit is given where it is due and it's not being used for exclusive financial gain.

So... you offer to work 80 hours on a project to produce XYZ product, and it takes ABC overhead on your equipment to facilitate that. You can charge billable hours for your time, and whatever your overhead is... and as long as you're not selling the product directly to whomever, you're fine.

Anyway. I understand it's a scary concept compared to the traditional "black box" development system. It took me a while to understand it and the implications.

Experience: accumulated knowledge over time.

Talent: the ability to use experience.

Which is more valuable?

RE: Consulting Engineer

Ron,

My point of view came from my memory about an engineer who was disciplined by the board for charging for a service that was never provided. I'm sure there was more to the story than just that.... and it has been a little while since I read the complaint/case but there was sufficient evidence to discipline the engineer. I also don't like to be "in debt" to someone.... and if I receive payment before the project is complete and they come up with some extra they will always say "well I pay you early so can't you just do this one little thing".

Just the way I feel and how I conduct business at this point (which may or may not change in the future).

RE: Consulting Engineer

SteelPE: That's why we add exclusions to the proposal list with a blanket statement on top with hourly rates. I am a sucker for doing little changes without charging for them. But not so much for large changes that we specifically say many different ways up front, large changes we will charge for. And if someone really wants some options we show optional items with prices. If we did work without getting upfront retainers we would have a really long list of people owing us money. Its hard enough collecting the money after the retainer. And I consider that last 10% we charge a wash.

Not sure how open source works but I wouldn't mind contracting out to people to do basic design work and let us handle it the rest of the way. We are slowly coming to a need for that as we can't handle everything and my time is starting to become more valuable picking up work and going to meetings. Since we are in the mode of running the business for as cheap as possible, we now hit that breaking point of what to do next to keep expanding but to keep our costs down.

B+W Engineering and Design
Los Angeles Civil Engineer and Structural Engineer
http://bwengr.com

RE: Consulting Engineer

brandonbw,

That's funny, because if I don't get paid I don't sign off on the structure. I have used my leverage before with success (at least until this point). I haven't been in business that long and my client list is pretty small. I have only been s*****d on one project where the client never paid and never called me back. It was someone who I used to work with who I knew had money problems from way back. I trusted him to pay but he never did, won't even return my calls now. Some day he will need me again and I will never forget.

RE: Consulting Engineer

It seems like a lot of projects we don't have to sign off on the grading certification. Some cities are even approving unsigned plans. That one baffles me.

We have changed when we start work and what people get based on a couple of really bad clients this past year.

B+W Engineering and Design
Los Angeles Civil Engineer and Structural Engineer
http://bwengr.com

RE: Consulting Engineer

i am also considering to start my own business soon but you dont need too much capital to start a consulting business especially if at first you will work from your home. i mean just some office supplies, printer, some software (which will be the most expensive component i believe), and insurance (2nd expensive). so overall a $5000 would do it, but of course this is assuming that you have other place of income and start as a side job. if you totally abandon your existing job and start a new consulting business full time then as some mentioned you must have at least 6 months worth of money to cover you for everything possible

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