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Inner Turmoil - Salaried Employee vs Self Employed
19

Inner Turmoil - Salaried Employee vs Self Employed

Inner Turmoil - Salaried Employee vs Self Employed

(OP)
Reading through "First Solo Project" https://www.eng-tips.com/viewthread.cfm?qid=455362 prompted me to make this post. I was gonna write a comment but it got too big and I didn't wanna steal the thread.

I'm starting to get a little itchy to leave my current job and set out on my own.


Current Side Work

I do smaller non-competitive engineering on the side (wood, cold-formed steel, concrete, etc.). Currently I only have one client, an architect. I average around one $2000, 20hr, job a month through him. I think I can charge a lot more, but have no way of knowing. I do the work before or after work, and my employers know and approve of it because it gives me the required experience for my CA SE.

Current Employment

I work for a structural steel sub-contractor, have an $88k salary, great health insurance, 4% 401k matching (I put in 10%), and an ESOP. (My share of the company was valued at $13,000 last year, but after a bad year the ESOP is worth ZERO). Should I wait a year to see if the ESOP will get back before cashing out and leaving the company? My feeling is I shouldn't base my decision off the ESOP - in the end it won't make a big difference.

My employers say they want to have me in a leadership position in the future, and have had me listen in on calls with CEO and COO to train me to basically do what they do in the future. Our lead, senior engineer (~$150K), CEO and COO (~$250k+), and many others are going to retire in 5-10 years, so there's big potential for me. But work has been so slow this last year and still is currently. The ESOP is at zero because last year we had a couple horrible jobs and the company went from having $5M in cash to being $2M in debt.

Lately I feel I've just been wasting my time at work, as there's been nothing to do, so I end up making super awesome complex spreadsheets that I'll probably never use. It drives me crazy. It used to not be so bad because I could study for the PE/SE exams when there was nothing to do. A couple of times I've down work on side jobs when there's been nothing to do but it racks me with guilt so I try to not do that anymore, but I'll justify it in my head that my employer's paying me for my time to be in the office, and if the company has nothing for me to do then that's the risk their taking. I know that must be a bad attitude, and I should always be finding something to do. I just don't like wasting time and feel that if I was on my own I wouldn't have that dilemma. What do other employees do when there's nothing to do? I feel like it's gotta be a pretty common issue but either it bugs me more than most and I'm making a bigger deal of it, or no one else wants to talk about it.

What to do next?

I'm 4 years out of college (master's degree). First couple years were not so slow, I was learning more, and working towards my PE, then my SE (just passed, but still need another year of experience to be licensed in CA). Now that I passed the SE exam, and work is slow I'm just feeling so itchy for the next thing. Maybe I need to talk to my boss about wanting a challenge to work towards, maybe I need to start my own business. I love the idea of being my own guy, fully responsible and in charge of my own income and not at the mercy of higher ups. Some of this comes from my Dad being a self employed contractor and growing up having the impression that employees were too scared to take risk to make more money and content with making okay money for having the security of a salaried job, while the business owner is the risk taker and more profitable and thus "better". I know that's flawed thinking and offensive and not true but it's in my head and I'm just word-vomitting and putting all my thoughts out there.

I've been thinking I should try to get more clients (I have a structural engineer mentor who is self employed, he says contractors are better clients than architects? ) I could pick up more side jobs until I can go off on my own, but I also don't want to not have anytime to be with my wife and kids, and I don't want to be dishonest with my current employer. I also don't have any E&O insurance, but my co-worker said that the companies E&O insurance covers any work we do on the side. That doesn't seem right to me though, and am wondering if I should get E&O insurance if I plan to do more sidework, or not worry about it until I'm out on my own. If I were to be on my own I'm not sure if I'd want to be my only employee or hire others.

I'm afraid of making the wrong decision. I don't know what I want more or what has more potential upside (be it money, satisfaction, freedom, spending more time with wife and kids, etc). I don't know what I'm going to regret not doing in 10-20 years. I don't want to work 15 more years making little more than I am now doing the same thing and being torn like I am right now, but I also don't want to quit my job and fail my start up, or realize the grass is not as green as it seemed from the other side, and realize I gave up a great opportunity at the company.


Other pertinent info....

I'm only 27 years old but I also have a wife and soon to be four children plus a $220,000 mortgage (but no other debt) for a 1000 sf house we're quickly outgrowing (value of house is ~$310,000 and we've got $40,000 in savings, saving an additional $1000 a month). We're debating moving into a larger $450,000 2000sf house next year, but I'm unsure if we should do that if I'm thinking of starting my own business. My wife and I even think of leaving California to go somewhere less expensive, and probably would've by now if we didn't have all of our family in California (I've heard being a CA SE but living elsewhere can be a good deal). Just another decision tormenting me, but we'll probably stay in California - just tired of scrimping and saving with 10% retirement savings (+4% company match = 14% + ESOP), 10% tithing, and saving $500 every other week for starting business/buying bigger house.

Lastly, I hate sounding braggadocious but feel that I am an exceptional engineer and could be an exceptional business owner. I was top of my classes without having to put forth nearly the same effort as my classmates. Classmates always complained about how hard classes were and how much time they spent on assignments, and I never really struggled and was always able to complete assignments much quicker than they, and often got the highest score on exams. I passed the FE, PE, CA state exams, and SE all first try without feeling crammed on time. I did both parts of the SE simultaneously while having a wife, 3 kids, and doing side jobs and still didn't feel like I was over straining myself. I already feel more capable than the other engineer thats been working here for 15 years, and know my employers agree with that. I can get stuff done in a third of the time it takes other engineers, and I am thorough. I feel that my time would be so much more efficiently used having my own business and could potentially be very lucrative. On the other hand I know being an exceptional engineer doesn't mean an exceptional business owner, and my current job could also be potentially lucrative. But both also have potential vastly under performing expectations. I know after proof reading this paragraph how arrogant I sound and I hate it and don't talk that way in actual conversations.

Also is there no way to PM people on this site? It'd be nice to share some things privately instead of putting it all out on the internet for all to see.




RE: Inner Turmoil - Salaried Employee vs Self Employed

How many hours a week do you currently work for your employer?
Are you salaried or hourly?
The mentor you mentioned, are they at the same company you are at?
How much actual structural engineering have you done at the steel fab business? 4 years of steady structural work is different than 4 years of semi-steady work. If your main experience is only steel, that can handicap you some.

Being in business has virtually no relationship to your engineering skills. Your engineering skills are what you use to complete the work you bring in. Potential clients' knowledge of your engineering skills can get you some work, but may not get you enough work. Once you take on the role of business owner, there is another hat you have to wear that some of us find painful to wear at times. How good are you at chasing work down or being creative at finding new clients?

You need to make your mind up first about staying in CA or moving. It is REAL hard to move somewhere that no one knows you and start a skill-related business. If you want to move, it may be wiser to first take another job with someone in the "more desirable" location and later start your own business there. Moving may cause you to lose good contact with your Mentor.


RE: Inner Turmoil - Salaried Employee vs Self Employed

A couple quick notes:

  • $2000 a month in side work is awesome, best of luck continuing this pace and growing
  • I would be extremely surprised if your current employer's insurance covered your side activities. I would confirm this ASAP.
  • Maybe I'm not completely understanding this, but if you aren't fully licensed yet, how are you providing the side services? Are you doing this work under another enigneer?
  • I know after proof reading this paragraph how arrogant I sound and I hate it and don't talk that way in actual conversations...You're stating the facts, I don't think you sound arrogant, just confident. I want to hire the confident engineer, not the guy that won't sell himself.
  • Ron247 makes a great point about finding work - this appears to be a skill you haven't tested yet (not saying you can't, just untested)
It sounds like you could benefit from staying at your current position (or similar position) a bit longer - those phone calls you're sitting in on with the CEO/COO are boosting your soft skills (see above regarding finding more work), and in your current position you're probably making contacts with future clients.

There is no way to PM people that I know of, but it would be a great feature to add to the site. I'm in a very similar situation - similar day job, similar age (I'm a few years older), similar side business, similar family situation - when I get a juicy side job rolling through I always get that thought that maybe I'm ready to make the jump to being completely independent, but I figure I'm a couple years away from that. For now, I keep learning everything I can at my day job, meet as many people as possible, and keep using the side jobs to pay for daycare. It can be stressful at times, but I always tell myself that its a good problem to have. Good luck!

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (OP)

My feeling is I shouldn't base my decision off the ESOP - in the end it won't make a big difference.

This would be my thought at as well.

Quote (OP)

Our lead, senior engineer (~$150K), CEO and COO (~$250k+), and many others are going to retire in 5-10 years, so there's big potential for me

Mixed bag. Those numbers and positions sound great. On the other hand, if there's not a serious succession plan in place, this might just be where the company folds and you're kinda stuck holding the back (tough love, try not to be offended).

Quote (cal91)

I love the idea of being my own guy, fully responsible and in charge of my own income and not at the mercy of higher ups. Some of this comes from my Dad being a self employed...

Whether entrepreneurship works out for you or not will be almost irrelevant to the decision I think. When I hear these kinds of statements coming from that kind of a family background, I feel that there is a very high probability that you'll never be satisfied unless you give entrepreneurship a go. A few things to consider:

1) Frankly, I feel that you're at the perfect age and experience level for this. Firstly, if you succeed, you've got lots of time to enjoy the fruits of your labor. Secondly, if you fail, you've still got plenty of time on the clock to get a cubicle job and climb the ladder. If I had it to do again, I wouldn't have waited a day past 35 and, preferably, would have been closer to 30.

2) I believe, right down to my bones, that risk aversion is the number one thing keeping people from maximizing their true potential. Particularly so in affluent places like North America where, truly, what's the worst outcome that could possibly result?

Quote (OP)

but my co-worker said that the companies E&O insurance covers any work we do on the side. That doesn't seem right to me though...

It doesn't sound right to me either unless your employer is either a bunch of morons or incredibly generous. I'd get this confirmed before relying upon it.

Quote (OP)

or realize the grass is not as green as it seemed from the other side, and realize I gave up a great opportunity at the company.

It actually does take a pretty great self-employment gig to beat a decent job in my experience. You're going to have to contend with a lot of annoying admin work, business development and, most importantly, pretty scary levels of uncertainty in your early years on your own. You may also wind up working much more than you did as an employee but that doesn't sound as though it's likely to be an issue for you.

Quote (OP)

Lastly, I hate sounding braggadocious but feel that I am an exceptional engineer and could be an exceptional business owner.

Perfect, this is how it needs to be. To be successful you should either a) be bringing something new to the market or b) be confident that you can do something better than most everyone else already doing it. Cocky. Check.

Quote (OP)

..he says contractors are better clients than architects?

Agree 1000%. Developers are excellent too if a little more difficult to court.

Quote (OP)

Also is there no way to PM people on this site?

Nope. But you should really contact me. See my profile page and see if you can't work out my email address. Given that you're so rock-star resourceful, it ought not be a problem... Firstly, I've recently done what you're considering and would be happy to offer whatever advice I can muster. I may also know of an opportunity that might appeal to you.

RE: Inner Turmoil - Salaried Employee vs Self Employed

So for the guys that are on their own, what's a reasonable number for top end earnings for a guy self-employed? Can you make double or triple what you can working for someone?

I personnally know two guys that went on their own. Both are now back working for someone. From conversations with them, it was a lot more stress and time investment (marketings, admin, billings, etc.). What they were earning evidently wasn't enough to justify the added commitment.

When the OP talks about his companies plan for him (leadership role) that sounds like it would be just what he's looking for. Sure he wouldn't have started it and built it to what is is today, but he could take it to new heights. To Koot's point though, you better make damn good sure there is a good succession plan in place.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Rabbit12)

So for the guys that are on their own, what's a reasonable number for top end earnings for a guy self-employed?

1) My guess would be about $300K max before you start needing to involve other folks and profiting from the fruits of their their labor. And that's working like a dog throughout an exceptionally fortuitous year.

Quote (Rabbit12)

Sure he wouldn't have started it and built it to what is is today, but he could take it to new heights.

2) If you have a reasonable level of certainty that you'll be the guy (or guys) at a larger firm that continues to be a successful business entity, that's tough to beat. Because of #1, the passive income part of it is all about leverage and, to that end, it's helpful to have a gaggle of capable worker bees from which to extract profit. There's a catch22 to it though. If you're on track to be the guy, odds are good that you are that guy precisely because you would have had what it took to do it on your own. In which case, you probably should have done it on your own as the whole structure of career progression in a larger firm is meant to create a lag between when you get your cake and when you first started deserving your piece.


Quote (Rabbit12)

I personally know two guys that went on their own. Both are now back working for someone.

3) This is a reflection of #2. Many that go out on their own do so because, on some level, they've realized that they're not going to be that guy at their firm. Or their just entrepreneurial cowboys that simply have to find out what they could do on their own. And the result of that exploration for many people is that they find out that they are, indeed, not that guy. This may well be how it pans out for me, we'll see.

4) A very big part of the stay/go conversation is the ultimate cost of the "stay". You don't make serious money until your some version of an owner. That can be shareholder rather than proprietor but it still has to be some meaningful version of equity. And the folks that retire from viable business concerns of their own creation rarely do so on overly generous terms. It's usually some version of liquidation and the folks that carry forward carry that burden as they go.

5) Related to #4 is the rather interesting situation of the "work from home" self employed entrepreneur. This is me at the moment with 1.5 junior guys helping me out and also working from home. With overhead shaved down right to the nuts, I almost have to try to have a poor fiscal year. I only need handful of mid-sized projects, and some smaller stuff around the margins, and I'm good. The minute I take on a physical office and employees with benefits etc, however, I could see that going up in smoke in a hurry.

RE: Inner Turmoil - Salaried Employee vs Self Employed

KootK,

Between your thirst for knowledge, your absolute need to get to the bottom of things, and the immense amount of time you spend on this forum, colour me surprised to hear that you are self employed.

I guess the next question is, with your reading/posting/studying habits, and your business, how do you remain married?!?

RE: Inner Turmoil - Salaried Employee vs Self Employed

2

Quote (NorthCivil)

Between your thirst for knowledge, your absolute need to get to the bottom of things, and the immense amount of time you spend on this forum, colour me surprised to hear that you are self employed.

I know it. Time will tell if it's sustainable.

Quote (NorthCivil)

I guess the next question is, with your reading/posting/studying habits, and your business, how do you remain married?!?

Married another structural engineer with a very generous heart. Naturally, she's a bit more sympathetic than your average gal probably would be. Let's just say there's not a lot of clubbing going on.

I've also had to split myself in two intellectually. Batman works the forum; Bruce tends the business. They're philosophically opposed and not fond of one another.

RE: Inner Turmoil - Salaried Employee vs Self Employed

I'm probably one of the closer people to your situation who has recently jumped to the self-employed route. I'll definitely share my thoughts on how it's worked out for me and what my challenges were.

I left my employer at 33 years old, my wife doesn't bring in much income (deliberately as our plan is to start a family soon and she does the housewife gig giving me more time to spend on work) but we similarly have low debt (only a house mortgage of $140,000 but bigger than yours, yay Maine). My previous employer paid just shy of $80,000 / year with medical for myself, a similar 401k to yours, but no other benefits. You'll need to adjust my figures for cost-of-living of Maine to California.

I started up with only a handful of clients but I timed the market well and there's a lot of contractors and fabricators in the New England region who are hungry for small engineering shops so I've had no lack of potential work. That said, you will spend a lot of time on non-billable things. Accounting, bringing in new work, advertising, heck even little things like checking the mail and reading emails adds up. Overall I probably average about 50 - 60 hours of work each week but I've had some weeks where I'm putting in 70 hours and some where I took a few extra days off. My first three months I only made about $4,000 each month, but now that I'm a few months into it I'm pulling in about $8,000 - $10,000 per month. This is sustainable but I'm skimping on things (no medical insurance right now, keeping expenses low, not adding to a 401k, etc.), plus we don't have kids yet so we can survive on less easily enough. Ideally I need to start bringing in at least $10,000+ each month to make this truly worth it and I can definitely see me maxing out around $150,000 at which point I'll probably start bringing in other employees, which sounds great. I started off with only $10,000 in initial office, accounting, and other expenses, plus $4,000 for E&O insurance. My expenses probably went to around $13,000 in the first few months with some added software, books, state licenses, and other expenses.

My biggest hurdle right now is bringing in repeatable work that I can do efficiently. If you're doing something new or time consuming each job then you'll never become profitable. Thankfully a good portion of my work is repeatable so I currently only see my profits going up to my target. KootK has given me a lot of advice on the side regarding my work and some of the best advice is to say "no" to potential work more than "yes". Take jobs you're good at or that you can do profitably, don't try to learn on the clients dime.

I encourage you to search the forums for other past topics on people starting out on their own. One big piece of advice I've found to be true is you must start out with 5-6 months of personal expenses saved up. I dipped into this a bit but overall didn't need it thankfully; however, I can easily see a few bad months happening and you definitely need this cushion to avoid falling flat right out of the gate. On top of that I didn't see profits until about 3 months in so you definitely need something to keep the bills paid during this transition.

All said, I'd say evaluate your personal finances and make sure you can afford to take the cut in pay that you'll initially have being self-employed. If you think you can suffer that combined with the potential stress knowing that you no longer have a steady paycheck, then I'd say go for it. It's been hugely rewarding for myself and I've enjoyed it so much more than working for someone else. It's been a learning process and it's definitely a lot more work, but seeing the big picture really helps motivation and the personal satisfaction of seeing a job completed. The make your own hours and spending more time at home is fantastic. KootK is 100% correct that if you do want to do this then do it sooner rather than later; before you get too entrenched in a good paying job or have too little time left if it doesn't work out.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL, HI)

RE: Inner Turmoil - Salaried Employee vs Self Employed

TME, when you are saying 8-10k per month is that gross profit before taxes?

Also, you're braver than I to roll without health insurance. I despise our healthcare system, but really don't want to go bankrupt should something bad happen to myself or my wife.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Rabbit12)

Also, you're braver than I to roll without health insurance.

I should speak to this to give an accurate picture of my own risk picture:

1) Canada has decent, free health care. Kind of a nice feature for spurring entrepreneurship, no? Sorry, couldn't resist.

2) My wife has kick as healthcare and dental care. And I get to back door purchase lucrative shares in her firm which rocks.

3) I had kids unfortunately young which has the one advantage that I'm mostly done with that now. Only my own life really remains to be screwed up.

So, yeah... I've got some things much easier than other will have them.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Koot, that gives a lot more clarity to your situation.

I have no doubts I could be my own boss and probably make some decent money at it, but I'm not sure running without health insurance and not contributing to any sort of retirement account is a wise decision. The money into a 401k/IRA in your 20's and 30's is huge because it works over and over for you until you retire. Tough to make that up later on.

To clarify my position, I'm making a base salary + bonus of just over 100k. We are an ESOP so every year I get shares and the company matches a portion of my 401k deposit. Health insurance and dental are good. It'd be really tough for me to justify going on my own. I get paid vacation and straight time OT if the project is under budget. I just don't think there is a big enough reward to take the risk.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Rabbit12)

The money into a 401k/IRA in your 20's and 30's is huge because it works over and over for you until you retire. Tough to make that up later on

Surely, but that right there is the golden handcuff phenomenon. A die hard entrepreneur would rephrase your statement as something like.

Man, when I get out on my own, I'm sooo going to kick some ass and dwarf my salaried earnings. I'd best get started on that adventure before I'm 35 so that those returns can compound over time.

Fundamentally, entrepreneurs are possessed of such extreme self confidence that betting on themselves becomes the rational choice. Is that self confidence always justified? Certainly not. Most people are, and ought to be, employees. Particularly so when those people hold very attractive positions such as your own. Being an employee isn't the bizarre anomaly, being the entrepreneur is. And, truly, I'm not implying that one path is any better than the other. Both can be good and both can be bad depending on the person and situation. I, for example, am definitely of a somewhat anxious disposition which often makes entrepreneurship more difficult for me than it probably needs to be. I learn a lot of difficult lessons on a pretty regular basis.

What follows is just for fun so, please, nobody read too much into it. I have this posted in my home office as a little pick me up reminder when I'm plagued by self doubt that I may have ruined my own career for no good reason. Yeah, I may come to regret not driving hard towards a partner track position at Thornton Tomasseti etc. But, whether that is true or that is false, I still make more money, more comfortably, and with greater freedom than probably 95% of the other humans that walk the earth and 99.995% of the other humans that have ever lived. Taken in a global/historical context, I'm a goddamn home office Pharaoh. And the person who needs to not forget that... is me.



RE: Inner Turmoil - Salaried Employee vs Self Employed

Yep. The golden-handcuffs. Watch out. They never come off, but they're never really on. You know what I'm sayin'.

If you think you can do the solo thing, do it. Be good at it beyond the financial. Security in someone else's hands is nice but you really can hold your own survival quite well when everything is squared up.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Just a word of caution; most engineers tend to be introverts and are not good at marketing, particularly themselves.

Which is actually good news, for those who can; their job and income prospects would drop if, say, twice as many engineers could and would decide to go solo.

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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RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Rabbit)

TME, when you are saying 8-10k per month is that gross profit before taxes?

Affirmative. I wasn't sure how technical I should get in my finances before my post would start looking like a profit/loss statement.

Regarding health insurance my wife and I are both healthy and I have some additional savings in a HSA that could cover some medial expenses. Getting profitable enough that I'm comfortable saying I'm a successful entrepreneur and affording some basic health insurance is my first priority. My hope/plan is to only be without healthcare for about 6-12 months. Seemed an acceptable risk.

Quote (Rabbit)

The money into a 401k/IRA in your 20's and 30's is huge because it works over and over for you until you retire. Tough to make that up later on.

After health insurance and all my general finances are at 100% strength I plan to evaluate whether to continue to invest in a 401k or invest in my own business. KootK gave me some great advice that my business can be considered a nest egg if I set it up right. I could potentially partner up and then sell my share to partners. Or I could just slowly wind the business down and semi-retire and just work till I'm 90.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL, HI)

RE: Inner Turmoil - Salaried Employee vs Self Employed

cal91:
You are trying to decide if you should go into business for yourself. Several posts have mentioned the difference in engineering and business. Someone astutely commented on Introversion, several on marketing etc. I am going to add to the business related comments the following:

-Since this is a forum filled with structural engineers, do you think we all communicate the same? Do you think we all value the same things to the same degree and in the same order?
-How much do you know about communication? Do you know how to converse with an Extrovert as compared to an Introvert? Do you know how to spot the difference? Do you know the difference in people (i.e. Clients) who make decisions based on Logic versus Feelings? Do you know how to spot the difference?

The reason I am posing just these very few and basic questions to you has to do with Business. As far I see so far, you may not be suited yet to start your own business. You may need to work on items similar to what I just asked you about rather than your engineering skills. Here is why:

-You posted 3 days ago. You have not interacted with anyone who has responded to your posts. Some of the audience will be put off by that.
-I was the first to respond. I asked you 4 questions. You have not responded. Some of the audience would be put off by that. I was nice enough to take time out of my day to assist where I can, to some, you would not appear appreciative enough to at least respond.
-These thoughts are business. You must be able to assess who you are reaching out to, figure out how to most effectively communicate with them and then sell them that you are the solution.

The following is a survey done years ago about why people hire consultants (Architects & Engineers). Learn this list and see how well you stack up. Also note #7. Number 1 and Number 2 are the ones that sound easy when you read them but in fact are VERY hard to do.

  1. Awareness and Understanding of Client’s needs and wants. This would include Time, Cost and Quality.
  2. Ability to Solve the Client’s Problems or Accomplish their Goals.
  3. Experience in Project Type.
  4. Ability to control schedule and costs.
  5. Interest in Job.
  6. Your Price.
  7. Qualifications of your staff. This includes licenses, grades, and experience.
  8. Repeat business.
  9. Professional recognition of your firm.
  10. Ability to control a remote project.
  11. Capital to cover expenses of business.
  12. Availability.

RE: Inner Turmoil - Salaried Employee vs Self Employed

The list I just posted is in order of importance to the Client.

RE: Inner Turmoil - Salaried Employee vs Self Employed

4
Some additional thoughts en route to what I hope is a balanced perspective.

1) Business development is hard and scary but that has not been the biggest challenge for me. For me, the biggest challenge has been reconciling myself to what are, on average, lower caliber projects with lower caliber clients relative to how things were when I was a big dog at a big firm. It's not like anybody's calling me up to do the next Guggenheim etc. And, certainly in the short to medium term, I don't see getting this aspect of my work back to where it once was. Working for an established firm is nearly impossible to beat in this regard in my opinion. Once you set out on your own, I think that your happiness depends, utterly, on your being able to view the solution of your business problems as your primary technical interest. And I struggle with that.

2) The flip side of #1 is that interesting business problems are plentiful and accessible to all entrepreneurs. In fact, you couldn't escape them even if you wanted to. Even when working at large firms as an established veteran, I still only had one or two projects a year that I thought were cool enough to fall in love with. 20% of my workload at most. So, in a sense, I was always starving a for more cool work even though there was some. External supply never met internal demand as it were. If you can train yourself to value technical business problems above all else -- and that's a big if -- you will find yourself awash in them in a way that can be immensely satisfying for the right people.

3) I get asked constantly if I think that self-employment is better than normal employment on a day to day basis. And my answer is that, it's probably about the same on average but, with self-employment there are much higher highs and much lower lows. Some months, $30K worth of checks with my name on them roll in and I feel like a god. Other months, $4K roll in and I feel like a chump. Once in a while, if there's a big snow dump the night before, I'll go skiing on a Tuesday which is awesome. Other times, I'll be much busier and have gotten myself into much more trouble than I ever could have as an employee and it will be an insane nightmare with me working every weekend for months. It takes a lot of mental discipline to stay cool and happy when operating under this much uncertainty and, for me, that pretty much offsets most of the "I'm my own boss" perks.

4) Even for introverts, engineering is really a team sport. I've found self-employment extremely lonely at times. Part of the reason that I've taken on partners and grown the business to include some employees is to address this and make it more fun for myself. In some ways, I almost think that the loneliness part is worse for introverts. My wife and most of my closest friends are structural engineers and, obviously, that's not a coincidence. Putting myself in a position where I don't meet any new SE friends unless I hire them has been challenging for me socially. That said, forums like this one help out immensely in this regard.

5) Family is a big deal to most folks considering this decision and I've had some truly unexpected results in this arena. Firstly, when I am crazy busy (#3), I'm no fun to be around and my family suffers. Fortunately, this aspect of things has been fairly minor and I'm getting better at compartmentalizing all the time. What's not been minor has been my ability to acquire what I call "kid moments". Anyone who's raised kids full cycle will confirm that your relationship with them really hinges upon the summation of all of the great, but somewhat rare moments when you're spending time together and something good/fun happens. Especially with older children, it's not as though you're just hanging out in group hugs for two hours at a time. You're really more like roommates or office mates interacting in short doses. Assessing this as an engineering problem, your odds of success go up drastically by spending lots of short burst of quality time with your kids on a regular basis. More rolls of the dice.

Back when I was a big company guy, I left the house before 7AM without seeing my kids and rarely returned home before 7PM at which time I'd bump into them briefly but, mostly, I'd be exhausted and just want to relax and watch some TV. We'd plan some grand adventure on the weekend to compensate but even that had it's limitations as we would usually be in a stressed "NOW we're going to have fun" state of mind. It's very different now. I start early and take a break around 8:30 AM to drive the kids to school. I'm not rushed in this, trying to get somewhere in a hurry. We invariably tease each other, tell a couple of jokes, and discuss our lives. No big deal but, often, a kid moment. When the kids get home at 4:00 PM I take a break (or just finish if I can) and we do some math/science homework and maybe grab an ice cream up the street. It's still pretty early in the day so everybody's energy levels are high and we're relaxed. The homework goes much better than it does later in the evening and, again, I often snare another kid moment out of the deal.

The net effect of all these kid moments that I've collect has been that, astoundingly, I seem to have a much better relationship with my kids than even my wife does (she's a kid person and I really am not). I know what their hopes and dreams are, I know what's going on in their lives, and I'm the go to parent for discussing sensitive problems. It actually makes my wife quite jealous. And I get all of this done with less than an hour's worth of effort each day. It just turns out that it's the right blocks of time exploited consistently. If I ever do go back to regular employment, it most definitely will not be until all of my kids are done with school. This aspect of things has been a huge win for me and was completely unexpected. Kind of like how my business is now my glamour project, so too are my children.

And, please, no one take these comments as my implying that anyone's a bad parent for holding down a day job. This is just how it's worked out for me. I've probably been somewhat in of a sociopath in the past with regard to my prioritizing my work over my children. I'm sure that most folks with regular jobs are doing a much better job of parenting than I used to.







RE: Inner Turmoil - Salaried Employee vs Self Employed

KootK: Regarding #4; you should join a local engineering society or two; solved the social problem for me quite nicely. Decent networking as well.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL, HI)

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (TME)

KootK: Regarding #4; you should join a local engineering society or two; solved the social problem for me quite nicely. Decent networking as well.

I appreciate the advice but, for me personally, I believe that the answer is different:

1) I think that tethering even more of my social life to engineering is to take me even further in the wrong direction.

2) I attend some business/entrepreneurial social groups which is also good networking and really helps me to develop in my weak areas.

3) I'm ramping up my involvement in cycling, music, etc as I really do think that it'll be healthy for me to focus more on non-engineering interests. As a man with considerable devotion to a non-engineering hobby, I know that you get this.

As much as I've loved and continue to love structural engineering, she's been a fickle mistress. I would not say that my rather intense affections have been consistently returned in kind. She's a looker, to be sure, but she still insists on seeing other people after all this time...

RE: Inner Turmoil - Salaried Employee vs Self Employed


6) Consider what you'll not spend when you're self employed in addition to what you will or won't earn. Currently, I get to play some neat tax games, I drive very little, I eat veggies from the fridge instead of lunch out, and I only maintain two nice business outfits. I keep a good deal what I earn these days and that's been a boon. I'm also leaving a lot of money in the company rather than paying myself. There are some risks associated with that but my hope is that, the next time there's a big recession, I'll just keep on paying myself modestly and work 1/2 time or whatever for a year or two. Again though, one really has to have or develop a stomach for risk to be able to exploit these kinds of benefits.

RE: Inner Turmoil - Salaried Employee vs Self Employed

(OP)

Quote (Ron247)

How many hours a week do you currently work for your employer?
40. We've rarely had weeks busy enough for me to not be able to get whatever work is on my plate done in 40 hours. Hours are relatively flexible too. 6:30 to 3:00, or 8:30 to 5:00 with a half hour lunch break. Or 7:00 to 5:00 with a two hour break. Employers are pretty chill, have never felt breathing down my neck.

Quote (Ron247)

Are you salaried or hourly?
Salaried.

Quote (Ron247)

The mentor you mentioned, are they at the same company you are at?
No, I know him through church. He's probably 55 and has been self employed for 25 + years.

Quote (Ron247)

How much actual structural engineering have you done at the steel fab business? 4 years of steady structural work is different than 4 years of semi-steady work. If your main experience is only steel, that can handicap you some.
4 years of semi-steady work. I worked part time and full time summers for two years at another firm that dealt with all four materials. While my experience (albeit limited) and studying for the SE gives me confidence in my skill set, I know I would spend a lot of time learning as well.


Quote (Ron247)

How good are you at chasing work down or being creative at finding new clients?
Don't know, never tried. But I'm confident in my ability to learn, and am confident in my people skills (especially compared to your typical engineer).


Quote (Ron247)


You need to make your mind up first about staying in CA or moving. It is REAL hard to move somewhere that no one knows you and start a skill-related business. If you want to move, it may be wiser to first take another job with someone in the "more desirable" location and later start your own business there. Moving may cause you to lose good contact with your Mentor.

COL with a single income for wife + 4 kids is tough in CA, but I do not see us moving as a large possibility. We value being by family too much. Funny thing is everyone else in our family thinks the same way. We joke about all migrating to Idaho.

Quote (CANPRO)

$2000 a month in side work is awesome, best of luck continuing this pace and growing

Thanks, that's all from one architect that my coworker was too busy to do work for, so he gave me the client. It makes me wonder if marketing and getting more clients wouldn't be too difficult.


Quote (CANPRO)

Maybe I'm not completely understanding this, but if you aren't fully licensed yet, how are you providing the side services? Are you doing this work under another enigneer?

I should've clarified, I am PE licensed, just waiting for required experience to be SE licensed.

Quote (CANPRO)

It sounds like you could benefit from staying at your current position (or similar position) a bit longer - those phone calls you're sitting in on with the CEO/COO are boosting your soft skills (see above regarding finding more work), and in your current position you're probably making contacts with future clients.

Yes, I think I am going to stick around for atleast the rest of 2019 to see how things go with the company, while also building up my side business.

Quote (KootK)

On the other hand, if there's not a serious succession plan in place, this might just be where the company folds and you're kinda stuck holding the back (tough love, try not to be offended).

That's been a concern of mine... that the company is just gonna fold after the top dogs leave. Try not to be offended by who, the company? Not following your thought.

Quote (KootK)

1) Frankly, I feel that you're at the perfect age and experience level for this. Firstly, if you succeed, you've got lots of time to enjoy the fruits of your labor. Secondly, if you fail, you've still got plenty of time on the clock to get a cubicle job and climb the ladder. If I had it to do again, I wouldn't have waited a day past 35 and, preferably, would have been closer to 30.

2) I believe, right down to my bones, that risk aversion is the number one thing keeping people from maximizing their true potential. Particularly so in affluent places like North America where, truly, what's the worst outcome that could possibly result?

Yes, I agree with all of this. Going on my own has high risk, high potential reward. Staying does not have as high of risk (besides just company folding in a couple years), but still has very high potential reward. That's why I'm thinking of staying and reevaluating the company after several months.

Quote (Rabbit12)

When the OP talks about his companies plan for him (leadership role) that sounds like it would be just what he's looking for. Sure he wouldn't have started it and built it to what is is today, but he could take it to new heights. To Koot's point though, you better make damn good sure there is a good succession plan in place.

Yes it is what I'm looking for, I'm just impatient and need to see how it goes for a little while, and put forth effort into learning leadership/management/client relations from the CEO and COO. If the company starts turning around this next year, with me progressing into leadership, then I'll stay. If not I'll go :)

Quote (TehMightyEngineer)

I'm probably one of the closer people to your situation who has recently jumped to the self-employed route. I'll definitely share my thoughts on how it's worked out for me and what my challenges were...

Ideally I need to start bringing in at least $10,000+ each month to make this truly worth it and I can definitely see me maxing out around $150,000 at which point I'll probably start bringing in other employees, which sounds great.

Thanks, all great advice and info. However that seems like a really small spread, $120,000 a year just to make it worth it, but at $150,000 ceiling before hiring others? I'd want to be able to make $200,000 without hiring others. No experience or data if it's doable, just what my goal would be.

Quote (Ron247)

-Since this is a forum filled with structural engineers, do you think we all communicate the same? Do you think we all value the same things to the same degree and in the same order?


Not sure what you're getting at with these questions, but no everyone communicates differently and values things differently.

Quote (Ron247)

-How much do you know about communication? Do you know how to converse with an Extrovert as compared to an Introvert? Do you know how to spot the difference? Do you know the difference in people (i.e. Clients) who make decisions based on Logic versus Feelings? Do you know how to spot the difference?

I actually have read a couple books on communication - Dale Carnegie's How to Win Friends and Influence People, 7 Habits of Highly Successful People, Jim Collin's Good to Great, and The Arbinger Institute's Leadership and Self-Deception: Getting out of the box. While I won't say I'm an expert, and I will say I have much to learn, I think that this is one of my strengths as a person, especially as an engineer.

Quote (Ron247)

-You posted 3 days ago. You have not interacted with anyone who has responded to your posts. Some of the audience will be put off by that.
-I was the first to respond. I asked you 4 questions. You have not responded. Some of the audience would be put off by that. I was nice enough to take time out of my day to assist where I can, to some, you would not appear appreciative enough to at least respond.
-These thoughts are business. You must be able to assess who you are reaching out to, figure out how to most effectively communicate with them and then sell them that you are the solution.

I am sorry if you are some of that audience that is put off by me not responding in 24 hours. I put a lot of effort into my first post to give as much information as I could and needed some time after that to clear my mind and take a break. But I am very appreciative of everyone's posts.

Quote (KootK)

Some additional thoughts en route to what I hope is a balanced perspective.

This post actually makes me realize that I do really have a good thing going, it's too early to turn away from it just yet. Great hours, potential and pay. I'm able to be home with my family a lot. I'm not stressed out (except for lately as I've been thinking about leaving). Don't get me wrong, if things don't pan out with the company I will not hesitate to start off on my own. In the mean time I'll just keep up with the side work, try and pick up a contractor as a client but still try to be a key player in my current company.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (cal91)

Try not to be offended by who, the company? Not following your thought.

Quote (KootK)

On the other hand, if there's not a serious succession plan in place, this might just be where the company folds and you're kinda stuck holding the bag (tough love, try not to be offended).

I simply meant that I'd hoped not to offend you by my suggestion that your company might fold. Not everyone is mature enough to gracefully handle the suggestion that there may be a hole in their plans. As you've already considered this, though, it's surely not a big deal. I'm Canadian damn it. Excessive, disingenuous politeness is part of genetic heritage.

RE: Inner Turmoil - Salaried Employee vs Self Employed

(OP)

Quote (KootK)

I simply meant that I'd hoped not to offend you by my suggestion that your company might fold. Not everyone is mature enough to gracefully handle the suggestion that there may be a hole in their plans. As you've already considered this, though, it's surely not a big deal. I'm Canadian damn it. Excessive, disingenuous politeness is part of genetic heritage.

Ha, no offense taken. Although normally I would not categorize you as excessively polite. You've been known to offend a poster or two through your passionate debates. Don't worry, I am not one of those and enjoy the debates, especially when I'm not in agreement with you as those are usually the most thought provoking ones.

And yes, I've considered the possibility of the company failing ever since I've been hired. If it happens, I'm not too worried. That'll give me the push I need to do my own thang.

On the otherhand, I do hope that I can play a large role in the company's success. Ideally I would make enough money and have enough job satisfaction to not even be tempted by side jobs.

My biggest concern is the middle ground, being on the fence (like I have been ever since I took me SE exam), and not progressing in the company. I don't want to be delaying my own business year after year because I think that NEXT year I'll be in a great leadership position, helping the company's success, the company actually WILL be succeeding, and I'll be rolling in dough, with reality being the company is getting by and I'm not in a leadership position but I'm comfortable enough to just stick with it and not really progressing much in leadership or pay, and still doing side jobs to afford some of the finer things.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (cal91)

You've been known to offend a poster or two through your passionate debates.

Yeah, no argument there. When I'm doing that, however, it is with purpose and quite against my nature. I did, however, spend my 20's in the US where I learned a few things about the benefits of direct, forthright communication. I'll always be indebted to uncle Sam for that. It practically makes me a predator up here.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (cal91)

needed some time after that to clear my mind and take a break.
This statement is similar to what I mean by my comment. My critical comments are intended to be helpful. One of the more gut-wrenching things you will have to do as a business person is to communicate in a style that is not your preferred style but is your future Client's preferred style. At best, given a 100 random people in an audience, you will maybe communicate successfully with 25% or less. If you want something from me, communicate in my preferred style to have a better shot at success. Some people are really good at this but they got that way from practice.

You already being cognizant of the fact people communicate and react differently is a huge plus. You would be surprised how many people do not realize these two simple facts. If you have never taken a personality traits test such as Myers-Briggs or something similar, take one for a 80% glimpse into your preferred styles but more important than what your answers indicate, look at the vast percentage of people with different traits that are in fact your potential customers. There are several test of this nature on the Internet. You need at least a 40 question one to get a glimpse. There is no correct "style" of personality and regardless of style you can be successful at anything. The important thing is to know the differences, better ways to reach other styles etc.

You needing to clear your mind is a prime example of a trait some would not understand and others would fully support. If you read your customer would not understand, you have to force yourself to not take as much time to clear you mind. The shortened time frame would be gut-wrenching.

RE: Inner Turmoil - Salaried Employee vs Self Employed

cal91, I assume you have some sort of annual review. If so, I'd seriously consider discussing your future goals candidly with your reviewer or someone else in the leadership chain you trust. Tell them what you're looking for and make it clear that if you aren't seeing progress towards your goals then you'll be forced to entertain other opportunities. If you are as good as you're leading us to believe they won't want to lose you and they will find a way to help you prosper and grow.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Further to Rabbit's point, I'd go right for the throat and ask what reasonable expectations are with regard to succession planning. That, if you haven't done this already. I think that much of this will come down to will be what percentage of the company you own at present and how much you could realistically purchase if it were offered to you. As I mentioned before, the "leavers" are mostly likely cashing out to see their retirement goals realized. If you'll own 30% of the company when the leavers go, I see leadership in your future. If you'll own 4% at that time, then I see leadership at your firm in someone else's future. Perhaps even someone external. As you said though, you've got time and it makes nothing but sense for you to use that time strategically to increase the odds of your making a better decision.

Another model that might be attractive to you is to go out on your own but finagle things such that your current employer is your anchor client. That's not always an easy conversion to make but it's been done to effect by many in the past.

RE: Inner Turmoil - Salaried Employee vs Self Employed

@Ron247: I feel as though you should probably be my business coach.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Thanks KootK, Happy to help anytime. I have learned a lot from you in this forum and would always be humbled to reciprocate.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Sweet. If you could turn me into the Don Draper of structural engineering that would be satisfactory.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Mad Men reference--3 Stars

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (KootK)

1) ...For me, the biggest challenge has been reconciling myself to what are, on average, lower caliber projects with lower caliber clients relative to how things were when I was a big dog at a big firm...

2) The flip side of #1 is that interesting business problems are plentiful and accessible to all entrepreneurs.
I've been transitioning over to running my own business.

The two issues quoted above are most definitely the biggest down-sides for me.

When I worked at a big firm, I worked on high-profile projects with fees with lots of zeroes. While getting a small firm up-and-running, I'd design an outhouse.

By #2, I assume you mean business and admin stuff. My advice to the OP is to take how long and how much you think you'll spend on admin, PE license, accounting, CoAs, and marketing and multiply them by about five. Those tasks can be a nearly full time job, and as a start-up, there's nobody else to do them. They're boring, tedious, and stressful.

RE: Inner Turmoil - Salaried Employee vs Self Employed

One of the worse things about a 1-person firm is how many hours you have to be putting in before you can hire another Engineer to grow your firm. In a 10 person firm, each person works 5% to 10% more time before someone decides to hire the 11th person. In a 1-person firm, you have to be working 50% to 70% more hours before you feel comfortable hiring the 2nd person UNLESS the 2nd person arrives with their own Clients.

When you add the Admin stuff in there that is difficult to get paid on, it really stresses you.

RE: Inner Turmoil - Salaried Employee vs Self Employed

A couple of quick notes about succession plans:
1) If it's not written down officially, then it's not worth anything.

2) Even if it's written down, I've seen things change. Your employer will do what's in their best interest. I've seen even someone I really respect wiggle their way out of a written agreement for 3% of the value of the company. The employee (this was not me) was given something less than 1% of the value of the company. His choice was a long, drawn out lawsuit, or to accept the 1%.

3) Succession plans go out the window (for the most part) if the company gets sold. This is what Mitt Romney's company did so well. They had a lot of companies come to them when the owner / operators wanted to retire, but didn't have a clear succession plan. Or, when they didn't believe they would be getting good value out of their succession plan. Romney's company would bring in new management or arrange for it the company to be purchased by a 3rd party... usually at a much higher price. Romney's company collected a nice profit. The former owners and their heirs got a better return for selling the company. All these people were happy..... But, I gotta believe there were some folks who THOUGHT they supposed to be part of the succession plan that ended up getting nothing.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (271828)

By #2, I assume you mean business and admin stuff.

No, although I agree with all that you wrote. That said, the Scrooge McDuck / Big Data parts of me are gradually starting to take a liking to accounting/invoicing day.

I was really referring to what could better be described as business strategy. Thinking strategically about the future and pairing up resources with opportunities. MBA stuff -- an area in which I've been doing a lot of reading over the last few years. Two examples of ostensibly boring stuff that really wasn't:

1) I currently earn about $30K/yr, nearly passively, by virtue of work that I have done by others. Am I Warren Buffet? No. But I did this thing and the doing of it and seeing it blossom have been enormously satisfying to me.

2) I recently identified that construction engineering is sorely lacking in my area. So I've leaned how to do some and I've engaged a technician stolen from a firm that is, essentially, my only competitor. It's early days but this appears promising and is exciting.

My brother is a hotshot business guy and always was. He used to taunt me often about being an engineer saying "if you want to solve technical problems so badly, why not make those technical problems the making of money? That way you can get your tech rocks off AND get rich doing it". Frankly, he's right. Of all that I currently do, I believe that the space where I bring the greatest values is where I've paired up people needing work with work that is available. And that's a highly technical challenge:

- Identify a new/undeserved market and figure out how to speak to it (and have the balls to speak to it).
- Learn how do to the work.
- Learn how to do the work profitably.
- Teach someone else how to do it.
- Teach someone else how to do it profitbly (Ron's last point RE staffing).
- Figure out how to keep the guy doing it profitably from quitting.
- Return to step one with a new client without messing things up with the previous client.

The part of my work that is just doing the work is not a high value thing and, frankly, is much less glamorous than it was when I was cubicle bound. This is my point really. If you're going to go the entrepreneurial route, then you need to put your happiness egg in that basket. Hanging your shingle out and then delaying happiness until you're making billions and doing the next Burj Dubai is a recipe for suffering. If you're going to run a business, do that because you want to run a business. Don't do it because you like to engineer things and are sick of your manager.


RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (cal91)

However that seems like a really small spread, $120,000 a year just to make it worth it, but at $150,000 ceiling before hiring others? I'd want to be able to make $200,000 without hiring others. No experience or data if it's doable, just what my goal would be.

I should clarify, $120k per year is my one-man shop goal but I expect it will probably vary from year to year. $150k is where I would consider hiring someone but you're right that realistically it should and could be higher. Also, some consideration for my local is in order; $200k out here in non-city New England is pretty good money. By my understand $200k in LA is not as much of a big deal. You should take my numbers and adjust them for cost-of-living. By a quick google search it's probably about a 40% increase. So, $120k = $167k and $150k = $208k.

Quote (Ron247)

If you have never taken a personality traits test such as Myers-Briggs or something similar, take one for a 80% glimpse into your preferred styles but more important than what your answers indicate, look at the vast percentage of people with different traits that are in fact your potential customers.

Good advice to be sure Ron but in my reading the Myers–Briggs is a pretty poor test with minimal repeatability and other issues. I personally don't hold much weight in the results of such tests. However the overall point to cal91 about different personalities and the conflicts that arise trying to market yourself to someone with conflicting personalities is entirely true in my experience.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL) Structural Engineer (IL, HI)

RE: Inner Turmoil - Salaried Employee vs Self Employed

TME: I agree about the Myers-Briggs. That is why I call it an 80% at best "glimpse". I consider the results of the test but taking the test, getting a 4 letter description of your traits and then acting like it is the gospel is not very prudent. I agree you can take several of these tests and get different results. I always hit 3 letters the same and fluctuate at times on 1 letter. To me, as important is the numerical score for each letter designation. The scale is sometimes 0 to 100 for Extrovert and 0 to 100 for Introvert with both meeting in the middle at 0. An Extrovert with a 6 and a Introvert with a 3 are almost the same in that respect but an Extrovert with a 100 and an Extrovert with a 3 may be miles apart. So to me the results are misleading without also knowing the "severity" of the letter.

Attached is a chart I have shown people that helps them see the difference in what you battle. The percentages shown are for all 16 designations based on controlled tests people (or guinea pigs) have taken. I grouped the traits based on how you take in information and how you make a decision. I felt these most matched what I do for living. I am an "NT" on every test I have taken. Problem is, that is less than 10% of the people that were ever tested. The lucky "SF"s are 43%. It helps me to see my method of taking in information and making a decision as compared to the rest of the world. My numbers suck so I had to learn to adapt some. While no where close to an exact science, the letter designations do come from your direct answers. What Myers-Briggs claims this means is where people like us agree is nowhere close to an exact science.

https://res.cloudinary.com/engineering-com/image/upload/v1562813347/tips/Pages_from_Problem_Solving_the_Ivory_Trident_Way_amroer.pdf

RE: Inner Turmoil - Salaried Employee vs Self Employed

Bear in mind that your benefits in a typical salaried position is roughly 50% of your salary; when other things like rent, other overhead, management, etc., are included, your billable hours are worth 2 to 4 times your salary.

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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RE: Inner Turmoil - Salaried Employee vs Self Employed

3

Quote (cal91)

Thanks, that's all from one architect that my coworker was too busy to do work for, so he gave me the client. It makes me wonder if marketing and getting more clients wouldn't be too difficult.

Have you done any business development with your current company? Despite what KootK says above, my main worry for you wouldn't necessarily be whether you can handle the work yourself or do the day to day business stuff. With someone with only a few years of experience, my major concern would be if every single job you've ever done has been given to you by someone else. Your company for your day job, a coworker for your side gig. You say right now that sometimes you feel like you have nothing to do. Usually would expect you to be going out and doing some BD then. Go out and drum up some more work, not sit in the office and write spreadsheets that are never going to get used.

Just keep in mind there's a lot of hustling to do to generate your own work and hustles usually lead nowhere for months, sometimes years. And some (most?) of the people you talk to won't ever turn into anything. There's going to be a lot of unanswered calls and dead ends. If you're out on your own, you don't have a company to pay your salary and benefits while you figure it out. So just make sure you have enough saved up to cover your expenses for a while. I would personally want to have a year's worth of expenses saved up.

RE: Inner Turmoil - Salaried Employee vs Self Employed

(OP)

Quote (MrHershey)

You say right now that sometimes you feel like you have nothing to do. Usually would expect you to be going out and doing some BD then. Go out and drum up some more work, not sit in the office and write spreadsheets that are never going to get used.

I agree, I've been thinking a lot about what to do when there's "nothing" to do and this is what I've come up with. I need to work on my soft skills and try to go out and get more work for the company. Thanks for all this advice.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (MrHershey)

usually would expect you to be going out and doing some BD then. Go out and drum up some more work, not sit in the office and write spreadsheets that are never going to get used

Cal91, that is some really good advice from MrH. Use your existing company to work on your Business Development skills. First, you will increase your value to them while increasing your skillset on their dime. Win-Win. And when you start going out doing BD, don't let failure stop you from keeping going. Market, Fail, Diagnose Why, Rinse,Repeat with a New Pitch.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (MrHershey)


...Just keep in mind there's a lot of hustling to do to generate your own work and hustles usually lead nowhere for months, sometimes years.
The time lag is worth repeating. In my experience, it takes a lot longer for work to build than one might think.

cal91: One client is nothing. They might miss-out on a few jobs and your income would drop to nothing. This could go on for months or longer. There needs to be several clients and an upward trajectory before I'd consider it wise to jump. The alternative is to have an enormous hill-and-valley fund for the business and another for the family. That way, if it takes two or three years to get the income up to a reasonable level, there's less danger of the business failing due to "starving out" and having to go back to working for someone else.

RE: Inner Turmoil - Salaried Employee vs Self Employed

good luck! thumbsup (i'm replying to follow this post and read the comments later)

RE: Inner Turmoil - Salaried Employee vs Self Employed

With respect to business development, I have what may be a helpful anecdote to share that is now filed safely in my live and learn file. My progression went like this.

1) Work for mid-sized firms doing small to mid-sized projects.

2) Work for large firm doing large projects. Count pretentious self lucky to no longer be working at small firm.

3) Start doing business development and forming relationships at large firm working on large project teams.

4) Step out on my own to discover that:

a) Large project clients are difficult to steal. They're purchasing decisions have more todo with the firm (the big one) than the man (KootK). And, obviously, if you're doing a skyscraper, you don't call up some dude working at home in his jammies.

b) When I look about at recently established, successful startups, most seem to be fronted by someone who was an important player at a small to mid-sized firm.

MY CONCLUSION:

If you know that you're ultimate goal is startup, I'd do one of two things:

- work at a small to mid-sized firm OR;

- participate in what is often called a "special/small" projects group within a large firm.

In this way, you're getting in front of the very people or, at least, the right kind of people that will be most critical to your success as an independent.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (KootK)

you don't call up some dude working at home in his jammies.
I disagree KootK, if the dude has jammies with feet in them, I am hiring them on Style Points alone.

RE: Inner Turmoil - Salaried Employee vs Self Employed

(OP)

Quote (Ron247)

I disagree KootK, if the dude has jammies with feet in them, I am hiring them on Style Points alone.

I try to stay away from the footsie pajamas, I find that clients wearing Snuggies end up being much more profitable.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (cal91)

clients wearing Snuggies end up being much more profitable

This a perfect example of marketing, "Your job..cal91..should you choose to accept it....is to convince the Client you are the reason they will be more profitable."

RE: Inner Turmoil - Salaried Employee vs Self Employed

I would give some serious thought to where you want to take the venture. I have been a sole proprietor for a great many years. If you are up for the challenge to grow this into a business where you will end up being a manager of people when you are getting into your 50's then it could be wonderful, if not, ponder the thought of doing the same mundane calc tasks at that stage of life. Most of the negatives have been discussed to some degree. If you tend to worry about things like many of us do, then I think one of the biggest challenges is having someone to bounce ideas off of, or complete an independent review of your work. Sure you can get some advice here, but at times you need something you can put in print for a file.

From the business side, can you afford this? You will run into clients that do not pay, are poorly funded or are slow to pay. After years and years of experience you learn what questions to ask, but at the start many tend to be a bit carefree about that aspect. I have been hiring one geotech for more than a decade now and he still has some of the same silly questions when he is awaiting payment from a client. SteelPE posts frequently, and you can find a couple of his discussions where he was having difficulty collecting or was being fed one of the oh so common BS stories you get when they have no money. I have no idea of the market in your area, but if you start toying in the residential game you could quickly end up with a 90d column of receivables that are difficult to collect.

"...I was top of my classes without having to put forth nearly the same effort as my classmates..." None of your clients will care. Sorry, that is just how the world works. Unless you are working on projects where they are using the two envelope bid procedure, your clients care about how much it costs, and when will it be done. Beyond that, 90% of people think all engineers will achieve the same result. It is a horrible assumption, but very common with less sophisticated clients. If you start working with contractors or sub-trades that hire engineers a lot, then they understand that some engineers lead to better results, but some of those are just looking for the friendliest engineer that lets them pretty much do what they want.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Brad805)

After years and years of experience you learn what questions to ask, but at the start many tend to be a bit carefree about that aspect

This would be me. Any chance you'd want to share some of these prophylactic questions you've figured out?

RE: Inner Turmoil - Salaried Employee vs Self Employed

I am going on my own next June in Utah. Ally yourself with me!

RE: Inner Turmoil - Salaried Employee vs Self Employed

2
Since we have quite a few sharing quite openly, what the heck, I will spill out a few musings.

When working with a building owner one of the best questions is to ask if they see their building as an "expense" or an "investment". The average developer looks at you dazed and confused by the question, but someone that will care about details tends to answer they see it as an investment. We have found those to be some of your better clients. They are higher maintenance, but they get involved in the design earlier on, and that is always a plus. If they view as an expense, that can be fine, but they tend to only be interested in cheap.

Another great tool in Canada is to do a court search using the business name or the principle client name. If they spend a lot of time in the courts fighting over jobs, they are a high risk and you need to be careful. Maybe they changed business names multiple times. That can be a huge flag they may not pay. One of our clients was asked to supply some products and he found the guy had been in the courts 45 times in a relatively short time. Needless to say, they did not ship them any material.

We do projects generally in the $2mil - $40mil working for contractors or owners. We do not work direct for a lot of architects for a variety of reasons. With new clients we like to probe during the initial interview:
1. Talk about the process they see moving forward. If you bump into someone that wants to be their own GC, you can rest assured that could be a challenging client. I have a couple wealthy developers that do this all the time and they are a lot of work. They are good at paying, but planning can be a bit of a minefield.
2. We are in a small area, so we know most of the local trades. We like to ask if they have given any thought who might be doing the work. That can be a cue about how the project might proceed. As a small firms we do not have resources to deal with a ton of RFI's (scope creep) nor do many of us really enjoy that type of work.
3. Be blunt and talk about the budget for the project. Unrealistic budgets never work.
4. Pry a little around the edges and get them talking. Eventually things always spill out that give you an idea about their character. Over the years I have always been amazed about how personalities can change when money gets involved.

Learn the lien process and do not be shy to be a dck. You are running a business and not a charity. That same geotech lost $40k on a project where the owner was going bankrupt. We were paid during their last re-financing effort because we had filed lien. As a whole, engineers are too eager to help, and we can get screwed.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Brad805)

We do projects generally in the $2mil - $40mil working for contractors or owners.

Thanks for the extra info Brad. It sounds like you're dong a pretty good clip for a sole proprietor. It's inspiring.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Here is one I have seen and used. Helps me start figuring out a Client. Draw a triangle with Time-Cost-Quality at the 3 corners. Hand the potential client the pen and ask them to place a single dot inside the triangle that depicts their current balance of the 3. If they say they want all 3, walk away or educate them. "I am sorry but I cannot give you the highest quality with the fastest turnaround for the cheapest price." If they place the dot, note where it is, paraphrase what you interpret the location to mean and use that as your starting basis for decision making. Periodically in the project, ask if they still have that balance. We call it the TCQ Triad.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Koot, myself and another bought out a small one man shop and grew since then. I would suggest to have a better plan than we did. We should have acquired another firm or two along the way to normalize the workload so we could have more employees. I am a bit tired of some of the things I still have to do now and likely for the next 15years. Our accountant was a small firm, and he bought up a few firms wanting to retire. Now he has a great retirement plan since he has a medium sized business that someone like KPMG might be interested in.

RE: Inner Turmoil - Salaried Employee vs Self Employed

3
Cal91 - My 2 cents is if you've got the itch then go ahead and do it. I wouldn't get bogged down in the details at this point, it'll just discourage you. You'll work it out. You're 27. The only thing you can be sure of is that you'll likely be dead in about 60 years (if you're lucky). I'd say its pretty unlikely that in 50 years you'll look back and kick yourself for that time you tried to start a business. Realistic bad case scenario(maybe not worst case) is that it's not a knockout, maybe you plug along and make 85 one year, 120 the next, and 70 the next, and then bail. In the long run the difference in finances won't mean anything. I'd say the odds of you ending up on the street are near zero so your potential downside is really pretty small.

Also, most of the conversation here is focused on the finances. Maybe I'm unique but I went off on my own because I despise having a boss of any sort. I figured that even if I could make about the same and not have anyone to answer to I was winning. Its an entirely different world once you don't work for someone (in good and bad ways), the money aspect is only a small portion of it. I occasionally run into old colleagues on the street - on their way to the same lunch spot, wearing more or less the same 'uniform', and every time I count my blessings that I tried something different. Just do it - you'll be fine.

RE: Inner Turmoil - Salaried Employee vs Self Employed

cal91: a tightly run solo shop can make much more than 80k/yr (4 or 5 times that), and yes people can call you up to do the next Guggenhiem. In my first year I designed the blast rated entrance to the World Trade Center and a bunch of nice bits on the Queens Museum of Art.

Four years of experience is not much, but if you have the right personality you can make it work. Santiago Calatrava opened his firm right out of school.

RE: Inner Turmoil - Salaried Employee vs Self Employed

@glass99: you are an experienced glass/facade specialist working in architecturally intensive markets, correct? If so, then I think that your comments need to be viewed from that perspective as your services are likely far less commoditized than are run of the mill EOR services. I'd wager that your odds of landing some facade work on the next Guggenheim vastly outweigh my odds as picking up that same project as a solo practitioner EOR. I fully agree with your point about Calatrava though. Many of the savants waste little to no time stepping out and putting their vision to the test.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Kootk: yes, I am in a good niche which helps. It also helps that I am a genius (!) But you might be a genius too, certainly in terms of your outlook, which I think is at the root of all success. I very much appreciated your comments about risk aversion holding people back. We live in an anxious world.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (glass99)

But you might be a genius too, certainly in terms of your outlook, which I think is at the root of all success.

Unfortunately, my "outlook" is really just a perspective that I parrot from what I read and see in better men. I'm as anxious as anybody I'm afraid, even though I see the flaw in it. It's cliche but, truly, I believe that fortune does indeed favor the bold. The big challenge for me will be seeing if I can change myself from what I naturally am into what I clearly need to be.

RE: Inner Turmoil - Salaried Employee vs Self Employed

I have some experience with glass design. Pretty much have to conquer any latent anxieties to survive there.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Brad805)

Our accountant was a small firm, and he bought up a few firms wanting to retire. Now he has a great retirement plan since he has a medium sized business that someone like KPMG might be interested in.

When it comes time to sell your firm, consider selling to me. Seriously. We're geo-cohorts of a fashion. Based on what I know of you from our interaction over the years, I'd have every confidence that your business would be honest and sound.

Quote (Brad805)

I am a bit tired of some of the things I still have to do now and likely for the next 15years.

This is a very big fear of mine as well. Although I'm coming at it from the opposite direction and hoping not to land there. It went like this for me:

1) I loved being a structural designer but, obviously, the pay is untenable over the long term for a family man.

2) I didn't mind being a project manager but was not set ablaze by it.

3) I utterly loathed being the manager of a structural department. I was a middle manager constantly squeezed between upper management wanting to hit performance targets and worker bees forever screwing up and whining about work life balance. I think that C-suite management would be fun but middle management just 'aint for me.

So my rather insane business plan is this:

1) I strive to be the world's highest paid EIT and have probably already succeeded in that (doesn't take much).

2) While glamorous project are tough to secure, I find that modest work is not. I strive to bring as much modest work under roof as possible and sort out ways to have it done by others so that it can exist as mostly passive income for me.

3) Once I get #2 up to a reasonable level, I plan to only do real work about 1/2 time and spend the other 1/2 of my days:

a) Developing my own suite of web based structural engineering tools. Kootware!

b) Designing lateral systems and other neat stuff for other consultants, either for free or at a ridiculously low rate.

c) Doing architectural projects with people I like and just accepting that they'll never be big profit generators.

I know, Warren Buffet I am not. I've come to the sad conclusion that, almost by definition, cool engineering assignments don't pay unless you really do have a great niche service offering like glass99. And that's simple supply and demand. There's a veritable army of talented, power nerd engineers out there happy to pay their employers for the privilege of taking a swing at the next Burj Dubai. Supply... greatly exceeds demand. So I'm not even going to try to position myself such that I'm making great money doing cool things. Instead, I mean to split the streams and make great money having others do modest things and do cool things myself nearly pro-bono. Or maybe I'll just get lazy read a lot out on the patio. One of those.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Buying up smaller firms is definitely something I have been interested in over the years. I would love to hear more about how that works in the real world.

We do cool projects for a decent fee, but we still struggle with a lot of the same stuff. The big one for me is the lack of linearity and repetition and therefore scalability of my practice.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (glass)

The big one for me is the lack of linearity and repetition and therefore scalability of my practice.

That's sort of the trouble with genius-ing. It's not easy to convince other geniuses that they ought to be your worker bees. It's almost always got to be a partnership arrangement.

Quote (glass99)

Buying up smaller firms is definitely something I have been interested in over the years. I would love to hear more about how that works in the real world.

I've done this once and attempted it two other times. All disasters hinging on two things:

1) It's all but impossible to agree upon a price that a retiring founder would find fair and, simultaneously, wouldn't represent too much of a cost burden for the buyer.

2) Any firm that I could afford to buy is going to be small. And that invariably means that the bulk of the real value of the firm is the reputation of the departing owner. That tends to feel a lot light buying nothing at all from the perspective of the purchaser. In this sense, I could see buying out your current employer being a more viable thing.

RE: Inner Turmoil - Salaried Employee vs Self Employed

I will share my own limited experience here. I made a similar choice to yours a little more than a year ago. I am 28. I was in a stable job, in a specialized SE/CE (Construction Engineering) industry. The industry had a limited career path, and I was becoming bored with it. Looking at my superiors, I wasn't inspired by the thought of sitting in those positions for the rest of my career. At the same time, I had friends who are general contractors, and were having a hell of a time finding a structural engineer to help them with their projects.

I did some market research, gave it some thought, and with a very understanding life partner (we're Quebec-married, new age shacked up), we moved 400 km & started the business at the same time. This meant starting the business with very few existing clients - we definitely did not make it easy on ourselves. My darling even took a crap-job at the start so that we could pay rent and eat ramen without any income from me. Previous job training in personalities, communication, and self-awareness paid huge dividends in those early months, as I figured out how to get the business off the ground, and also how to keep my sweetie from freaking. The challenges, as many have suggested, are two pronged. There is the technical challenge of running a professional practice, not exceeding your knowledge/experience while satisfying clients, and the challenge of running a business.

My biggest challenge is with money. Without formal business training, figuring out what fee structure my client will prefer (and which will give me the fewest ulcers) is a challenge. That's mainly a challenge in reading the client's personality & situation. It's also sometimes a challenge to persuade your client that the value you create is valuable to them. Persuasion skills pay off big in focusing your clients on your abilities/experience/other-distinguishing-traits rather than on price. As many on these forums have complained, competing on price is a race to the bottom and a race towards poor quality and hurt feelings. Best of all, if you can provide a unique service, and eliminate any competitors, that's ideal. That's where we are - somewhat remote, and the only service provider in the area.

My other largest challenge has been handling situations where I would have normally bounced ideas off of colleagues. This forum has helped somewhat, as have my former colleagues. Sitting in that grey cubicle farm, they are often happy to pick up the phone and "shoot the sh*t" about a cool challenge. I do the same for them in return. Don't see your former colleagues as dead to you - they are everything but.

Many consultants seem to struggle with getting paid. I seem to have largely avoided this issue, and I don't think it's coincidence. When working hourly, I always provide an estimate, and update the client if that estimate is becoming invalid. Same when working fixed-fee and coming up against a change. I do my best to not surprise clients with bills that are out of line with what they anticipated, and that seems to be appreciated. That personal touch sets me apart from the big firm, where billing issues tend to get forgotten until the month's end.

We've been incredibly lucky/fortunate/supported-by-the-community. Keeping your karma account topped up seems to go far. Both myself and my partner are now working for the business, and we've got a growing client base who are starting to return. We are also super happy with the benefits of working for ourselves. I answered a call from a client halfway up a rock climb yesterday. Life could be worse.

RE: Inner Turmoil - Salaried Employee vs Self Employed

I'm also thinking of going on my own and have read all the post above, it is all inspiring.
I have realised awhile back what bookowski said above regarding the chances of a young structural engineer ending up on the street and how things might pan out, but still I'm antsy of going on my own for various reasons.

I, like most people above, didn't have training on the business side of things but took part-time study in business to have a better understanding of finance/management/markets/economics. However, what I really think is my weak spot is me being someone from overseas and not having the same kind of connections as those who are locals. I've been practicing where I currently reside for about 5 years and have about another 5 years in another country. While I been able to get my license to practice here, have assimilated well, established a good working relationship with my colleauges (and clients), and made friends with a few people, I can't help but feel that as a non-local, looking for projects might prove to be more difficult (my potential client list aint that long).

Anyone who has a similar experience? What are your thoughts?

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Enhineyero)

Anyone who has a similar experience? What are your thoughts?

1) Bad news first. Yes, it is always better to have more local contacts and you're most definitely in a weaker position where they lack. In terms of business development, much of your low hanging fruit will be your existing contacts. And my recommendation to anybody getting started would be to make a concerted effort to reach out to everybody that you know straight out of the gate. Tell Facebook, LinkedIn, and your goddam grandmother's bridge partner that you're in business now and looking for work. You'll be surprised how much love will come pouring in. That karma thing mentioned above. I have to turn half of this stuff away because I've determined much of it to be strategically disadvantageous. But I've been most grateful for the other half.

With respect to assignments that are strategically disadvantageous, my opinion has settled on this: unless I'm starving, I don't want any assignment that doesn't stand a reasonable chance of either a) leading to repeat work or b) significantly enhancing my reputation. That, because:

a) Learning to do new work with a new client is almost always a money loser for the first few projects and;

b) Time spent satisfying one off clients is time not spent satisfying repeat clients. Pretty obvious in retrospect.

So no, if your neighbor is a dentist, I probably do not want to come look at the crumbling retaining wall in their back yard.

2) Good news second. As far as I'm concerned, absolutely every successful entrepreneur needs to be able to conjure new work, practically out of thin air. Existing contacts and relationship based selling are great but are usually just the start. So, in this respect, you're no worse off that anybody else. One of the more useful business books that I've read is shown below. This is geared towards hardcore sales people but still gives a sense of where your head needs to be at once you step out. One could sum the whole book up as this:

a) Have the ovaries to reach out to strangers and ask for work constantly. Constantly. You're either hunting or soon to be starving.

b) Be strategic about how your reach out to people for work because you won't get many chances to make your play. But don't overthink it to the point of inaction.

c) Have an ego strong enough to allow you to hear the word "no" nine times out of ten.

I read this book at least once each year, one chapter at a time. Sometimes, I feel inspired and empowered. Other times, when I'm faced with the limitations of my native proclivities, I want to projectile vomit. Unless you're a natural / Don Draper type, the name of the game is killing off the person you were born to be so that you can become the person that you want to be.

I'm a marketing wus by nature which has been a challenge. I've made it a personal goal to make this my first act of every day: I reach out to one person and ask for their work. That will be:

1) an existing client.
2) a client from a past life.
3) a school friend or former colleague working in the construction industry.
4) a random project team member from a past project.
5) a random LinkedIn connection who's interest, I feel, might intersect mine.
6) a fabricator or supplier of any damn component that I feel might merit structural engineering.
7) a friend from Eng-Tips that I know how to contact.
8) a cohort from a technical society.
... on and on.

Out of the gate, I felt as though my Rolodex couldn't be more than 50 contacts deep. With some emotional fortitude and creative thinking, I've realized that it's nearly infinite. To be honest, this effort takes me only 5-15 minutes a day and it still takes enormous self discipline for me to do even this. That, in contrast to the sales guys in the book who do about six concentrated hours of it a day. And I hear "no" a LOT. I don't think that my hit rate is any better than 1:50. However, there are 250 business days in the year which means five new clients for me every year. Which is plenty. As they take great pains to point out, aggressive sales is a) doable by anyone and b) truly a numbers game.

This part is uncomfortable and makes me feel sleazy at times. The book actually has a technical term for this that I like: "rejection intensive work". And truer words have never been said.




RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (KootK)

You'll be surprised how much love will come pouring in.

I'll second this. 90% of my work has been referred from previous employers, old work contacts, or other people I know providing references.

Ian Riley, PE, SE
Professional Engineer (ME, NH, VT, CT, MA, FL, CO) Structural Engineer (IL, HI)

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (Enhineyero)

I, like most people above, didn't have training on the business side of things but took part-time study in business to have a better understanding of finance/management/markets/economics.

Good for you with respect to the part time studies. Like most engineers at good companies:

1) I participated in proposals and business development.

2) I went to some seminars etc on sales and client management.

3) I was constantly exposed to the trickle of business development advice. Zipper effect and such.

4) I thought that I understood the importance of being client/solution focused.

5) I thought that I understood the importance of monitoring project financial performance.

6) I thought that I understood the importance of maintaining morale within a team.

As it turns out, #4, #5, and #6 were things that I only knew in my head. Now, I know these things in my bones which is different. And, should I ever find myself an employee again, I suspect that I'll be the world's greatest employee for knowing these things. Interestingly, I know of a few guys and gals that struck out on their own, hung it up in favor of cubicle jobs, and then succeeded wildly in those jobs. I suspect this is why. It's just hard to really understand what is important to your employer until you've truly walked a mile in their shows. Or even a few yards.

So, despite items one through six, I still found myself woefully unprepared for the business world. And, for better or worse, I'm one of those foolish people that thinks that all of the answers can be found in a book if only I could find the right book. And I've found that finding the right book has been hard. There isn't really a "how to start a structural engineering firm" book out there and much of what exist for entrepreneurs assumes that you're a business consultant, a tech startup, or a "real" company in the sense that you're gong to have set up a $1B factory and start outsourcing labor to Mexico.

Given the amount of interest that this thread has generated, I thought it might be helpful to list some of the resources that I have found to be gems.

1) The Business of Design. This is basically "how to start an architecture firm" which has been the closest thing that I could find to "how to start a structural engineering firm". It has the added benefit of having helped me to understand my clients' business models better which is, of course, a good thing. I actually converted one startup, architectural friend into a small architectural client by sharing this information with him. It is somewhat universal that simple generosity is a pretty good business development strategy.

2) The Personal MBA. In my opinion everybody needs some core business training. Also, in my opinion, an MBA is a waste of time unless it's a job prerequisite or you go to Yale/Rotman and milk the snot out of good old boy connections. Otherwise, all I want is the information which seems to be easily accessible to anyhow capable of reading. So I googled "Give me an MBA in one book" and got this. And it is as advertised. It's got me, in a very short span of time, thinking about the right things in the right ways. And it provides gobs of references should one wish to dive deeper on a particular topic.

3) The Accounting Game. Initially, I thought accounting to be utterly beneath me. My brother's an accountant, available to help, and it's really just adding and subtracting, right? That... was wrong. There's something to basic accounting philosophy that every business owner should understand. And, if you're trying to do some of your accounting yourself out of the gate, knowing these things is key to making good, time saving decisions about how you structure things out of the gate. And I caution anyone about thinking that this book is too "accounting for dummies" to be worth their time just because it deals only with the development of a single lemonade stand business. The presentation is nothing short of brilliant in that it uses the simplest possible example, taken ad nauseum, to explain very sophisticated business finance concepts. In my opinion, this is actually more information than I need but presented in such a clever and entertaining way that it was about as taxing as reading People Magazine. Interestingly, even though my own brother is a accomplished finance guy, even he couldn't "reach" me when it came to explaining some of these things in the way that I needed them explained. As with our profession, accounting has it's own jargon and foundational dogma. And after 20yrs in the game, my brother's really unable to filter those things from his language in a way that would make sense to me. I needed to know some of the things that he takes for granted and this book is what got me there.





RE: Inner Turmoil - Salaried Employee vs Self Employed

The thread is quite inspirational. I better hit my local library soon to find some useful personal MBA books.

RE: Inner Turmoil - Salaried Employee vs Self Employed

I'd like to contribute an additional thought regarding the timing of one's entrepreneurship adventure. To recap a few previous comments, leaning towards the bold, and to bring them together into a cohesive whole:

Quote (KootK)

Frankly, I feel that you're at the perfect age and experience level for this. Firstly, if you succeed, you've got lots of time to enjoy the fruits of your labor. Secondly, if you fail, you've still got plenty of time on the clock to get a cubicle job and climb the ladder. If I had it to do again, I wouldn't have waited a day past 35 and, preferably, would have been closer to 30.

Quote (KootK)

I believe, right down to my bones, that risk aversion is the number one thing keeping people from maximizing their true potential. Particularly so in affluent places like North America where, truly, what's the worst outcome that could possibly result?

Quote (KootK)

A die hard entrepreneur would rephrase your statement as something like: Man, when I get out on my own, I'm sooo going to kick some ass and dwarf my salaried earnings. I'd best get started on that adventure before I'm 35 so that those returns can compound over time.

Quote (Brad805)

I would suggest to have a better plan than we did. We should have acquired another firm or two along the way to normalize the workload so we could have more employees. I am a bit tired of some of the things I still have to do now and likely for the next 15years. Our accountant was a small firm, and he bought up a few firms wanting to retire. Now he has a great retirement plan since he has a medium sized business that someone like KPMG might be interested in.

Quote (Bookowski)

My 2 cents is if you've got the itch then go ahead and do it. I wouldn't get bogged down in the details at this point, it'll just discourage you. You'll work it out. You're 27. The only thing you can be sure of is that you'll likely be dead in about 60 years (if you're lucky). I'd say its pretty unlikely that in 50 years you'll look back and kick yourself for that time you tried to start a business. Realistic bad case scenario(maybe not worst case) is that it's not a knockout, maybe you plug along and make 85 one year, 120 the next, and 70 the next, and then bail. In the long run the difference in finances won't mean anything. I'd say the odds of you ending up on the street are near zero so your potential downside is really pretty small.

Quote (glass99)

I very much appreciated your comments about risk aversion holding people back. We live in an anxious world.

Quote (glass99)

It also helps that I am a genius (!) But you might be a genius too

The additional thought that I'd like to table for consideration is the real life case of this firm: WHM

1) One of the founders of this firm is a friend. We went to school together, used to work at the same firm, and he occasionally tosses some work my way as, effectively, an act of charity. He's a good guy in many respects. He's my age with, like me, about 20 yrs left on the work clock.

2) A quick tour of the firm webpage will reveal that he's got a stable of employees and works on a lot of excellent projects in a number so sectors. Not Burj Dubi but modest residential highrises, schools, exotic homes etc. I would consider what he's accomplished to be the 80/20 version of about the best that I might hope for. But he got started fifteen years ago and I'm just getting started now.

3) My friend will be able to enjoy the considerable fruits of his labors for the next twenty years whereas I, if I'm lucky, might get to the same place about 15 minutes ahead of retiring.

4) My friend's firm is plenty big enough now to represent a viable retirement plan. Either he sells it for big a payout or, more likely, he transitions it to a distributed ownership model internally. I know nothing of his succession planning personally so I couldn't say with any certainty. But he most definitely does have some attractive alternatives available.

My point is that there's almost nobody in all the world that I'm more envious of than this guy. You know, in a real world sense. Obviously, I'd also like to be Beyonce, Putin etc. I don't regret going out on my own, I regret not going out on my own sooner. And I believe that, coming from a truly entrepreneurial perspective, this is how it should be viewed. One shouldn't fear the clock because today's possible lost earnings won't compound over time. One should fear the clock because, all too soon, we'll be dead, retired, or otherwise unable to capitalize on our own genius and entrepreneurial spirit. We all need to figure out how to maximize our own happiness and, for most of us, that means mitigating the snot out of risk. However, for anyone that is fairly certain that they'll be stepping out eventually, most signs point toward the wisdom of arriving to that particular party nice and early.




RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (KootK)

I don't regret going out on my own, I regret not going out on my own sooner. And I believe that, coming from a truly entrepreneurial perspective, this is how it should be viewed. One shouldn't fear the clock because today's possible lost earnings won't compound over time. One should fear the clock because, all too soon, we'll be dead, retired, or otherwise unable to capitalize on our own genius and entrepreneurial spirit. We all need to figure out how to maximize our own happiness and, for most of us, that means mitigating the snot out of risk. However, for anyone that is fairly certain that they'll be stepping out eventually, most signs point toward the wisdom of arriving to that particular party nice and early.

Quote (glass99)

I very much appreciated your comments about risk aversion holding people back. We live in an anxious world.

Those two things have been playing in my mind. Most engineers are thinkers and most entrepreneurs are doers. I'm on the process of building up my battle chest (money, skills, and mindset) to brace myself on what I will be facing, but have yet to cross that line. I do believe that money is not the most precious currency but time is, and hopefully I will get the courage to actually pull this off, as it in my opinion the most meaningful way of spending my 'working' time.

Thanks for the references you have posted above, I don't know alot of engineers who went on their own and couldn't ask anyone for useful references. I've been searching for awhile but its difficult to find a needle on a haystack, particularly in the internet. Most of the senior people in the office don't even bother with such things as work comes to them.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Here are some places to look for additional work.

1. Find a general Civil firm that does not have structural ability. I know of 1 or 2 in my area. Talk with them about them referring you or using you when they get structural requests. You reciprocate when you get Civil calls. I do that now. They do not want to send the Client to a Civil firm competitor that has in-house structural.

2. Not every engineer is good at everything. Think out your 2 or 3 strongest areas and likewise you weakest areas. Find structural firms with somewhat the opposite and swap work. You should have no real desire to begin a new company with your weaknesses. I actually do work for other structural firms sometimes in a few areas because I have a strong background in these areas. As an example, since cold-formed and masonry are not taught in college, some firms do not take many of these type of projects if better stuff is available. If someone calls me about a multistory concrete building, I may send them to another firm since I do smaller jobs and one like that would eat up my time. Likewise, larger firms sometimes do not want some smaller job.

3. If you see areas that no one is good at but there is a market for that skill, LEARN IT. Some companies get a larger job they want but it can tend to have portions they are not really interested in or are not good at. They do not want to lose the big job. I used to do a lot of smaller fabrication for larger fab shops that were not interested in 10%-15% of what they bid on. I was involved in a smaller shop that was tickled to get the smaller jobs.

Basically, see competition as a potential Client.

RE: Inner Turmoil - Salaried Employee vs Self Employed

I forgot this one in my previous post.

4. Find firms in small towns nearby and contact them about calls they get that they are not capable of handing. There are a lot of really small firms that only do 1 or 2 things in small towns.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Having read through the entire thread with much interest as I was in a similar situation some years ago.
Being a one-man show for some years (and since 2015 I've got a partner), I was not taken seriously by some of my clients in the beginning, even though at that moment I was well over 30 yrs old.
You've got some great advice, however at 27 yrs old, no matter how exceptionally good you may be as an engineer (and no, I'm not being sarcastic or smug), you lack experience. I've got 15 yrs of experience, and still hesitate to accept some jobs because they contain new challenges for me. Experience tells you at that point whether you are right to be confident to tackle the job, or whether you should be wise enough to let that one go to your competition, risking to lose any following jobs from that customer.

My son is still going to school, but my advice will be to have at least three different employers for some years (with some > 4) before (if he wants) to venture off alone. I worked at a small company, a large one and one public company, each has tought me things that I use everyday. Not just engineering, but mostly how the world works.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Ron: I like the concept of the "frenemy". Everyone is a potential collaborator, client, or competitor. When my client decides to bring engineering in house, they are my competitor. When the glass engineering firm across the street is the contractor's engineer on my design, we are collaborators. When the big engineering firm needs a specialist, they are my client. When my contractor offers design assist to my architect, they are taking work from me.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (enhineyero)

Most of the senior people in the office don't even bother with such things as work comes to them.

To swing the pendulum back the other way, in hopes a a balanced perspective, that sounds a bit like the "business within a business" model of career progression. Basically, you do what everyone should be doing and treating yourself like an entrepreneurial entity within somebody elses' entrepreneurial entity. And that's pretty tough to beat when it's working well. Frankly, if ARUP called me up this afternoon and offered to make me a principal with some serious equity, I'd be pretty darn tempted. The B-in-B is a pretty great balance of risk and reward. That said, there's a lot that needs to go right for this to work:

1) Gotta be a company where you like the work, the people, and the management.

2) Gotta be a company with good equity offerings.

3) Gotta be a company with a convincing succession plan.

4) If you've done any job switching, you may have to pay your dues for a decade or so before it starts to rain.

#4's really the one that got me. At my first decent structural job, I was well regarded and felt that I probably was the "heir apparent" so to speak. Big fish in a mid-sized pond. Family circumstances required me to leave that job and move back to Canada. I naively assumed that I'd wind up the heir apparent most anywhere because, you know... I'm awesome. Not so. I wasn't ever able to replicate that again and other firms tended to view me as a nice, clever guy destined to be a worker bee of the long haul.

It was actually one of those personality tests that caused me to leave one of my better jobs. My profile came back B-tard and I could tell that, despite their admonitions to the contrary, they were going to let that taint my progression. I am/was a B-tard for sure. But those tests only speak to natural proclivity and do not speak to drive, passion, and one's ability to change. And I'm not one to be artificially limited on the basis of some goofy HR test. Nobody puts KootK in the corner damn it.

I interviewed extensively with a firm that wanted to a acquire me after I'd been on my own a while. And they did the personality test thing. Interestingly, that time, it basically came back that I was the Don Draper of structural engineering and that my talents would be completely wasted unless I was doing something entrepreneurial. That's BS too though, I'm still a B-tard. By way of an Eng-Tips colleague, I do sort of have a business coach and he's taught me how to talk the talk. Part of my struggle with the personality tests is that it's impossible for me to be honest in the taking of them. I can't turn of the part of my brain that wants to game the system. The HR nerds swear these test are immune to attempts to cheat by I put exactly zero stock in that assertion.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Quote (kingnero)

Being a one-man show for some years (and since 2015 I've got a partner), I was not taken seriously by some of my clients in the beginning, even though at that moment I was well over 30 yrs old.

Not being taken seriously is a likely, and painful, consequence of going solo. I've had numerous people tell me that having a physical office is pretty important to getting taken seriously as well (a step I've not yet taken). I've got a good anecdote to share with respect to being taken seriously. I need to boast a bit first though. Here's me:

- Graduate degree.
- Two decades experience.
- Canadian license.
- California SE.
- Worked for the two most high powered firms in my market.
- A few of the marquee buildings and LRT stations locally bear my name.

I've got this one client, that I love, who uses me for small stuff. He'd like to use me for larger stuff but can't because it's always public works stuff where the proposals are qualifications based. And my firm has jack for qualifications.

So when this guy calls me up for a job, it always starts like this: "Great news! I've got this project coming up that doesn't require any qualifications. So you're in!". Imagine. How that. F*ing feels? I laugh about it now as I've relaxed some but I sure wasn't laughing the first few times.

RE: Inner Turmoil - Salaried Employee vs Self Employed

The office space thing is something that can be worked around these days with all the co-working and office share things out there in most cities. Even if you don't want an actual shared office, you can get a business mailing address at the place and then rent meeting rooms whenever you want at a reasonable price.

RE: Inner Turmoil - Salaried Employee vs Self Employed

LOL KootK-So let me guess, you have no plans of making that your company slogan? "Don't Need any Qualifications!!! Call Me."

RE: Inner Turmoil - Salaried Employee vs Self Employed

@Ron: yeah, I fancy myself the Better Call Saul of structural engineering. My game is mostly shame.

RE: Inner Turmoil - Salaried Employee vs Self Employed

As long as family tin-foil lined clothes obsessions don't rub off on you, you will do fine.

RE: Inner Turmoil - Salaried Employee vs Self Employed

Imagines KootK sitting round doing engineering in his tin foil jammies (booties optional)........

Some food for thought:-

I don't work for myself, but I do some irregular contract work for a one man band. A guy I worked with at two previous employers, one big 3k employees, one medium 40-50 employees. We've worked together on and off for 15 odd years on some bigger projects at these two employers.

He concentrates on residential stuff, because thats all he seems to be able to hook into. The race to the bottom is real in this type of work.

He struggles to get what I would term good fees. He has some good repeat clients, but the market dictates that people just go with the cheapest quote with little look in to the fact your documentation is better, that you might end up costing the client less in the long run by reduce clients risk of cost overruns during construction compared to competitors. I come up with a fee base don time and are double his what the market will take estimate. So being aware of the feasibility of doing the type of work in your local market for the fees you want is vitally important.

Its a frustrating rut to be in, when I help him out I don't see how he even makes any money, hell I barely make any money when I look back at what my hourly rate ends up being on some jobs compared to sitting in a salaried position in the past. The ability to work when you want is certainly a plus though.

Between the two of us we have the experience and ability to take on much larger projects, but its really hard to get the first one in the bag unless you can offer something larger firms cannot. Often you just attract the 'cheap' developers option, and thats not either of our style really as we prefer highly coordinated, solid design concepts, etc. But you're comparing with other similar engineers in the same market who can sell their soul at a moments notice to do cheap and nasty.

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