None of us will admit it, but I know… deep down we all want to build wealth. Don’t worry. I won’t tell anyone. You can keep it a secret if you want but the reality is that engineering owners should be profit driven. It is just good business.
Providing great engineering services and running a financially successful firm are not mutually exclusive. It’s quite the contrary. If you are as good an engineer as you think, you’ll be successful and it won’t be because of your design or management skills.
I hate to state the obvious, but for most engineers, design and project construction is the fun and can be the easy part. It’s in their DNA. And while the world is filled with lots of bad designers, it’s also full lots of really great designers. What separates the great–struggling designers from the great-successful designers isn’t luck.
It’s not your fault that after all the years of education and training you endured to become an engineer you don’t know the first thing about how to run a business. Sure, you can design – like nobody’s business – but do you truly understand the difference between income and revenue? How about a credit and debit? Do you know what an overhead factor is and why it’s so critical? Do you know what your minimum billing rate is? Did you ever sit down and map out your firm’s operating budget?
Have you truly put on your business hat and planned for your financial success and sustainability? Chances are the answer to all of these questions is no. However, it is absolutely critical that get you on the right track to understanding your firm’s finances.
But wait. You’re an engineer. You provide design services, the end result of which is hopefully a successful project. Why do you need to understand the business side of engineering? It’s hard enough to be able to create new projects, why burden yourself with all this business stuff that just seems to get in the way of what I need to get done for my clients?
I’m always amazed how engineers spend more time perfecting the designs of their projects and learning things such as sustainable design practices but don’t put much effort into making their own firms sustainable. Let me put this as succinctly as possible.No Profit equals no Business. Unless you have a big fat trust fund or married rich, my advice is before building someone else’s project…
Get your business in order.
You’ve managed to make one of the biggest and most difficult steps in your career by opening your own firm. Nothing could be more important than being able to make your mark and to exceed your client’s expectations. You want to provide the finest design services possible to ensure your status as a quality engineer and a designer. In addition, you want to create a firm that people want to do business with.
But the reality is with any business, it has to be profitable to make sense to go through all the trouble. But wait, we are engineers and we don’t want to be about chasing the mighty buck!
It may be a sad, sobering fact, but making money is what allows us to do the things we want. It gives us freedom. And if all you want is to be a good designer then make sure you bring people into your office who want to make money. Then, and only then, will you be able to flout your talents, pick your projects and reap the glory that allows you to sit back and say you are successful.
Being a strong businessperson also earns you the respect of your clients. Being able to stand toe-to-toe with someone who has the means to afford to build nice projects – to speak in a language that they understand business wise –demonstrates that you’re not a push over and that you have earned respectable status. You understand the rules of the game and you wield them to the benefit of your firm, your projects and your clients. Clients are attracted to winners.
Sorry to be the one to rain on your parade. But now that you’ve opened your own office you’re going to have to grow up quickly. No more playing in the backyard sandbox. Now you have to provide for your new family, that is your firm.
Yes, your firm is now your Work family. You have a responsibility to make sure the money is flowing in for this family just as you have responsibilities with your Home family.
Your income is no longer just about paying the mortgage or rent, to buy food and clothing. To pay for the car, the gas and maybe even have a few bucks left over to splurge on something special every once-in-a-while.
When you hire people to work in your firm, you have a responsibility to them too. After all, they too are using your business as a way to bring income home. Your cash flow has to cover both your Work and Home families. And as the owner of the firm, you’re the last to get paid.